12-22 - R TOWN OF PROSPER,TEXAS RESOLUTION NO. 12-22
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, HEREBY ACCEPTING THE TOWN'S 2010-2011
FISCAL YEAR INDEPENDENT AUDIT REPORT AND
COMPREHENSIVE ANNUAL FINANCIAL REOPRT AS PRESENTED
BY DAVIS KINARD & CO, P.C., CERTIFIED PUBLIC ACCOUNTANTS
ON MARCH 27,2012; AUTHORIZING PUBLICATION OF THE AUDIT.
WHEREAS, the Town Council is required by Section 7.18 of the Town Charter to call
for an Independent Audit to be made of all accounts of the Town at the close of each fiscal year, a
report of which is to be presented to the Town Council.
WHEREAS, Town Staff engaged Davis Kinard & Co. P.C. to complete the Town's
Fiscal Year 2010-2011 Independent Audit.
WHEREAS, a copy of the Independent Audit and accompanying Financial Statements
for the 2010-2011 Fiscal Year were received and reviewed by Town Staff.
WHEREAS, the Town Charter requires that upon completion of the audit, a copy of
the audit shall be posted to the Town's website and copies placed on file in the office of
the person performing the duties of Town Secretary, as a public record.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS:
SECTION 1: The Town Council of the Town of Prosper, Texas, hereby accepts the
Town's 2010-2011 fiscal year financial audit as presented by Davis Kinard & Co., P.C., Certified
Public Accountants on March 27, 2012.
SECTION 2: A copy of the completed audit shall be published immediately on the
Town website and copies of the audit placed on file in the office of the person performing
the duties of Town Secretary, as a public record.
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COMPREHENSIVE
ANNUAL FINANCIAL
REPORT
FOR FISCAL YEAR ENDED
SEPTEMBER30 , 2011
• TOWN OF PROSPER, TEXAS
• "PROSPER IS A PLACE WHERE EVERYONE MATTERS"
Town of Pros er, Texas
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"PROSPER IS A PLACE WHERE EVERYONE MATTERS"
Comprehensive Annual Financial Report
For the Fiscal Year Ended September 30, 2011
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Prepared by the
Finance Department
Matthew B. Garrett, MBA, CGFO — Finance Director
Ronald V. Butler, MBA— Comptroller
Town Manager
Mike Land
Town Council
Ray Smith, Mayor
Kenneth Dugger, Mayor Pro-Tern
Meigs Miller, Deputy Mayor Pro-Tem
Dave Benefield, Council Member
Curry Vogelsang Jr. ,. Council Member
Danny Wilson , Council Member
Jason Dixon, Council Member
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TOWN OF PROSPER, TEXAS
"PROSPER IS A PLACE WHERE EVERYONE /MATTERS"
WWW.1)R0SI"ERTX.GOV
P1n,s1c',jL: 121 W. BROADWAY MAILING: Y.O. Box 307
PROSPu:R, "TX 75078 PROSPER, TX 75078
N.
TOWN OF PROSPER,TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30,2011
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letterof Transmittal........................................................................................................................................................ 3
Certificateof Achievement............................................................................................................................................... 8
OrganizationalChart....................................................................................................................................................... 9
Listof Principal Officials................................................................................................................................................. 10
FINANCIAL SECTION
IndependentAuditor's Report......................................................................................................................................... 14
Management's Discussion and Analysis......................................................................................................................... 16
Basic Financial Statements:
Government-Wide Financial Statements:
Statementof Net Assets........................................................................................................................................ 24
Statementof Activities......................................................................................................................................... 25
Fund Financial Statements:
Balance Sheet—Governmental Funds.................................................................................................................. 27
Reconciliation of Balance Sheet—Governmental Funds to the Statement of Net Assets.................................... 29
Statement of Revenues,Expenditures and Changes in Fund Balances—Governmental Funds........................... 30
Reconciliation of Revenues,Expenditures and Changes in Fund Balances—Governmental Funds to the
Statementof Activities...................................................................................................................................... 34
Statement of Revenues,Expenditures and Changes in Fund Balance-
Budget(GAAP Basis)and Actual—General Fund........................................................................................... 35
Statement of Net Assets—Proprietary Funds....................................................................................................... 36
Statement of Revenues,Expenses,and Changes in Fund Net Assets—Proprietary Funds.................................. 37
Statement of Cash Flows—Proprietary Funds ..................................................................................................... 38
Notesto Financial Statements................................................................................................................................... 39
Required Supplemental Information:
Statement of Revenues,Expenditures,and Changes in Fund Balance
Budget(GAAP Basis)and Actual—Impact Fee Fund...................................................................................... 58
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet—Nonmajor governmental funds................................................................................ 59
Combining Statement of Revenues,Expenditures and Changes in Fund Balance-
NonmajorGovernmental Funds....................................................................................................................... 60
Schedule of Revenues,Expenses and Changes in Net Assets
Budgetand Actual—Utility Fund..................................................................................................................... 61
I
TABLE OF CONTENTS
(continued)
STATISTICAL SECTION
Financial Trends:
NetAssets by Component.................................................................................................................................... 66
Changesin Net Assets.......................................................................................................................................... 67
Governmental Activities Tax Revenues by Source.............................................................................................. 68
Fund Balances of Governmental Funds................................................................................................................ 69
Changes in Fund Balances of Governmental Funds............................................................................................. 70
Revenue Capacity:
General Governmental Tax Revenues by Source................................................................................................. 71
Property Tax Rates—Direct and Overlapping Governments............................................................................... 72
PropertyTax Levies and Collections.................................................................................................................... 73
PrincipalProperty Taxpayers............................................................................................................................... 74
Debt Capacity:
Ratiosof Outstanding Debt by Type.................................................................................................................... 75
Pledged-Revenue Coverage.................................................................................................................................. 76
Water,Wastewater and Solid Waste Revenues.................................................................................................... 77
Demographic and Economic Information:
PrincipalEmployers............................................................................................................................................. 78
Operating Information:
Operating Indicators by Function/Program.......................................................................................................... 79
Full-Time Equivalent Town Government Employees by Function...................................................................... 80
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TOWN OF
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INTRODUCTORY
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PISPER
OWN OF
"A Place Where Lver`olle NNatters`
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March 21, 2012
To the Honorable Mayor and Town Council, and
Citizens of the Town of Prosper, Texas
The Town's Management Staff is pleased to submit the Comprehensive Annual Financial
Report ("CAFR") of the Town of Prosper ("Town") for the fiscal year ending September 30,
2011. The Town's Management assumes responsibility for the accuracy of the data and the
completeness and fairness of the presentation, including all disclosures. To the best of our
knowledge and belief, the enclosed data is accurate in all material respects. The data is
reported in a manner designed to present fairly the financial position and results of operations
of the various funds of the Town. To enable the reader to gain an understanding of the
Town's financial activities, all necessary disclosures have been included.
The Town is required to obtain an annual audit of the books of account, financial records, and
transactions of all administrative departments of the Town. The Town's financial statements
have been audited by Davis Kinard & Co. PC, a firm of licensed certified public accountants.
The goal of the independent audit is to provide reasonable assurance that the financial
statements of the Town for the fiscal year ended September 30, 2011, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall
financial statement presentation. The independent auditor concluded based upon the audit,
that there was reasonable basis for rendering an unqualified opinion that the Town's financial
statements for the fiscal year ended September 30, 2011, are fairly presented in conformity
with Generally Accepted Accounting Principles ("GAAP"). The independent auditor's report is
presented as the first component of the financial section of this report.
The CAFR is prepared in accordance with GAAP in the United States of America established
by the Government Accounting Standards Board. The CAFR is presented in three sections:
introductory, financial, and statistical. The introductory section includes this transmittal letter,
the Town's organizational chart, and a fist of principal officials. The financial section includes
the management's discussion and analysis ("MD&A"), the government-wide and fund
financial statements, notes to basic financial statements, required supplemental information,
other supplemental information, as well as the independent auditors' report on the basic
financial statements. The statistical section includes selected financial and demographic
information which is presented on a multi-year basis.
The MD&A is a narrative introduction, overview, and analysis to accompany the basic
financial statements. The MD&A can be found immediately following the independent
auditors' report. This letter of transmittal is designed to complement the MD&A and should
be read in conjunction with the MD&A.
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The Reporting Entity
The Town is a political subdivision and a home rule municipality under the laws of the State.
