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R-2015-040 2015-03-09 RESOLUTION NO. R2015-40 A Resolution of the City Council of the City of Pearland, Texas, accepting the City's comprehensive annual financial report for fiscal year 2014 as prepared by the accounting firm of Whitley Penn, LLP. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain comprehensive annual financial report as prepared by Grant Thornton, 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 9"' day of March, A.D., 2015. a TOM REID MAYOR ATTEST: �Q�RLg4.0, _41i'_mac/. i =p ..... ... ....i.... Yi ,NG LO';�I�, TR 7' -v:. J� SEC-13 ARY ,N ` APPROVED AS TO FORM: '','''i,,""'����````` cGI . DA RIN M. COKER CITY ATTORNEY 0 I CITY OF PEARLAND, TEXAS ■I PF9 ■ O T E X A S iliallsi461 Est.. 189 COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2014 Officials Issuing Report Clay Pearson Jon Branson Trent Epperson Claire Bogard Rick Overgaard City Manager Deputy 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 xi Organizational Chart xii GFOA Certificate of Achievement xiii Financial Section Report of Independent Auditors 1 Management's Discussion and Analysis 7 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 21 Statement of Activities 22 Fund Financial Statements: Balance Sheet-Governmental Funds 24 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 27 Statement of Revenues,Expenditures,and Changes in Fund Balances- Governmental Funds 28 Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balance of Governmental Funds to the Statement of Activities 30 Statement of Net Position-Proprietary Funds 31 Statement of Revenues,Expenses and Changes in Fund Net Position- Proprietary Funds 32 Statement of Cash Flows-Proprietary Funds 33 Notes to the Financial Statements 35 Required Supplementary Information: General Fund-Schedule of Revenues,Expenditures,and Changes in Fund Balances- Budget and Actual 70 Notes To Required Supplementary Budget Information 71 Required Pension System and Other Post Retirement Benefit Supplementary Information 72 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 78 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances- Non-Major Governmental Funds 82 Schedules of Revenues,Expenditures,and Changes in Fund Balance-Budget and Actual: Debt Service Fund 86 Hotel/Motel Tax Fund 87 Court Security Fund 88 City-Wide Donations Fund 89 Court Technology Fund 90 Street Assessments 91 Park Donations Fund 92 Police Seizure Fund 93 Parks and Recreation Development Fund 94 Sidewalk Fund 95 Grant Fund 96 Traffic Impact Improvements 97 Juvenile Management Fund 98 Capital Projects Fund 99 Educational TV Fund 100 U of H Fund 101 Long-Term Debt Amortization Schedules: Combining Schedule of Governmental Activity Long-Term Debt 104 Combining Schedule of Enterprise Fund Long-Term Debt 112 CITY OF PEARLAND,TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS(Continued) Statistical Section(Unaudited) Page Net Position by Component 118 Changes in Net Position 120 Fund Balances of Governmental Funds 124 Changes in Fund Balances of Governmental Funds 126 Spending and Growth Analysis 128 Assessed Value and Estimated Actual Value of Taxable Property 130 Per Capita,Household,Square Mile for Benchmark Cities of Taxable Property 133 Direct and Overlapping Property Tax Rates 134 Property Tax Levies and Collections 136 Principal Property Taxpayers 137 Taxable Sales by Category 138 Outstanding Debt by Type 140 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita 142 Direct and Overlapping Governmental Activities Debt 143 Pledged Revenue Coverage 144 Demographic and Economic Statistics 145 Principal Employers 147 Full-time Equivalent City Government Employees by Function/Program 148 Operating Indicators by Function/Program 150 Capital Asset Statistics by Function/Program 154 Introductory Section (This page intentionally left blank.) RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE r E 4 City of Pearland 2 � o 3519 Liberty Drive Pearland,Texas 77581 r E x As Tel:281.652.1600 E pearlandtx.gov S7. gk) February 23, 2015 Honorable Mayor,Members of City Council,and.Citizens of the City of Pearland,Texas 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 ending September 30, 2014, 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 ending September 30, 2014.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 108,800 residents estimated as of September 2014. 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 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. RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE 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; convention and visitors bureau; 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 City in 1995 under the Texas Development Corporation Act of 1979 to promote, assist, and enhance economic and related development activities on behalf of the City. The Tax Increment Reinvestment Zone (TIRZ #2)was created in 1998 for the purposes of development and redevelopment in the Zone Area, better known as Shadow Creek Ranch. The City participates in the Zone by contributing a portion of tax increments produced in the Zone to the Tax Increment Fund. The Development Authority of Pearland was created in 2004 to provide financing for the development of TRIZ #2. All these component units are considered blended component units and have been included as major funds in the Governmental Funds. ECONOMIC CONDITIONS Local Economy Located minutes away from downtown Houston, Texas, the nation's second largest seaport, the world-renowned Texas Medical Center, and NASA-Johnson Space Center, Pearland is the premier location for residential and commercial growth. With abundant land, business facilities, a sound infrastructure, and a diverse workforce supported by educational programs, Pearland's growth has been consistent and will continue to be sustained over time with continued residential and commercial development. The total of all new construction permitted during the 2014 calendar year was over $390 million, a 37% increase in value from 2013. New single-family housing permits totaled 1,068 with a construction value of$199 million. Multi-family permits totaled 1,008 with a value of$59 million. Pearland's economy continues to maintain strong levels. During the final quarter of 2014 there was a 52% increase in residential permits compared to the same time last year. Residential permitting activity for the 2015 fiscal year is expected to remain near 2014 levels, budgeted at 1,000 permits. For calendar year 2014, the City had 309 commercial permits with a value of $132.4 million, compared to 184 permits with a value of$74 million in 2013. The commercial real estate market also remains strong. ii RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE Sales of homes throughout the greater Houston area remained robust in 2014, driven by a combination of good local job numbers and historically low interest rates.The Houston Association of Realtors reported within Pearland and ETJ. 75,319 single family home sales for 2014, up 2.8% from the 73,232 sales in 2013. The average price of a single family home rose 8.7% from $248,591 in 2013 to $270,182 in 2014. 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. Houston is the world's energy capital. Growth in the oil and gas industry has been robust, however, because of the recent decrease in the price of oil, exploration has been taping off. Spending for exploration in 2015 should be 40 percent lower than 2014. It may be 2016 before we see an increase in the price of oil and exploration. With the decrease in exploration, Houston will look to other sectors for growth. The forecast is for growth in all sectors except oil field services, oil field equipment manufacturing, and oil field exploration. Pearland's unemployment rate was 4.3% in September 2014, down from 5.0% in September 2013. This is compared to the national unemployment rate of 5.9% and the State of Texas unemployment rate of 5.2% as of September 2014. Pearland's unemployment is less than the national and state rates with a growing economy. Houston added 69,800 jobs in 2014 and the Greater Houston Partnership is forecasting 62,900 new jobs for 2015. Although this is lower than the past couple of years, the Houston economy is still strong. The Houston area, and the State of Texas, 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, and livable developments along the Highway 288 corridor, one north of Shadow Creek Parkway and the other South. A strategic and target market study shows that energy, healthcare, life sciences, and manufacturing are key areas of interest for Pearland. 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. Modern Green Development, one of the largest developers in China, chose a 48-acre site for its first U.S. project and only its second in North America. Pearland's Planning and Zoning Commission approved the project in July. The rendering of early stages of the project, called the Ivy District, show land for a 150-room hotel and conference center, a community center to hold local meetings and banquets, 160,000 square feet of retail space and 140,000 square feet of office space. There will be 1,150 residential units, 400 of which will be rentals. Another block will be designed as an entertainment area. About 20 acres will be left as green park space, according to the announced plans. In late 2014, Hospital Corporation of America (HCA) completed construction on its Pearland Medical Center, the community's first acute-care hospital. The 144,000 square-foot, 32-bed hospital contains surgical suites, medical/surgical beds, intensive care beds and a 24-hour emergency department. The hospital, which opened to the public in February 2015, is located on a 48-acre site that also is home to a full-service freestanding emergency department, imaging center and three-story, 80-000 square-foot medical office building. Other medical developments include Memorial Hermann beginning construction on its new hospital and breaking ground on a second 100,000 square-foot medical office building on its 40-acre campus. The 64-bed acute-care hospital is expected to open in 2015 and will feature an intensive care unit, operating rooms, cardiac catherization labs, medical/surgical suites, women's and neonatology units. In addition, Chamberlain College of Nursing opened a new campus in Pearland. The Pearland campus is Chamberlain's second in Texas and 14th in the nation. Located at 12000 Shadow Creek Parkway, Chamberlain's new Pearland campus offers an on-site Bachelor of Science in Nursing degree program and features Chamberlain's SIMCARE CENTERTM, which provides high-tech iii RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE simulated patient care in clinical learning environments. Sales tax for fiscal year 2014 totaled $25.7 million, an increase of$2.1 million or 8.9% over fiscal year 2013. Of the $25.7 million, $17.1 million went to the City's General Fund for operations and $8.6 million went to the City's Economic Development Corporation for economic development programs and activities. The City's General Fund is 28% funded by sales tax, an elastic revenue stream that will fluctuate with the economy. As such, the City closely monitors sales tax and the economy. Pearland is a regional shopping destination and the economy has turned around since the recession of 2010 and 2011. The City saw a resurgence of spending in 2012, which continued in 2013 and 2014. As such, the City projected a 5.6%growth in sales tax for fiscal year 2015. The nation's largest retail group, National Retail Federation, expects retail sales to increase at a slightly faster pace this year than last year as continued improvements in jobs and housing should help shoppers feel more confident about spending. Increased residential units in Pearland and the immediate trade area support the established retail base. 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 2015 through fiscal year 2019 totals $419 million and continues to implement the $162 million bond program approved by the voters in May 2007. As of September 30, 2014 there was $77.6 million in unissued bonds approved by the voters and based on the 2014-2018 CIP. Projects include drainage ($22M), streets ($171M), facilities ($41M), parks ($20M), water and wastewater ($165M). 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, currently totaling $70.6 million, most of this utilities, will be identifying projects for the City's next bond referendum,potentially as early as 2016. The Debt Service Fund forecast shows a need to increase the Debt Service component of the tax rate to$0.5325 by fiscal year 2017 to implement the Five-Year CIP,excluding unfunded projects,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 debt service component of the tax rate for fiscal year 2015 remains the same as in fiscal year 2014 at$0.4900. 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 taken for fiscal year 2011, 2012 or 2013, however, the model anticipates rate increases for 2015, 2017 and 2018. The City's utility system continues to be self-supporting and financially sound. Relevant Financial Policies/Guidelines Financial Policies guide the development and implementation of the budget and are a framework for fiscal decision making and that ensure financial resources are available to meet the current and future needs of the City. 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. iv • RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE • 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, 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 out of the top 50 Cities. 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. Pearland 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 would have been costly and would not guarantee improved radio coverage. The City of Houston 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 switched to the City of Houston's radio system which will result in 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. The City of Pearland Police Department communications division provided 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 became apparent that the Police communications division workload was 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 has contributed to increased safety for emergency responders as well as better deployment and utilization of resources. Fire Station 2, located at the northeast corner of Harkey and Fite Road, is under construction. This station will be approximately 10,400 sq. ft. and house an operation crew, two fire engines, and one ambulance. This facility construction started in October 2014 and will be ready for starting occupancy by July 2015. Fire Station 1, currently located at the corner of Orange Street and Old Alvin Road, will relocate in 2018 to provide quicker response times. The new station will be located on McHard Road near Pearland Parkway.At approximately 8,500 sq. ft., the station will house a 24 v RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE hour operation crew,one fire engine, and one ambulance. Fire Station 3 began construction in June 2014 on a new 10,726 square foot station which is located on the corner of Yost and Broadway adjacent to the existing EMS station. The new station will accommodate both Fire and EMS as the department transitions from volunteer to a career fire department and the two emergency entities have now merged. The existing EMS station that is currently located in a converted house on the same site as the new station will remain functional throughout construction. The new Fire Station#3 will accommodate 10 full-time fire fighters and is expected to be open and operational by April 2015, after which the existing EMS station will be demolished. Another initiative of the City, is the approved merger of the Fire and EMS departments effective October 1, 2014. In 2010, the City engaged the firm of McGrath Consulting Group to evaluate the City's Fire and EMS departments. One of the recommendations was to consolidate the Departments; the purpose being to improve the efficiency and effectiveness of current and future delivery of services at the highest possible level of quality while considering costs. The consolidation is multi- year, multi-phase plan with cross-training occurring in fiscal year 2014 and full-implementation in fiscal year 2015. Economic Development The Pearland Economic Development Corporation (PEDC) is a non-profit Type B Corporation under the Texas Development Corporation Act and is primarily funded by a half-cent sales tax in the City of Pearland. PEDC is committed to enhancing the community's economic vitality through the attraction, retention and expansion of primary employers. PEDC works to ensure Pearland's business climate and built environment strongly support these efforts by focusing on aesthetics, infrastructure, quality of life, image, workforce and quality development and redevelopment of key Pearland districts and corridors. PEDC 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. The following highlights a few of PEDC's Fiscal Year 2014 attraction and retention projects. In January, Mitsubishi Heavy Industries Compressor Corp. broke ground on its first U.S. manufacturing facility in Pearland's Lower Kirby District. The 100,000 square-foot manufacturing and service facility is located on a 26-acre site on Kirby Drive. The facility, which is estimated to bring$40 million in investment to the community, will house approximately 100 employees who will produce, service and market compressors to serve the growing demand of North American chemical customers. Dover Energy, a division of diversified global manufacturer Dover Corporation, opened a 150,000 square-foot manufacturing and operations facility in Fall 2014. PEDC recruited Dover Energy to the community in 2013 when the company was looking to consolidate its multiple Texas locations into one regional facility. The $23.8 million facility, located on a 14-acre site at the northeast corner of Spectrum Boulevard and Hooper Road in Pearland's Lower Kirby District, is home to approximately 200 employees. Merit Medical's opened its new Pearland R&D and manufacturing facility in October. The 92,000 square-foot office building has brought more than $14 million in investment to the community. PEDC and the City began working with Merit Medical in 2011 on its multi-state search for a site for this facility. It is located on a 12-acre site in Pearland's Lower Kirby District. The facility is home to approximately 220 employees, including management personnel, engineers, and production staff, who serve client hospitals worldwide in the development, manufacture and distribution of proprietary disposable medical devices used in interventional and diagnostic procedures,particularly vi RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE in cardiology,radiology and endoscopy. Keystone Engineering Group selected a site in Pearland for its new office and manufacturing facility in December. The $6 million, 45,000 square-foot facility will be located on a 23-acre site on McHard Road near SH 35. PEDC began working with the company last year on the project, which will consolidate several regional sites into one location. The new facility will house approximately 70 employees,including office and administrative staff, machinists and inspectors. PEDC continued to work with the Highway 288 Management District (PMMD#2), created in 2013, on corridor beautification. The corridor currently is non-landscaped and does not reflect City standards. The goal is to create a vibrant visually appealing corridor that will attract investment in the City. District board members have been appointed and the District has levied a 10-cent tax rate, which is anticipated to generate approximately $400,000 annually. The Board has also approved a master plan for the District and cleanup efforts have begun in the corridor. PEDC, along with local partners in government, education, healthcare and business, continue to work on implementation of the Pearland 20/20 community strategic plan. The long-term strategic community and economic development plan that was created in 2012 incorporates nine strategies to ensure a shared vision for the community's future growth and an action plan to achieve it. The nine strategies are 1.Marketing, 2.Mobility, 3. Corridors, 4. Recreation and Culture, 5. Beautification, 6. Lower Kirby Mixed Use District, 7. Multi-Use Event Center, 8. Workforce Pipeline, and 9. Image Campaign. One of the City's prime areas for development, the Lower Kirby Mixed Use District at Hwy 288 and Beltway 8, has infrastructure needs that make it more difficult to develop. The PEDC is working with two area Municipal Management Districts and the City on the development of regional detention, reconstruction of Hooper Road and the installation of underground electricity that will serve developable sites on Kirby Drive. 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. The City's Convention and Visitor's Bureau (CVB), funded by hotel occupancy taxes, also focuses on economic development through tourism and putting heads in beds. In late 2012, the City Council authorized the creation of a city department for the Convention and Visitor's Bureau, service that had been previously contracted out. In fiscal year 2013, an Executive Director and staff was hired. The location of Pearland, as previously mentioned, makes Pearland a perfect hub and spoke for visitors and "A Perfect Pick...to play, stay, meet, and getaway", the tag line for the CVB. The time has come for Pearland to complement and support its development with cultural and lifestyle amenities to include a multi-use events center. This need has been noted in multiple Pearland planning processes as an enhancement to make the city more competitive for employers and residents.Annual hotel occupancy taxes total slightly over$1.4 million dollars and the funds ending balance is$3 million as of September 30, 2014. Land Use Plan/Annexation Land use planning seeks to order and regulate the use of land in an efficient and ethical way, thus preventing land use conflicts. Land use planning is the systematic assessment of land, alternatives for land use, and social and economic conditions in order to select and adopt the best land use options. Its purpose is to select and put into practice those land uses that will best meet the needs of the people while safeguarding resources and ensuring sustainability. 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, and vii RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE currently known as the Lower Kirby Mixed Use District, that leverages the area's unique location (on Beltway 8 and 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 Mixed Use District.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 Mixed Use District, 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. 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 Old Town Site while also responding to existing growth patterns in the city. A primary initiative for this plan is to reinvent the Old Town 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 2015-2019 totals $419 million. Projects include drainage ($22M), streets ($171M), facilities ($41M), parks ($20M), water and wastewater($165M). Major thoroughfare projects include the widening of Bailey Road between FM1128 and Veterans, reconstruction of one mile of Old Alvin Road from Plum Street to McHard Road, McHard Road extension from Mykawa to Cullen, expansion of Smith Ranch Road from two lanes asphalt to four lanes concrete,curb and gutter from Hughes Ranch to North of Broadway, 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 and future storm water regional detention at FM518 and Cullen. 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 and Fire Station#2,relocation of Fire Station#1, and City Hall and Hill House Road facility improvements. 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 expansion of the Far viii RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE Northwest, Barry Rose and JHEC wastewater treatment plants, 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 and funding. 