The Town was incorporated in 1914. The Town operates with a Town Council comprised of
the Mayor and six Councilmembers. The term of office is three years. The Town Manager is
the chief executive officer for the Town. Some of the services that the Town provides are:
public safety (police, fire protection, dispatch and municipal court), highways and streets,
water and sanitary sewer utilities, culture-recreation, code enforcement, library, public
improvements, planning and zoning, economic development and general administrative
services. Some technical services such as engineering, legal, information technology and
solid waste/recycling are outsourced in full or in part to the private sector.
The Town is located in North
Central Texas, and covers
approximately 27 square miles of
the Dallas/Fort Worth Metroplex
("DFW"). Prosper includes areas in
both Collin and Denton Counties,
with most of the Town's population
residing in Collin County. The Town
is positioned at the crossroads of
Preston Road and US Highway 380,
and is just five minutes north of the
bustling Dallas North Tollway cities
.. of Frisco and Plano.
• R,,. r The Town is bursting with pride for
its first rate education and state
° "°st' championship sports teams,
picturesque ranches and other
amenities. Access to the DFW area
coupled with a commitment to
maintain a high standard of living
have created substantial growth for
the Prosper community and this
growth is expected to turn up
sharply in the next few years.
A Home Rule Charter was approved by the qualified voters of the Town at an election held
November 7, 2006 and was recently revised on May 14, 2011. The Town covers
approximately 27 square miles. The 2000 Census population for the Town was 2,097, while
the estimated 2012 population is 11,600.
30,000
26,247
25,000 __-
21,692
4
20,000 - -- __ __- -- --- ;-
17,927
15,000 _- --- --- .. ----- -- --.--_14,291
10,55 11,600
0 -
10,000 _- -- - - __ -8923- -
6350
5250 ,
5,000
2097248003100 5� 675 1018
0
.t0 $O �O 00 O'L OP
ell 49 ,y0 'tit ,i'L tia ,ti0 � .LO
10 ti� ,loi ,y0 ,ti0 ,y0 , ,y0 ,y0 ,ti0 ,LO ,y0 ,y0 ,y0
Source:Census for available years.Population estimates to date are from North Central Teaas Council
of Governments,Future estimates are from Town of Prosper Staff
-4-
Prosper began with the first settlers arriving in this area in 1846. Those who settled here
were drawn to North Texas' black prairie soil - rich, fertile land that nurtured a thriving cotton
crop in a time when cotton was "King". Between 1850 and 1902, two settlements coexisted.
One community, two miles south of the present town, was called Rock Hill. The second
community, one mile north, was called Richland. The development of these small
communities was expedited in 1876 when County Courts ordered small tracts of land to be
established for quick sale. These tracts, each approximately 160 acres in size, were sold for
$3.50 per acre. Dr. A. T. Bryant of McKinney purchased one of the tracts, which later became
the geographic nucleus for the Town of Prosper.
The establishment of the St. Louis & San Francisco Railroad in March of 1902 created the
change that forced the communities of Rock Hill and Richland to merge forming the Town of
Prosper. For years, Prosper was the central stop for the railroad between Dallas and
Sherman. When community officials applied for a Post Office with the name "Richland", they
were informed that city name was already taken. Postmaster B.J. Naugle asked for an
alternative name and J.C. Slaughter suggested the name Prosper. A new name was adopted
for the hybrid community - one that spoke of the prosperous living conditions and the
prosperous crops harvested that year. And so it was that the town of Prosper was born.
The Town of Prosper was incorporated in 1914 with a commission form of government and a
population of 500. U.N. Clary was Mayor and served in that position for the next 49 years. It
served for decades as a market center for area farmers and their abundant cotton and corn
crops. From the mule drawn wagon and horse drawn buggy, the automobile evolved. Thus
began the evolution of people moving in and out of the rural community. Surviving the war
and the depression, the mechanization of farming provided the next big impact on Prosper's
population. In 1980, the introduction of light industry, combined with the growth of the
Metroplex, led to a comeback for Prosper.
To this day, Prosper has managed to retain its 19th century country charm, carefully
controlling its growth to that end. Unlike the bustling cities of Dallas, Plano and Frisco that lie
just a few miles south, Prosper is characterized by estate-size home sites, pristine rolling hills
and vast expanses of open land. Here, you'll discover an alluring lifestyle in beautiful homes
that populate quiet neighborhoods. Today, Prosper is the home to more than 100 businesses
and hundreds of new families.
The Economic Outlook
The Town continues to enjoy new home permits at a record pace and benefits tremendously
from its location. Prosper, while not immune from economic pressures, has been more
insulated than even most DFW communities. According to a recent Dallas Business Journal
article (January 2012), Prosper is listed as the fastest growing community in the region for
communities over 10,000 in
$1,40p.000 SaC0,000
population. The new homes ;
permitted in 2011 averaged si.2oo.ow
$310,000 in value and 4600 total
square feet. In July of 2010 D x1.000,000
Magazine rated Prosper as the
5th Best Suburb in the region. _ :1, 3,b: $200,D°°
$600.000 $1
-,98$1. ij.915
5150,000
Despite the good press for $400,000 57;,j1C
Prosper, uncertainty in the `019 $100,0W economy, valuations and growth $200,000 42.s5
550
52 ,96-S 19!5 LUC,
assumptions have conditioned $- s
staff to remain very conservative 2002 2003 2004 zoos 2006 2007 2008 2009 1010 2011
s a Cert,fied Net Assessed Taxable valuanons Avg Home Taxable Value
in forecasts. uses Aae approved Totals
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Fortunately, the Town maintained growth and benefitted from annexations above early
estimates in taxable valuation growth. Certified property valuations increased by $60M
(5.2%) for FY 2011-2012. Property values increased from $1,145.8M to $1,205.8. While the
growth in total certified property valuations continues to increase, existing property values
remain relatively flat, with most of the increase coming from new construction or annexations.
Most of the Town's current values come from Collin County properties, but the Denton
County portion of Prosper continue to increase.
The Town of Prosper Town Council continues its implementation of rate recommendations
that support the Town Council's adopted Water and Wastewater Utility Comprehensive
Business Plan. The Plan as adopted contains recommendations to enhance revenues, to
establish at least a 60 day operations and maintenance reserve and to fund an annual
contribution of 2%to a capital replacement program.
More detailed revenue information can be explored in the MD&A section of the financial
section of this CAFR.
The DFW Metroplex continues to outperform most other major metropolitan areas for job
growth and stability. Town staff believes that Prosper will maintain a steady economic uptick
and be poised for radical growth as construction picks back up.
Accounting System and Budgetary Control
Town management is responsible for establishing and maintaining an internal control
structure designed to ensure that the assets of the Town are protected from loss, theft, or
misuse. Management must also ensure that adequate accounting data is complied to allow
for the preparation of financial statements in conformity with GAAP. The internal control
structure is designed to provide reasonable, but not absolute, assurance that these objectives
are met. The concept of reasonable assurance recognizes that (1) the cost of a control
should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits
requires estimates and judgments by management. All internal control evaluations occur
within the above framework.
The Town's accounting records for general governmental operations are maintained on a
modified accrual basis, with revenues recognized when measurable and available, and
expenditures recorded when the liability is incurred. Proprietary operations are maintained
on a full accrual basis.
The objective of budgetary controls is to ensure compliance with legal provisions contained in
the annual budget approved by the Town Council. The budget is developed and controlled at
the department level, although appropriations are set at the fund level. The annual budget
serves as the foundation for the Town's financial planning and control. The budget is
prepared by Fund and department (e.g. police, fire, inspections). Department Heads may
transfer resources within a department with the Town Manager's approval. Any amendments
or additional funding requests for appropriations over that of the budgeted fund level total
need approval from the governing Council.
The accompanying CAFR incorporates all funds of the Town and includes all government
activities, organizations and functions for which the Town is financially accountable. The
criteria used in determining activities to be reported within the Town's basic financial
statements are based upon and consistent with those set forth by the Governmental
Accounting Standards Board.
Component units are legally separate organizations that a primary government must include
as a part of its financial entity. On May 6, 1995, Town of Prosper voters approved the 4A
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Sales Tax proposition which increased the sales and use tax by'/z of 1%for the promotion
and development of new and expanded business enterprises. The 4A funds account for the
local sales tax used to encourage additional private investment that will increase and diversify
the tax base, create jobs, lower residential taxes, increase the number of retail, commercial
and industrial companies locating to the Town and improve Prosper residents' quality of life.
The Corporation is town-chartered and governed by a 5-member Board of Directors
appointed by the Town Council. The Town has included financial statements for the Prosper
Economic Development Corporation in its government-wide financial statements.