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 (TIP) for 2013-2016 and five of the City's projects were selected for funding. The projects are McHard Road Extension(Mykawa to Cullen), Bailey Road (Veterans to FM1128), Smith Ranch Road Extension and Green Tee Terrace and Shadow Creek Ranch Trails. These projects will receive 80% funding from state or federal sources totaling $63,251,113 with the City providing 20% matching funds. These projects are in addition to the four projects that received funding in 2011 totaling $20,180,901 in state or federal funding from the TIP. These projects are slated to be completed within the City's current Five-Year Capital Improvement Program. With the growth in population along the Highway 288 corridor and the number of Pearland residents that rely on Hwy 288 to commute to Houston and the Texas Medical Center, the City along with Brazoria County have been meeting and working with the Texas Department of Transportation to provide traffic relief on the corridor through managed toll lanes. Harris County is preparing to begin construction by the end of 2015 on four new toll lanes on Texas 288 north of the Brazoria-Harris County line to the Texas Medical Center. Brazoria County will follow with managed toll lanes from the county line south to County Road 58. The Gulf Coast Center operates a transportation program known as Connect Transit. Connect Transit provides "curb cab" service to Pearland. Services are shared ride services with pick-up and delivery from curb to curb by reservation. The City funds approximately $20,000 for this service annually to its citizens meeting the eligibility requirements; seniors,person with disabilities, or low- income.This is a way to provide those needing transportation to grocery stores, doctor visits,etc. 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 proactive 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. Since fiscal year 2013 we have seen a turnaround in the economy and growth. The improving Houston area economy and the City's increasing population played major roles in the development of the fiscal year 2015 budget. The strong local economy will most likely result in continued growth in revenues in the current fiscal year, 2015, most noticeably in sales tax and building permits. Sales tax revenue for fiscal year 2014 is up 7.0% over the prior year. The fiscal year 2015 Adopted Budget includes an increase of 2.3% over fiscal year 2014. Building Permit revenue is also projected to ix RESPONSIVE RESULTS-ORIENTED TRUST-BUILDERS ACCOUNTABLE maintain the strong levels that have developed during fiscal year 2014. The Adopted Budget for fiscal year 2015 anticipates 1,000 single family permits. Another significant factor that impacts the Adopted Budget is a 3% increase in population. This increase in population results in a need for increased services to meet needs of new residents. This projected increase in population is the result of both newly constructed homes and multifamily dwellings. The Adopted Budget includes a .007 cent increase in the property tax rate from $0.7051 to $0.7121 per $100 valuation. Of the total adopted tax rate of 71.21 cents per hundred dollars valuation, the operating tax rate increased to 22.21 cents per hundred dollars and the debt service tax rate remains unchanged at 49 cents. While about half-way into the 2015 fiscal year, the City is already beginning to prepare for the 2016 budget process and up-coming forecast with the same goal of being fiscally responsible to our citizens. AWARDS AND ACKNOWLEDGEMENTS The Texas State Comptroller awarded the City of Pearland a Platinum Leadership Circle Award, which spotlights entities that go above and beyond providing financial transparency online through clear, consistent pictures of spending and sharing information in a user-friendly format that lets viewers easily drill down for more information. 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, 2013. This was the 37th 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.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 submitted, aft, Clay J. Pearson, City Manager Claire Bogard,Director of Finance x CITY OF PEARLAND,TEXAS PRINCIPAL OFFICIALS Term Expires Elected Officials Position May Torn Reid Mayor 2017 Tony Carbone Council Member at Large-Position One 2016 Scott Sherman Council Member at Large-Position Two 2015 Gary Moore Council Member at Large-Position Three 2017 Keith Ordeneaux Council Member at Large-Position Four,Mayor Pro Tern 2015 Greg Hill Council Member at Large-Position Five 2016 Appointed Officials Position Clay Pearson City Manager Damn Coker City Attorney Letitia Farnie Municipal Court Judge City Management Position Jon Branson Deputy City Manager Trent Epperson Assistant City Manager Claire Bogard Director of Finance Matt Buchanan Executive Manager of Development Services and PEDC President Young Lorfing City Secretary Eric Wilson 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 Kim Sinistore Executive Director,CVB Sparkle Anderson Communications Manager xi CITY OF PEARLAND,TEXAS ORGANIZATION CHART 1 Office of the City. Manager Deputy City Manager Management i Parks& d Finance& Analyst Recreation Purchasing • City Secretary ,...HR/Organizational Development 1 Communications 7 CVR Municipal Court — i I I I I Assistant Executive Chief Information City Manager of I Fire Police Officer '`anger Development Services&PEOC '^------._.__.. ___.._—____. President i% I_.-City Engineer Public Works I I I Fire Marshal I Animal Control IT/GIS • • • —.'.'-"—I Community —. L PEDC Development �� _ —I t Projects Operations �y Water&Sewer Code&Health Strategic 1 _ Enforcement Initiatives Planning I Li Traffic • --i, Engineering ,I Facilities Operations Building Inspections Right of Way Xii G4 Government Finance Officers Association 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, 2013 fieisp-4e04. Executive Director/CEO xiii (This page intentionally left blank.) Financial Section (This page intentionally left blank) �. Houston Office ■ 3411 Richmond Avenue whitleypenn Suite 500 Houston,Texas 77046 713.621.1515 Main whitleypenn.com REPORT OF INDEPENDENT AUDITORS 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 30,2014,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 fmancial 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 fmancial 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 fmancial 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 circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity'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. 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, the aggregate each major fund, and the aggregate remaining fund information of the City, as of September 30, 2014, 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. An lnrienerxiera 1 Member of Dallas Fort Worth Houston NI N I A INTF.RAATIO`IAI. To the Honorable Mayor and Members of the City Council Emphasis of Matter As discussed in Note 16 to the financial statements, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 65,Items Previously Reported as Assets and Liabilities as of September 30, 2014. Our opinion is not modified with respect to this matter. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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 7 through 17, budgetary comparison information on pages 70 through 71, and pension system supplementary information and other post-employment benefit supplementary information on page 72 be presented to supplement the basic fmancial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic fmancial 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. Other Information Our audit was conducted for the purpose of forming opinions on the fmancial statements that collectively comprise the City's basic fmancial statements. The introductory section, combining and individual fund statements and schedules, other supplementary information, budgetary comparison schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic fmancial statements and certain additional procedures, including comparing and reconciling such 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 combining and individual fund statements and schedules, other supplementary information,and budgetary comparison schedules are fairly stated,in all material respects, in relation to the basic 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 them. 2 To the Honorable Mayor and Members of the City Council Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards,we have also issued our report dated February 23, 2015, 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 in considering City's internal control over financial reporting and compliance. Wh;+i r Z LL-F) Houston,Texas February 23,2015 3 (This page intentionally left blank) 4 Management's Discussion and Analysis 5 (This page intentionally left blank.) 6 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Pearland (the "City"), 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 30,2014. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the primary government of the City exceeded its liabilities as of September 30, 2014, by $668.2 million (net position). Of this amount, $605.2 million is invested in capital assets, net of related capital debt and $60.3 million restricted for capital projects, debt service, community development projects, public safety, and economic development. • The City's total primary government net position increased by $26.8 million primarily due to capital contributions from developers. • At the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of$71.4 million, an increase of$6.6 million in comparison with the prior year. Increases are seen in the Pearland Economic Development Corporation of$3.8 million and $2.0 million in the non-major governmental funds. Approximately $51.8 million of the $71.4 million is considered restricted; $23.8 million for economic development, and $17.5 million is mainly attributable to unspent bond proceeds for capital projects. • As of September 30, 2014, the unassigned fund balance for the General Fund was $17.9 million or 30%of total General Fund expenditures. The total fund balance for the General Fund is $19.5 million or 33%of General Fund expenditures. • The City's General Obligation and Certificates of Obligation debt for governmental activities totaled$293.2 million,a net decrease of $1.5 million over the previous year. Revenue bonds for the City's component units totaled $80.1 million, an increase of$5.0 million from last year. The City's debt for business activities totaled $114.8 million, a net decrease of approximately $4.9 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 fmancial statements are designed to provide readers with a broad overview of the City's fmances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, and liabilities, with the difference between the three reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the fmancial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the fiscal year. All changes in net position 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). 7 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 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 21 through 23 of this report. The government-wide financial statements include not only the City, 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 is financially accountable. Financial information for these blended component units is reported together with 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 24 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, Pearland Economic Development Corporation, Tax Increment Reinvestment Zone#2,and Development Authority of Pearland,which are considered to be major funds. Data from the non-major 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 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. 8 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 31 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 31 through 34 of this report. 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 35 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 fmancial statements beginning on page 70 of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City,assets and deferred outflows of resources exceeded liabilities by$668.2 million at the close of the most recent fiscal year. By far the largest portion of the City's net position (91%) 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. 9 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) COMPARATIVE SCHEDULE OF NET POSITION September 30,2014 and 2013 Amounts in(000's) Governmental Activities Business-type Activities _ Totals 2014 2013* 2014 2013* 2014 2013* Assets Current and other assets $ 99,425 $ 92,877 $ 39,996 $ 41,056 $ 139,421 $ 133,933 Capital assets 759,236 749,038 288,672 281,213 1,047,908 1,030,251 Total Assets 858,661 841,915 328,668 322,269 1,187,329 1,164,184 Deferred Outflows of Resources Deferred charge on refunding 11,517 11,053 509 560 12,026 11,613 Total Deferred Outflows of Resources 11,517 11,053 509 560 12,026 11,613 Liabilities Other liabilities 11,846 17,170 7,735 9,147 19,581 26,317 Long-term liabilities outstanding 395,230 386,657 116,392 121,521 51 1,622 508,178 Total Liabilities 407,076 403,827 124,127 130,668 531,203 534,495 Net position Net investment in capital assets 430,286 420,009 174,955 165,915 605,241 585,924 Restricted 45,826 34,666 14,483 9,542 60,309 44,208 Unrestricted (13,010) (5,534) 15,612 16,704 2,602 11,170 Total Net Position $ 463,102 $ 449,141 S 205,050 $ 192,161 $ 668,152 $ 641,302 *As restated Due to the implementation of GASB 61,The Financial Reporting Entity: Omnibus An Amendment of GASB Statements No. 14 and No. 34(GASB 61),Pearland Economic Development Corporation,Pearland TIRZ#2 and the Development Authority of Pearland have been presented as blended component units and therefore are included in the Governmental Activities column. As a result of this implementation,unrestricted net position for governmental activities is negative$13.0 million for fiscal year 2014. Governmental Accounting Standards require that the Development Authority of Pearland outstanding debt be deducted from the unrestricted component of the government's net position as the Development Authority has acquired no capital assets,therefore the debt is considered non-capital related. If one were to adjust for this, Governmental Activities Unrestricted Net Position would have been a positive $19.9 million compared to $20.6 million in fiscal year 2013, a reduction of$698 thousand in unrestricted net position. The increase in Total Net Position from the prior year is $26.9 million,which is primarily attributed to capital contributions from developers. 10 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) COMPARATIVE SCHEDULE OF CHANGES IN NET POSITION For the Years Ended September 30,2014 and 2013 Amounts in(000's) Governmental Activities Business-type Activities Totals 2014 2013* 2014 2013* 2014 2013* Revenues Program revenues: Charges for services $ 19,847 $ 22,719 $ 35,937 $ 37,183 $ 55,784 $ 59,902 Operating grants and contributions 9,297 2,325 9,297 2,325 Capital grants and contributions 29,269 53,101 17,677 16,273 46,946 69,374 Property taxes 57,378 54,433 57,378 54,433 Sales and use taxes 27,295 24,942 27,295 24,942 Franchise taxes 6,484 5,999 6,484 5,999 Investment earnings 254 155 139 95 393 250 Other 2,399 1,701 275 682 2,674 2,383 Total Revenues 152,223 165,375 54,028 54,233 206,251 219,608 Expenses General Government 12,241 13,358 12,241 13,358 Public Safety 32,130 28,944 32,130 28,944 Public Works 38,579 31,690 38,579 31,690 Community Services 4,687 3,807 4,687 3,807 Parks and Recreation 6,896 9,524 6,896 9,524 Economic Development 26,498 17,411 26,498 17,411 Interest on long-term debt 16,225 10,534 16,225 10,534 Water and Sewer 32,444 31,289 32,444 31,289 Solid Waste 6,664 8,324 6,664 8,324 Total Expenses 137,256 115,268 39,108 39,613 176,364 154,881 Increase(decrease)in net position before special item and transfers 14,968 50,107 14,920 14,620 29,888 64,727 Special item-loss on disposal of asset (3,039) (3,039) Transfers 2,031 1,607 (2,031) (1,607) Increase in net position 13,960 51,714 12,889 13,013 26,849 64,727 Net position-beginning,as restated 449,141 397,427 192,161 179,148 641,302 576,575 Net position-ending S 463.1 0 1 S 449.141 S 205.050 $ 192,161 S 66s,151 S 641.302 *As restated At the end of the current fiscal year,the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business- type activities. 11 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) Governmental activities - Governmental activities increased the City's net position by $14.0 million, thereby accounting for 52%percent of the total increase in the net position of the City. Key elements of this increase are as follows: • Property taxes,sales and use taxes,and franchise taxes totaled$57.4 million, $27.3 million,and $6.5 million respectively.These revenues increased by$5.8 million from prior year primarily as a result of an increase in taxable assessed values and increased consumer spending. • Capital contributions totaled $29.3 million as a result of infrastructure contributed by developers. • The revenues were offset by expenses for general government,public safety,public works, and economic development of $12.2 million, $32.1 million, $38.6 million, and $26.5 million respectively. In total,these expenses were relatively consistent with the prior year. Expenses and Program Revenues-Governmental Activities $45,000 $40,000 - $35,000 7„ $30,000 ■expenses c $25 000 ■Program Revenues r $20,000 $15,000 $10,000 $5,000 -- $- O` Sad ' • o S aka co O co> G° 5p Revenues by Source - Governmental Activities Charges for services 13% Grants and contributions Other 25% 2% Sales and use taxes Property taxes • 18% 38% Franchise taxes 4% 12 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) Business-type activities-Business-type activities increased the City's net position by$12.9 million,thereby accounting for 48% percent of the total increase in the net position of the City. Key elements of this increase are as follows: • Charges for services of$35.9 million decreased approximately $1.2 million over the prior year primarily due to a decrease in water and sewer consumption due to rainfall. • Capital grants and contributions of million increased $1.4 million from the prior year mainly due to increased contributions from developers for impact fees. • The revenues listed above were offset by expenses of $32.4 million and $6.7 million, respectively, for Water and Sewer and Solid Waste. Expenses decreased from prior year by $505.0 thousand as the billing of commercial garbage was transitioned directly between City provider and commercial accounts. Expenses and Program Revenues-Business-type Activities $50,000 -$45,000 $40,000 $35,000 II Expenses _ $30,000 ■Program Revenues _ § $25,000 a $20,000 -- $15,000 $10,000 $5,000 Water and Sewer Solid Waste Revenues by Source - Business-type Activities (hher 10, Charges for services 66% Grants and contnbutions 33% 13 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 finance-related legal requirements. Governmental Funds - The focus of the City's governmental funds is to provide information of near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the 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$71.4 million.A portion of the combined fund balance, or $17.9 million, is unassigned and available for day-to-day operations of the City; $17.5 million is restricted for capital projects;$23.8 million for economic development and the remaining balance is restricted for debt service and other programs. There was an increase in the combined fund balance of$6.6 million from the prior year. The increase in fund balance includes a decrease of$106.9 thousand in the Debt Service Fund balance,offset by a combined increase of approximately $831.4 thousand in the General Fund, $3.8 million in the Pearland Economic Development Corporation,and$2.0 million in the non-major governmental funds. The General Fund's fund balance totaled$19.5 million at year end. The Pearland Economic Development Corporation, TIRZ #2, and Development Authority, the City's component units blended with the primary government, had expenditures totaling $32.5 million, leaving an ending fund balance of$19.2 million,$4.3 million,and$1.9 million,respectively,all considered restricted. 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. GENERAL FUND BUDGETARY HIGHLIGHTS During the year, there was a $1.6 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 2013-2014 budget process. Budget estimates for revenues and other sources combined increased by approximately$1.5 million for the year; also to reflect carryovers and revised projections. Actual revenues of $57.7 million were $613.5 thousand over the final budget mainly in sales and use tax and licenses and permits. Actual expenditures of $59.7 million were under budget by $3.9 million, resulting in the year-end fund balance of$19.5 million over budget by$3.9 million. At year-end,equipment purchases and several projects were still in progress and part of the$3.9 million will be carried over and reappropriated in the 2014-2015 budget year. 14 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets - At the end of fiscal year 2014, the City's governmental activities and business-type activities had invested $759.2 million and $288.7 million, respectively, in a variety of capital assets and infrastructure,as reflected in the following schedule.This represents a net increase of$10.2 million,or 1.4 percent over the end of last fiscal year for the governmental activities and a net increase of$7.5 million or 2.7 percent over the end of last fiscal year for business-type activities. Governmental Activities Business-Type Activities Totals 2014 2013 2014 2013 2014 2013 Land $ 31,264 $ 31,264 $ 3,796 $ 3,796 $ 35,061 $ 35,060 Construction in progress 19,975 23,306 9,509 8,918 29,483 32,224 Infrastructure 617,866 607,940 221,763 212,666 839,628 820,606 Buildings and improvements 79,233 77,899 26,438 27,168 105,672 105,067 Machinery and equipment 8,110 6,165 1,289 1,401 9,399 7,566 Furniture and fixtures 2,789 2,464 30 37 2,819 2,501 Contractual water rights 25,847 27,227 25,847 27,227 Total Capital Assets S 759 236 $ 749,038 $ 288,672 S 281,213 S 1,047,908 $1,030,251 Construction in progress at year-end represents numerous ongoing projects, the largest of which relate to street,parks,and water/sewer projects. Additional information on the City's capital assets can be found in Note 4 to the financial statements. 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$511.6 million. Of this amount,$249.6 million is composed of general obligation bonds, $56.5 million is composed of certificates of obligation and$182.1 million represents revenue bonds secured solely by specified revenue sources. Governmental Activities Business-Type Activities Totals 2014 2013 2014 2013 2014 2013 General obligation bonds $ 236,730 $ 230,040 $ 12,865 $ 14,020 $ 249,595 $ 244,060 Certificates of obligation 56,505 64,690 56,505 64,690 Revenue bonds 80,125 75,125 101,925 105,690 182,050 180,815 Unamortized amount for issuance premium/(discount) 10,123 6,159 592 730 10,715 6,889 Capital leases payable 4,344 3,681 169 261 4,513 3,942 Compensated absences 5,682 5,007 525 463 6,207 5,470 Post employment benefit liability 1,721 1,955 315 357 2,036 2,312 $ 395,230 $ 386.657 $ 116,391 S 121.521 $ 511.622 S 508.178 The City's general obligation bonds and certificates of obligation debt for governmental activities decreased to$293.2 million. The decrease is due to principal payments offset by new monies issued.The City's debt for business activities decreased to $114.8 million, a net decrease of$4.9 million from the previous year,which was a result of principal payments. 15 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) Current ratings on debt issues are as follows: Moodys Standard Investor and Poors Fitch Services General obligation bonds AA AA Aa2 Revenue bonds AA- AA- Aa3 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. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES The City continues to grow in FY 2015, but with some challenges and vulnerabilities. The first vulnerability is the City is significantly leveraged,which was necessary to give us the opportunity to grow successfully. As of September 30, 2014 the City had $293.2 million in General Obligation and Certificates of Obligation outstanding being paid back primarily by property taxes. Our fmancial obligations will continue to be met, and the City will continue to grow, but knowing that the heavy investments both past and future may limit our resources for ongoing operations and innovations. Second is the challenge to maintain strong property values on limited land resources. The property values derived from the City's growth have not been of extremely high value relative to the land that has been developed compared to some other large suburban communities. Despite these valuation concerns, the overall tax base reflects a strong 8.5% increase for FY 2015, compared to 7.1% in FY 2014, and 1.0%, 0.6%, and 2.6% in fiscal years 2011, 2012, and 2013, respectively. The third vulnerability is bringing the City's organizational structure up to the task of supporting an expansive 48.39 square mile, 110,000 resident, and $7 billion valuation community. In FY 2015 we will institute a modem configuration to take advantage of the talents of our staff and continue to deliver excellent results,with the biggest move bring Public Works and Projects/Engineering together. With the improving Houston area economy and the continued growth in population served by the City we are budgeting a 5%increase in General Fund revenues over FY 2014. For General Fund operations,sales tax has been our single most important revenue at 28% of operating revenue with $18.1 million for the City General Fund and$8.9 million for the Economic Development Corporation. Sales tax is projected to increase 6.0% over FY 2014. The FY 2015 budget includes an increase of$0.007 to the Operating and Maintenance property tax rate, which should provide an additional $412,720 in revenue, for a total tax rate of$.7121 in FY 2015. Although residential building permits still remain strong at almost 1,000 a year, there is a lag time before the benefits of the new construction are realized in the community, in revenue generation, as well in the provision of services. The budget includes an increase in fees for development,planning,and health services to reflect the actual cost of services. Because of these changes in fee charged, additional revenue of$335,930 is projected for FY 2015. However, as predicted for FY 2015, the General Fund has a structural imbalance, with recurring operating expenditures greater than recurring operating revenues. The total net revenues for FY 2015, or drawdown of fund balance is ($3,827,478) and comprised of$1.5 million in recurring expenditures and $2.3 million in non-recurring expenditures. Overall General Fund expenditures, including transfers out, are up 1.8% in FY 2015. Operating expenditures without the transfers out are up 3.8%from FY 2014 projections.Wage and benefits are 67% of General Fund expenditures, with health care costs becoming a significant cost factor. Public Safety is 16 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) more than half(54%) of General Fund expenditures (Police and Fire/EMS), which have grown 4.7%, 16.8%, and 14.5% in fiscal years 2015, 2014 and 2013,respectively. The Parks and Recreation category is budgeted at $6.77 million in expenditures, lower than last year's budget of$8.64 million, which is primarily a function of our reorganization transferring functions to Public Works. Capital Improvements total $55.1 million for FY 2015. A few of the projects planned for the year are McHard Road extension, Bailey Road widening, Shadow Creek Ranch Sports Complex, building of Fire Station 2, and expansion of Reflection Bay Wastewater. As Pearland continues to grow, staff continues the planning for the expansion of the various components of the public water-sewer utility; striving to keep pace with both the system's expansion as well as the rehabilitation of the aging portions of the infrastructure. In order to operate the system, provide for debt service, cash reserves and to meet bond coverage requirements, the fiscal year 2015 budget included a 4.63% revenue increase, generating $1.358 million in additional revenues. This increase was effective with October 2014 consumption.The last rate increase was six years ago,in October 2008. REQUESTS FOR INFORMATION The financial report is designed to provide our citizens, customers, investors and creditors with a general overview of City's finances. If you have questions about this report or need any additional financial information,contact Claire Bogard,Director of Finance,at 3519 Liberty Drive,Pearland,Texas 77581,or call (281) 652-1600. The report and general information can be found on the City's website at www.cityofpearland.com. 17 18 Basic Financial Statements 19 (This page intentionally left blank.) 20 CITY OF PEARLAND,TEXAS STATEMENT OF NET POSITION September 30,2014 Primary Government Governmental Business-type Activities Activities Total Assets Cash and equivalents $ 43,398,683 $ 1,952,004 $ 45,350,687 Investments 27,169,072 10,976,950 38,146,022 Receivables,net of allowance for uncollectibles 22,257,880 3,355,570 25,613,450 Due from other governmental agencies 4,606,223 4,606,223 Inventories 137,364 137,364 Prepaid items 273,960 12,946 286,906 Restricted cash and investments 1,581,708 23,698,185 25,279,893 Capital assets: Capital assets not subject to depreciation 51,238,883 13,305,246 64,544,129 Capital assets,net of accumulated depreciation 707,997,510 275,366,686 983,364,196 Total Capital Assets 759,236,393 288,671,932 1,047,908,325 Total Assets 858,661,283 328,667,587 1,187,328,870 Deferred Outflows of Resources Deferred charge on refunding 1 1,516,723 509,414 12,026,137 Total Deferred Outflows of Resources 11,516,723 509,414 12,026,137 Liabilities Accounts payable and accrued liabilities 6,958,302 4,178,461 11,136,763 Accrued interest 1,241,106 395,419 1,636,525 Unearned revenues 3,562,276 3,562,276 Customer deposits 84,808 3,161,497 3,246,305 Long-term liabilities: Due within one year 17,269,808 5,279,661 22,549,469 Due in more than one year 377,960,070 111,111,719 489,071,789 Total Liabilities 407,076,370 124,126,757 531,203,127 Net Position Net investment in capital assets 430,286,194 174,954,845 605,241,039 Restricted for: Capital improvements 7,433,862 12,256,333 19,690,195 Debt service 5,857,298 2,227,279 8,084,577 Community development programs 5,984,329 5,984,329 Public safety 389,883 389,883 Economic development 26,160,315 26,160,315 Unrestricted (13,010,245) 15,611,787 2,601,542 Total Net Position S 463.101,636 S 205,050,244 $ 668,151,880 See Notes to Financial Statements. 2l CITY OF PEARLAND,TEXAS STATEMENT OF ACTIVITIES For the Year Ended September 30,2014 Program ReNenue Charges for Operating Grants Capital Grants Functions/Programs Expenses Services and Contributions and Contributions Primary Government Governmental Activities: General Government $ 12,240,571 $ 6,636,909 $ 440,613 $ Public Safety 32,129,934 2,792,687 433,973 Public Works 38,578,835 321,715 7,612,275 29,268,764 Community Services 4,686,8% 7,375,068 336,541 Parks and Recreation 6,896,350 2,290,588 473,952 Economic Development 26,497,574 430A72 Interest on long-term debt 16,224,826 Total Governmental Activities 137,254,986 19,847,439 9,297,354 29,268,764 Business-type activities: Water and Sewer 32,444,427 28,928,774 17,677,185 Solid Waste 6,663,564 7,008,474 Total Business-Type Activities 39,107,991 35,937,248 17,677,185 Total Primary Government S. 176,362 977 $ 55,784,687 S 9.297.354 $ 46.945.949 General Revenues: Taxes: Property taxes Sales and use taxes Franchise taxes Unrestricted investment earnings Miscellaneous Special item-loss on disposal of asset Transfers Total General Revenues and Transfers Change in net position Net position-beginning,as restated Net position-ending See Notes to Financial Statements. 22 Net(Expense)Revenue and Changes in Net Position Primary Governmc nt Governmental Business-type Activities Activities Total $ (5,163,049) $ $ (5,163,049) (28,903,274) (28,903,274) (1,376,081) (1,376,081) 3,024,713 3,024,713 (4,131,810) (4,131,810) (26,067,102) (26,067,102) (16,224,826) (16,224,826) (78,841,429) (78,841,429) 14,161,532 14,161,532 344,910 344,910 14,506,442 14,506,442 (78,841,429) 14,506,442 (64,334,987) 57,378,285 57,378,285 27,294,598 27,294,598 6,483,961 6,483,961 254,228 138,712 392,940 2,398,589 274,466 2,673,055 (3,038,547) (3,038,547) 2,030,588 (2,030,588) 92,801,702 (1,617,410) 91,184,292 13,960,273 12,889,032 26,849,305 449,141,363 192,161,212 641,302,575 $ 46 x.101.616 $ 2(15(110,244 S 668.151.880 I 23 CITY OF PEARLAND,TEXAS BALANCE SHEET GOVERNMENTAL FUNDS September 30,2014 Pearland Tax Economic Increment General Debt Development Reinvestment Fund Service Corporation Zone#2 Assets Cash and cash equivalents S 10,403,021 $ 1,638,827 S 5,527,157 $ 4,346,425 Investments 8,730,187 2,993,905 11,465,298 Receivables,net of allowance for uncollectlbles 5,668,522 9,008,351 4,187,704 Due from other governments 516,600 Due from other funds 275,323 Inventories 137,364 Prepaid items 64,675 166,894 38.171 Restricted cash 665,254 Total Assets S 25,795,692 S 13,807 977 S 21.883,584 S 4.346.425 Liabilities Accounts payable $ 2,659,825 $ 247,442 83,411 5 Accrued expenditures 1,394,615 103,332 16,352 Deposits 46,475 38,333 Due to other funds Unearned revenue 1,773,256 1,789,020 Total Liabilities 5,874,171 2,139,794 138,096 Deferred Inflows of Resources Unavailable revenue 467,020 7,132,246 2,590,001 Total Deferred Inflows of Resources 467,020 7,132,246 2,590,001 Fund Balances Non-spendable Inventories 137,364 Prepaid items 64,675 166,894 38,171 Restricted Debt service 4,369,043 665,254 Capital improvements Community development programs Public safety Economic development 18,452,062 4,346,425 Assigned 1,393,883 Unassigned General fund 17,858,579 Total Fund Balances 19,454,501 4,535,937 19,155,487 4,346,425 Total Liabilities,Deferred Inflows of Resources, and Fund Balances $25,795,692 $ 13,807,977 $ 21,883,584 $ 4,346,425 See Notes to Financial Statements. 24 Development Non-nlajo, l'otal Authority of Cove tome ntal Go c e runic ntal Pearland Funds Funds $ 1,016,477 $ 17,595,463 $ 40,527,370 5,712,643 28,902,033 3,253,480 22118,057 4,089,623 4,606,223 275,323 137,364 4 220 273,960 916,454 1,581,708 $ 1,932,931 S 30,655.429 S 98,422(138 $ 735 S 2,011,974 $ 5,003,387 136,761 1,651,060 84,808 275,323 275,323 3,562,276 735 2,424 058 10,576,854 6,238,130 16,427,397 6,238,130 16,427,397 137,364 4,220 273,960 916,454 5,950,751 17,518,567 17,518,567 4,080,571 4,080,571 389,883 389,883 1,015,742 23,814,229 1,393,883 17,858,579 1,932,1% 21,993,241 71,417,787 S 1.932,9-;I S 30.655,429 $ 98,422,038 25 (This page intentionally left blank) 26 CITY OF PEARLAND,TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION September 30,2014 Total fund balance,governmental funds $ 71,417,787 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and,therefore, are not reported in the funds. 759,236,393 Deferred outflows represent a consumption of net position that applies to future periods and therefore will not be recognized as an outflow of resources until then.The amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. 11,516,723 Other long-term assets(property taxes receivable and adjudicated court fines receivable) are not available to pay current period expenditures and,therefore,are reported as unavailable revenue in the funds. 16,427,397 Long-term liabilities,including bonds payable,are not due and payable in the current period,therefore,are not reported in the funds. Bonds and capital leases payable (387,826,573) Compensated absences (5,682,057) Accrued interest governmental activity debt (1,241,106) Estimated post employment benefit liability (1,721,250) Internal service funds are used by management to charge the cost of property insurance and employee benefits to individual funds.The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 974,322 Net Position of Governmental Activities in the Statement of Net Position S 463,101.636 See Notes to Financial Statements. 27 CITY OF PEARLAND,TEXAS STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended September 30,2014 Pe arland Economic Tax Increment General Debt Development Reinvestment Fund Service Corporation Zone#2 Revenues Property taxes $ 12,095,419 $27,131,534 $ $ 18,150,930 Sales and use taxes 17,326,556 8,563,736 Franchise fees 6,214,046 Licenses and permits 4,148,763 Fines and forfeitures 2,970,397 Charges for services 12,663,599 414,000 Investment earnings 88,232 37,272 76,217 13,366 Intergovernmental 663,540 79,060 Other 2,172,857 111,856 20,108 Total Revenues 57,679,869 27,944,202 9,153,121 18,164,296 Expenditures Current: General government 7,234,797 Public safety 29,039,403 Public works 7,946,912 Community services 3,747,462 Parks and recreation 7,357,692 Economic development 3,334,329 6,653,380 Debt Service: Principal 89,950 11,575,162 920,000 Interest and other charges 24,536 13,102,430 1,109,810 Capital outlay 4,233,164 Intergovernmental 4,307,496 Total Expenditures 59,673,916 28,985,088 5,364,139 6,653,380 Excess(deficiency)of revenues over expenditures (1,994,047) (1,040,886) 3,788,982 11,510,916 Other Financing Sources(Uses) Issuance of debt Refunding bonds issued 29,720,000 Payments to refunded bond escrow agent (33,182,437) Bond premium 3,778,000 Capital leases 1,852,939 Transfers in 3,756,917 618,439 Transfers out (2,784,425) (11,494,978) Total Other Financing Sources(Uses) 2,825,431 934,002 (11,494,978) Net change in fund balances 831,384 (106,884) 3,788,982 15,938 Fund balances-beginning 18,623,117 4,642,821 15,366,505 4,330,487 Fund balances-ending $ 19,454,501 S 4.535.937 S 19,155.487 S 4,346,425 See Notes to Financial Statements. 28 Development Non-major Total Authority of Governmental Governmental Pcarland Funds Funds $ $ 57,377,883 1,404,306 27,294,598 269,915 6,483,961 4,148,763 150,125 3,120,522 13,077,599 2,394 36,083 253,564 1,798,276 2,540,876 1,852,425 4,157,246 2,394 5,511,130 118,455,012 9,218 783,336 8,027,351 131,711 29,171,114 174,508 8,121,420 212,144 3,959,606 458,104 7,815,796 15,260,000 25,247,709 3,230,000 15,815,112 2,024,178 111,564 16,372,518 11,302,540 15,535,704 4,307,496 20,523,396 13,173,907 134,373,826 (20,521,002) (7,662,777) (15,918,814) 9,150,000 10,690,000 19,840,000 29,720,000 (33,182,437) 1,005,606 4,783,606 1,852,939 11,494,978 636,591 16,506,925 (2,687,112) (16,966,515) 20,644,978 9,645,085 22,554,518 123,976 1,982,308 6,635,704 1,808,220 20,010,933 64,782,083 $ 1,932,196 $ 21,993,241 $ 71,417.787 29 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 30,2014 Net change in fund balances -total governmental funds: $ 6,635.704 Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental funds report outlays for capital assets as expenditures.However,in the Statement of Activities,the cost of these assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays of$15,209,398 exceeded depreciation of $30,832,741 in the current period. (15,623,343) 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. (3,038,547) Capital assets net of related debt acquired as a result of in City development. 28,859,861 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. 4,909,389 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. (2,578,538) Some expenses reported in the Statement of Activities do not require the use of current financial resources and,therefore,are not reported as expenditures in governmental funds: Accrued interest 5,770 Deferred charge on refunding (463,231) Bond premiums/discounts (3,963,389) Compensated absences (675,326) Capital lease activity (662,849) Post employment benefit liability 233,904 The internal service funds are used by management to charge the costs of property insurance and employee benefits to individual funds.The net revenue(expense)of certain activities of internal service funds is reported with governmental activities. with governmental activities. 320.868 Change in net position of governmental activities $ 13 960273 See Notes to Financial Statements. 30 CITY OF PEARLAND,TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNAS' September 30,2014 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 $ 1,081,007 $ 870,997 $ 1,952,004 $ 1,138,353 Investments 10,729,315 247,635 10,976,950 Accounts receivable,net of allowance for doubtful accounts 2,745,768 609,802 3,355,570 139,824 Prepaid items 12,946 12,946 Restricted cash and cash equivalents 16,254,065 16,254,065 Restricted investments 7,444,120 7,444,120 Total current assets 38,267,221 1,728,434 39,995,655 1,278,177 Non-current assets: Capital assets: Land and improvements 3,796,382 3,796,382 Construction in progress 9,508,864 9,508,864 Contractual rights to water supply 34,511,428 34,511,428 Infrastructure 317,072,555 317,072,555 Buildings 31,256,472 31,256,472 Machinery and equipment 3,909,461 3,909,461 Less Accumulated depreciation (111,383,230) (111,383,230) Total non-current assets 288,671,932 288,671,932 Total Assets 326,939,153 1,728,434 328,667,587 1,278,177 Deferred Outflows of Resources Deferred charge on refunding 509,414 509,414 Total Deferred Outflows of Resources 509,414 509,414 Liabilities Current liabilities: Accounts payable and accrued expenses 2,861,779 1,316,682 4,178,461 303,855 Accrued interest payable 395,419 395,419 Customer deposits 3,161,497 3,161,497 Compensated absences-current portion 87,701 87,701 Bonds and permanent improvement payable-current portion 5,105,000 5,105,000 Capital lease-current portion 86,960 86,960 Total current liabilities 11,698,356 1,316,682 13,015,038 303,855 Non-curre nt liabilities: Compensated absences 437,208 437,208 Capital lease obligation 82,180 82,180 Other post-employment benefits 315,267 315,267 Bonds and permanent improvement payable 110,277,064 110277,064 Total non-current liabilities 111,111,719 111,111,719 Total Liabilities 122,810,075 1,316,682 124,126,757 303,855 Net Position Net investment in capital assets 174,954,845 174,954,845 Restricted for debt service 2,227,279 2,227,279 Restricted for capital projects 12,256,333 12,256,333 Unrestricted 15200,035 411.752 15,611,787 974,322 Total Net Position $ 204,638,492 5 411,752 $205,050244 S 974.322 See Notes to Financial Statements. 31 CITY OF PEARLAND,TEXAS STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended September 30,2014 Cove mmental Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Fund Fund Total Service Fund Revenues Charges for services $ 28,928,774 $ 7,008,474 $ 35,937,248 $ 5,625,833 Total operating revenues 28,928,774 7,008,474 35,937,248 5,625,833 Operating Expenses Personnel services 5,515,437 5,515,437 Supplies and materials 1,855,344 1,855,344 Contractual services 7,878,094 6,627,904 14,505,998 7,687,649 Repairs and maintenance 2,016,347 2,016,347 5,766 Other expenses 442,269 35,660 477,929 102,392 Depreciation and amortization 9,629,848 9,629,848 - Total Operating Expenses 27,337,339 6,663,564 34,000,903 7,795,807 Operating income(loss) 1,591,435 344,910 1,936,345 (2,169,974) Non-Operating Revenues(Expenses) Earnings on investments 137,477 1,235 138,712 664 Miscellaneous revenue(expense) 274,466 274,466 Interest expense (5,107,088) (5,107,088) Total Non-Operating Revenues(Expenses) (4,695,145) 1,235 (4,693,910) 664 Income(loss)before contributions and transfers (3,103,710) 346,145 (2,757,565) (2,169,310) Capital contributions 17,677,185 17,677,185 Transfers in 235,491 235,491 2,490,178 Transfers out (2,119,2851 (146,794) (2,266,079) Change in net position 12,689,681 199,351 12,889,032 320,868 Total net position-beginning,as restated 191,948,811 212,401 192,161,212 653,454 Total net position-ending $ 204,638,492 $ $205 $ 974322 See Notes to Financial Statements. 32 CITY OF PEARLAND,TEXAS Page 1 of 2 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30,2014 Governmental Business-type Activities-Enterprise Funds Activities- \Aatcr and Sesser Solid Waste Internal Fund Fund Total Service Fund Cash Flows from Operating Activities Receipts from customers and users $ 28,846,378 $ 7,221,014 $ 36,067,392 $ 5,549,746 Disbursed for personnel services (5,506,476) (5,506,476) Disbursed for goods and services (13,332,732) (7,055,799) (20,388,531) (7,756,583) Net cash provided(used)by operating activities 10,007,170 165,215 10,172,385 (2,206,837) Cash Flows from Noncapital Financing Activities Transfers from funds 235,491 235,491 2,490,178 Transfers to other funds (2,119,285) (146,794) (2,266,079) Cash received from non-operating revenues 274,466 274,466 Net cash provided by(used by)noncapital financing activities (1,609,328) (146,794) (1,756,122) 2,490,178 Cash Flows from Capital and Related Financing Activities Proceeds from the sale of equipment 60,317 60,317 Capital grants and contributions 8,491,718 8,491,718 Principal payments on debt (4,920,000) (4,920,000) Principal payments on leases (91,844) (91,844) Interest paid (5,107,088) (5,107,088) Acquisition and construction of capital assets (7,015,557) _ (7,015,557) Net cash used by capital and related financing activities (8,582,454) (8,582,454) Cash Flows from Investing Activities Purchase of investments (4,968,770) (247,635) (5,216,405) Interest received 137,477 1,235 138,712 664 Net cash provided by(used by)investing activities (4,831,293) (246,400) (5,077,693) 664 Net increase(decrease)in cash and equivalents (5,015,905) (227,979) (5,243,884) 284,005 Cash and equivalents,beginning 22,350,977 1,098,976 23449,953 854,348 Cash and equivalents,end $ 17,335.072 $ 870.997 S 18,206,069 $ 1,138,353 Unrestricted cash and equivalents $ 1,081,007 $ 870,997 $ 1,952,004 $ 1,138,353 Restricted cash and equivalents 16,254,065 16,254,065 $ 17,335,072 $ 870.997 S 18,206,069 S 1,138,353 See Notes to Financial Statements. 33 CITY OF PEARLAND,TEXAS Page 2 of 2 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30,2014 Governmental Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Fund Fund Total Service Funds Reconciliation of operating income to net cash provided by operating activities Operating income(loss) $ 1,591,435 ` 344,910 $ 1,936,345 S (2,169,974) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 9,629,848 9,629,848 (Increase)decrease in accounts receivable (220,881) 212,540 (8,341) (76,087) (Increase)decrease in prepaid expenses 384 384 10,086 Increase(decrease)in accounts payable (1,141,062) (392,235) (1,533,297) 29,138 Increase(decrease)in salaries payable 8,961 8,961 Increase(decrease)in customer deposits 138,485 138,485 Net cash provided by(used by)operating activities $ 10.007.170 > 165,215 S 10,172.355 S (2.206.537) Summary of non-cash transactions Contributed capital assets $ 9,185,467 $ $ 9,185,467 $ See Notes to Financial Statements. 