Acknowledgements
The preparation of this report could not be accomplished without the efficient and dedicated
services of the Town Manager and Finance Department staff. We would like to express our
appreciation to all employees who contributed to its presentation. Acknowledgement is also
given to the representatives of Davis Kinard & Co. PC for their assistance in this year's report
with special thanks to Lori Herrick, the Audit Manager for this engagement.
Lastly, we would also like to thank the members of the Town Council for their interest and
support in planning and conducting the financial operations of the Town in a responsible and
progressive manner.
Respectfully submitted,
,r
Mike Land Matthew B. Garrett
Town Manager Finance Director
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
'own of Prosper
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30,2010
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports(CAFRs)achieve the highest
standards in government accounting
and financial reporting.
VA
M"D
DLVMTN S� - President
Executive Director
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TOWN OF PROSPER, TEXAS
ORGANIZATIONAL CHART _
FISCAL YEAR ENDED SEPTEMBER 20, 2011 `"
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TOWN OF PROSPER, TEXAS
LIST OF PRINCIPAL OFFICIALS
FISCAL YEAR ENDED SEPTEMBER 30, 2011
TOWN COUNCIL
MAYOR RAY SMITH
COUNCILMEMBER PLACE 1 DAVE BENEFIELD
COUNCILMEMBER PLACE 2, MAYOR PRO-TEM KENNETH RUGGER
COUNCILMEMBER PLACE 3 _Curry Vogelsang Jr.
COUNCILMEMBER PLACE 4, DEPUTY MAYOR PRO-TEM_MEIGS MILLER
COUNCILMEMBER PLACE S DANNY WILSON
COUNCILMEMBER PLACE 6 JASON DIXON
APPOINTED OFFICIALS
TOWN MANAGER MIKE LAND
CHIEF OF POLICE KIRK MCFARLIN
DIRECTOR OF DEVELOPMENT SERVICES HULON WEBB
DIRECTOR OF FINANCE MATTHEW GARRETT
DIRECTOR OF PUBLIC WORKS ,FRANK JAROMIN
FIRE CHIEF RONNIE TUCKER
TOWN SECRETARY AMY PIUKANA
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TOWN CJ F
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TOWN •
SP EIR
FINANCIAL
SECTION
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TOWN OF
SPER
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T�• First Financial Bank Building
400 Pine Street,Ste.600,Abilene,TX 79601
cr_nr�rrLn e�c�3cic.accot ,vr.�,vTS 325.672.4000/800.588.2525/f.325.672.7049
Quality.hztegrzty.Knowledge. wvvw.dkepa.com
INDEPENDENT AUDITOR'S REPORT
To the Honorable Mayor,
Members of the Town Council of the
Town of Prosper,Texas:
We have audited the accompanying financial statements of the governmental activities, the business-type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund information of the Town of Prosper,
Texas, as of and for the year ended September 30,2011,which collectively comprise the Town's basic financial statements as
listed in the table of contents. These financial statements are the responsibility of the Town of Prosper, Texas' management.
Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinions.
In our opinion,the financial statements referred to above present fairly,in all material respects,the respective financial position
of the governmental activities, business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the Town of Prosper,Texas,as of September 30,2011,and the respective changes in
the financial position and, where applicable,cash flows thereof and the budgetary comparison for the general fund for the year
then ended in conformity with accounting principles generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the management's discussion and
analysis and budgetary comparison information on pages 16 through 23 and 58 be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion 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.
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Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town
of Prosper,Texas' financial statements as a whole.The introductory section,combining and individual nonmajor fund financial
statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial
statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were
derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and other records used
to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America.In our opinion,the information is fairly stated in all
material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been
subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express
an opinion or provide any assurance on them.
DWW-;, "e0;-0(W
Certified Public Accountants
Abilene,Texas
March 12,2012
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TOWN OF PROSPER,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the Town of Prosper, Texas, we offer readers of the Town of Prosper's financial statements this narrative
overview and analysis of the financial activities of the Town of Prosper for the fiscal year ended September 30,2011.
Financial Highlights
➢ The assets of the Town of Prosper, on a government wide basis, exceeded its liabilities at the close of the most
recent fiscal year by$67,368,580(net assets). Of this amount, $15,047,809 (unrestricted net assets)may be used to
meet the government's ongoing obligations to citizens and creditors.
➢ The government's total net assets increased by$3,894,986. Most of the increase is due to property taxes,sales taxes
and impact and escrow fees.
➢ As of the close of the current fiscal year,the Town of Prosper's governmental funds reported combined ending fund
balances of$21,825,207 (made up of$5,568,868 in general fund, $6,895,458 in impact fee fund, $737,259 in debt
service fund, $5,348,151 in capital projects fund and $3,275,471 in other governmental funds), an increase of
$686,677 in comparison with the prior year. The increase is primarily due to an increase in general fund revenues
and decrease in the general fund and capital project fund expenditures. Approximately $3,959,464 is unassigned
and available for spending at the government's discretion.
➢ At the end of the current fiscal year, unassigned fund balance for the general fund was $3,959,464 or 49 percent of
total general fund expenditures.
➢ The Town's long-term liabilities increased by$175,708 during the year due mainly to issuance of a tax note in 2010
of$2,045,000.
➢ The Town's capital assets increased by $1,903,266 due to the completion of capital projects funded by prior year
bond proceeds.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Town of Prosper's basic financial statements. The
Town of Prosper's basic :nancial statements comprise three�nmtnnnPntc• 1) government-wide financial gtat'-Me 2) fiwnrd
r b , " .
financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in
addition to the basic financial statements themselves.
Government-wide financial statements-The government-wide financial statements are designed to provide readers with a
broad overview of the Town of Prosper's finances, in a manner similar to a private-sector business.
The Statement of Net Assets presents information on all of the Town of Prosper's assets and liabilities, with the difference
between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of
whether the financial position of the Town of Prosper is improving or deteriorating.
The Statement of Activities presents information showing how the government's net assets changed during the most recent
fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs,regardless
of the time of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only
result in cash flows in future fiscal periods(e.g.,uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the Town of Prosper that are principally supported
by taxes and intergovernmental revenues (governmental activities) from other 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
Town of Prosper include general government, public safety, public works, recreation, and transportation. The business-type
activities of the Town of Prosper include the water and sewer system, as well as sanitation collection and disposal and storm
drainage.
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The government-wide financial statements include not only the Town of Prosper itself(known as the primary government),
but also a legally separate economic development corporation. Financial information for this component unit is reported
discretely with the financial information presented for the primary government itself. The government-wide financial
statements can be found on pages 24-26 of this report.
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 Town of Prosper,like other state and local governments,uses
fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The funds of the Town of
Prosper 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 statements focus on near-term inflows and outflows 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 more narrow 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 fund balance sheet and the governmental fund statement
of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The Town of Prosper maintains six governmental funds. Information is presented separately in the governmental fund
balance sheet and statement of revenues, expenditures, and changes in fund balances for the general fund, impact fee fund,
debt service fund, and capital projects fund, all of which are considered to be major funds. Data from the two other
governmental funds are combined into a single, aggregated presentation. Individual fund data for both of these nonmajor
governmental funds is provided in the form of combining statements elsewhere in this report.
The Town of Prosper adopts an annual appropriated budget for its general fund and impact fee fund. Budgetary comparison
statements have been provided for these funds to demonstrate compliance with the budgets.
The basic governmental fund financial statements can be found on pages 27-35 of this report.
Proprietary funds-The Town of Prosper maintains two types of proprietary funds. Enterprise funds are used to report the
same functions presented as business-type activities in the government-wide financial statements. The Town of Prosper uses
an enterprise fimri to account for its water, sewer, sanitation and storm drainaoe activities_ Pronrietary funds provide the
same type of information as the government-wide financial statements, only in more detail. A budgetary comparison
statement for the enterprise fund can be found on page 61 of this report.
The internal service fund is used to accumulate and allocate costs internally among the Town's various functions. The Town
uses its internal service fund to account for its employee medical reimbursement program. Because these services
predominately benefit the governmental rather than the business-type functions, they have been included within
governmental activities in the government-wide financial statements.
The basic proprietary fund financial statements can be found on pages 36-38.
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 on
pages 39-57 of this report.
Other information - In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the Town of Prosper. The Town of Prosper adopts an annual appropriated
budget for its impact fee fund. A budgetary comparison statement has been provided for the impact fee fund to demonstrate
compliance with this budget. Required supplementary information can be found on page 58 of this report.
- 17-
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the
Town of Prosper, assets exceeded liabilities by$67,368,580 at the close of the most recent fiscal year.