34 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.In May 2014, the citizens voted to amend the City Charter to increase the size of City Council from five councilmembers to seven councilmembers over a period of three years. The Mayor and all members are elected at large.The Mayor is allowed to vote only in case of a tie vote.The Mayor and each Council member hold office for a period of three years and until his/her successor is elected and qualified. Council members shall be limited to two full consecutive terms of office and there is no limitation on the office of the Mayor. The City Manager is appointed by Council and is responsible for implementation of Council policy,execution of the laws,and all day-to-day operations of the City. A. Financial Reporting Entity The City is an independent political subdivision of the State of Texas governed by an elected council and a mayor and is considered a primary government. As required by accounting principles generally accepted in the United States of America, these financial statements have been prepared based on considerations regarding the potential for inclusion of component units, which are other entities or organizations that are financially accountable to the City. Blended component units are component units that are considered so closely related to the legal entity that the blended component unit funds appear as id the funds are integral parts of the primary government. The City's financial statements include the following blended component units: the Pearland Economic Development Corporation (PEDC); the Tax Increment Reinvestment Zone (TIRZ #2); and the Development Authority of Pearland (DAP). No other entities have been included in the City's reporting entity. Additionally, as the City is considered a primary government for financial reporting purposes,its activities are not considered a part of any other governmental or other type of reporting entity. Considerations regarding the potential for inclusion of other entities, organizations, or functions in the City's financial reporting entity are based on criteria prescribed by generally accepted accounting principles. These same criteria are evaluated in considering whether the City is a part of any other governmental or other type of reporting entity. The overriding elements associated with prescribed criteria considered in determining that the City's financial reporting entity status is that of a primary government are that it has a separately elected Governing body; it is legally separate; and it is fiscally independent of other state and local governments. Additionally prescribed criteria under generally accepted accounting principles include: considerations pertaining to organizations for which the primary government is financially accountable; and considerations pertaining to other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The component units discussed below are included in the City's reporting entity because of the significance of their operational or fmancial relationships with the City.The component units do not issue separate financial statements. 35 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies(continued) A. Financial Reporting Entity(continued) Blended 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 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 Position and the Statement of Changes in Net Position)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. 36 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 fmancial 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 position. 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 fmancial 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 financed. The City reports the following major governmental funds: The General Fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenues include local property taxes, sales and franchise taxes, licenses and permits, fines and forfeitures, and charges for services. Expenditures include general government, administrative services,public works,parks and recreation,community development,and public safety. 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 Pearland Economic Development Corporation fund is used to account for the revenues and expenditures associated with the half-cent sales tax for economic development approved by the voters in 1995. Use of funds are governed by State Law. The Pearland Economic Development Corporation is considered a major fund for reporting purposes. 37 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 Tax Increment Reinvestment Zone #2 fund is used to account for the incremental property tax revenues in the specific geographical area and use thereof from the participating taxing entities in the Zone.The Tax Increment Re-investment Zone#2 is considered a major fund for reporting purposes. The Development Authority of Pearland fund is used to account for the fmancing of the development of the TIRZ#2.The Development Authority of Pearland 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 financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses including depreciation) of providing goods or services to the general public on a continuing basis will be 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 Fund include property and liability insurance coverage and employee health benefits. The Internal Service Fund is included in governmental activities for government-wide reporting purposes. 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. 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. Amounts reported as program revenues include: (1)charges to customers or applicants for goods,services,or privileges provided,(2)operating grants and contributions,and(3)capital grants and contributions,including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenue.Likewise,general revenue includes all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's Enterprise Fund are charges to customers for sales and services. Operating expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expense. 38 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies(continued) 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 defmition of restricted or committed fund balance. Under the City's policy,amounts can be assigned by the City's Director of Finance. Unassigned— Amounts that are available for any purpose. Positive amounts are reported only in the General Fund. 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. 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. 39 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies (continued) D. Fund Balance Working Capital Policies(continued) Internal Service Fund Unrestricted Net Position The Internal Service 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. The Internal Service 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 as it relates to employee benefits. 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. 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. 40 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1-Summary of Significant Accounting Policies(continued) F. Investments Investments consist of United States (U.S.) Government Agency securities and Certificates of Deposit with original maturities greater than three months from the date of acquisition. 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". Interfund receivables and payables which are not expected to be paid within 12 months are classified as loans from/loans to other funds. 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. 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. 41 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies(continued) K. Capital Assets(continued) 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 Intangible Assets-Water Rights 25 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. Certified police and firefighter personnel earn 15 days of vacation after 1 year and 20 days of vacation after 16 years. Employees are required to use their vacation in the year it is earned. Employees who are unable to use their vacation due to departmental scheduling or staffing problems, may, with the City Manager's approval, receive compensation for half of the remaining balance up to a maximum of forty(40)hours. City employees receive 12 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 120 hours,including employees involved in public safety. 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. 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 financial 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. 42 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies(continued) O.Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element,deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources(expense/expenditure)until then.The City has only one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s)and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly,the item,unavailable revenue, is reported only in the governmental funds balance sheet. 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,obligations of states,counties,and cities, fully collateralized certificates of deposit, bankers' acceptances, mutual funds, repurchase agreements and local government investment pools. The maximum maturity allowed is five years from date of purchase. The City's investment policy does not allow investments in collateralized mortgage obligations. 43 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 Cash deposits $ 61,453,498 Temporary Investments FAMC discount note 2,005,806 FFCB discount note 5,015,070 FHLB discount note 5,000,892 FHLMC discount note 5,997,927 FNMA discount note 6,460,061 Certificates of deposit 22,843,348 $ 108,776,602 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: Total Fair Value Interest income $ 445,531 Unrealized gain(loss)on temporary investments (52,591) Investment earnings $ 392,940 44 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: Weighted Average Maturity Total Fair Value (days) Temporary Investments FAMC discount note $ 2,005,806 1,464 FFCB discount note 5,015,070 870 FHLB discount note 5,000,892 1,013 FHLMC discount note 5,997,927 885 FNMA discount note 6,460,061 985 Certificates of deposit 22,843,348 554 $ 47,32321.04 Portfolio weighted average maturity 775 The City's investment policy specifies a maximum weighted average maturity for the portfolio of 900 days or 30 months based on the stated maturity date of the investments. When including cash investments the weighted average maturity for the City is 338 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 five years or 1,825 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, 2014, the City had investments in U.S. Agency securities that exceeded five percent of the total investment portfolio at year-end. Percentage of Total Investment Investment Type Total Fair Value Portfolio FAMC discount note $ 2,005,806 4% FFCB discount note 5,015,070 11% FHLB discount note 5,000,892 10% FHLMC discount note 5,997,927 13% FNMA discount note 6,460,061 14% Certificates of deposit 22,843,348 48% Total $ 47,323,104 100% s- s 45 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 2-Deposits(Cash)and Investments(continued) Credit Risk Federal National Mortgage Association, 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. Revenue bond debt service $ 2,622,698 Customer deposits 3,161,497 Capital improvements 17,913,990 Total $ 23,698,185 Note 3-Receivables Receivables at September 30,2014,consisted of the following: Primary Government: Governmental Funds: Pe arland Economic Non-major Debt Service Development Governmental General Fund Fund Corporation Funds Total Receivables Property taxes,including penalties and interest $ 511,630 $ 843,729 $ $ $ 1,355,359 Lease receivable 8,171,947 8,171,947 Sales and other taxes 4,553,628 1,569,076 477,251 6,599,955 Interest 20,345 6,102 25,265 4,602 56,314 Other 591,069 2,593,363 2,771,627 5,956,059 Allowance for uncollectibles (8,159) (13,427) (21,577) S 5,668.522 S 9,008,351 S 4,187,704 S 1,251.480 S 22.1 18,057 46 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 3-Receivables(continued) Enterprise Funds: Water and Solid Waste Internal Sewer Fund Fund Service Fund Total Receivables Customer accounts $ 2,743,178 $ 662,843 $ $ 3,406,021 Interest 53,578 8 53,586 Other 9,992 139,824 149,816 Allowance for uncollectibles (60,980) (53,049) (114,029) $ 2,745,768 609,802 139,824 $ 3,495,394 Governmental funds report 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 unavailable and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Delinquent property taxes receivable -general fund $ 467,020 $ Delinquent property taxes receivable- debt service fund 749,318 Lease revenues-principal 6,382,928 Street assessments 2,527,689 Other 6,300,442 Lease interest revenues 1,789,020 Grants and revenues prior to meeting all eligibility requirements 1,773,256 Total S 16,427.397 $ 3,562,276 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. 47 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, 2014, follows: Balance Balance September 30, September 30, 2013 Increases (Decreases) 2014 Governmental Activities Capital assets not being depreciated: Land $ 31,264,285 $ $ $ 31,264,285 Construction in progress 23,306,457 (3,331,859) 19,974,598 Total capital assets not being depreciated 54,570,742 (3,331,859) 51,238,883 Other capital assets: Infrastructure 862,884,771 38,545,615 (3,092,313) 898,338,073 Buildings and improvements 97,930,523 4,742,752 102,673,275 Machinery and equipment 15,031,317 3,278,577 (898,094) 17,411,800 Furniture and fixtures 4,699,729 838,630 (25,500) 5,512,859 Total other capital assets 980,546,340 47,405,574 (4,015,907) 1,023,936,007 Less accumulated depreciation for: Infrastructure (254,945,190) (25,595,727) 68,718 (280,472,199) Buildings and improvements (20,031,360) (3,389,166) (23,420,526) Machinery and equipment (8,865,997) (1,334,287) 878,690 (9,321,594) Furniture and fixtures (2,236,114) (513,564) 25,500 (2,724,178) Total accumulated depreciation (286,078,661) (30,832,744) 972,908 (315,938,497) Other capital assets,net 694,467,679 16,572,830 (3,042,999) 707,997,510 Totals $ 749,038,421 $ 16,572,830 $ (6,374,858) $ 759,236,393 Balance Balance September 30, September30, 2013 Increases (Decreases) 2014 Business-type Activities Capital assets not being depreciated: Land $ 3,796,382 $ $ $ 3,796,382 Construction in progress 8,918,035 590,829 9,508,864 Total capital assets not being depreciated 12,714,417 590,829 13,305,246 Other capital assets: Water and sewer system 300,748,324 16,324,231 317,072,555 Buildings and improvements 31,256,473 31,256,473 Machinery and equipment 3,706,656 283,613 (194,210) 3,796,059 Furniture and factures 106,127 7,274 113,401 Contractual water rights 34,511,428 34,511,428 Total other capital assets 370,329,008 16,615,118 (194,210) 386,749,916 Less accumulated depreciation for: Water and sewer system (88,082,289) (7,227,723) (95,310,012) Buildings and improvements (4,088,060) (729,977) (4,818,037) Machinery and equipment (2,306,076) (365,846) 164,668 (2,507,254) Furniture and factures (69,517) (13,536) (83,053) Contractual water rights (7,284,417) (1,380,457) (8,664,874) Total accumulated depreciation (101,830,359) (9,717,539) 164,668 (111,383,230) Other capital assets,net 268,498,649 6,897,579 (29,542) 275,366,686 Totals S 281,213,066 $ 7488,408 $ (29.542) S 288,671,932 48 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 4-Capital Assets(continued) Depreciation was charged to programs as follows: General government $ 786,038 Public safety 2,140,277 Public works 25,367,059 Community services 224,598 Parks and recreation 2,314,772 Total Governmental Activity $ 30,832,744 Water and sewer $ 9,717,539 Total Business-Type Activity $ 9,717,539 The City had active construction projects as of September 30, 2014. 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: Total In Remaining Project Description Contract Progre ss Commitment Drainage Improvement $ 15,686,274 $ 4,246,926 $ 11,439,348 Building Improvements 17,152,221 1,459,540 15,692,681 Street Improvement 62,818,725 11,928,505 50,890,220 Park Improvements 11,116,593 2,339,627 8,776,966 Total Governmental Activities 106,773,813 19,974,598 86,799,215 Water and Sewer Improvements 24,161,067 9,508,864 14,652,203 Total Primary Government $ 130,934.880 S 29,483,462 $ 101,451,418 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 City's component units, which are considered blended components units, have revenue bonds used to acquire and construct or to reimburse developers for major capital improvements. Revenue bonds are paid through the Pearland Economic Development Corporation from sales tax and through the Development Authority of Pearland from property tax increment. 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) The City issued $40,410,000 of Permanent Improvement and Refunding Bonds, Series 2014 dated September 1, 2014. Proceeds of $31,430,000 from the sale of the bonds were used to refund certain obligations of the City and to pay the costs associated with the sale and issuance of the bonds. As a result, the refunded portions of the bonds are considered defeased and the liability has been removed from the general long-term debt of the City. The reacquisition price exceeded the net carrying amount of the old debt resulting in a loss on the refunding of$1.8 million.This amount is being netted against the new debt and amortized using the straight-line method over the remaining life of the refunded debt. This refunding resulted in an economic gain/present value of $2.9 million. The premium of $4.8 million is being amortized over the life of the bonds using the straight-line method. The City issued$9,150,000 of Tax Increment Contract Revenue Bonds, Series 2013 dated November 26, 2013. Proceeds from the sale of the bonds were used to reimburse developers and to pay the costs associated with the sale and issuance of the bonds. The following is a summary of changes in the City's total governmental long-term liabilities for the year ended September 30, 2014. In general, the City uses the General and Debt Service funds as well as the Economic Development Corporation and Development Authority to liquidate governmental long-term liabilities. Restated Balance Balance Amounts September 30, September 30, Due Within 2013* Additions (Reductions) 2014 One Year Governmental Activities Bonds payable: • General obligation bonds $ 230,040,000 $ 40,410,000 $ (33,720,000) $ 236,730,000 $ 8,300,000 Certificates of obligation 64,690,000 (8,185,000) 56,505,000 2,745,000 Sales tax revenue bonds 23,610,000 (920,000) 22,690,000 965,000 Tax increment revenue bonds 51,515,000 9,150,000 (3,230,000) 57,435,000 3,250,000 Unamortized premiumrl(discount) 6,158,967 4,783,606 (820,217) 10,122,356 Total bonds payable 376,013,967 54,343,606 (46,875,217) 383,482,356 15,260,000 Other liabilities: Obligations under capital leases 3,681,366 1,852,939 (1,190,090) 4,344,215 1,208,438 Compensated absences 5,006,729 3244,188 (2,568,860) 5,682,057 801,370 Other post-employment benefits 1,955,154 (233,904) 1,721,250 Total Governmental Activities S 386.657216 S 59.440.733 S (50.868,0711 $ 395,229,878 S 17269,808 *As Restated 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. 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) A summary of the terms of general obligation bonds and certificates of obligation,as of September 30,2014, follows: Original Interest Debt Series Issue Matures Rate(%) Outstanding General Obligation Bonds Permanent Improvement and Refunding Bonds,Series 2005 37,015,000 2029 3.25-5.00 $ 13,545,000 Permanent Improvement and Refunding Bonds,Series 2006 32,165,000 2029 4.00-5.00 9,955,000 Permanent Improvement and Refunding Bonds,Series 2007 69,640,000 2032 4.00-5.00 64,115,000 Permanent Improvement,Series 2008 22,835,000 2032 4.50-5.50 21,360,000 Permanent Improvement and Refunding Bonds,Series 2009 16,735,000 2034 2.00-5.00 14,985,000 Permanent Improvement,Series 2010A 12,415,000 2035 3.00-4.00 10,995,000 Permanent Improvement Refunding,Series 2010B 1,630,000 2018 2.00-4.00 780,000 Permanent Improvement,Series 2011 5,400,000 2036 2.125-4.125 5,055,000 Permanent Improvement and Refunding Bonds,Series 2012 43,575,000 2029 3.00-5.00 43,575,000 Permanent Improvement Bonds,Series 2013 43,575,000 2029 3.00-5.00 9,040,000 Permanent Improvement and Refunding Bonds,Series 2014 40,410,000 2034 2.00-5.00 40,410,000 Annexed Municipal Utility District Bonds BC MUD 1 Series 2007 1,940,000 2030 3.75-4.35 535,000 BC MUD 4 Series 2011 2,640,000 2032 2.50-5.00 2,380,000 Total General Obligation Bonds S 236.730.000 Certificates of Obligation Certificates of Obligation,Series 2004 21,000,000 2028 4.00-5.25 $ 710,000 Certificates of Obligation,Series 2006 9,700,000 2029 3.65-4.68 3,995,000 Certificates of Obligation,Series 2007 23,250,000 2032 3.25-5.25 22,150,000 Certificates of Obligation,Series 2008 9,000,000 2032 3.75-5.00 8,325,000 Certificates of Obligation,Series 2009 8,520,000 2034 2.25-5.00 7,605,000 Certificates of Obligation,Series 2009A 12,145,000 2029 2.00-4.50 9,585,000 Certificates of Obligation,Series 2011 2,095,000 2021 2.09 1,465,000 Certificates of Obligation,Series 2013 2,745,000 2038 3.00-4.625 2,670,000 Total Certificates of Obligation S 56,505,000 A summary of the terms of the revenue bonds recorded as long-term liabilities in the Pearland Economic Development Corporation and Development Authority of Pearland as of September 30,2014,is as follows: Original Interest Debt Series Issue Matures Rate(%) Outstanding Pearland Economic De.e!opine nt Corporation Sales Tax Revenue Bonds,Series 2005 $ 10,590,000 2026 2.30-4.42 $ 7,095,000 Sales Tax Revenue Bonds,Series 2006 10,235,000 2030 3.66-4.75 8,860,000 Sales Tax Revenue Bonds,Series 2010 7,685,000 2030 variable-resets 6,735,000 every 6 months Development Authority of Pearland Tax Increment Revenue Bonds,Series 2012 56,915,000 2029 3.07* 48,715,000 Tax Increment Revenue Bonds,Series 2013 9,150,000 2029 3.77 8,720,000 Total Component Unit Long-Term Debt S S0,125,000 *Fixed for 10 years,then rate changes to be 65%of LIBOR,not to exceed 6.0% 51 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 5-Long-Term Debt(continued) A. General Obligation Bonds and Certificates of Obligation (continued) 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 fmancial statements. At September 30, 2014, approximately $60 million of previously refunded bonds outstanding were considered defeased. General Obligation PIB Series 2005 $ 14,155,000 PIB Series 2006 20,495,000 CO Series 2006 4,475.000 $39,125,000 Development Authority of Pearland Series 2005 $ 6,280,000 Series 2006 7,395,000 Series 2009 7,230,000 $20,905,000 Total: $60,030,000 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$6.8 million. Following is a summary of future lease payments due on this equipment: Fiscal Year Obligations 2015 $ 1,402,292 2016 1,092,850 2017 913,394 2018 614,365 2019 479,916 2020 283,444 Total 4,786,261 Less: Interest (272,906) Obligations under capital leases $ 4,513,355 52 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 30,2014,were as follows: Cove mile ntal Activities General Obligation Certificates of Obligation Fiscal Year Principal Interest Principal Interest 2015 $ 8,300,000 $ 9,975,103 $ 2,745,000 $ 2,396,055 2016 9,350,000 9,600,084 2,120,000 2,303,869 2017 8,955,000 9,224,255 2,190,000 2,219,348 2018 8,830,000 8,859,379 2,765,000 2,115,972 2019 11,690,000 8,430,716 2,505,000 2,006,841 2020 12,470,000 7,920,506 2,580,000 1,900,410 2021 12,855,000 7,376,686 2,665,000 1,789,213 2022 13,675,000 6,797,126 2,535,000 1,674,221 2023 14,225,000 6,185,290 2,625,000 1,555,824 2024 14,795,000 5,537,300 2,725,000 1,431,690 2025 15,475,000 4,885,247 2,825,000 1,301,289 2026 15,870,000 4,232,618 2,960,000 1,164,378 2027 15,870,000 3,552,560 3,840,000 1,018,540 2028 19,400,000 2,891,764 3,995,000 863,823 2029 14,230,000 2,215,900 4,175,000 700,421 2030 10,185,000 1,625,578 3,410,000 544,513 2031 10,125,000 1,154,971 3,805,000 384,238 2032 10,660,000 675,193 4,185,000 199,088 2033 3,185,000 361,506 635,000 86,263 2034 3,300,000 217,869 660,000 55,163 2035 1,520,000 112,044 130,000 22,813 2036 795,000 62,122 140,000 16,650 2037 480,000 33,763 140,000 10,175 2038 490,000 11,331 150,000 3,469 $ 236,730,000 $ 101,938,909 S 56,505,000 $ 25,764,260 s 53 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 blended component unit revenue bonds outstanding at September 30, 2014,were as follows: Governmental Activities Pearland Economic Development Authority of Development Corporation Pe arland Fiscal Year P rincipal Interest Principal Interest 2015 $ 965,000 $ 1,068,839 $ 3,250,000 $ 1,824,295 2016 1,010,000 1,025,057 3,350,000 1,721,965 2017 1,060,000 976,218 3,455,000 1,616,460 2018 1,115,000 924,986 3,565,000 1,507,696 2019 1,175,000 870,739 3,675,000 1,395,416 2020 1,230,000 819,126 3,565,000 1,279,653 2021 1,285,000 764,705 3,680,000 1,167,093 2022 1,350,000 707,225 3,765,000 1,050,862 2023 1,415,000 645,158 3,690,000 930,131 2024 1,480,000 579,894 3,840,000 812,928 2025 1,555,000 511,083 3,990,000 690,735 2026 1,635,000 438,397 4,150,000 563,552 2027 1,715,000 361,922 4,315,000 431,072 2028 1,805,000 275,920 4,485,000 293,107 2029 1,895,000 188,544 4,660,000 149,467 2030 2,000,000 96,818 $ 22,690,000 $ 10,254,633 $ 57,435,000 $ 15,434,429 54 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 30,2014. Restated Balance Balance Amounts September30, September30, Due Within 2013* Additions (Reductions) 2014 One Year Business-type Activities Bonds payable: Permanent Improvement Bonds S 14,020,000 $ $ (1,155,000) $ 12,865,000 $ 1,530,000 Water and sewer revenue bonds 105,690,000 (3,765,000) 101,925,000 3,575,000 Unamortized premium/(discount) 730,310 (138,246) 592,064 Total bonds payable 120,440,310 (138,246) (4,920,000) 115,382,064 5,105,000 Other liabilities: Obligations under capital leases 260,984 (91,844) 169,140 86,960 Compensated absences 463,482 296,131 (234,704) 524,909 87,701 Other post-employment benefits 356,544 (41,277) 315,267 Total Business-type Activities S 121,521,320 5 157,885 S (5287,825) $ 116,391,380 $ 5,279,661 *As Restated A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as of September 30,2014,is as follows: Original Interest Debt Series Issue Matures Rate(%) Outstanding Water and Wastewater Fund Water and Sewer System Adjustable Rate Revenue Bonds, Series 1999 $ 8,000,000 2020 4.41-4.60 $ 2,580,000 Water and Sewer System Revenue and Refunding Bonds, Series 2006 13,845,000 2031 3.74-4.82 10,170,000 Water and Sewer System Revenue and Refunding Bonds, Series 2007 40,135,000 2031 3.50-5.50 35,705,000 Water and Sewer System Revenue Bonds,Series 2008 14,950,000 2034 4.125-5.00 13,690,000 Water and Sewer System Revenue Bonds,Series 2009 13,130,000 2034 3.00-5.50 1 1,340,000 Permanent Improvement and Refunding Bonds,Series 2009 11,660,000 2018 2.00-5.00 6,635,000 Water and Sewer System Revenue Bonds,Series 2010A 14,040,000 2035 1.75-4.50 12,505,000 Water and Sewer System Refunding Bonds,Series 2010B 8,970,000 2023 1.75-4.00 7,875,000 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 8,060,000 Total Utility System Fund t 11-1.790,o(x) 55 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 30,2014,were as follows: Business-Type Activities Revenue Bonds Permanent Improvement Bonds Fiscal Year Principal Interest Principal Interest 2015 $ 3,575,000 $ 4,439,469 $ 1,530,000 $ 474,813 2016 3,725,000 4,302,209 1,560,000 427,900 2017 3,880,000 4,153,814 2,415,000 344,000 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 3,503,758 370,000 142,200 2022 4,810,000 3,306,020 385,000 127,100 2023 5,025,000 3,100,220 395,000 111,500 2024 4,190,000 2,884,169 1,480,000 74,000 2025 4,440,000 2,689,274 1,480,000 22,200 2026 6,155,000 2,477,949 2027 6,450,000 2,181,686 2028 6,765,000 . 