A portion of the Town of Prosper's net assets (64 percent) reflects its investment in capital assets (e.g., land, buildings,
machinery,and equipment), less any related debt used to acquire those assets that are still outstanding. The Town of Prosper
uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the Town of Prosper'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.
An additional portion of the Town of Prosper's net assets (14 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets(22 percent)may be used to meet the
government's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the Town of Prosper is able to report positive balances in all categories of net assets,
both for the government as a whole,as well as for its separate governmental and business-type activities.
Town of Prosper's Net Assets
Government-Wide
Governmental Business-type
Activities Activities Total
(Restated)
2011 2010 2011 2010 2011 2010
Current and other assets $ 23,251,619 $ 21,971,319 $ 8,192,142 $ 6,598,009 $ 31,443,761 $ 28,569,328
Capital assets 55,417,682 52,897,488 18,794,474 19,411,402 74,212,156 72,308,890
Total assets 78,669,301 74,868,807 26,986,616 26,009,411 105,655,917 100,878,218
Longterm liabilities 23,6655644 22,734,835 13,195,901 13,951,002 36,861,545 36,685,837
Other liabilities 965,785 398,165 460,007 320,622 1,425,792 718,787
Total liabilities 24,631,429 23,133,000 13,655,908 14,271,624 38,287,337 37,404,624
Net assets:
Invested in capital assets,
net of related debt 37,347,057 37,271,055 5,615,024 5 704 234 42,9625081 42 975 5 289
Restricted 9,358,690 5,951,694 9,358,690 5,951,694
Unrestricted 7,332,125 8,513,058 7,715,684 6,033,553 15,047,809 14,546,611
Total net assets $ 54,037,872 $ 51,735,807 $ 13,330,708 $ 11,737,787 $ 67,368,580 $ 63,473,594
- 18-
Town of Prosper's Changes in Net Assets
Government-wide
Governmental Business-type
Activities Activities Total
(Restated)
2011 2010 2011 2010 2011 2010
Revenues:
Program revenues:
Charges for services $ 1,226,483 $ 1,069,437 $ 7,238,153 $ 5,393,026 $ 8,464,636 $ 6,462,463
Capital grants&contributions 2,907,683 3,797,279 2,907,683 3,797,279
Operating grants&contributions 349,877 950,869 349,877 950,869
General revenues:
Property taxes 5,986,296 5,504,833 5,986,296 5,504,833
Other taxes 1,745,171 1,810,301 1,745,171 1,810,301
Other income 738,336 618,537 100,509 113,176 838,845 731,713
Transfers 434,125 15,118 (434,125) (15,118) - -
Total revenues 13,387,971 13,766,374 6,904,537 5,491,084 20,292,508 19,257,458
Expenses:
General government 1,622,024 1,233,969 1,622,024 1,233,969
Police 1,115,837 1,074,133 1,115,837 1,074,133
Dispatch 472,774 328,702 472,774 328,702
Court 231,747 217,592 231,747 217,592
Fire 2,287,665 2,249,048 2,287,665 2,249,048
Streets 2,369,730 1,609,155 2,369,730 1,609,155
Parks and recreation 677,679 832,873 677,679 832,873
Library 69,748 84,574 69,748 84,574
Engineering 158,863 145,762 158,863 145,762
Code enforcement 416,793 132,958 416,793 132,958
Inspections 143,382 368,404 143,382 368,404
Planning 380,712 310,924 380,712 310,924
Interest on long-term debt 1,138,952 895,015 1,138,952 895,015
Utility 5,311,616 5,139,778 5,311,616 5,139,778
Total expenses 11,085,906 9,483,109 5,311,616 5,139,778 16,397,522 14,622,887
Change in net assets 2,302,065 4,283,265 1,592,921 351,306 3,894,986 4,634,571
Net assets-beginning of year 51,735,807 47,452,542 11,737,787 11,386,481 63,473,594 58,839,02:3
Net assets-end of year $ 54,037,872 $ 51,735,807 $ 13,330,708 $ 11,737,787 $ 67,368,580 $ 63,473,594
The following key elements influenced the changes in net assets from the prior year:
Revenues for FY 2010-11 increased by$1,035,050 or 5 percent in comparison to FY 2009-10. The increase is primarily due
to the increase in charges for services and property taxes during the year. Charges for services increased $2,002,173 over
prior year. Capital and operating grants and contributions decreased $1,490,588 from prior year. Property taxes increased
$481,463 from prior year. Other taxes decreased by$65,130 and other income increased by$107,132 from prior year.
The majority of the revenues from charges for services were derived from the Enterprise Fund water and sewer services
provided to residents of the Town of Prosper.
- 19 -
Governmental Activities:
Governmental activities increased the Town of Prosper's net assets by$2,302,065.
• Impact and escrow fee collections decreased by $1,042,474 (39 percent) during the year, primarily due to planned real
estate development. Impact fees are included as part of capital contribution revenues and the escrow fees are included in
other income.
• Total governmental activity expenses increased by $1,602,797 (17 percent) during the year due to increases in general
government($410,061),street department($760,575),and code enforcement($283,835).
Business-type Activities
Business-type activities increased the Town of Prosper's net assets by$1,592,921.
• Operating revenue increased$1,832,460(33 percent)mainly due to increased water sales.
• Operating expenses increased by$171,838(3 percent)from the previous year due to an increase in contractual services.
Financial Analysis of the Government's Funds
As noted earlier, the Town of Prosper uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds-The focus of the Town of Prosper's governmental funds is to provide information on near-term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the Town of Prosper's financing
requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available
at the end of the fiscal year.
At the end of the current fiscal year, the Town of Prosper's governmental funds reported combined ending fund balances of
$21,825,207, an increase of$686,677 from the prior year. Most of the increase is due to increase in property taxes and fewer
capital projects during the year. Of the current combined ending fund balance, $576 is nonspendable due to prepaids,
$14,706,841 is restricted for debt service and capital projects, $1,608,828 is committed for contingency in accordance with the
Town charter, $1,549,498 is assigned for specific purpose such as impact fees and other specific purposes, and $3,959,464 is
unassigned.
The general fund is the chief operating fund of the Town of Prosper. At the end of the current fiscal year, unassigned fund
balance of the general fund was $3,959,464. Total unassigned fund balance represents 49 percent of total general fund
expenditures. The increase in fund balance of$494,959 is primarily due to increase in property taxes and decrease in overall
expenditures from the prior year.
The impact fee fund has a total fund balance of $6,895,458, which is restricted for capital projects. The increase in fund
balance of$656,601 is due to current year impact fee revenue exceeding impact fee expenses during the year.
The debt service fund has a total fund balance of$737,259, all of which is restricted for payment of debt service. The increase
in fund balance of$160,588 is due to property tax revenues exceeding bond payments during the year.
The capital projects fund has a total fund balance of$5,348,151,all of which is restricted for construction.The increase in fund
balance of$10,801 is due to the issuance of tax notes in the amount of$2,045,000 offsetting current year capital projects.
Proprietary funds. The Town of Prosper's proprietary funds provide the same type of information found in the government-
wide financial statements,but in more detail.
Unrestricted net assets of the Enterprise Funds at the end of the year amounted to$7,715,684.The total increase in net assets of
the Enterprise Fund was $1,592,921. The factors concerning the finances of this fund have already been addressed in the
discussion of the Town of Prosper's business type activities.
-20-
General Fund Budgetary Highlights
During the year,revenues were$615,752 more than budgeted and expenditures were$791,712 more than budgetary estimates.
The excess expenditures were mostly due to capital outlay. The original budget had planned for a decrease in fund balance of
$35,230. Due to improvements over the budgeted amounts for total revenues,proceeds from insurance and transfers in,the net
change in fund balance increased to$494,959.
Capital Asset and Debt Administration
Capital assets. The Town of Prosper's investment in capital assets for its governmental and business-type activities as of
September 30, 2011, amounts to $74,212,156 (net of accumulated depreciation). This investment in capital assets includes
land,buildings and systems,and equipment.
Major capital asset events during the current fiscal year included the following:
• Capital asset acquisitions in governmental activities totaled $4,107,511. The majority of this activity was funded from
bond proceeds and was for streets,parks and related infrastructure.
• Capital asset additions in business-type activities totaled$7,154.The increase was from equipment.
Governmental Business-type
Activities Activities Total
2011 2010 2011 2010 2011 2010
Government-wide capital assets:
Non-depreciable assets $ 7,330,998 $ 14,742,809 $ 5,000 $ 5,000 $ 7,335,998 $ 14,747,809
Depreciable assets 54,776,011 43,430,850 22,484,074 22,511,625 77,260,085 65,942,475
Total capital assets 62,107,009 58,173,659 22,489,074 22,516,625 84,596,083 80,690,284
Less accumulated depreciation 6,689,327 5,276,171 3,694,600 3,105,223 10,383,927 8,381,394
Government-wide capital assets,
net $ 55,417,682 $ 52,897,488 $ 18,794,474 $ 19,411,402 $ 74,212,156 $ 72,308,890
Additional information on the Town of Prosper's capital assets can be found in Note 5 on pages 4647 of this report.
Long-term debt. At the end of the current fiscal year,the Town of Prosper had bonded debt outstanding of$34,534,300.This
amount comprises debt backed by the full faith and credit of the government.
The Town of Prosper's bond rating is Aa3 as assigned by Moody's in October,2011.
Total long-term debt consisted of the following:
Governmental Business-type
Activities Activities Total
2011 2010 2011 2010 2011 2010
Government-wide long-term debt:
Certificates of obligation $ 21,354,850 $ 22,259,250 $ 13,179,450 $ 13,915,050 $ 34,534,300 $ 36,174,300
Tax notes payable 2,045,000 2,045,000 -
Compensated absences payable 237,040 424,739 16,451 35,952 253,491 460,691
Capital leases payable 19,292 50,846 19,292 50,846
Total government-wide long-term
debt $ 23,656,182 $ 22,734,835 $ 13,195,901 $ 13,951,002 $ 36,852,083 $ 36,685,837
-21 -
Additional information on the Town of Prosper's long-term debt can be found in note 10 on pages 49-53 of this report.
Economic Factors and Next Year's Budgets and Rates
The global markets,unemployment and indicators such as consumer confidence have been rocky,but the Dallas metroplex and
Prosper specifically have weathered the recent storms very well. Even in these last two "slow" years, the Town maintained
growth above preliminary estimates. Being hesitant to overstate the Town's positive outlook,the Fiscal Year 2012 budget was
prepared with conservative revenue assumptions despite general optimism about its not too distant future. Overall, revenues
are projected to increase 11.6%compared to that budgeted in 2010-2011.
Revenue Projection Highlights
• The adopted Ad Valorem Property Tax Rate in the coming fiscal year is equal to last year's rate and is set at$0.52 per
one hundred dollars taxable valuation. Certified property valuations increased by $60 million (5.2%) for FY 2011-
2012. Property values increased from $1,145.8 million to $1,205.8 million. While the growth in total certified
property valuations continues to increase, existing property values remain relatively flat, with most of the increase
coming from new construction or annexations.
• With only a few new commercial operations opening in Prosper and retaining several solid businesses, sales tax
forecasts have remained around$1.1 million for several years and are projected the same for FY 2012-2012. Actual
collections for the last two years have exceeded $1.2 million,but staff remains cautious since a large portion of the
Town's sales tax revenues is directly linked to construction, making a decline in that economy a large threat. The
Town expects to receive approximately$1,133,000 in sales tax in FY 2011-2012.
• Municipal Court Fines and Licenses are projected to remain at current levels.
• Building Permit Revenues are projected to increase to$934,900 or 287.0%when compared to the 2010-2011 Adopted
Budget reflecting steady new home and minimal non-residential construction in the coming year at the new,increased
permit fee rates. Single Family permits increased from 226 in 2008 to 373 in 2011,an increase of 65%. Commercial
permits have slowed since 2008,but continue to trickle in with higher average values than in previous years.
• SAFER Grant revenues are scheduled to reduce 48% from $218,183 to $113,989. This source will be exhausted in
FY 2012-2013 with reimbursements totaling $28,496. Over the life of this grant, the Town will have received
$948,825 to help pay for the addition of six full-time Firefighter/Paramedic positions.
• Utility franchise payment and administrative fees from the Town's Water and Sewer Funds are projected to increase
in accordance with the Town's adopted Water and Wastewater Utility Comprehensive Business Plan and subsequently
adopted rate study. A similar,but smaller fee of 6%will be transferred from the Drainage Utility Fund.
• Revenues for the Water, Sewer and Solid Waste Fund are expected to increase to$6.3 million. The adopted business
plan for the Water and Sewer Utility Fund identifies the need for revenue enhancements to cover existing and future
operations and maintenance costs as well as debt service and contracted sewer costs with the Upper Trinity Regional
Water District.
Appropriations Budget Highlights
• In FY 2009-2010, employees did not earn salary increases,but rather were allotted one time payments instead. In FY
2010-2011, the Town Council set the target base salary range assignment at 100% of the average prevailing rate for
the comparator market and worked within the budget to get all employees up to their respective range minimum. For
FY 2011-2012, the strategy is to move employees with more time in their position further into the range beyond the
minimum. Salary increases total approximately$115,000 in the coming year.
• Employee Health, Dental and other benefits typically increase in cost year to year,but this year the Town expects to
save approximately $4,619 compared to the same list of benefits offered last year. The Town has kept medical
premium increases for staff to a minimum.
-22-
• The TMRS rate budgeted for FY 2011 is 10%, which is slightly more than the Annual Required Contribution(ARC)
Rate of 9.77%as required by GASB Statement Number 27.While SB 350 didn't give the Town much net ARC relief,
the new calculation and the fractional "overpayment" serve to offset future increases. Working with the TMRS
actuary over several scenarios, the payments over ARC helps reduce expected increases to less than 0.05%per year
over the next few years.
• Continued partnerships with other entities have produced multiple saving opportunities for shared services, thus
improving our customer service to residents and visitors alike.
• The Town continues to operate the Community Library in the Reynolds Middle School.
• The Town renews its agreements along with several area cities to contract with Collin County for Animal
Control and Sheltering Service.
• The Town has several agreements with Frisco including using Frisco GIS for our departments and Interlocal
agreements for part time help in both the Municipal Court and Dispatch as needed.
• The Town will be completing a Comprehensive Plan update and Impact Fee/CIP update.
• First Street and Coit Road will remain under construction during FY 2011-2012.
• The Wilson Creek Interceptor sewer project is expected to be completed in the coming year.
The Town of Prosper continues steady growth in population and property values. Staff has been able to expand services,
further compensate existing staff while maintaining a low tax rate for the Town. The Town of Prosper is fortunate in that one
of the pressing issues is still how to properly manage growth without overextending resources too far ahead. As adopted,next
year's budget keeps prudent feet on the ground,but stretches far enough to see over the horizon expectantly for radical growth.
All these factors were considered in preparing the Town of Prosper's budget for the 2011-2012 Fiscal Year.
Request for Information
This financial report is designed to provide a general overview of the Town of Prosper's finances for all those with an interest
in the government's finances. Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to the Office of the Town Manager,P.O.Box 307,Prosper,Texas 75078.
-23 -
TOWN OF PROSPER,TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30,2011
Component
Primary Government Unit
Prosper
Economic
Governmental Business-Type Development
Activities Activities Total Corporation
ASSETS
Cash and cash equivalents $ 20,073,863 $ 2,671,869 $ 22,745,732 $ 1,822,859
Investments 2,300,000 4,500,756 6,800,756
Receivables(net of allowance):
Utility bills 700,635 700,635
Delinquent property taxes 68,025 68,025
Sales tax 284,252 284,252 94,751
Other 68,304 68,304
Due from component unit 9,565 9,565
Prepaids 576 2,050 2,626
Inventory 57,342 57,342
Restricted cash and cash equivalents 68,155 68,155
Bond issuance costs 447,033 191,335 638,368
Capital assets not being depreciated:
Land 2,064,797 5,000 2,069,797
Construction-in-progress 5,266,201 5,266,201
Capital assets(net of accumulated
depreciation):
Building and systems 12,854,928 18,551,441 31,406,369
Vehicles and equipment 3,067,215 238,033 3,305,248
Infrastructure 32,164,541 32,164,541
TOTAL ASSETS 78,669,300 26,986,616 105,655,916 1,917,610
LIABILITIES
Accounts payable 446,010 392,872 838,882
Accrued interest 143,800 77,445 221,245
Escrow payable 341,666 341,666
Customer deposits 24,000 24,000
Internal balances 34,308 (34,310) (2)
Due to primary government - 9,566
Noncurrent liabilities:
Due within one year 1,362,339 783,566 2,145,905 182
Due in more than one year 22,303,305 12,412,335 34,715,640
TOTAL LIABILITIES 24,631,428 13,655,908 38,287,336 9,748
NET ASSETS
Invested in capital assets,net of related debt 37,347,057 5,615,024 42,962,081
Restricted for:
Debt service 737,259 737,259
Capital projects 8,621,431 8,621,431
Unrestricted 7,332,125 7,715,684 15,047,809 1,907,862
TOTAL NET ASSETS $ 54,037,872 $ 13,330,708 $ 67,368,580 $ 1,907,862
The accompanying notes are an integral part of the financial statements.