1,867,325 2029 7,080,000 1,552,813 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 $ 101,925,000 $ 51,648,423 $ 12,865,000 $ 2,284,600 D. Legal Compliance Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal years 2006,2007,and 2013 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. 56 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 30,2014,is as follows: Transfers In Transfers Out Amounts Purpose General Fund Capital Projects Fund $ 1,942,825 Transfer of funds for capital projects costs General Fund City Wide Donations Fund 21,000 Transfer of funds for operating costs General Fund Grant Fund 287,210 Transfer of funds for operating costs General Fund Solid Waste Fund 146,794 Transfer of funds for administrative costs General Fund Water Sewer Fund 1,359,088 Transfer of funds for administrative costs Total General Fund 3,756,917 Debt Servi a Fund General Fund 159,272 Transfer of funds for debt service payments Debt Service Fund Water Sewer Fund 459,167 Transfer of funds for debt service payments Total Debt Service Fund 618,439 Development Authority of Pearland Tax Increment Reinvestment Zone#2 11,494,978 Debt service;developer reimbursements U of H Fund General Fund 5,717 Operating Capital Projects Fund General Fund 194,797 Transer of funds for capital project costs Capital Projects Fund Parks and Recreation Development 66,500 Transer of funds for capital project costs Capital Projects Fund Sidewalk Fund 14,652 Transer of funds for capital project costs Capital Projects Fund Grant Fund 344,300 Transer of funds for capital project costs Capital Projects Fund Street Assessments Fund 10,625 Transer of funds for capital project costs Total Capital Projects Fund 630,874 Internal Service Fund General Fund 819,638 Operating costs Internal Service Fund Water Sewer Fund 301,030 Operating costs Internal Service Fund General Fund 1,369,510 Operating costs and reserves Total Internal Service Fund 2,490,178 Water Sewer Fund General Fund 235,491 Operating costs Total S 19232,594 A summary of interfund receivables and payables at September 30,2014,follows: Receivable Fund Payable Fund Amount Purpose General Fund Grant Fund $ 244,629 Short term loan General Fund U of H Fund 30,694 To fund operations $ 275,323 57 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 7-Fund Balance/Net Position Encumbrances Encumbrance accounting is employed as an extension of formal budgetary integration for the General Fund,special revenue funds,and capital projects funds. September 30,2014,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: Encumbrance s General Fund-assigned $ 1,393,883 Pearland Economic Development-restricted 342,048 Aggregate non-major funds-restricted 17,222,932 S 18,958,863 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. 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,hybrid defined benefit plan in the state-wide Texas Municipal Retirement System("TMRS"),an agent multiple-employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. Benefits depend upon the sum of the employee's contributions to the plan,with interest,and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee,with interest,prior to establishment of the plan. Monetary credits for service since the plan began are a percent(100%, 150%,or 200%)of the employee's accumulated contributions. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information(RSI) for TMRS;the report also provides detailed explanations of the contributions,benefits,and actuarial methods and assumptions used by the System. This report may be obtained from TMRS'website at www.TMRS.com. 58 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 9-Employee Retirement System(continued) 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.Plan provisions for the City were as follows: Plan Year 2013 Plan Year 2014 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. Contributions Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the projected unit credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member's projected benefit allocated annually;the prior service contribution rate amortizes the unfunded(overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits,such as updated service credits and annuity increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes,there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. The City's total payroll in fiscal year 2014 was$34.8 million and the City's contributions were based on a payroll of $33.2 million. Contributions made by employees totaled $2.3 million, and the City made contributions of$4.3 million during the fiscal year ended September 30,2014. 59 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 9-Employee Retirement System (continued) Contributions(continued) Three-year trend information is presented below: 2014 2013 2012 Annual Pension Cost(APC) $ 4,311,811 $ 3,780,847 $ 3,518,289 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. The required contribution rates for fiscal year 2014 were determined as part of the December 31,2011 and 2012 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2013, also follows: Valuation Date 12/31/2013 12/31/2012 12/31/2011 Actuarial Cost Method Entry Age Normal Projected Unit Credit Projected Unit Credit Amortization Method Level Percent of Payroll Level Percent of Payroll Level Percent of Payroll GASB 25 Equivalent Single Amortization Period 30.0 Years-Closed Period 25.3 Years-Closed Period 26.3 Years-Closed Period Amortization Period for new Gains/Losses 30 years 30 years 30 years Asset Valuation Method 10-year Smoothed Market 10-year Smoothed Market 10-year Smoothed Market Actuarial Assumptions: Investment Rate of Return 7.00% 7.00% 7.00% Projected Salary Increases Varies by age and service Varies by age and service Varies by age and service Includes Inflation At 3.00% 3.00% 3.00% Cost-of-Living Adjustments 2.1% 2.1% 2.1% 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 resulted in increased contribution rates,provided for advanced funding and positive improvement in the pension funding rates. The TMRS Board provided for an eight-year phase-in period for new rates to enable cities to slowly increase contributions. The City chose the phase-in option. The funded status as of December 31,2013,the most recent valuation date is presented as follows: Unfunded Actuarial Actuarial (UAAL)as a Valuation Actuarial Actuarial Accrued Annual Percentage Date Value of Accrued Percentage Liability Covered of Covered December 31, Assets Liabilities Funded (UAAL) Payroll Payroll 2013 $ 78,831,539 $ 98,960,025 80% $20,128,486 $33,237,051 61 60 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 9-Employee Retirement System(continued) Contributions(continued) Actuarial valuations 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 actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits. 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 Retire d Cost Cost Cost Employees $ 107,425 $ $ 107,425 11 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. 61 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 fmancial 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.The results of the City's most recent actuarial valuation are as follows: Unfunded (UAAL)as Actuarial a Actuarial Actuarial Actuarial Accrued Annual Percentage Valuation Date Value of Accrued Percentage Liability ('oNered of Covered October 1, Assets Liabilities Funded (UAAL) Payroll Payroll 2012 $ $ 8,339,937 0% $ 8,339,937 $28,876,260 29% Net OPEB obligations at year-end for the last three fiscal years are as follows: 2012 2013 2014 Normal cost $ 190,706 $ 243,253 $ 234,852 Amortization of UAAL 141,837 177,878 177,878 Annual required contribution(ARC) 332,543 421,131 412,730 Interest on prior-year net OPEB obligation 57,127 72,715 81,115 Amortization of prior-year net OPEB obligation (ARC adjustment) (109,364) (142,285) Annual OPEB cost(expense) 389,670 384,482 351,560 Employer contributions (174,458) (342,919) Increase in net OPEB obligation 389,670 210,024 8,641 Net OPEB obligation-beginning of year 1,428,182 1,817,852 2,027,876 Net OPEB obligation-end of year $ I.817.852 S 2.027.876 $ 2,036.517 The annual cost recorded to the general ledger for fiscal year 2014 is $493,845, which includes the estimated normal cost of $234,852 to provide for the benefits earned by active employees. The total liability, which is not recorded to the general ledger, is $8,339,937, 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 1,2012 include using the Projected Unit Credit actuarial costs method, a closed amortization period of 26 years, a discount rate of 4%, medical inflation and ultimate pre-Medicare rate of 10% and 5% respectively, with a straight years of service amortization method. Separate, audited GAAP-basis postemployment benefit plan reports are not applicable for the other post- retirement benefit plan for the City as there are no separately issued plan financial statements. 62 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 30,2014. 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 2014 Balance Altus Harbor $ 87,500 $ 80,000 $ $ 7,500 Amerlux 185,000 185,000 Base Pair Bio-Technologies 38,500 9,625 28,875 Keystone Engineering 189,000 189,000 KS Management 2,663,000 2,663,000 Merit Medical Systems 888,000 758,000 130,000 Zapp Precision Wire 60,000 60,000 $4,111,000 $ 80,000 $ 767,625 $3,263,375 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. 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. 63 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 11 -Commitments and Contingencies(continued) Shadow Creek Town Center(continued) 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 30,2014,the City remitted sales tax to the developer pursuant to the agreement in the amount of$2,347,103,of which $446,275 was remitted in fiscal year 2014. To date, $1,898,518 million has been reimbursed towards principal and $448,585 for interest. The City anticipates the developer reimbursements funded from sales tax to be complete in fiscal year 2016. Lower Kirby Urban Center Master Plan One of the priorities of the Lower Kirby Urban Center Master Plan, the Pearland 20/20 Strategic Plan, and a City Council goal is the implementation of regional detention for the Lower Kirby area. The purpose of regional detention is to create a more attractive urban development,reclaim land from the 100 year flood plain and increase property values needed to pay for infrastructure. A regional approach will prevent each property owner from having to provide individual on site detention allowing for drainage areas that become amenities. One of the first steps taken by the City to facilitate regional detention was the purchase of the existing large borrow pit on the south side of the District in November 2010 that will be utilized as the detention pond. The City hired LJA Engineering in 2012 to conduct a drainage design and impact analysis for the necessary improvements and to begin a discussion with Texas Department of Transportation(TXDOT)to utilize their existing drainage ditch for conveyance. The ditch runs north and south parallel to State Highway 288 and will convey water from the eastern 467 acres of the District to the detention pond before it outfalls into Clear Creek. The Lower Kirby Municipal Management District (LKMMD) and the Pearland Municipal Management District No. 1 (PMMD#1) on February 6, 2014 adopted a master drainage plan for the implementation and enforcement of regional detention that established rules, regulations and fees. The regional detention will be developed and utilized by both the LKMMD and the PMMD#1. The PMMD#1 master drainage plan will be for the entire 127 acres of the District and the LKMMD master drainage plan is a first phase that will provide regional detention for 340 acres of the District. The Districts entered into a cost sharing and implementation agreement to cooperate on the regional detention system. The total cost of this phase of the regional detention system is estimated at approximately $16M that will be split between the two Districts at 72.3% for LKMMD and 27.7% for PMMD#1. Based on this cost sharing,the LKMMD will charge$34,495 per acre foot and PMMD#1 will charge $37,047 per acre foot. Thirty percent of the fee will be a pro-rata participation fee paid by the developer and the remaining seventy percent will be reimbursed to the developer when funds are available from the District. 64 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 12-Risk Management The City is exposed to various risks of loss related to torts: theft of,damage to,and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City's risk management program mainly encompasses obtaining property and liability insurance through Texas Municipal League's Intergovernmental Risk-Pool (TML-IRP), and through commercial insurance carriers. The participation of the City in TML-IRP is limited to payment of premiums. The City has not had any significant reduction in insurance coverage, and the amounts of insurance settlements have not exceeded insurance coverage for any of the last three years. The City also provides Workers' Compensation insurance on its employees through TML-Workers' Compensation Fund. Workers' Compensation premiums are subject to change when audited by TML Workers'Compensation Fund.At fiscal year-end September 30,2014,the City believed the amounts paid on Workers' Compensation would not change significantly from the amounts recorded. Note 13-Capital Lease The City has a 20-year agreement to lease a facility to the University of Houston Clear Lake (UHCL), which commenced in July 2010. Rent or lease payments are broken into two parts, debt service and operating. For accounting purposes the City has classified the lease as a direct fmancing 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 61st day preceding the 20`h 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 30,2014, the future minimum debt service lease payments to be received under the lease are as follows: Fis cal year ending September 30, Payment 2015 $ 654,255 2016 643,059 2017 627,598 2018 610,030 2019 594,808 2020-2024 2,751,760 2025-2029 _ 2,343,556 Total $ 8,225,066 65 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 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, 2014, the future minimum debt service lease payments to be received under the lease are as follows: Fiscal year ending September 30, Payment 2015 S 110,153 2016 108,268 2017 105,665 2018 102,707 2019 100,144 2020-2024 463,297 2025-2029 394,570 Total $ 1,384,804 Note 15-Subsequent Events Certificates of Obligation,Series 2014 On October 16, 2014, the City received $4,625,000 in certificates of obligations. Proceeds from the sale of the Certificates will be used for (i) improvements, renovations and additions to the existing public works service center located at East Orange Street and Old Alvin Road; (iii) acquisition of land for and the design and construction of two new fire stations located at Yost Road and FM 518 and at Harkey Road and Fite Road;(iv)project management for parks,street and facility capital projects within the City; (v)renovations to the existing City Hall Complex;and(vi)to pay the costs of issuance of the Certificates. Interest rates on the certificates range from 2.0%to 4.0%and mature in 2034. Water and Sewer System Revenue Bonds,Series 2014 On October 16, 2014, the City received $9,210,000 in water and sewer system revenue bonds. Proceeds from the sale of the bonds will be used for waterworks and sanitary sewer system improvements, and to pay the costs of issuance of the bonds. Interest rates on the bonds range from 2.0%to 4.0%and mature in 2039. Development Authority of Pearland Tax increment Revenue Bonds, Series 2014 On November 10, 2014,the Development Authority of Pearland approved the issuance of$8,060,000 of Tax Increment Contract Revenue Bonds. Proceeds from the sale of the bonds were used to reimburse the developer$7,890,000 for infrastructure within the TIRZ boundaries. The bonds have and annual interest rate of 2.72%and will mature in 2029. 66 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 15-Subsequent Events(continued) Capital Lease One December 18, 2014, City Council approved a seven year $574,049 lease purchase agreement with Clayton Holdings, LLC for the purchase of a Pierce Quantum pumper truck. The bid was at a 2.02% interest rate with the first semi-annual payment of$43,735.39 due January 2015,with final payment July 2021.The escrow account closed on January 5,2015. Note 16-Restated Net Position The City expensed unamortized bond issuance costs in accordance with the implementation of GASB Statement No.65,Items Previously Reported as Assets and Liabilities.The effect of these restatements on beginning net position are as follows: Water and Governmental Business-type Sewer Fund Activities Activities Net Position as of September 30,2013 $ 193,025,610 $ 451,958,192 $ 193,238,011 Expense unamortized debt issuance costs in the accordance with GASBS No.65: (1,076,799) (2,816,829) (I 076.79Q) Net Position as of September 30,2013(restated) $ 191,948,811 $ 449,141,363 ti 192,161 212 67 (This page intentionally left blank.) 68 Required Supplementary Information 69 CITY OF PEARLAND,TEXAS GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL For the year ended September 30,2014 Variance with Final Budget- Budgeted Amounts Positive Original Final Actual (Negative) Revenues • Property taxes $ 11,818,335 $ 11,901,823 $ 12,095,419 $ 193,596 Sales and use taxes 17,428,319 17,038,649 17,326,556 287,907 Franchise fees 6,106,615 6,264,559 6,214,046 (50,513) Licenses and permits 2,877,117 3,642,823 4,148,763 505,940 Fees and forfeitures 3,568,281 2,945,940 2,970,397 24,457 Charges for services 13,175,835 12,828,870 12,663,599 (165,271) Investment earnings 60,500 82,974 88,232 5,258 Other 514,862 2,360,758 2,172,857 (187,901) Total Revenues 55,549,864 57,066,3% 57,679,869 613,473 Expenditures Current: General government 8,793,823 7,687,619 7,234,797 452,822 Public safety 29,395,291 30,038,310 29,039,403 998,907 Public works 8,507,284 8,318,137 7,946,912 371,225 Community services 3,743,683 3,893,808 3,747,462 146,346 Parks and recreation 8,138,479 8,028,920 7,357,692 671,228 Debt Service: Principal 89,950 89,950 89,950 Interest and other charges 24,536 24,536 24,536 Capital outlay 3,269,551 5,470,572 4,233,164 1,237,408 Total Expenditures 61,962,597 63,551,852 59,673,916 3,877,936 Excess(deficiency)of revenues over expenditures (6,412,733) (6,485,456) (1,994,047) 4,491,409 Other Financing Sources (Uses) Proceeds from capital leases 901,825 2,426,987 1,852,939 (574,048) Transfers in 3,709,547 3,751,670 3,756,917 5,247 Transfers out (1,386,903) (2,784,191) (2,784,425) (234) Total Other Financing Sources (Uses) 3,224,469 3,394,466 2,825,431 (569,035) Net change in fund balances (3,188,264) (3,090,990) 831,384 3,922,374 Fund balances, beginning 18,623,117 18,623.117 18,623,117 Fund balances,ending $ 15,434.853 S 15.532,127 S 19,454,501 S 3,922.374 70 CITY OF PEARLAND,TEXAS NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION Budgetary Compliance The City has complied with all material budget requirements for the year ended September 30,2014. 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 fmancial plan for the Enterprise Fund. City Council approves the annual budget for the Pearland Economic Development Corporation,which is included in the City's fmancial 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. 71 CITY OF PEARLAND,TEXAS REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION September 30,2014 TEXAS MUNICIPAL RETIREMENT SYSTEM(UNAUDITED) Schedule of Funding Progress Unfunded Actuarial Actuarial (UAAL)as a Valuation Actuarial Actuarial Accrued Annual Percentage Date Value of Accrued Percentage Liability Covered of Covered December31, Assets Liabilities Funded (UAAL) Payroll Payroll 2013 $ 78,831,539 $ 98,960,025 80% $20,128,486 $33,237,051 61% 2012 69,800,322 85,022,771 82% 15,222,449 28,876,260 53% 2011 61,822,285 78,404,115 79% 16,581,830 27,756,555 60% CITY OF PEARLAND OTHER POST-EMPLOYMENT BENEFIT OBLIGATION Schedule of Funding Progress Unfunded Actuarial Actuarial (UAAL)as a Valuation Actuarial Actuarial Accrued Annual Percentage Date October Value of Accrued Percentage Liability Covered of Covered 1, Assets Liabilities Funded (UAAL) Payroll Payroll 2012 S $ 8,339,937 0% $ 8,339,937 $28,876,260 29% 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. Actuarial valuations are conducted every two years. Trend information is designed to provide information about the progress made in accumulating sufficient assets to pay benefits when due. 72 Other Supplementary Information 73 (This page intentionally left blank.) 74 Combining and Individual Fund Statements and Schedules 75 (This page intentionally left blank.) 76 CITY OF PEARLAND,TEXAS NON-MAJOR GOVERNMENTAL 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. Street Assessments Fund — A fund created to account for the revenue and expenditure of street assessments as approved by City Council for a designated street(s). 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 and expenditures from traffic impact analysis. Juvenile Management Fund - A fund created to account for receipt and expenditure of revenues from court fines for juvenile case manager. Capital Projects Fund-A fund 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. 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 II) 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. 77 CITY OF PEARLAND,TEXAS COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS September 30,2014 HoteI/Motel Court City-Wide Court Tax Security Donation Technology Assets Cash and cash equivalents $ 879,290 $ 119.571 S 49.667 $ 48,433 Investments 1,741,186 Receivables(net of allowance for uncollectibles) 438,482 Due from other governments Prepaid items 4,220 Total Assets $ 3,063.178 $ 119571 $ 49,667 S 48.433 Liabilities Accounts payable S 64.710 $ 2,112 $ S Accrued expenditures Due to other funds Total Liabilities 64.710 2,112 Deferred Inflows of Resources Unavailable revenue Total Deferred Inflows of Resources Fund Balance Non-spendable 4,220 Restricted for: Community development programs 2,994,248 117,459 3,471 Public safety 46,196 48,433 Capital improvements Total Fund Balances 2,998,468 117,459 49,667 48,433 Total Liabilities,Deferred Inflows of Resources, and Fund Balances S 3,063.178 $ 119571 $ 49,667 $ 48.433 78 Page 1 of 2 Park and Street Park Police Recreation Assessments Donation Seizure Development $ S 168.639 $ 205,187 $ 525,494 495,884 2,527,689 39.196 211 $ 2.527.689 S 168,639 S 244.383 $ 1.021,589 $ 300 $ 2.641 $ 33,439 300 2,641 33,439 2,527,689 2,527,689 168,339 241,742 988,150 168,339 241,742 988,150 I $ 2,527,689 $ 168,639 $ 244,383 $ 1,021589 79 CITY OF PEARLAND,TEXAS COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS September 30,2014 Traffic Impact Juvenile Sidewalk Grant Improvement Management Assets Cash and cash equivalents $ 242,999 $ $ 176,216 $ 55,113 Investments 496,089 Receivables(net of allowance for uncollectibles) 304 Due from other governments 319.934 Prepaid items Total Assets $ 242,999 $ 319.934 $ 672,609 $ 55,113 Liabilities Accounts payable $ $ 5,803 $ $ 1.601 Accrued expenditures Due to other funds 244,629 Total Liabilities 250,432 1,601 Deferred Inflows of Resources Unavailable revenue Total Deferred Inflows of Resources Fund Balance Non-spendable Restricted for: Community development programs 69,502 Public safety 53,512 Capital improvements 242,999 672,609 Total Fund Balances 242,999 69,502 672,609 53,512 Total Liabilities,Deferred Inflows of Resources, and Fund Balances $ 242,999 $ 319,934 $ 672,609 $ 55113 80 Page 2 of 2 Capital Educational Projects TV U of H Totals $ 14,437,088 $ 447,638 $ 240,128 $ 17,595,463 2,979,484 5,712,643 207,598 40,000 3,253,480 3,710,441 59,248 4,089,623 4,220 $ 21,334,611 S 487,638 S 299,376 $ 30,655,429 $ 1,872,600 $ 214 $ 28,554 $ 2,011,974 136,761 136,761 30,694 275,323 2,009,361 214 59,248 2,424,058 3,710,441 6,238,130 3,710,441 6,238,130 4,220 487,424 240,128 4,080,571 389,883 15,614,809 17,518,567 15,614,809 487,424 240,128 21,993,241 S 17,624,170 $ 487,638 $ 299,376 $ 26,944,988 81 CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS For the Year Ended September 30,2014 Hotel/Motel Court City-Wide Court Tax Security Donation Technology Revenues Sales and use taxes $ 1,404,306 $ $ $ Franchise fees Fines and forfeitures 53,213 60,846 Investment earnings 4,079 180 104 202 Intergovernmental Other 80,990 40,775 Total Revenues 1,489,375 53,393 40,879 61,048 Expenditures Current: General government 708,755 Public safety 17,433 Public works Community services 65,542 37.945 Parks and recreation Debt Service: Interest and other charges Capital outlay 53,304 44,116 258,105 Total Expenditures 762,059 65,542 61,549 296,050 Excess(deficiency)of revenues over expenditures 727,316 (12,149) (20,670) (235,002) Other Financing Sources (Uses) Issuance of debt Bond premium Transfers in Transfers out (21,000) Total Other Financing Sources (Uses) (21,000) Net change in fund balances 727,316 (12,149) (41,670) (235,002) Fund balances -beginning 2,271,152 129,608 91,337 283,435 Fund balances -ending $ 2,998,468 $ 117,459 $ 49,667 $ 48,433 82 Page 1 of 2 Park and Street Park Police Recreation Assessments Donation Seizure Development $ $ $ 394 258 352 1,942 62,194 111,529 118,233 292,379 62,588 111,787 118,585 294,321 62,588 72,342 133,052 46,000 35,590 62,588 133,052 118,342 35,590 (21,265) 243 258,731 (66,500) (66,500) (21,265) 243 192,231 189,604 241,499 795,919 $ $ 168,339 $ 241,742 $ 988,150 83 CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS For the Year Ended September 30,2014 Traffic Impact Juvenile Sidewalk Grant Improvement Management Revenues Sales and use taxes Franchise fees Fines and forfeitures 36,066 Investment earnings 351 2,488 86 Intergovernmental 848,339 Other 33,390 40,850 Total Revenues 33,741 848,339 43,338 36,152 Expenditures Current: General government 11,993 Public safety 41,936 Public works 1,890 Community services 27,641 43,139 Parks and recreation Debt Service: • Interest and other charges Capital outlay 112,061 Total Expenditures 1,890 193,631 43,139 Excess(deficiency)of revenues over expenditures 31,851 654,708 43,338 (6,987) Other Financing Sources (Uses) Issuance of debt Bond premium Transfers in Transfers out (14,652) (631,510) (10,625) Total Other Financing Sources (Uses) (14,652) (631,510) (10,625) Net change in fund balances 17,199 23,198 32,713 (6,987) Fund balances -beginning 225,800 46,304 639,896 60,499 Fund balances -ending $ 242,999 $ 69,502 $ 672,609 $ 53,512 84 Page 2 of 2 Capital Educational Projects TV U of H Totals $ $ $ $ 1,404,306 269,915 269,915 150,125 24,804 473 370 36,083 712,409 237,528 1,798,276 990,299 81,786 1,852,425 1,727,512 270,388 319,684 5,511,130 783,336 131,711 172,618 174,508 37,877 212,144 325,052 458,104 111,564 111,564 10,747,763 5,601 11,302,540 11,031,945 43,478 325,052 13,173,907 (9,304,433) 226,910 (5,368) (7,662,777) 10,690,000 10,690,000 1,005,606 1,005,606 630,874 5,717 636,591 (1,942,825) (2,687,112) 10,383,655 5.717 9,645,085 1,079,222 226,910 349 1,982,308 14,535,587 260,514 239,779 20,010,933 $ 15,614,809 $ 487,424 $ 240,128 $ 21,993,241 85 CITY OF PEARLAND,TEXAS DEBT SERVICE FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Property taxes $ 26,684,495 $ 27,131,534 $ 447,039 $ 25,898,494 Investment earnings 36,561 37,272 711 19,296 Miscellaneous 775,398 775,396 (2) 1,946,973 Total Revenues 27,496,454 27,944,202 447,748 27,864,763 Expenditures Debt Service: Principal 11,575,162 11,575,162 11,950,504 Interest and other charges 13,163,774 13,102,430 61,344 12,667,961 Intergovernmental 4,307,496 4,307,496 4,057,682 Total Expenditures 29,046,432 28,985,088 61,344 28,676,147 Excess(deficiency)of revenues over expenditures (1,549,978) (1,040,886) 509,092 (811,384) Other Financing Sources (Uses) Proceeds from long-term debt 29,720,000 29,720,000 Premium on general obligation debt 3,778,000 3,778,000 Payments to refunding escrow agent (33,182,437) (33,182,437) Transfers from other funds 618,439 618,439 461,726 Total Other Financing Sources (Uses) 934,002 934,002 461,726 Net change in fund balance (615,976) (106,884) 509,092 (349,658) Fund Balances -Beginning 4,642,821 4,642,821 4,992,479 Fund Balances-Ending $ 4,026,845 $ 4,535,937 $ 509,092 $ 4,642,821 86 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 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Sales and use taxes $ 1,342,794 $ 1,404,306 $ 61,512 $ 1,150,360 Investment earnings 5,200 4,079 (1,121) 3,277 Other 82,000 80,990 (1,010) Total Revenues 1,429,994 1,489,375 59,381 1,153,637 Expenditures Current: General government 727,292 708,755 18,537 533,088 Capital outlay 53,630 53,304 326 173,226 Total Expenditures 780,922 762,059 18,863 706,314 Net change in fund balance 649,072 727,316 78,244 447,323 Fund Balances-Beginning 2,271,152 2,271,152 1,823,829 Fund Balances - Ending $ 1920.224 $ 2.998.468 S 78,244 $ 2,271,152 I 4 I I 87 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 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Fines and forfeitures $ 54,508 $ 53,213 $ (1,295) $ 59,476 Investment earnings 175 180 5 200 Total Revenues 54,683 53,393 (1,290) 59,676 Expenditures Current: Community services 78,457 65,542 12,915 71,189 Total Expenditures 78,457 65,542 12,915 71,189 Net change in fund balance (23,774) (12,149) 11,625 (11,513) Fund Balances -Beginning 129,608 129,608 141,121 Fund Balances -Ending $ 105,834 $ 117,459 $ 11.625 $ 129,608 88 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-CITY-WIDE DONATION SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive/ Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 150 $ 104 $ (46) $ 118 Other income 69,085 40,775 (28,310) 34,413 Total Revenues 69,235 40,879 (28,356) 34,531 Expenditures Current: Public safety 17,433 17,433 14,558 Community services 10,675 10,675 Capital outlay 53,986 44,116 9,870 Total Expenditures 82,094 61,549 20,545 14,558 Excess(deficiency)of revenues over expenditures (12,859) (20,670) (7,811) 19,973 Other Financing Sources (Uses) Transfers out (21,000) (21,000) Net change in fund balance (12,859) (41,670) (7,811) 19,973 Fund Balances - Beginning 91,337 91,337 71,364 Fund Balances - Ending $ 57,478 $ 49,667 $ (7,811) $ 91,337 4 4 I 41 I 89 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-COURT TECHNOLOGY SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES INFUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive/ Final Budget Actual (Negative) 2013 Revenues Fines and forfeitures $ 62,000 $ 60,846 $ (1,154) $ 70,909 Investment earnings 246 202 (44) 380 Total Revenues 62,246 61,048 (1,198) 71,289 Expenditures Current: Community services 46,994 37,945 9,049 31,149 Capital Outlay 293,000 258,105 Total Expenditures 339,994 296,050 9,049 31,149 Net change in fund balance (277,748) (235,002) 7,851 40,140 Fund Balances -Beginning 283,435 283,435 243,295 Fund Balances - Ending $ 5,687 $ 48,433 $ 7,851 $ 283,435 90 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-STREET ASSESSMENTS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenue s Investment earnings $ 394 $ 394 $ $ Other 62,194 62,194 Total Revenues 62,588 62,588 Expenditure s Current: General government 62,588 62,588 Total Expenditures 62,588 62,588 Net change in fund balance Fund Balances - Beginning Fund Balances - Ending S s 5 $ 91 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-PARK DONATION SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 994 $ 258 $ (736) $ 203 Other 104,025 111,529 7,504 163,096 Total Revenues 105,019 111,787 6,768 163,299 Expenditure s Current: Parks and recreation 141,758 133,052 8,706 76,882 Capital outlay 5,245 Total Expenditures 141,758 133,052 8,706 82,127 Net change in fund balance (36,739) (21,265) 15,474 81,172 Fund Balances -Beginning 189,604 189,604 108,432 Fund Balances -Ending S 152,865 S 168,339 S 15,474 S 189,604 92 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 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 351 $ 352 $ 1 $ 372 Other 56,162 118,233 62,071 43,191 Total Revenues 56,513 118,585 62,072 43,563 Expenditures Current: Public safety 99,479 72,342 27,137 50,639 Capital outlay 46,000 46,000 29,883 Total Expenditures 145,479 118,342 27,137 80,522 Net change in fund balance (88,966) 243 89,209 (36,959) Fund Balances -Beginning 241,499 241,499 278,458 Fund Balances - Ending $ 152,533 S 241,742 S 89,209 $ 241,499 93 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-PARK AND RECREATION DEVELOPMENT SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 ,,'ith comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 1,202 $ 1,942 $ 740 $ 1,247 Other 223,879 292,379 68,500 243,803 Total Revenues 225,081 294,321 69,240 245,050 Expenditures Current: Parks and recreation 52,441 Capital outlay 181,523 35,590 145,933 256,392 Total Expenditures 181,523 35,590 145,933 308,833 Excess(deficiency)of revenues over expenditures 43,558 258,731 215,173 (63,783) Other Financing Sources (Uses) Transfers out (66,500) (66,500) Total Other Financing Sources (Uses) (66,500) (66,500) Net change in fund balance (22,942) 192,231 215,173 (63,783) Fund Balances -Beginning 795,919 795,919 859,702 Fund Balances -Ending $ 772,977 $ 988,150 $ 215,173 $ 795,919 I I 94 I 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 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 325 $ 351 $ 26 $ 308 Other 33,390 33,390 20,129 Total Revenues 33,715 33,741 26 20,437 Expenditures Current: Public works 1,890 (1,890) Total Expenditures 1,890 (1,890) Excess(deficiency)of revenues over expenditures 33,715 31,851 (1,864) 20,437 Other Financing Sources (Uses) Transfers out (14,652) (14,652) Total Other Financing Sources (Uses) (14,652) (14,652) Net change in fund balance 19,063 17,199 (1,864) 20,437 Fund Balances -Beginning 225,800 225,800 205,363 Fund Balances -Ending $ 244,863 $ 242,999 $ (1,864) $ 225,800 I 4 I 95 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-GRANT SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 11 $ $ (11) $ 27 Intergovernmental 1,383,649 848,339 (535,310) 814,545 Other 12,292 Total Revenues 1,383,660 848,339 (535,321) 826,864 Expenditures Current: General government 21,200 11,993 9,207 Public safety 95,056 41,936 53,120 57,282 Community service 87,132 27,641 59,491 93,441 Parks and recreation 3,741 Capital outlay 264,656 112,061 152,595 15,659 Total Expenditures 468,044 193,631 274,413 170,123 Excess(deficiency)of revenues over expenditures 915,616 654,708 (260,908) 656,741 Other Financing Sources (Uses) Transfers in 20,748 Transfers out (936,017) (631,510) 304,507 (659,196) Total other financing sources (uses) (936,017) (631,510) 304,507 (638,448) Net change in fund balance (20,401) 23,198 43,599 18,293 Fund Balances -Beginning 46,304 46,304 28,011 Fund Balances -Ending $ 25,903 $ 69,502 S 43,599 S 46,304 96 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-TRAFFIC IMPACT IMPROVEMENT SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 2,000 $ 2,488 $ 488 $ 1,006 Other 40,850 40,850 204,689 Total Revenues 42,850 43,338 488 205,695 Other Financing Sources/(Uses) Transfers out (10,625) (10,625) (157,907) Total Other Financing Sources (Uses) (10,625) (10,625) (157,907) Net change in fund balance 32,225 32,713 488 47,788 Fund Balances - Beginning 639,896 639,896 592,108 Fund Balances - Ending S 672,121 $ 672,609 $ 488 $ 639,896 I I El 97 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-JUVENILE MANAGEMENT SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Fines and Forfeitures $ 37,164 $ 36,066 $ (1,098) $ 69,603 Investment earnings 85 86 1 70 Total Revenues 37,249 36,152 (1,097) 69,673 Expenditure s Current: Community services 44,092 43,139 953 44,081 Total Expenditures 44,092 43,139 953 44,081 Net change in fund balance (6,843) (6,987) (144) 25,592 Fund Balances - Beginning 60,499 60,499 34,907 Fund Balances - Ending $ 53,656 S 51.512 S 144 _S 60,499 I I I I I 98 I CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-CAPITAL PROJECTS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenue s Investment earnings $ 24,854 $ 24,804 $ (50) $ 18,070 Intergovernmental 7,373,681 712,409 (6,661,272) 3,593,783 Other income 1,980,716 990,299 (990,417) 4,116,743 Total Revenues 9,379,251 1,727,512 (7,651,739) 7,728,596 Expenditure s Current: Public works 371,081 172,618 198,463 309,833 Debt Service Interest and other charges 385,000 111,564 273,436 324,993 Capital outlay 37,644,848 10,747,763 26,897,085 17,487,825 Total Expenditure s 38,400,929 11,031,945 27,368,984 18,122,651 Excess(deficiency) of revenues over expenditures (29,021,678) (9,304,433) 19,717,245 (10,394,055) Other Financing Sources (Uses) Issuance of debt 15,574,401 10,690,000 (4,884,401) 12,060,000 Bond premium 1,005,606 1,005,606 331,309 Transfers in 940,626 630,874 (309,752) 421,615 Transfers out (1,942,825) (1,942,825) (1,659,245) Net change in fund balance (13,443,870) 1,079,222 14,523,092 759,624 Fund Balances -Beginning 14,535,587 14,535,587 13,775,963 Fund Balances - Ending $ 1,091,717 $ 15,614,809 S 14,523,092 $ 14,535,587 99 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 30,2014 with comparative actual totals for the year ended September 30,2013 2014 Variance Positive/ Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 407 $ 473 $ 66 $ 204 Franchise taxes 265,000 269,915 4,915 240,378 Total Revenues 265,407 270,388 4,981 240,582 Expenditures Current: Community services 36,390 37,877 (1,487) 19,881 Capital outlay 10,156 5,601 4,555 44,813 Total Expenditures 46,546 43,478 3,068 64,694 Net change in fund balance 218,861 226,910 8,049 175,888 Fund Balances - Beginning 260,514 260,514 84,626 Fund Balances - Ending $ 479,375 $ 487,424 $ 8,049 $ 260,514 100 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-U OF H SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2014 with comparative actual totals jor the year ended September 30,2013 2014 Variance Positive / Final Budget Actual (Negative) 2013 Revenues Investment earnings $ 370 $ 370 $ $ 61 Intergovernmental 249,889 237,528 (12,361) 186,970 Other 85,523 81,786 (3,737) 338,511 Total Revenues 335,782 319,684 (16,098) 525,542 Expenditure s Current: Parks and recreation 340,935 325,052 15,883 316,828 Total Expenditures 340,935 325,052 15,883 316,828 Excess(deficiency)of revenues over expenditures (5,153) (5,368) (215) 208,714 Other Financing Sources (Uses) Transfers in 5,483 5,717 234 34,670 Transfers out (34,670) Total Other Financing Sources (Uses) 5,483 5,717 234 Net change in fund balance 330 349 19 208,714 Fund Balances - Beginning 239,779 239,779 31,065 Fund Balances - Ending S 240.109 S 240.128 $ 19 S 239,779 101 (This page intentionally left blank.) 102 Long-Term Debt Amortization Schedules 103 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT BY MATURITY DATE September 30,2014 Certificates of Obligation,Series 2004 Permanent Improvement&Refunding Bonds, Series 2005 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 710,000 $ 14,200 $ 724,200 $ 2,010,000 $ 603,428 $ 2,613,428 2016 940,000 529,678 1,469,678 2017 385,000 498,478 883,478 2018 445,000 481,878 926,878 2019 170,000 469,493 639,493 2020 170,000 462,501 632,501 2021 175,000 455,320 630,320 2022 180,000 447,820 627,820 2023 390,000 435,610 825,610 2024 1,185,000 397,600 1,582,600 2025 1,245,000 336,850 1,581,850 2026 1,310,000 272,975 1,582,975 2027 1,355,000 209,738 1,564,738 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 2037 2038 $ 710,000 $ 14,200 $ 724,200 $ 13,545,000 $ 5,779,741 $ 19,324,741 Certificates of Obligation,Series 2006 Permanent Improvement&Refunding Bonds, Series 2006 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 370,000 $ 174,685 $ 544,685 $ 430,000 $ 458,756 $ 888,756 2016 395,000 152,985 547,985 445,000 440,978 885,978 2017 405,000 134,263 539,263 460,000 422,025 882,025 2018 405,000 117,405 522,405 480,000 402,050 882,050 2019 108,900 108,900 1,335,000 361,813 1,696,813 2020 108,900 108,900 370,000 322,525 692,525 2021 108,900 108,900 395,000 303,400 698,400 2022 108,900 108,900 420,000 283,025 703,025 2023 108,900 108,900 535,000 259,150 794,150 2024 108,900 108,900 535,000 232,400 767,400 2025 108,900 108,900 565,000 204,900 769,900 2026 108,900 108,900 595,000 175,900 770,900 2027 765,000 91,688 856,688 630,000 146,063 776,063 2028 805,000 56,363 861,363 920,000 109,250 1,029,250 2029 850,000 19,125 869,125 1,840,000 43,700 1,883,700 2030 2031 2032 2033 2034 2035 2036 2037 2038 $ 3 995 000 $ 1 617 713 $ 5,612,713 $ 9,955,000 S 4,165,934 $ 14,120,934 104 Page 1 of 4 Certificates of Obligation,Series 2007 Permanent Improvement& Refunding Bonds, Series 2007 Fiscal Year Principal Interest Total Principal Intere st Total 2015 $ 350,000 $ 990,588 S 1,340,588 $ 2,685,000 $ 2,924,025 $ 5,609,025 2016 400,000 970,900 1,370,900 2,345,000 2,791,563 5,136,563 2017 450,000 948,588 1,398,588 2,460,000 2,671,438 5,131,438 2018 1,005,000 910,394 1,915,394 2,220,000 2,554,438 4,774,438 2019 1,060,000 856,188 1,916,188 3,830,000 2,403,188 6,233,188 2020 1,115,000 799,094 1,914,094 5,190,000 2,190,663 7,380,663 2021 1,170,000 739,113 1,909,113 5,395,000 1,952,500 7,347,500 2022 1,230,000 676,113 1,906,113 5,610,000 1,704,888 7,314,888 2023 1,295,000 609,831 1,904,831 5,005,000 1,466,050 6,471,050 2024 1,360,000 540,138 1,900,138 5,230,000 1,235,763 6,465,763 2025 1,430,000 466,900 1,896,900 3,835,000 1,034,197 4,869,197 2026 1,500,000 389,988 1,889,988 3,845,000 866,197 4,711,197 2027 1,580,000 324,938 1,904,938 4,010,000 686,850 4,696,850 2028 1,660,000 272,288 1,932,288 2,290,000 537,225 2,827,225 2029 1,745,000 216,956 1,961,956 2,370,000 426,550 2,796,550 2030 1,540,000 163,575 1,703,575 2,590,000 308,750 2,898,750 2031 1,600,000 104,550 1,704,550 2,620,000 185,013 2,805,013 2032 1,660,000 35,275 1,695,275 2,585,000 61,394 2,646,394 2033 2034 2035 2036 2037 2038 $ 22,150,000 S 1 0,015,413 $ 32,165,413 $ 64,115,000 26,000,688 S 90,115,688 Certificates of Obligation,Series 2008 Permanent Improvement Bonds,Series 2008 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 145,000 S 393,828 $ 538,828 $ 310,000 $ 1,025,025 S 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 2037 2038 $ 53253 5) $ 5,452,919 $ 13.777,919 $ 21.36■.155u $ 14.053.519 5 35.413.519 105 I CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT BY MATURITY DATE September 30,2014 Certificates of Obligation,Series 2009 Certificates of Obligation,Series 2009A Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 235,000 $ 339,953 $ 574,953 S 640,000 S 341,765 $ 981,765 2016 240,000 332,903 572,903 640,000 324,965 964,965 2017 245,000 325,703 570,703 640,000 301,765 941,765 2018 255,000 317,128 572,128 640,000 275,403 915,403 2019 320,000 307,565 627,565 640,000 252,560 892,560 2020 325,000 294,765 619,765 635,000 231,361 866,361 2021 340,000 281,765 621,765 640,000 210,163 850,163 2022 350,000 268,165 618,165 640,000 187,763 827,763 2023 365,000 253,815 618,815 640,000 164,403 804,403 2024 385,000 238,303 623,303 640,000 140,563 780,563 2025 400,000 221,363 621,363 635,000 116,339 751,339 2026 420,000 203,363 623,363 640,000 91,315 731,315 2027 440,000 183,938 623,938 640,000 65,715 705,715 2028 465,000 163,038 628,038 635,000 39,898 674,898 2029 485,000 139,788 624,788 640,000 13,440 653,440 2030 415,000 116,750 531,750 2031 410,000 96,000 506,000 2032 475,000 75,500 550,500 2033 505,000 51,750 556,750 2034 530,000 26,500 556,500 2035 2036 2037 2038 _ S 7.605.000 $ 4,238,050 $ 11,843,050 S 9,585,000 S 2,757,41; I'.; i I• Permanent Improvement and Refunding Bonds, Permanent Improvement Bonds,Series 2010A Series 2009 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 405,000 S 626,754 $ 1,031,754 S 370,000 $ 399,553 S 769,553 2016 420,000 615,918 1,035,918 380,000 388,353 768,353 2017 435,000 599,267 1,034,267 390,000 378,703 768,703 2018 455,000 578,154 1,033,154 400,000 366,853 766,853 2019 590,000 557,888 1,147,888 415,000 354,628 769,628 2020 615,000 537,863 1,152,863 425,000 342,028 767,028 2021 635,000 517,075 1,152,075 440,000 329,053 769,053 2022 655,000 494,490 1,149,490 455,000 315,059 770,059 2023 680,000 470,120 1,150,120 465,000 300,109 765,109 2024 705,000 444,321 1,149,321 485,000 284,065 769,065 2025 735,000 416,953 1,151,953 500,000 265,578 765,578 2026 765,000 387,505 1,152,505 520,000 246,153 766,153 2027 795,000 356,305 1,151,305 540,000 226,603 766,603 2028 825,000 323,492 1,148,492 560,000 205,558 765,558 2029 865,000 288,415 1,153,415 585,000 182,938 767,938 2030 835,000 249,375 1,084,375 610,000 159,038 769,038 2031 945,000 204,875 1,149,875 635,000 133,344 768,344 2032 1,090,000 154,000 1,244,000 660,000 105,825 765,825 2033 1,235,000 95,875 1,330,875 690,000 77,138 767,138 2034 1,300,000 32,500 1,332,500 720,000 47,175 767,175 2035 750,000 15,938 765,938 2036 2037 2038 S 14,985,000 $ 7,951,145 S 22,936.145 S 10.995.00(1 $ 5,123,684 $ 16,118,684 106 Page 2 of 4 Permanent Improvement Bonds,Series 2010B Permanent Improvement Bonds,Series 2011 Fiscal Year Principal Interest Total Principal interest Total 2015 $ 225,000 $ 21,150 $ 246,150 $ 150,000 5 190,131 $ 340,131 2016 225,000 14,400 239,400 155,000 184,031 339,031 2017 240,000 6,300 246,300 165,000 177,631 342,631 2018 90,000 1,350 91,350 170,000 170,931 340,931 2019 175,000 164,031 339,031 2020 185,000 156,831 341,831 2021 190,000 149,331 339,331 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 2037 2038 $ 780.000 $ 43200 $ 823,200 $5,55.000 $ 2,435,172 $ 7,490,172 Certificates of Obligation,Series 2011 Permanent Improvement&Refunding Bonds, Series 2012 Fiscal Year Principal Intere st Total Principal Intere st Total 2015 $ 210,000 $ 28,424 $ 238,424 S 685,000 $ 1,552,550 $ 2,237,550 2016 210,000 24,035 234,035 1,955,000 1,489,975 3,444,975 2017 205,000 19,698 224,698 2,625,000 1,388,600 4,013,600 2018 210,000 15,362 225,362 2,690,000 1,282,300 3,972,300 2019 210,000 10,973 220,973 3,210,000 1,164,300 4,374,300 2020 210,000 6,584 216,584 2,200,000 1,056,100 3,256,100 2021 210,000 2,195 212,195 2,340,000 965,300 3,305,300 2022 2,680,000 864,900 3,544,900 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 2037 2038 S 1,465,000 $ 107,269 S 1,572,269 $ 43,575,000 $ 12,518,125 $ 56,093,125 107 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT BY MATURITY DATE September 30,2014 BC MUD#1 BC MUD#4 Tax and Revenue Bonds,Series 2007 Unlimited Tax Bonds,Series 2011 Fiscal Year Principal Interest Total Principal Intere st Total 2015 $ 