-24-
TOWN OF PROSPER,TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2011
PROGRAM REVENUES
Operating Capital
Charges for Grants and Grants and
FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions
PRIMARY GOVERNMENT:
Governmental activities:
General government $ 1,622,024 $ 82,206 $ 24,015 $
Police 1,115,837 21,477 23,849
Dispatch 472,774
Court 231,747 220,913 3,436
Fire 2,287,665 158,538 276,559
Streets 2,369,730 2,700,996
Parks and recreation 677,679 206,687
Library 69,748 22,018
Engineering 158,863
Code enforcement 416,793 9,475
Inspections 143,382 689,062
Planning 380,712 44,812
Interest and fiscal charges 1,138,952
Total governmental activities 11,085,906 1,226,483 349,877 2,907,683
Business-type activities:
Utility billing and sanitation 709,553 715,150
Water and sewer 4,514,598 6,330,653
Storm drainage 87,465 192,350
Total business-type activities 5,311,616 7,238,153 - -
TOTAL PRIMARY GOVERNMENT $ 16,397,522 $ 8,464,636 $ 349,877 $ 2,907,683
COMPONENT UNIT:
Economic development 136,114
Total component unit $ 136,114
GENERAL REVENUES:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Escrow fees
Unrestricted investment earnings
Miscellaneous revenue
Transfers
Total general revenues and transfers
Change in net assets
Net assets-beginning(restated)
Net assets-ending
The accompanying notes are an integral part of the financial statements.
-25-
i
NET(EXPENSE)REVENUE AND CHANGES IN NET ASSETS COMPONENT
PRIMARY GOVERNMENT UNIT
Prosper
Economic
Governmental Business-type Development
Activities Activities Total Corporation
$ (1,515,803) $ $ (1,515,803)
(1,070,511) (1,070,511)
(472,774) (472,774)
(7,398) (7,398)
(1,852,568) (1,852,568)
331,266 331,266
(470,992) (470,992)
(47,730) (47,730)
(158,863) (158,863)
(407,318) (407,318)
545,680 545,680
(335,900) (335,900)
(1,138,952) (1,138,952)
(6,601,863) - (6,601,863)
5,597 5,597
1,816,055 1,816,055
104,885 104,885
1,926,537 1,926,537
(6,601,863) 1,926,537 (4,675,326)
$ (136,114)
(136,114)
5,986,296 5,986,296
1,320,686 1,320,686 438,636
424,485 424,485
53,351 53,351
154,577 53,242 207,819 20,299
530,408 47,267 577,675
434,125 (434,125) -
8,903,928 (333,616) 8,570,312 458,935
2,302,065 1,592,921 3,894,986 322,821
51,735,807 11,737,787 63,473,594 1,585,041
$ 54,037,872 $ 13,330,708 $ 67,368,580 $ 1,907,862
-26-
TOWN OF PROSPER,TEXAS
BALANCE SHEET-
GOVERNMENTAL FUNDS
SEPTEMBER 30,2011
Impact Debt
General Fee Service
Fund Fund Fund
ASSETS:
Cash and cash equivalents $ 3,714,723 $ 6,884,650 $ 438,505
Investments 2,000,000 300,000
Receivables(net of allowance for uncollectibles):
Property taxes 43,536 24,489
Sales tax 284,252
Other 58,625 1,399
Due from other funds 264,346 71,068
Due from component unit 9,566
Prepaids 576
Total Assets $ 6,375,624 $ 6,955,718 $ 764,393
LIABILITIES:
Accounts payable $ 398,601 $ 32,955 $
Escrow payable
Deferred revenues 43,536 24,489
Due to other funds 364,619 27,305 2,645
Total Liabilities 806,756 60,260 27,134
FUND BALANCES:
Nonspendable for:
Prepaids 576
Restricted for:
Debt service 737,259
Capital projects 6,895,458
Committed for:
Contingency 1,608,828
Assigned
Unassigned 3,959,464
Total Fund Balances 5,568,868 6,895,458 737,259
TOTAL LIABILITIES AND FUND BALANCES $ 6,375,624 $ 6,955,718 $ 764,393
The accompanying notes are an integral part of the financial statements.
-27-
Capital Other Total
Projects Governmental Governmental
Funds Funds Funds
$ 5,357,979 $ 3,615,380 $ 20,011,237
2,300,000
68,025
284,252
3,280 63,304
455 335,869
9,566
576
$ 5,357,979 $ 3,619,115 $ 23,072,829
$ $ $ 431,556
341,666 341,666
68,025
9,828 1,978 406,375
9,828 343,644 1,247,622
576
737,259
5,348,151 1,725,973 13,969,582
1,608,828
1,549,498 1,549,498
3,959,464
5,348,151 3,275,471 21,825,207
$ 5,357,979 $ 3,619,115 $ 23,072,829
-28-
TOWN OF PROSPER,TEXAS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
AS OF SEPTEMBER 30,2011
Total Fund Balances-Governmental Funds $ 21,825,207
Amounts reported for governmental activities in the statement of net assets(page 24)are different because:
I
Capital assets used in governmental activities are not financial resources and therefore,are not
reported in governmental funds.At the beginning of the year,the cost of these assets was
$58,173,659 and the accumulated depreciation was$5,276,171.The net effect of the beginning
balances for capital assets(net of depreciation)in the governmental activities is an increase to
net assets. 52,897,488
Long-term liabilities are not due and payable in the current period and therefore,are not reported
as liabilities in the governmental funds.The long-term debt,including capital leases of$50,846,was
$22,310,096 with bond issuance costs of$420,000 at the beginning of the year. The effect of the
beginning balances for long-term debt in the governmental activities is a decrease to net assets. (21,890,096)
Current year capital outlays are expenditures in the fund financial statements,but they are shown
as increases in capital assets in the government-wide financial statements.The net effect of
including capital outlays of$4,107,511,less net book value of asset retirements of$10,688,
is to increase net assets. 4,096,823
Current year long-term debt principal payments and changes in long-term obligations of$935,954
and bond issuance costs of$56,039 are expenditures in the fund financial statements,but they are
shown as reductions in long-term debt in the government-wide financial statements. The net effect
of including principal payments,decrease in long-term obligations and increase in bond issuance
costs is to increase net assets. 991,993
Current issuance of the 2010 Tax Note and related bond premium is an other financing source
in the governmental fund financial statements because it is not due and payable during the
current year. However this will increase the long-term debt in the government-wide financial
statements. The total note and premium amount was$2,054,462.The net effect of this is a
decrease to net assets. (2,054,462)
Depreciation and amortization expense are not reflected in the governmental funds,but are recorded
in the government-wide financial statements as an expense and an increase to accumulated
depreciation and decrease to bond issuance costs.The net effect of the current year depreciation
and amortization expense of$1,605,635 is to decrease net assets. (1,605,635)
The Town uses an internal service fund to charge the costs the medical reimbursement program to
appropriate departments in other funds. The assets and liabilities of the insurance fund are included
in governmental activities in the statement of net assets. The net effect is to increase net assets. 89,369
Various other reclassifications are necessary to convert the fund financial statements from the
modified accrual basis of accounting to accrual basis of accounting. These included the following
adjustments for the current year:
Recognition of deferred property tax revenues 68,025
Accrual for interest payable on long-term debt (143,800)
Accrual for compensated absences (237,040) (312,815)
Net Assets of Governmental Activities $ 54,037,872
The accompanying notes are an integral part of the financial statements.
-29-
TOWN OF PROSPER,TEXAS
STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-
GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30,2011
Impact Debt
General Fee Service
Fund Fund Fund
REVENUES:
Taxes:
Property $ 3,868,027 $ $ 2,144,426
Sales 1,320,686
Franchise 424,485
Licenses and permits 670,199
Charges for services 163,188
Intergovernmental
Impact fees 1,592,139
Escrow income
Grants 284,645
Investment income 69,567 30,666 17,328
Fines,fees,warrants and seizures 386,001
Contributions
Miscellaneous 114,666
Total Revenues 7,301,464 1,622,805 2,161,754
EXPENDITURES:
Current:
General government 1,524,824
Police 1,071,276
Dispatch 399,632
Court 217,117
Fire 2,129,840
Streets 302,862 966,204
Parks and recreation 529,756
Library 69,748
Engineering 164,812
Inspection 423,145
Code enforcement 144,368
Planning 385,206
Capital outlay 646,325
Debt service:
Principal 31,554 904,400
Interest and fiscal charges 3,676 1,096,766
Bond issue costs and fees
Total Expenditures 8,044,141 966,204 2,001,166
EXCESS(DEFICIENCY)OF REVENUES
OVER(UNDER)EXPENDITURES $ (742,677) $ 656,601 $ 160,588
The accompanying notes are an integral part of the financial statements.
continued
-30-
Capital Other Total
Projects Governmental Governmental
Funds Funds Funds
$ $ $ 6,012,453
1,320,686
424,485
670,199
163,188
1,108,857 1,108,857
1,592,139
53,351 53,351
284,645
28,637 7,811 154,009
7,095 393,096
200,747 71,172 271,919
114,666
1,338,241 139,429 12,563,693
104,815 3,188 1,632,827
28,116 1,099,392
399,632
15,697 232,814
17,262 2,147,102
1,269,066
53,472 583,228
69,748
164,812
423,145
144,368
385,206
3,056,694 409,119 4,112,138
935,954
1,100,442
58,771 58,771
3,220,280 526,854 14,758,645
$ (1,882,039) $ (387,425) $ (2,194,952)
continued
-31 -
TOWN OF PROSPER,TEXAS
STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-
GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30,2011
Impact Debt
General Fee Service
Fund Fund Fund
OTHER FINANCING SOURCES(USES):
Proceeds from insurance $ 426,430 $ $
Proceeds from capital related debt issued
Premium on issuance of bonds
Transfer in 841,446
Transfer out (30,240)
Total Other Financing Sources(Uses) 1,237,636 -
Net change in fund balances 494,959 656,601 160,588
Fund balances,beginning(restated) 5,073,909 6,238,857 576,671
Fund balances,ending $ 5,568,868 $ 6,895,458 $ 737,259
The accompanying notes are an integral part of the financial statements.
-32-
Capital Other Total
Projects Governmental Governmental
Funds Funds Funds
$ $ $ 426,430
2,045,000 2,045,000
11,039 11,039
224,679 - 1,066,125
(387,878) (248,847) (666,965)
1,892,840 (248,847) 2,881,629
10,801 (636,272) 686,677
5,337,350 3,911,743 21,138,530
$ 5,348,151 $ 3,275,471 $ 21,825,207
-33 -
TOWN OF PROSPER,TEXAS
RECONCILIATION OF STATEMENT OF REVENUES,EXPENDITURES AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2011
Net Change in Fund Balances-Governmental Funds $ 686,677
Amounts reported for governmental activities in the statement of activities(pages 25-26)
are different because:
Current year capital outlays are expenditures in the fund financial statements,but they are shown
as increases in capital assets in the government-wide financial statements.The net effect of
including capital outlays of$4,107,511,less net book value of asset retirements of$10,688,
is to increase net assets. 4,096,823
Current year long-term debt principal payments and changes in long-term obligations of$935,954
and bond issuance costs of$56,039 are expenditures in the fund financial statements,but they are
shown as reductions in long-term debt in the government-wide financial statements. The net effect
of including principal payments,decrease in long-term obligations and increase in bond issuance
costs is to increase net assets. 991,993
Current issuance of the 2010 Tax Note and related bond premium is an other financing source
in the governmental fund financial statements because it is not due and payable during the
current year. However this will increase the long-term debt in the government-wide financial
statements. The total note and premium amount was$2,054,462.The net effect of this is a
decrease to net assets. (2,054,462)
Depreciation and amortization expense are not reflected in the governmental funds,but are recorded
in the government-wide financial statements as an expense and an increase to accumulated
depreciation and decrease to bond issuance costs.The net effect of the current year depreciation
and amortization expense of$1,605,635 is to decrease net assets. (1,605,635)
The Town uses an internal service fund to charge the costs of the medical reimbursement program
to the appropriate departments in other funds. The change in net assets of the insurance fund is
reported with governmental activities. 33,476
Various other reclassifications are necessary to convert the fund financial statements from the
modified accrual basis of accounting to accrual basis of accounting. These included the following
adjustments for the current year:
Change in recognition of deferred property tax revenues (26,157)
Change in accrual for interest payable on long-term debt (8,349)
Change in accrual for compensated absences 187,699
153,193
Change in Net Assets of Governmental Activities $ 2,302,065
The accompanying notes are an integral part of the financial statements.
-34-
Iq
TOWN OF PROSPER,TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE-
BUDGET(GAAP BASIS)AND ACTUAL-GENERAL FUND
YEAR ENDED SEPTEMBER 30,2011
Variance
General Fund With Final
Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)
REVENUES:
Taxes
Property $ 3,880,789 $ 3,880,789 $ 3,868,027 $ (12,762)
Sales 1,103,500 1,103,500 1,320,686 217,186
Franchise 327,550 327,550 424,485 96,935
Licenses and permits 636,575 636,575 670,199 33,624
Charges for services 196,505 196,505 163,188 (33,317)
Grants 234,183 234,183 284,645 50,462
Investment income 50,500 50,500 69,567 19,067
Fines,fees,warrants and seizures 220,000 220,000 386,001 166,001
Miscellaneous 36,110 36,110 114,666 78,556
Total Revenues 6,685,712 6,685,712 7,301,464 615,752
EXPENDITURES:
General government 1,181,322 1,206,728 1,524,824 (318,096)
Police 1,075,915 1,075,915 1,071,276 4,639
Dispatch 475,295 475,295 399,632 75,663
Court 233,010 233,010 217,117 15,893
Fire 2,180,340 2,101,485 2,129,840 (28,355)
Streets 276,855 276,855 302,862 (26,007)
Parks and recreation 505,935 505,935 529,756 (23,821)
Library - 78,855 69,748 9,107
Inspections 410,285 410,285 423,145 (12,860)
Code enforcement 136,290 136,290 144,368 (8,078)
Planning 279,455 343,905 385,206 (41,301)
Engineering 144,735 144,735 164,812 (20,077)
Debt Service 35,230 - 35,230 (35,230)
Capital outlay 185,435 263,136 646,325 (383,189)
Total Expenditures 7,120,102 7,252,429 8,044,141 (791,712)
Deficiency of revenues over expenditures (434,390) (566,717) (742,677) (175,960)
OTHER FINANCING SOURCES (USES):
Proceeds from insurance - - 426,430 426,430
Transfers in 429,400 429,400 841,446 412,046
Transfers out (30,240) (30,240) (30,240) -
Total other financing sources(uses) 399,160 399,160 1,237,636 838,476
Change in fund balances (35,230) (167,557) 494,959 662,516
Fund balances,beginning(restated) 4,971,175 4,971,175 5,073,909 102,734
Fund balances,ending $ 4,935,945 $ 4,803,618 $ 5,568,868 $ 765,250
The accompanying notes are an integral part of the financial statements.
-35-
TOWN OF PROSPER,TEXAS
STATEMENT OF NET ASSETS-
PROPRIETARY FUNDS
SEPTEMBER 30,2011
Governmental
Enterprise Fund Activities-
Utility Internal Service
Fund Funds
ASSETS
Current Assets:
Cash and cash equivalents $ 2,671,869 $ 62,626
Investments 4,500,756
Receivables(net of allowance of uncollectibles) 700,635 5,000
Due from other funds 262,911 36,196
Prepaids 2,050
Inventory 57,342
Restricted cash and cash equivalents 68,155
Total Current Assets 8,263,718 103,822
Noncurrent Assets:
Bond issuance costs 191,335
Capital assets
Land 5,000
Buildings and systems 21,935,860
Equipment 548,214
Less: accumulated depreciation (3,694,600)
Net property,plant and equipment 18,794,474 -
Total Noncurrent Assets 18,985,809 -
Total Assets 27,249,527 103,822
LIABILITIES:
Current Liabilities:
Accounts payable 392,872 14,453
Deposits 24,000
Due to other funds 228,601
Accrued interest 77,445
Compensated absences 11,516
Long-term debt,due in one year 772,050
Total Current Liabilities 1,506,484 14,453
Noncurrent Liabilities:
Compensated absences 4,935
Long-term debt 12,407,400
Total Noncurrent Liabilities 12,412,335 -
Total Liabilities 13,918,819 14,453
NET ASSETS:
Invested in capital assets,net of related debt 5,615,024
Unrestricted 7,715,684 89,369
Total Net Assets $ 13,330,708 $ 89,369
The accompanying notes are an integral part of the financial statements.