70,000 $ 22,958 $ 92,958 S 130,000 $ 94,300 S 224,300 2016 20,228 20,228 130,000 90,888 220,888 2017 20,228 20,228 130,000 87,313 217,313 2018 20,228 20,228 130,000 83,575 213,575 2019 20,228 20,228 130,000 79,350 209,350 2020 20,228 20,228 130,000 74,800 204,800 2021 20,228 20,228 130,000 69,925 199,925 2022 20,228 20,228 130,000 64,725 194,725 2023 20,228 20,228 130,000 59,444 189,444 2024 20,228 20,228 130,000 54,081 184,081 2025 20,228 20,228 130,000 48,475 178,475 2026 20,228 20,228 130,000 42,625 172,625 2027 20,228 20,228 130,000 36,645 166,645 2028 145,000 20,228 165,228 130,000 30,535 160,535 2029 155,000 13,920 168,920 130,000 24,360 154,360 2030 165,000 7,178 172,178 130,000 18,120 148,120 2031 130,000 11,750 141,750 2032 170,000 4,250 174,250 2033 2034 2035 2036 2037 2038 $ 5350(R) S 30'u13 $ 842.0)3 S 2,380,000 $ 975,160 .S 3355.I60 Permanent Improvement Bonds,Series 2013 Certificates of Obligation,Series 2013 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 295,000 $ 370,943 S 665,943 $ 85,000 $ 112,613 $ 197,613 2016 295,000 362,093 657,093 85,000 110,063 195,063 2017 305,000 351,568 656,568 85,000 107,513 192,513 2018 305,000 339,368 644,368 85,000 104,963 189,963 2019 320,000 326,868 646,868 90,000 102,338 192,338 2020 320,000 314,068 634,068 100,000 98,988 198,988 2021 330,000 301,068 631,068 100,000 94,488 194,488 2022 330,000 287,868 617,868 100,000 89,488 189,488 2023 340,000 274,468 614,468 100,000 84,488 184,488 2024 350,000 260,668 610,668 100,000 79,488 179,488 2025 360,000 246,468 606,468 110,000 74,238 184,238 2026 370,000 231,868 601,868 110,000 69,288 179,288 2027 370,000 217,068 587,068 110,000 64,888 174,888 2028 380,000 202,068 582,068 110,000 60,488 170,488 2029 390,000 186,424 576,424 120,000 55,738 175,738 2030 400,000 169,880 569,880 120,000 50,563 170,563 2031 410,000 152,411 562,411 120,000 45,313 165,313 2032 420,000 134,203 554,203 120,000 40,063 160,063 2033 430,000 115,288 545,288 130,000 34,513 164,513 2034 440,000 95,713 535,713 130,000 28,663 158,663 2035 450,000 75,688 525,688 130,000 22,813 152,813 2036 460,000 55,213 515,213 140,000 16,650 156,650 2037 480,000 33,763 513,763 140,000 10,175 150,175 2038 490,000 11,331 501,331 150,000 3,469 153,469 $ 9,040,000 $ 5,116,356 S 14,156,356 $ 2,670,000 $ 1,561,281 $ 4,231,281 108 Page 3 of 4 Permanent Improvement& Refunding Bonds, Sales Tax Revenue Bonds,Series 2005 Series 2014 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 535,000 $ 1,685,531 S 2,220,531 $ 460,000 $ 305,938 $ 765,938 2016 1,735,000 1,662,831 3,397,831 480,000 287,538 767,538 2017 1,020,000 1,630,181 2,650,181 505,000 263,538 768,538 2018 1,085,000 1,603,231 2,688,231 530,000 238,288 768,288 2019 1,240,000 1,573,031 2,813,031 555,000 211,788 766,788 2020 2,310,000 1,508,281 3,818,281 575,000 189,588 764,588 2021 2,415,000 1,401,706 3,816,706 600,000 166,588 766,588 2022 2,510,000 1,284,831 3,794,831 625,000 141,988 766,988 2023 3,165,000 1,149,206 4,314,206 650,000 116,363 766,363 2024 2,710,000 1,002,331 3,712,331 675,000 89,550 764,550 2025 2,830,000 863,831 3,693,831 705,000 61,200 766,200 2026 3,055,000 716,706 3,771,706 735,000 31,238 766,238 2027 4,120,000 537,331 4,657,331 2028 3,145,000 385,191 3,530,191 2029 5,860,000 218,850 6,078,850 2030 535,000 90,950 625,950 2031 535,000 69,550 604,550 2032 535,000 48,150 583,150 2033 535,000 28,088 563,088 2034 535,000 9,363 544,363 2035 2036 2037 2038 $ 40.410.000 S I'..4O.172 S 57.879.1„ S 7.01S.000 $ 2.101600 $ 9.19s 600 Sales Tax Revenue Bonds,Series 2006 Sides Fax Revenue Bonds.Series 211111 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 230,000 $ 422,919 $ 652,919 $ 275,000 $ 339,983 $ 614,983 2016 240,000 411,419 651,419 290,000 326,101 616,101 2017 255,000 401,219 656,219 300,000 311,462 611,462 2018 265,000 390,381 655,381 320,000 296,318 616,318 2019 280,000 378,788 658,788 340,000 280,164 620,164 2020 300,000 366,538 666,538 355,000 263,001 618,001 2021 310,000 353,038 663,038 375,000 245,080 620,080 2022 325,000 339,088 664,088 400,000 226,150 626,150 2023 345,000 322,838 667,838 420,000 205,958 625,958 2024 365,000 305,588 670,588 440,000 184,757 624,757 2025 385,000 287,338 672,338 465,000 162,546 627,546 2026 405,000 268,088 673,088 495,000 139,072 634,072 2027 1,190,000 247,838 1,437,838 525,000 114,085 639,085 2028 1,255,000 188,338 1,443,338 550,000 87,583 637,583 2029 1,320,000 128,725 1,448,725 575,000 59,819 634,819 2030 1,390,000 66,025 1,456,025 610,000 30,793 640,793 2031 2032 2033 2034 2035 2036 2037 2038 $ 8,860,000 $ 4,878,163 $ 13,738,163 $ 6,735,000 $ 3,272,871 $ 10,007,871 109 (This page intentionally left blank.) 110 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT I'ape 4 of 4 BY MATURITY DATE September 30,2014 Development Authority of Pearland Development Authority of Pearland Tax Increment Contract Revenue Tax Increment Contract Revenue Bonds, and Refunding Bonds,Series 2012 Series 2013 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 2,885,000 $ 1,495,551 $ 4,380,551 $ 365,000 $ 328,744 $ 693,744 2016 2,970,000 1,406,981 4,376,981 380,000 314,984 694,984 2017 3,070,000 1,315,802 4,385,802 385,000 300,658 685,658 2018 3,160,000 1,221,553 4,381,553 405,000 286,143 691,143 2019 3,255,000 1,124,541 4,379,541 420,000 270,875 690,875 2020 3,120,000 1,024,613 4,144,613 445,000 255,041 700,041 2021 3,215,000 928,829 4,143,829 465,000 238,264 703,264 2022 3,030,000 830,128 3,860,128 735,000 220,734 955,734 2023 3,130,000 737,107 3,867,107 560,000 193,024 753,024 2024 3,225,000 641,016 3,866,016 615,000 171,912 786,912 2025 3,320,000 542,009 3,862,009 670,000 148,727 818,727 2026 3,425,000 440,085 3,865,085 725,000 123,468 848,468 2027 3,530,000 334,937 3,864,937 785,000 96,135 881,135 2028 3,635,000 226,566 3,861,566 850,000 66,541 916,541 2029 3,745,000 114,972 3,859,972 915,000 34,496 949,496 2030 j 2031 2032 2033 2034 2035 2036 2037 2038 $ 48.715,000 $ 12,384,687 S 61,099,687 $ 8,720,000 S 3,049,742 $ 11,769,742 111 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT BY MATURITY DATE September 30,2014 Water&Sewer Revenue Bonds, Water&Sewer Revenue Bonds, Series 1999 Series 2006 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 135,000 $ 118,680 $ 253,680 S 710,000 $ 499,519 $ 1,209,519 2016 145,000 112,470 257,470 745,000 467,569 1,212,569 2017 540,000 105,800 645,800 100,000 434,044 534,044 2018 565,000 80,960 645,960 100,000 429,744 529,744 2019 585,000 54,970 639,970 100,000 425,369 525,369 2020 610,000 28,060 638,060 100,000 420,869 520,869 2021 100,000 416,244 516,244 2022 100,000 411,619 511,619 2023 100,000 406,994 506,994 2024 100,000 402,369 502,369 2025 100,000 397,744 497,744 2026 1,150,000 393,119 1,543,119 2027 1,205,000 338,494 1,543,494 2028 1,265,000 278,244 1,543,244 2029 1,330,000 214,994 1,544,994 2030 1,395,000 146,831 1,541,831 2031 1,470,000 75,338 1,545,338 2032 2033 2034 2035 2036 2037 S 2.iso.000 S ;0).940 S 3O8)`)40 S 10.170.000 $ 6.159.100 S 16329.100 Water&Sewer Revenue Bonds, Water&Sewer Revenue Bonds, Series 2007 Series 2008 Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 965,000 $ 1,619,413 $ 2,584,413 S 275,000 5 641,215 $ 916,215 2016 1,010,000 1,566,338 2,576,338 290,000 628,840 918,840 2017 950,000 1,510,788 2,460,788 315,000 615,790 930,790 2018 995,000 1,458,538 2,453,538 340,000 601,615 941,615 2019 1,045,000 1,403,813 2,448,813 370,000 586,315 956,315 2020 1,095,000 1,348,950 2,443,950 395,000 569,665 964,665 2021 1,155,000 1,294,200 2,449,200 420,000 551,890 971,890 2022 1,210,000 1,236,450 2,446,450 440,000 532,990 972,990 2023 1,275,000 1,175,950 2,450,950 460,000 514,840 974,840 2024 2,295,000 1,112,200 3,407,200 490,000 495,520 985,520 2025 2,480,000 997,450 3,477,450 510,000 474,450 984,450 2026 3,120,000 873,450 3,993,450 540,000 448,950 988,950 2027 3,280,000 717,450 3,997,450 560,000 421,950 981,950 2028 3,440,000 553,450 3,993,450 595,000 393,950 988,950 2029 3,615,000 398,650 4,013,650 600,000 364,200 964,200 2030 3,795,000 272,125 4,067,125 580,000 334,200 914,200 2031 3,980,000 139,300 4,119,300 560,000 305,200 865,200 2032 1,890,000 277,200 2,167,200 2033 1,980,000 182,700 2,162,700 2034 2,080,000 93,600 2,173,600 2035 2036 2037 S 35,705,000 5 17,678,513 $ 53,383,513 $ 13,690,000 5 9.035.080 $ 22,725,080 112 Page 1 of 2 Water&Sewer Revenue Bonds, Permanent Improvement and Refunding Bonds, Series 2009 Series 2009(water/sewer portion) Fiscal Year Principal Interest Total Principal Interest Total 2015 $ 385,000 $ 547,363 $ 932,363 $ 1,195,000 $ 243,713 $ 1,438,713 2016 400,000 535,813 935,813 1,220,000 212,000 1,432,000 2017 410,000 522,813 932,813 2,065,000 143,600 2,208,600 2018 420,000 508,975 928,975 2,155,000 45,988 2,200,988 2019 435,000 493,750 928,750 2020 450,000 476,350 926,350 2021 465,000 458,350 923,350 2022 485,000 438,588 923,588 2023 505,000 416,763 921,763 2024 520,000 393,406 913,406 2025 545,000 368,056 913,056 2026 570,000 340,806 910,806 2027 600,000 311,594 911,594 2028 630,000 280,844 910,844 2029 665,000 247,769 912,769 2030 700,000 212,025 912,025 2031 730,000 173,525 903,525 2032 765,000 133,375 898,375 2033 815,000 91,300 906,300 2034 845,000 46,475 891,475 2035 2036 2037 S 11.3-10000 S 6997933 S IS.33793S S 6.635.000 S 6453(X) S 7.250300 Water&Sewer Revenue Bonds, Water&Sewer Revenue Bonds, Series 2010A Series 2010B Fiscal Year Principal Interest Total Principal Interest Total 2015 S 405,000 $ 498,581 S 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 495,000 422,319 917,319 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 580,000 338,319 918,319 2026 600,000 315,119 915,119 2027 625,000 291,119 916,119 2028 650,000 265,338 915,338 2029 680,000 237,713 917,713 2030 710,000 208,813 918,813 2031 740,000 177,750 917,750 2032 755,000 144,450 899,450 2033 785,000 110,475 895,475 2034 825,000 75,150 900,150 2035 845,000 38,025 883,025 2036 2037 S 12505.000 $ 6.598.994 S 19.103.994 $ 7.875.000 $ 2,036,588 S 9,911,588 113 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT Page 2 of-2 BY MATURITY DATE September 30,2014 Permanent Improvement and Refunding Bonds, Water&Sewer Revenue Bonds,Series 2012 Series 2012(water/sewer portion) Principal Interest Total Principal Interest Total 2015 $ 335,000 $ 231,100 $ 566,100 $ 345,000 $ 225,155 $ 570,155 2016 340,000 215,900 555,900 355,000 218,255 573,255 2017 350,000 200,400 550,400 755,000 211,155 966,155 2018 360,000 186,200 546,200 765,000 196,055 961,055 2019 365,000 171,700 536,700 780,000 180,755 960,755 2020 370,000 157,000 527,000 800,000 165,155 965,155 2021 370,000 142,200 512,200 230,000 141,155 371,155 2022 385,000 127,100 512,100 230,000 134,255 364,255 2023 395,000 111,500 506,500 240,000 127,355 367,355 2024 1,480,000 74,000 1,554,000 230,000 120,155 350,155 2025 1,480,000 22,200 1,502,200 225,000 113,255 338,255 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 83,313 278,313 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 $ 6,230,000 $ 1,639,300 $ 7,869,300 $ 8,060,000 $ 2,641,271 $ 10,701,271 114 Statistical Section (Unaudited) 115 (This page intentionally left blank.) 116 Unaudited Statistical Section This part of the City's 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 118 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 140 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 145 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 148 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources:Unless otherwise noted,the information in these schedules is derived from the comprehensive annual fmancial reports for the relevant year. 117 CITY OF PEARLAND,TEXAS NET POSITION BY COMPONENT Last Ten Fiscal Years Amounts in(000's) (Accrual Basis ofAccounting) 2005 2006 2007 2008 2009 Governmental Activities Net investment in capital assets $396,619 $402,103 $400,522 $410,002 $429,054 Restricted 6,862 8,085 10,130 10,864 10,615 Unrestricted 5,785 8,917 11,809 10,903 13,330 Total governmental activities net position $409,266 $419,105 $422,461 $431,769 $452,999 Business-type activities Net investment in capital assets $127,144 $130,648 $126,779 $138,679 $146,150 Restricted 7,027 10,129 24,258 16,094 11,965 Unrestricted 552 700 1,638 3,406 9,256 Total business-type activities net position $134,723 $141,477 $152,675 $158,179 $167,371 Primary government Investment in capital assets $523,763 $532,751 $527,301 $548,681 $575,204 Restricted 13,889 18,214 34,388 26,958 22,580 Unrestricted 6,337 9,617 13,447 14,309 22,586 Total primary government net position $543,989 $560,582 $575,136 $589,948 $620,370 (1)Due to implementation of GASB 61,the City's component units are now considered blended component units versus discretely presented as in years prior to fiscal year 2013. Fiscal year 2012 has been restated for comparison purposes. (2)Restated due to implementation of GASB 65 in fiscal year 2014. Fiscal years 2012 and 2013 have been restated for comparison purposes. 118 2010 2011 2012(2) 2013(1x2) 2014 $422,643 $413,439 $367,747 $420,009 $430,286 18,020 16,462 36,548 34,666 45,826 13,692 14,543 (6,868) (5,534) (13,010) $454,355 $444,444 $397,427 $449,141 $463,102 $144,244 $156,629 $156,888 $165,915 $174,955 17,587 5,603 9,821 9,542 14,484 11,942 13,910 12,439 16,704 15,612 $173,773 $176,142 $179,148 $192,161 $205,050 $566,887 $570,068 $524,635 $585,924 $605,241 35,607 22,065 46,369 44,208 60,309 25,634 28,453 5,571 11,170 2,602 $628,128 $620,586 $576,575 $641,302 $668,152 119 CITY OF PEARLAND,TEXAS CHANGES IN NET POSITION Last Ten Fiscal Years Amounts in(000's) (Accrual Basis of Accounting) 2005 2006 2007 2008 Expenses Governmental activities General Government $ 8,714 $ 8,574 $ 8,660 $ 11,161 Public Safety 11,857 12,564 14,655 17,684 Public Works 28,858 26,914 24,041 24,532 Community Services 2,939 2,903 3,113 3,336 Parks and Recreation 4,131 4,882 7,157 Economic Development Interest on long-term debt 5,115 6,559 9,070 12,266 Total government activities expenses 57,483 61,645 64,421 76,136 Business-type activities: Water and Sewer 17,624 20,531 21,076 22,570 Solid Waste 5,218 6,024 Total business-type activities: 17,624 20.531 26,294 28,594 Total primary government expenses S 75,107 S 82.176 $ 90,715 $104,730 Program Revenue Governmental activities Charges for services: General Government $ 185 $ $ $ Public Safety 3,640 2,627 2,788 2,959 Public Works 7,221 4,331 195 103 Community Services 1,263 6,312 5,822 5,130 Parks and Recreation 825 818 936 Economic Development Operating grants and contributions General Government 2 1,239 1,659 3,951 Public Safety 673 III 154 230 Public Works 456 551 Community Services 479 55 34 129 Parks and Recreation 21 11 115 Capital grants and contributions General Government 800 Public Safety 312 503 Public Works 6 15,743 8,690 15,263 Parks and Recreation 6 261 Total governmental activities program revenues 14,582 31,270 20,627 30,131 Business-type activities: Charges for services Water and Sewer 11,219 13,849 17,754 21,524 Solid Waste 5,218 6,038 Operating grants and contributions Water and Sewer 474 385 315 Capital grants and contributions Water and Sewer 8,365 13,434 12,621 5,869 Total business-type activities program revenues 19,585 27,757 35,978 33,746 Total primary government program revenues $ 34,167 $ 59,027 $ 56,605 $ 63,877 (1)Due to implementation of GASB 61,the City's component units are now considered blended component units versus discretely presented as in years prior to fiscal year 2013.Fiscal year 2012 has been restated for comparison purposes. (2)Restated due to implementation of GASB 65 in fiscal year 2014. Fiscal years 2012 and 2013 have been restated for comparison purposes. 120 Page 1 of2 2009 2010 2011 2012(2) 2013(1)(2) 2014 $ 12,355 $ 13,439 $ 15,945 $ 13,334 $ 13,358 $ 12,241 22,438 24,268 23,042 27,403 28,944 32,130 26,893 35,679 31,130 28,510 31,690 38,579 3,290 3,323 3,254 4,267 3,807 4,687 7,240 7,699 8,062 9,264 9,524 6,896 26,311 17,411 26,498 11,647 13,738 13,142 11,572 10,534 16,225 83,863 98,146 94,575 120,661 115,268 137,255 25,439 27,157 29,192 29,392 31,289 32,444 7,106 7,089 7,285 7,528 8,324 6,664 32,545 34,246 36,477 36,920 39,613 39,108 $116,408 $132,392. $131,052 $157,581. $154,881 $176,363 $ 6,351 $ 6,351 $ $ 6,637 S 6,326 $ 6,637 3,524 3,296 3,679 4,206 7,410 2,793 35 10 18 43 3,096 322 4,755 4,312 4,632 5,855 3,264 7,375 672 906 2,027 2,080 2,209 2,290 413 414 430 4,913 5,215 5,488 6,045 44 440 420 641 407 711 603 434 375 207 675 53 1,388 7,612 202 159 366 311 108 337 450 424 462 542 182 474 180 279 98 26,092 29,800 10,330 18,743 52,921 29,269 4,653 100 52,721 51,419 28,084 45,739 78,145 58,413 26,617 24,961 28,664 27,535 29,008 28,929 6,766 7,313 7,258 7,654 8,175 7,008 2,464 70 61 205 6,125 8,611 4,215 8,118 16,273 17,677 41,972 40,955 40,198 43,512 53,456 53,614 $ 94,693 $ 92,374 $ 68,282 $ 89,251 $131,601 $112,027 121 CITY OF PEARLAND,TEXAS CHANGES IN NET POSITION Last Nine Fiscal Years* Amounts in(000's) (Accrual Basis of Accounting) 2005 2006 2007 2008 Net(Expense)/Revenue Governmental activities $(42,901) $(30,375) $(43,794) $(46,005) Business-type activities 1,961 7,226 9,684 5,152 Total primary government net expense $(40.940) S(23,149) S(34.110) S(40.853) General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ 19,805 $ 21,845 $ 24,823 $ 29,492 Sales and use taxes 8,026 9,980 11,025 12,581 Franchise taxes 3,097 3,426 3,760 4,427 Investment earnings 1,863 2,991 4,943 4,572 Miscellaneous 828 740 1,539 2,911 Special item Transfers 359 1,230 1,060 1,330 Total governmental activities $ 33,978 $ 40,212 $ 47,150 $ 55,313 Business-type activities: Investment earnings $ 399 $ 758 $ 2,574 $ 1,669 Miscellaneous 12 Transfers (359) (1,230) (1,060) (1,330) Total business-type activities 40 (472) 1,514 351 Total primary government $ 34,018 $ 39,740 $ 48,664 $ 55,664 Change in Net Position Governmental activities $ (8,923) $ 9,837 $ 3,356 $ 9,308 Business-type activities 2,001 6,754 11,198 5,503 Total primary government $ (6,922) $ 16,591 $ 14,554 $ 14,811 (1)Due to implementation of GASB 61,the City's component units are now considered blended component units versus discretely presented as in years prior to fiscal year 2013.Fiscal year 2012 has been restated for comparison purposes. (2)Restated due to implementation of GASB 65 in fiscal year 2014. Fiscal years 2012 and 2013 have been restated for comparison purposes. 122 Page 2 of 2 2009 2010 2011 2012(2) 2013(1x2) 2014 $(31,142) $(46,727) $(66,491) $(74,922) $(37,123) $(78,842) 9,427 6,709 3,721 6,592 13,843 14,506 $(21.715) $(40.018) $(62,770) 8(68,330) $(23,280) 8(64,336) $ 31,140 $ 32,963 $ 33,451 $ 52,230 $ 54,433 $ 57,378 14,218 13,578 13,983 22,969 24,942 27,295 5,075 5,426 5,605 5,670 5,999 6,484 1,376 253 157 134 155 254 6,294 1,028 1,854 1,554 1,701 2,398 (3,039) 621 1,186 1,475 2,269 1,607 2,031 $ 58,724 $ 54,434 $ 56,525 $ 84,826 $ 88,837 $ 92,801 $ 363 $ 100 $ 116 $ 68 $ 95 $ 139 23 779 9 444 682 274 (621) (1,186) (1,475) (2,269) (1,607) (2,030) (235) (307) (1,350) (1,757) (830) (1,617) $ 58,489 $ 54,127 $ 55,175 $ 83,069 $ 88,007 $ 91,184 $ 27,582 $ 7,707 $ (9,966) $ 9,904 $ 51,714 $ 13,960 9,192 6,402 2,371 4,835 13,013 12,889 $ 36.774 $ 14,109 $ (7595) $ 14,739 $ 64.727 $ 26,849 12; CITY OF PEARLAND,TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Amounts in(000's) (Modified Accrual Basis of Accounting) 2005 2006 2007 2008 General fund Non-spendable $ 71 $ 84 $ 123 $ 181 Restricted Assigned 552 581 4,698 Unassigned 8,132 9,961 12,932 8,647 Total General Fund $ 8,203 $ 10,597 $ 13,636 $ 13,526 All other governmental funds Non-spendable $ $ $ $ Restricted Debt service 3,855 4,658 6,552 6,835 Capital improvements 43,545 52,957 96,542 110,715 Public safety 348 453 591 583 Economic Development Community development programs Tourism 670 864 1,051 1,247 Parks and recreation 992 1,393 1,652 1,183 Capital projects -other 1,007 1,064 1,138 1,346 Other 238 247 114 629 Total other Governmental Funds $ 50,655 $ 61,636 $ 107,640 $ 122,538 (1)Due to implementation of GASB 61,the City's component units are now considered blended component units versus discretely presented as in years prior to fiscal year 2013. 124 2009 2010 2011 2012 2013 (1) 2014 $ 119 $ 146 $ 130 $ 182 $ 158 $ 202 126 699 117 160 167 1,554 1,394 11,401 12,599 14,108 17,222 16,911 17,859 $ 12,219 S 12,862 $ 14,524 $ 17,571 $ 18,623 $ 19,455 $ $ $ $ $ 183 $ 209 7,246 6,705 5,160 4,992 5,192 5,951 62,467 30,893 23,461 13,776 14,536 17,519 699 612 541 702 715 390 20,777 23,814 1,344 1,394 1,452 1,821 2,267 2,994 1,094 1,214 1,143 968 985 168 1,146 962 810 797 866 85 79 87 215 638 918 $ 74,081 S 41,859 $ 32,654 $ 23,271 $ 46,159 $ 51,963 s � 125 CITY OF PEARLAND,TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Amounts in(000's) (Modified Accrual Basis ofAccounting) 2005 2006 2007 2008 Revenues Property taxes $ 19,745 $ 22,150 $ 24,525 $ 29,200 Sales and use taxes 8,026 9,980 11,025 12,581 Franchise fees 3,097 3,426 3,760 4,427 Licenses and permits 3,864 4,067 4,030 2,992 Fines and forfeitures 1,935 2,038 2,048 2,086 Charges for services 6,139 8,734 5,250 7,512 Investment earnings 1,863 2,991 4,938 4,568 Intergovernmental 2,382 7,852 14,463 3,731 Other 1,172 1,744 1,815 5,638 Total Revenues 48,223 62,982 71,854 72,735 Expenditures General government 6,750 6,381 6,293 7,388 Public safety 11,081 12,870 14,598 19,604 Public works 10,450 9,728 6,278 7,536 Community services 2,747 3,787 3,102 3,426 Parks and recreation 3,358 4,908 6,605 Economic development Debt service: Principal 3,535 3,429 3,228 3,160 Interest and other charges 5,555 6,771 10,197 12,382 Capital outlay 28,661 36,706 28,530 27,777 Intergovernmental 1,084 1,684 2,169 3,434 Total Expenditures 69,863 84,714 79,303 91,312 Excess of revenues over(under)expenditures (21,640) (21,732) (7,449) (18,577) Other Financing Sources(Uses) Transfers in 4,870 5,852 4,596 4,912 Transfers out (4,510) (4,698) (3,536) (3,582) Bonds issued 37,015 41,959 94,559 31,835 Payment to Escrow Agent Capital leases 271 1,568 Other (15,926) (8,005) (40,695) 200 Total other Financing Sources(uses) 21,720 35,108 56,492 33,365 Net change in fund balances $ 80 $ 13,376 $ 49,043 $ 14,788 Debt service as a percentage of noncapital expenditures 22.1% 21.2% 26.4% 24.5% a Due to implementation of GASB 61,the City's component units are now considered blended component units versus discretely presented as in years prior to fiscal year 2013. 126 2009 2010 2011 2012 2013' 2014 $ 31,349 $ 32,856 $ 33,454 $ 34,362 $ 54,475 $ 57,378 14,218 13,578 13,983 15,632 24,942 27,295 5,075 5,426 5,605 5,817 5,999 6,484 2,079 1,807 1,721 2,320 2,989 4,149 2,325 2,475 2,895 3,374 3,534 3,121 8,885 9,328 11,687 11,891 12,982 13,078 1,375 591 156 92 154 254 7,589 3,689 2,199 3,089 4,595 2,541 8,980 982 1,560 2,541 7,973 4,157 81,875 70,732 73,260 79,118 117,643 118,455 8,412 8,527 10,866 7,784 7,958 8,027 22,310 23,784 23,926 25,372 26,204 29,171 12,051 7,108 6,505 5,533 7,812 8,121 3,386 3,839 3,376 4,246 3,523 3,960 5,789 6,305 7,539 7,499 7,244 7,816 17,414 25,248 5,482 6,200 8,217 9,373 15,637 15,815 12,080 13,635 13,543 12,401 15,859 16,373 68,615 61,317 25,703 9,201 22,101 15,536 3,250 3,794 3,954 3,992 4,058 4,307 141,375 134,509 103,629 85,401 127,810 134,374 (59,500) (63,777) (30,369) (6,283) (10,167) (15,919) 3,246 3,498 3,525 5,909 15,515 16,507 (2,625) (2,312) (2,050) (5,096) (14,583) (16,967) 8,520 28,962 21,637 49,805 12,060 49,560 (1,630) (54,478) (33,182) 649 2,050 1,289 1,179 1,853 (54) 56 3.809 331 4,784 9,736 32,198 22,826 (5 I) 14,502 22,555 $ (49.764) S (;1.579) S (7543) $ (6.334) S 4,335 $ 6,636 24.1% 27.1"t0 27.9'n 28.3% 29.s 27.0% 127 CITY OF PEARLAND,TEXAS SPENDING AND GROWTH ANALYSIS Last Ten Fiscal Years Amounts in(000's) (Modified Accrual Basis of Accounting) Amounts in(000's) Expenditures 2005 2006 2007 2008 General Gov't $ 6,750 $ 6,430 $ 6,363 $ 7,406 Public Safety 11,081 12,870 14,598 19,604 Public Works 10,450 9,728 6,278 7,536 Coummunity Servies 171 3,787 3,102 3,426 Parks&recreation 2,576 3,358 4,908 6,605 Economic Development 16,528 10,670 14,391 16,899 Debt Service-principal 3,950 5,309 5,183 4,265 Debt service-interest 7,530 9,141 13,483 15,688 Capital outlay 28,661 36,706 28,530 27,777 Intergovernmental 1,084 8,8% 14,699 3,434 Total $ 88,781 $ 106,895 $ 111,535 $ 112,640 Distribution of Spending General Gov't 7.6% 6.0% 5.7% 6.6% Public Safety 12.5% 12.0% 13.1% 17.4% Public Works 11.8% 9.1% 5.6% 6.7% Coummunity Servies 0.2% 3.5% 2.8% 3.0% Parks&recreation 2.9% 3.1% 4.4% 5.9% Economic Development 18.6% 10.0% 12.9% 15.0% Debt Service-principal 4.4% 5.0% 4.6% 3.8% Debt service-interest 8.5% 8.6% 12.1% 13.9% Capital outlay 32.3% 34.3% 25.6% 24.7% Intergovernmental 1.2% 8.3% 13.2% 3.0% Total 100.0% 100.0% 100.0% 100.0% Per Capita Expenditures Adjusted for CP1 POPULATION 62,634 79,322 84,500 89,000 PER CAPITA $ 1,417.46 $ 1,347.61 $ 1,319.94 $ 1,265.62 CPI INDEX(NATIONAL) 195.29 201.59 207.34 215.30 PER CAPITA ADJ TO 2014 $ 1,703.85 $ 1,569.27 $ 1,494.42 $ 1,379.94 PER CAPITA ADJ TO 2005 $ 1,417.46 $ 1,305.49 $ 1,243.23 $ 1,147.99 128 1 Average Compounded 2009 2010 2011 2012 2013 2014 %CHG Growth Rate $ 8,423 $ 19,561 $ 10,877 $ 7,797 $ 7,958 $ 8,027 18.9% 1.94% 22,310 23,784 23,926 25,372 26,204 29,171 163.3% 11.35% 12,051 7,108 6,505 5,533 7,812 8,121 -22.3% -2.76% 3,386 3,839 3,376 4,246 3,523 3,960 2215.6% 41.78% 5,789 6,305 7,539 7,499 7,244 7,816 203.4% 13.13% 18,730 15,426 17,391 20,397 17,414 25,248 52.8% 4.82% 7,517 8,525 10,847 12,893 15,637 15,815 300.4% 16.67% 15,704 17,096 17,154 15,534 15,859 16,373 117.4% 9.01% 75,490 64,563 25,768 9,201 22,101 15,536 -45.8% -6.58% 7,630 4,234 4,127 4,158 4,058 4,307 297.4% 16.57% $ 177,030 $ 170,441 $ 127,510 $ 112,630 $ 127,810 $ 134,374 51.4% 4.71% 4.8% 11.5% 8.5% 6.9% 6.2% 6.0% 12.6% 14.0% 18.8% 22.5% 20.5% 21.7% 6.8% 4.2% 5.1% 4.9% 6.1% 6.0% 1.9% 2.3% 2.6% 3.8% 2.8% 2.9% 3.3% 3.7% 5.9% 6.7% 5.7% 5.8% 10.6% 9.1% 13.6% 18.1% 13.6% 18.8% 4.2% 5.0% 8.5% 11.4% 12.2% 11.8% 8.9% 10.0% 13.5% 13.8% 12.4% 12.2% 42.6% 37.9% 20.2% 8.2% 17.3% 11.6% 4.3% 2.5% 3.2% 3.7% 3.2% 3.2% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Ave rage Compounded Growth Rate 92,600 94,100 97,200 99,800 104,100 1 06,900 6.12% $ 1,911.77 $ 1,811.28 $ 1,311.83 $ 1,128.56 $ 1,227.76 $ 1,257.00 -1.33% 214.54 218.06 224.94 229.59 232.96 234.75 2.07% $ 2,091.89 $ 1,949.95 $ 1,369.05 $ 1,153.90 $ 1,237.21 $ 1,257.00 -3.32% $ 1,740.27 $ 1,622.19 $ 1,138.93 $ 959.95 $ 1,029.25 $ 1,045.72 -3.32% 129 CITY OF PEARLAND,TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Nine Fiscal Years Real Prole rt Tax Less Tax Exempt Fiscal Year Year Residential ( ommcrcial Personal Property Real Property 2006 2005 $ 2,689,041,440 $ 1,072,417,312 $ 309,552,190 $ 270,175,010 2007(I) 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 4,673,324,8% 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 2013(2) 2012 5,042,965,503 1,954,587,058 612,564,952 617,274,555 2014 2013 5,530,854,515 1,966,675,342 614,461,500 627,308,465 Notes: Assessed valuation for fiscal year 2007 does not include Brazoria County Mud#1 valuation of (1) $241,248,630 that was annexed into the City on December 31,2006. Assessed valuation for fiscal year 2013 does not include Brazoria County Mud#4 valuation of (2) $241,712,166 that was annexed into the City on December 31,2012. Assessed value based on adjusted taxroll at year end. 130 Assessed Value Less Other as 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 I00% 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% 454,866,920 6,537,976,038 0.7051 6,537,976,038 100% 487,709,374 6,996,973,518 0.7051 6,996,973,518 100% 131 (This page intentionally left blank.) 132 CITY OF PEARLAND,TEXAS PER CAPITA,HOUSEHOLD,SQUARE MILE FOR BENCHMARK CITIES OF TAXABLE PROPERTY Fiscal Year 2014 Total Taxable Value per Capita Cary,NC $157,118 Frisco,TX I $146,514 Sugar Land,TX , $127,067 Rancho Cucamonga,CA $116,361 Plano,TX $96,110 McKinney,TX $86,040 Pearland,TX $74,587 League City,TX $64,956 Franklin,TN - $49,894 Olathe,KS Il• $11,206 $0 $40,000 $80,000 $120,000 $160,000 Total Taxable Value per Household Frisco,TX $439,576 Cary,NC I $433,665 Sugar Land,TX I $392,732 Rancho Cucamonga,CA I $358,464 McKinney,TX $265,381 Plano,TX $256,763 Pearland,TX $218,182 League City,TX $179,758 Franklin,TN $127,281 Olathe,KS 1♦ $31,872 $0 $100,000 $200,000 $300,000 $400,000 $500,000 • Taxable Value per Square Mile Rancho Cucamonga,CA $487,582,736 •• Cary,NC $399,386,415 Plano,TX $355,228,600 Sugar Land,TX $314,821,735 Frisco,TX $257,811,478 McKinney,TX $186,066,086 Pearland,TX - $144,715,149 League City,TX ' $101,690,909 Franklin,TN $78,482,619 Olathe,KS ■ $23,561,100 $0 $200,000,000 $400,000,000 $600,000,000 Notes: Data from Community Development Strategies Survey 133 CITY OF PEARLAND,TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years (rate per$100 ofassessed value) City Direct Rates Overlapping, Rues Pearland Pasadena Alvin independent Independent Independent Alvin Fort Port of Fiscal M&0 I&5 Total School School School Comm Brazoria Bend Harris Houston Year Rate Rate Direct District District District College County County County Authority 2005 $0.339 $0.356 $ 0.695 $ 1.792 $ $ $0.241 $0.422 $ 0.500 $ 0.400 $ 0.017 2006 0.345 0.329 0.674 1.792 0.238 0.408 0.517 0.400 0.015 2007 0.299 0.354 0.653 1.662 1.350 1.546 0.220 0.382 0.517 0.402 0.013 2008 0.250 0.402 0.653 1.427 1.350 1.328 0.210 0.311 0.517 0.392 0.014 2009 0.220 0.433 0.653 1.419 1.350 1.328 0.200 0.330 0.500 0.391 0.018 2010 0.220 0.433 0.653 1.419 1.350 1.304 0.200 0.366 0.500 0.392 0.016 2011 0.215 0.450 0.665 1.419 1.350 1.304 0.200 0.403 0.500 0.388 0.021 2012 0.215 0.470 0.685 1.419 1.350 1.344 0.199 0.413 0.500 0.391 0.019 2013 0.215 0.490 0.705 1.419 1.350 1.329 0.200 0.426 0.500 0.400 0.020 2014 0.215 0.490 0.705 1.416 1.350 1.329 0.194 0.492 0.500 0.415 0.017 Source:Brazoria County,Harris County,and Fort Bend County Appraisal District. Overlapping rates are those of local and county governments that apply to property owners within the City of Pearland.Not all overlapping rates apply to all Pearland property ownerss;for example,although the county property tax rates apply to all. 134 Harris Hai is I l:u,i, Brazoria/ County Count'. (ounth Ft Bend Flood Hospital Dept of MUD MUD MUD MUD MUD MUD MUD MUD MUD Control District Education No.1 No.17 No.18 No.19 No.23 No.26 No.28 No.34 No.35 $ 0.033 $0.190 $0.006 S $0.750 $0.650 0.800 0.850 0.850 $ 0.820 $ 0.850 $ 0.033 0.192 0.006 0.850 0.750 0.640 0.800 0.850 0.850 0.820 0.850 0.032 0.192 0.006 0.850 0.750 0.610 0.780 0.850 0.770 0.820 0.850 0.031 0.192 0.006 0.850 0.730 0.590 0.680 0.850 0.710 0.820 0.850 0.850 0.031 0.192 0.006 0.850 0.630 0.570 0.660 0.820 0.710 0.820 0.850 0.890 0.029 0.192 0.060 0.850 0.600 0.560 0.630 0.800 0.710 0.820 0.850 1.020 0.029 0.192 0.007 0.850 0.547 0.550 0.620 0.770 0.710 0.820 0.850 1.020 0.028 0.192 0.007 0.850 0.547 0.545 0.600 0.630 0.690 0.820 0.850 1.020 0.028 0.182 0.007 0.850 0.547 0.530 0.580 0.610 0.690 0.820 0.850 1.020 0.028 0.170 0.006 0.850 0.544 0.510 0.550 0.600 0.690 0.820 0.850 1.020 135 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 2005 $ 21,073,788 $ 20,576,812 97.64% $ 477,235 $ 21,054,047 99.9% 2006 24,284,597 23,690,031 97.55% 564,465 24,254,496 99.9% 2007 28,819,229 28,235,276 97.97% 555,538 28,790,814 99.9% 2008 35,035,569 34,461,652 98.36% 563,405 35,025,057 100.0% 2009 38,368,354 37,820,603 98.57% 516,212 38,336,815 99.9% 2010 41,081,407 40,590,543 98.81% 425,209 41,015,752 99.8% 2011 41,968,046 41,594,389 99.11% 278,859 41,873,248 99.8% 2012 43,441,792 43,110,373 99.24% 249,826 43,360,199 99.8% 2013 45,850,625 45,509,522 99.26% 200,552 45,710,074 99.7% 2014 49,096,473 48,802,720 99.40% 48,802,720 99.4% Source:Brazoria County Tax Office Taxes levied based on adjusted tax roll. 136 CITY OF PEARLAND,TEXAS PRINCIPAL PROPERTY TAX PAYERS Current Year and Nine Years Ago 2014 2005 Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Weatherford U.S.,Inc. $ 69,914,860 1 1.00% $ Pearland Town Center LP 66,757,240 2 0.95% Global Pipe Supply 51,522,280 3 0.74% Amreit SPF Shadow Creek,LP 47,959,306 4 0.69% Centerpoint Energy,Inc. 32,832,920 5 0.47% Shadow Creek Parkway 27,100,030 6 0.39% Discovery Shadow Creek 25,330,000 7 0.36% Shadow Kirby LTD Partnership 25,000,000 8 0.36% Walmart Real Estate BUS TR 23,179,360 9 0.33% 12,428,460 2 0.45% FICA Healthcare Corp 18,981,110 10 0.27% Lowe's Home Centers,Inc. 13,731,150 1 0.50% Home Depot 9,756,700 3 0.35% Walmart Stores,Inc. 7,855,740 4 0.28% CFPI LP 6,488,200 5 0.23% Home Depot USA,Inc. 6,410,390 6 0.23% HD Development Properties,LP 6,117,950 7 0.22% Walmart Stores,Inc. 5,920,880 8 0.21% WC Properties,LTD 4,679,450 9 0.17% Walmart Stores,Inc. 4,099,890 10 0.15% Total $ 388,577,106 5.55% $ 77,488,810 2.80% Source:Brazoria County Appraisal District 137 CITY OF PEARLAND,TEXAS TAXABLE SALES BY CATEGORY Last Ten Calendar Years (in thousands of dollars) 2005 2006 2007 2008 Retail Trade $ 370,665 $ 464,850 $ 536,352 $ 667,470 Accommodations& Food Services 80,185 95,154 107,850 127,994 Real Estate/Rental/Leasing 18,629 33,329 44,560 52,276 Manufacturing 41,057 46,241 50,134 47,447 Wholesale Trade 24,070 30,592 28,782 32,999 Other Services(Except Public Admin) 16,921 20,390 20,794 23,764 Information 7,203 8,553 10,086 12,567 Construction 13,234 18,348 16,232 17,496 Arts,Entertainment&Recreation 4,787 5,208 8,789 9,751 Mining,Quarrying,Oil and Gas 2,985 11,186 9,280 10,520 Admin/Support/Waste Mgmt/Remediation 13,688 8,060 9,209 12,656 Professional/Scientific/Technical 3,538 3,893 4,103 5,218 Health Care/Social Assistance 72 56 63 37 Finance,Insurance 1,811 1,722 1,038 1,469 Agriculture,Forestry,Fishing 283 453 473 675 Transportation/Warehousing 55 155 169 138 Educational Services 204 110 110 212 Utilities 7 3 6 Management of Companies/Enterprises 2,278 1,161 2,594 Other 13 2 Total $ 601.677 $ 748,310 S 849.188 $1,025,289 City direct sales tax rate b 1.00% 1.00% 1.00% 1.00% Source: State Comptroller's Office. a 2014 taxable sales thru 2nd quarter of 2014. 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. 138 Calendar Year 2009 2010 2011 2012 2013 2014' $ 699,338 $ 673,714 $ 697,419 $ 764,460 $ 829,666 $ 393,002 146,598 155,345 172,126 198,439 216,155 117,241 38,924 46,811 48,059 61,690 56,079 27,978 31,243 39,582 49,474 48,213 34,598 20,705 25,954 30,730 33,163 33,566 34,358 19,925 23,670 25,114 29,557 30,669 34,175 18,687 14,413 15,672 16,896 19,194 24,387 15,155 14,372 15,537 17,558 23,181 24,370 12,285 9,909 11,315 11,511 12,710 13,570 7,294 3,355 3,246 3,316 3,726 12,893 6,762 11,670 10,650 11,004 12,696 13,778 6,364 5,923 6,277 7,072 9,037 11,317 4,388 52 184 252 351 1,057 1,629 1,811 1,404 1,261 1,347 1,246 661 566 180 306 468 772 218 161 282 418 425 318 157 144 207 314 429 374 136 6 3 187 3 7 S1.028,107 S 1,036.253 S 1,099,893 S 1.220.603 $ 1.309.121 S 652.588 1.00') ) 1.00 1.00"/„ 1.00' 1.00 1.00 I I 139 CITY OF PEARLAND,TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years (dollars in thousands,except per capita) Goy e runic ntal Activities Business-Type Activities General Certificates Capital Permanent Capital Fiscal Obligation of Obligation Revenue Lease Revenue Improvement Lease Year Bonds Bonds Bonds Obligations Bonds Bonds Obligations 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 4,344 3,407 109,305 15,130 342 2013 236,199 64,690 75,125 3,681 105,690 14,020 253 2014 246,852 56,505 80,125 4,344 102,517 12,865 169 Note:Details regarding the city's outstanding debt can be found in the notes to the financial statements. *Due to implementation of GASB 61 in fiscal year 2013,the City's component units are now considered blended component units versus discretely as in years prior to fiscal year 2013.As such,the outstanding debt for the components units have been added.,however,the City,or primary government is not legally responsible for the payment of its debt. 140 Excluding Total Percentage Total Component Primary of Personal Per Units Government Income Capita Per Capita $ 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% 4,380 422,123 13.1% 4,230 499,658 14.1% 4,800 4,019 503,378 13.2% 4,709 3,859 141 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 Year Year Bonds Funds Debt Assessed Value Income a Capita a 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% 2,8% 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 2013 2012 314,909 4,643 310,266 4.7% 8.7% 2,980 2014 2013 316,222 4,536 311,686 4.5% 8.2% 2,916 Note: Details regarding the city's outstanding debt can be found in the notes to the financial a Population and personal income data can be found in demographic and economic statistics table. 142 CITY OF PEARLAND,TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT September 30,2014 Debt as of September 30, Overlapping Taxing Jurisdiction 2014 Percent Amount Alvin Community College District $14,380,000 27.15% $ 3,904,170 Alvin ISD 463,780,000 30.34% 140,710,852 Brazoria County 90,265,000 25.46% 22,981,469 Brazoria County MUD No. 17 26,990,000 100.00% 26,990,000 Brazoria County MUD No. 18 28,170,000 97.35% 27,423,495 Brazoria County MUD No. 19 34,825,000 100.00% 34,825,000 Brazoria County MUD No.23 16,530,000 100.00% 16,530,000 Brazoria County MUD No.26 41,235,000 100.00% 41,235,000 Brazoria County MUD No.28 22,820,000 100.00% 22,820,000 Brazoria County MUD No.34 28,205,000 100.00% 28,205,000 Brazoria County MUD No.35 8,815,000 100.00% 8,815,000 Brazoria-Fort Bend County MUD No. 1 62,105,000 60.32% 37,461,736 Fort Bend County 448,570,000 0.42% 1,883,994 Harris County(a) 2,396,117,860 0.14% 3,354,565 Harris County Dept.of Education 7,410,000 0.14% 10,374 Harris County Flood Control District 87,400,000 0.14% 122,360 Pasadena ISD 590,315,000 0.14% 826,441 Pearland 1SD 321,365,767 75.74% 243,402,432 Port of Houston Authority 702,379,397 0.14% 983,331 Total estimated Overlapping 662,485,219 The City $307,701,571 100.00% 307,701,571 Total Direct and Estimated Overlapping Debt S 970,186,790 Population 106,900 Per Capita Debt-Direct and Overlapping Debt $ 9,076 Source: Individual jurisdictions and/or Texas Municipal Reports. *Debt amounts are as of September 30,2014. (a) Harris County Toll Road Certificates are considered self-supporting and are not included in the amount shown for Harris County. 143 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 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 2013 29,607 17,423 12,184 3,615 4,724 8,339 1.46 2014 29,341 17,707 11,633 3,765 4,584 8,349 1.39 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.Debt service excludes Permanent Improvement Bonds paid with system revenues,as those bonds do not require bond coverage. 144 CITY OF PEARLAND,TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Education Per Capita level in School Fiscal Personal Income Personal Medan Years of I'm rollnient Unemployment Year Population(A) (in$000's) Income(B) Age(B) Schooling (C) Rate(D) 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% 2013 104,100 3,555,431 34,154 34.4 14.2 23,771 5.0% 2014 106,900 3,822,958 35,762 34.6 14.2 23,075 4.3% (A)Estimated (B) Pearland Economic Development Corporation (C)Texas Education Agency (D) Bureau of Labor Statistics *Information not presented is not avaialble. 145 (This page intentionally left blank.) 146 CITY OF PEARLAND,TEXAS PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2014 2005 Percentage Pe rce ntage of Total City o f Total City Employer Employees Rank Employment Employees Rank Employment Pearland ISD 2,472 1 5.42% 1,820 1 7.26% Kelsey Seybold 850 2 1.86% City of Pearland 614 3 1.35% 420 3 1.67% Kemlon 390 4 0.86% 185 6 0.74% Alvin ISD 352 5 0.77% Davis-Lynch(Forum Energy Tech.' 300 6 0.66% Packaging Service Co. 230 7 0.50% Texas Honing 190 8 0.42% TurboCare 175 9 0.38% 175 7 0.70% Weatherford 160 10 0.35% 250 4 1.00% Wal-Mart 800 2 3.19% Randall's 250 5 1.00% Super Target 150 8 0.60% Tele-flow 140 9 0.56% Lowes 132 10 0.53% Total 5,733 12.57% 4.322 17.23% Sources: Pearland Economic Development Corp. 147 CITY OF PEARLAND,TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY Ft NCTION/PROGRA .1 Last Ten Fiscal Years 2005 2006 2007 2008 2009 2010 2011 Function/Program Governmental Activities: General Government 42 49 51 55 55 57 57 Public Safety 170 184 205 242 253 264 276 Public Works 43 44 47 45 47 47 45 Community Services 41 47 50 51 52 47 45 Parks and Recreation 58 52 59 68 72 99 105 Business Type Activities: Water&Sewer 62 76 78 77 82 82 87 Component Unit: Economic Development 4 4 4 5 5 6 5 Total 420 456 494 543 564 601 619 Source: City Budget 148 2012 2013 2014 56 44 48 286 295 315 31 57 60 56 51 53 109 101 99 90 99 104 5 5 5 633 652 684 149 CITY OF PEARLAND,TEXAS OPERATING INDICATORS BYFUNCTION/PROGRAM Last Ten Fiscal Years Fiscal 1'car 2005 2006 2007 2008 2009 2010 Function/Program GENERAL GOVERNMENT Finance Number of purchase orders 3,183 3,085 3,475 3,552 3,264 2,913 Number of budget transfers 117 226 194 398 406 470 Number of invoices paid 21,180 22,438 22,279 23,434 23,259 21,632 Average number of employees paid per month 930 984 1,026 1,185 1,230 1,220 Human Resources Number of hires 77 95 97 109 90 91 Number of applications received 3,138 2,808 3,074 2,495 3,137 3,880 Legal Number of resolutions and ordinances prepare 234 295 269 293 266 229 Information Technology Average monthly service requests 350 370 486 616 649 734 Number of PC's supported 205 220 354 386 394 429 PUBLIC SAFETY Police Number of police calls resulting in dispatch 27,443 30,496 32,747 34,865 37,440 35,676 Total police arrests made 3,753 4,809 5,053 4,424 5,188 5,986 Dispatched calls per patrol officer 704 555 544 592 576 513 Commercial vehicles equipment violations 1,015 1,069 980 860 711 672 UCR Part I cases assigned(I) 418 366 371 349 629 2,003 Fire Total number of arson incidents 4 11 21 9 8 5 Fires investigated 70 120 96 28 33 22 Total annual inspections 965 1,307 2,333 2,677 2,374 1,752 Total calls for service(2) 1,168 1,188 1,202 2,215 2,432 2,416 EMS Total calls for service 3,941 4,290 5,372 6,029 6,411 6,472 Patients treated 3,848 4,048 4,983 5,529 5,804 5,619 PUBLIC WORKS Fleet Maintenance Fleet maintenance jobs completed 3,950 4,778 4,686 4,153 3,063 2,394 Preventative maintenance performed 2,251 1,815 1,889 1,756 1,998 1,741 Other Public Works Fuel issued(gallons) 220,000 303,930 318,587 343,865 313,5% 354,422 Street sweeping(miles) 790 790 583 2,324 2,561 2,239 Street signs maintained/replaced 1,170 1,725 1,404 1,288 2,864 2,049 Total work orders completed 19,327 21,181 19,961 18,723 20,213 18,632 150 page 1 of 2 Fiscal Year 2011 2012 2013 2014 2,679 2,415 2,671 2,640 427 429 465 548 21,000 20,768 23,512 21,486 1,438 1,481 1,527 1,548 131 112 94 98 3,299 4,936 7,642 8,507 205 220 254 243 815 832 843 838 439 448 454 575 39,815 42,318 47,200 45,500 6,218 6,525 7,642 7,081 606 625 659 550 852 900 810 598 3,304 1,836 2,094 1,900 2 2 6 7 25 18 16 25 1,380 1,537 1,958 1,644 2,621 2,826 3,369 7,602 7,055 7,668 7,420 7,446 6,121 6,537 6,537 6,936 3,410 3,581 3,817 3,860 747 682 611 610 361,464 377,754 350,186 353,890 1,299 1,079 1,155 871 1,588 1,090 884 993 16,834 17,803 18,346 21,212 151 CITY OF PEARLAND,TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM Last Nine Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 2010 (unction/Program(continued) P:1I4 KS AND RECREATION .VI Parks and recreation ROW maintained-acres N/A 478 385 210 228 245 Trees maintained 3,450 3,450 4,280 5,000 5,004 5,800 Acres of city property mowed N/A 167 439 470 851 1,301 Total number of parkwork orders received N/A 227 361 316 275 252 Parkland-acres(3) N/A 175 175 180 138 139 Total number of special events held 24 20 25 25 25 24 Total number of tournaments held N/A 19 25 9 6 9 Number of recreation classes offered(4) 1,170 1,189 1,222 1,083 855 307 Average monthly attendance(all locations)(A 5,977 6,723 7,988 7,607 3,623 11,823 COMMUNITY SERVICES Aninal Control Number of animals at shelter 2,228 2,898 3,068 2,947 2,868 2,532 Total number of calls for service 5,443 4,600 6,099 4,296 3,529 4,206 Inspection Services Total building inspections 53,924 36,724 31,004 34,773 24,834 21,753 Total code violation cases 2,792 2,739 3,962 3,629 4,274 3,433 Total permits issued 15,289 14,889 13,769 9,878 9,249 7,874 Number of plans reviewed 3,026 2,682 3,055 1,309 925 969 Municipal Court Number of trials 2,800 1,952 2,305 1,616 1,391 402 Number of charges 18,275 22,185 20,481 19,666 24,400 24,657 Warrants cleared N/A N/A 3,596 6,402 7,374 8,692 WATER&SEWER Distribution and Collection Fie hydrant maintenance and inspections(6) 1,967 99* 537 740 451 402 Backed up sewer repairs 278 251 330 393 270 325 Water mains repaired 71 129 108 160 168 82 Water Production Water produced-wells (in millions of gallons) 1,925 2,044 1,597 2,128 2,574 3,065 Surface Water Purchased (intuitions of gallons) 683 967 1,121 1,147 1,146 634 Billing&Collections Annual meter reads 211,956 234,875 285,930 325,471 340,281 344,618 Number of bills 192,014 248,848 293,833 318,160 325,201 336,668 Wastewater Treatment Wastewater treated (in millions of gallons) 1,398 1,668 2,305 2,096 2,106 2,361 Sources:Various city departments. Information not presented was not available at tine of publication. 1UCR method of reporting was terminated after 2009. Effective 2010,Incident Based Reporting (IBR)is used. 2First Responders calls to Fire Department are included in this number.Fist Responder calls increased from 1,492 in FY 13 to 5,422 in FY I4. 3Prior to 2009,Parkland acres included medians and Wastewater Treatment Plants. After 2009, reported under total acres of city property maintained. 4 Prior to 2010,individual music classes were included in the total recreation classes held Program was cancelled. 5In FY 2010,a new facility,Recreation Center/Natatorium,opened. 61n Water&Sewer,Distribution and Collection fre hydrant maintenance and inspections is contracted out.During FY06,the contractor's services were disrupted by a storm. 152 page'of2 Pis cal 1'car 2011 2012 2013 2014 255 251 251 251 6,327 6,157 6,312 6,313 1,331 1,380 1,035 1,035 249 230 140 180 139 138 138 138 21 22 22 20 11 2 1 3 459 486 281 272 16,116 18,378 18,980 21,366 2,685 2,220 2,375 2,176 4,346 4,326 5,236 6,114 19,244 22,416 26,274 28,434 2,860 1,952 2,244 2,140 7,869 8,696 10,630 13,972 917 1,050 939 1,185 688 1,116 885 839 26,369 30,187 27,439 23,182 8,204 10,080 10,328 9,050 395 887 1,399 837 310 275 286 334 410 283 380 I11 3,869 2,916 2,859 2,470 968 1,321 1,816 2,133 364,424 370,755 403,220 414,499 350,871 359,716 387,997 388,338 1,943 2,364 2,530 2,493 153 CITY OF PEARLAND,TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Function/Program PUBLIC SAFETY Police Police stations 1 I I I 1 I 1 1 1 1 Police vehicles 109 112 117 126 130 138 142 155 157 161 Fire Fine stations 4 4 4 4 4 4 5 6 6 6 Fire vehicles 15 16 16 17 17 17 22 23 26 26 EMS EMS Stations* 3 3 3 3 3 3 3 4 5 1 EMS Ambulances 5 5 5 6 8 8 8 8 9 9 PUBLIC WORKS Other public works Streets(mks)** 248 578 758 773 807 807 806 806 839 844 Vehiclelnventory*** N/A 342 405 360 333 355 363 385 374 375 Traffr signals 47 48 57 67 71 80 62 74 81 81 PARKS AND RECREATION Packs and recreation Developed acreage**** 124 175 175 180 138 139 139 138 138 138 Pools 1 I I I I 3 3 3 3 3 Outdoor basketball courts N/A 10 10 10 10 10 10 6 6 6 Soccer fields N/A 12 12 12 12 12 12 12 12 12 Activity buildings 3 3 3 3 3 4 4 3 3 3 Baseball/Softball Fields 4 4 4 4 4 4 4 4 4 4 WATER AND SEWER Water Production Water wells 9 9 10 I I 11 1 1 11 I I 10 10 Pumping stations 2 2 2 2 2 2 2 3 3 3 Ground storage tanks 13 15 15 15 15 15 15 15 15 15 Elevated towers 4 5 5 5 5 6 6 6 6 6 Wastewater Treatment Plants 4 4 5 5 5 5 5 5 5 5 Lift Stations 78 74 78 76 78 78 80 80 75 76 Distribution and Collection Water mains(Mks) 296 361 395 410 420 433 443 448 469 488 Sanitary sewers(mks) 279 321 353 360 370 378 380 382 400 415 Sources:Various city departments. Note:No capital asset indicators arc available for the general government and comrunity services functions. Information not presented was not available at time of publication. *EMS and Fire Departments merged in FY 2014 and EMS locations are now included with Fire stations,except in one location. **Inside city Units. Prior to FY07,street miles were measured visually.Beginning FY07,a GIS system was used to measure street miles. Ahhough new streets were added in FY201I,an audit of the database resulted in the elimination of some street miles previously reported. ***Decrease in inventory reflects surplus of vehicles auctioned off.Increases reflect new purchases,which nay offset with those sold. those sold.Vehicle inventory includes public safety revenues. ****Prior to 2009,Parkland acres included medians and Wastewater Treatment Plants. 154