-36 -
TOWN OF PROSPER,TEXAS
STATEMENT OF REVENUES,EXPENSES AND CHANGES
IN FUND NET ASSETS-PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30,2011
Governmental
Enterprise Fund Activities-
Utility Internal Service
Fund Fund
OPERATING REVENUE:
Water and sewer charges $ 5,904,939 $
Sanitation charges 681,480
Storm drainage utility fees 192,350
Water and sewer connections 425,714
Service initiation 33,670
Insurance charges for services 34,290
Miscellaneous 47,267
Total Operating Revenue 7,285,420 34,290
OPERATING EXPENSES:
Personnel services 555,837 36,347
Materials and supplies 263,689
Contractual services 3,212,791
Storm drainage 87,465
Depreciation and amortization 637,921
Total Operating Expenses 4,757,703 36,347
Operating Income 2,527,717 (2,057)
NON-OPERATING REVENUES(EXPENSES)
Interest income 53,242 568
Interest expense (553,913)
Total Non-operating Revenues(Expenses) (500,671) 568
Income before transfers 2,027,046 (1,489)
Transfers in(out) (434,125) 34,965
Change in net assets 1,592,921 33,476
Net assets,at beginning of year 11,737,787 55,893
Net assets,at end of year $ 13,330,708 $ 89,369
The accompanying notes are an integral part of the financial statements.
-37-
TOWN OF PROSPER,TEXAS
STATEMENT OF CASH FLOWS-PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30,2011
Governmental
Enterprise Fund Activities-
Utility Internal Service
Fund Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 7,085,926 $
Cash contributions for insurance premiums 29,290
Cash payments to suppliers for goods and services (3,277,487)
Cash payments for insurance premiums (34,404)
Cash payments to employees for services (641,060)
Net cash provided(used)by operating activities 3,167,379 (5,114)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers to/from other funds (434,125) 34,965
Advances from other funds (102,814) (13,146)
Net cash provided(used)by noncapital financing activities (536,939) 21,819
CASH FLOWS FROM CAPITAL&RELATED FINANCING ACTIVITIES
Acquisition and construction of capital assets (7,154)
Disposition of assets 2,708
Principal paid on bonds (735,600)
Interest paid on bonds (553,913)
Net cash provided by capital and related financing activities (1,293,959) -
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (4,500,756)
Interest on deposits and investments 53,242 568
Net cash provided(used)by investing activities (4,447,514) 568
Net increase(decrease)in cash&cash equivalents (3,111,033) 17,273
Cash and cash equivalents at beginning of year 5,851,057 45,353
Cash and cash equivalents at end of year $ 2,740,024 $ 62,626
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Operating income(loss) $ 2,527,717 $ (2,057)
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation and amortization 637,921
(Increase)decrease in accounts receivable (214,494) (5,000)
(Increase)decrease in inventory and prepaids (6,463)
Increase(decrease)in accounts payable 292,921 1,943
Increase(decrease)in accrued liabilities (65,722)
Increase(decrease)in compensated absences (19,501)
Increase(decrease)in customer deposits 15,000
Net cash provided(used)by operating activities $ 3,167,379 $ (5,114)
The accompanying notes are an integral part of the financial statements.
-38 -
l
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Prosper,Texas have been prepared in conformity with generally accepted
accounting principles (GAAP)as applied to governmental units. The Governmental Accounting Standards Board
(GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting
principles. The more significant of the government's accounting policies are described below.
Renortine Entitv
The government is a municipal corporation governed by an elected seven-member council. As required by
accounting principles generally accepted in the United States of America, these financial statements present the
government and its component units, entities for which the government is considered to be financially
accountable. The discretely presented component unit is reported in a separate column in the government-wide
financial statements to emphasize it is legally separate from the government.
Discretelv Presented Component Unit
The Prosper Economic Development Corporation(EDC)serves all citizens of the government and is governed by
a board appointed by the government's elected council.The government can impose its will on the EDC and affect
the day-to-day operations of the EDC by removing appointed board members at will. The scope of public service
of the EDC benefits the government and its citizens and is operated primarily within the geographic boundaries of
the government. The EDC is presented as a governmental fund type and has a September 30 year end.
Complete financial statements for the EDC may be obtained at the entity's administration office, Prosper
Economic Development Corporation,P. O.Box 1060,Prosper,Texas 75078.
Government-wide and Fund Financial Statements
The government-wide financial statements (i.e. the statement of net assets and the statement of activities) report
information on all of the nonfiduciary activities of the primary government and its component units. For the most
part, the effect of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from business-type
activities, which rely to significant extent on fees and charges for support. Likewise, the primary government is
reported separately from certain legally separate component units for which the primary government is financially
accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment
are 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.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial
statements.
Measurement Focus, Basis of Accounting,and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned
and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements by the provider have been met.
-39-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—continued
Measurement Focus,Basis of Accounting,and Financial Statement Presentation-continued
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to
be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures,as well as
expenditures related to compensated absences and claims and judgments,are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, licenses, and interest income associated with the current fiscal period
are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period.
Only the portion of special assessments receivable due within the current fiscal period is considered to be
susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable
and available only when cash is received by the government.
The government reports the following major governmental funds:
The general fund is the government's primary operating fund. It accounts for all financial resources of the
general government,except those required to be accounted for in another fund.
The impact fee fund, a special revenue fund, accounts for revenues that are legally restricted for particular
purposes. This fund is used to account for activity related to impact fees.
The debt service fund accounts for the resources accumulated and payments made for principal and interest
on long-term obligation debt of governmental funds.
The capital Proiects fund accounts for the acquisition of capital assets or construction of major capital
projects not being financed by proprietary funds.
The government reports the following proprietary funds:
The enterprise fund is used to account for those operations that are financed and operated in a manner
similar to private business or where the council has decided that the determination of revenues earned,costs
incurred and/or net income is necessary for management accountability. The government's enterprise fund
is for water,sewer, sanitation and storm drainage operations.
The internal service fund is used to accumulate and allocate costs internally among the Town's various
functions. The Town uses its internal service fund to account for its employee medical reimbursement
program. Because these services predominately benefit the governmental rather than the business-type
functions, they have been included within governmental activities in the government-wide financial
statements.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are
followed in both the government-wide and proprietary fund financial statements to the extent that those standards
do not conflict with or contradict guidance of Governmental Accounting Standards Board. Governments also have
the option of following subsequent private sector guidance for their business-type activities and enterprise funds,
subject to this same limitation. The government has elected not to follow subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the
government's water and sewer function and various other functions of the government. Elimination of these
charges would distort the direct costs and program revenues reported for the various functions concerned.
-40-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUALWARY OF SIGNIFICANT ACCOUNTING POLICIES—continued
Measurement Focus.Basis of Accounting,and Financial Statement Presentation-continued
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or
privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including
special assessments. Internally dedicated resources are reported as general revenues rather than as program
revenues.Likewise,general revenues include 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 enterprise fund are
charges to customers for sales and services. The enterprise fund also recognizes as operating revenue the portion
of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for
enterprise funds include the cost of sales and services,administrative expenses,and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
Deposits and Investments
For purposes of the statement of cash flows, cash and cash equivalents include cash on hand, demand deposits,
and short-term investments with a maturity date within three months of the date acquired by the government.
Other short-term investments are included in investments. Investments are stated at cost which approximates fair
value.
Short-Term Interfund Receivables/Pavables
During the course of operations, numerous transactions occur between individual funds for goods provided or
services rendered. These receivables and payables are classified as"due from other funds"or"due to other funds"
on the balance sheet. Short-term interfund loans are classified as"interfund receivables/payables".
Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds
are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect
costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund
financial statements.
Restricted Assets
Certain resources set aside for the repayment of bonds are classified as restricted assets on the balance sheet
because their use is limited by applicable bond covenants. When the government incurs an expense for which it
may use either restricted or unrestricted assets,it uses the restricted assets first.
Capital Assets
Capital assets,which include property,plant,equipment, and infrastructure assets(e.g.,roads,bridges, sidewalks,
and similar items), are reported in the applicable governmental or business-type activities columns in the
government-wide financial statements. Capital assets are defined by the government as assets with an initial,
individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years.
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 cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets
lives are not capitalized.
-41 -
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—continued
Capital Assets-continued
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest is
capitalized on proprietary fund assets acquired with tax-exempt debt. The amount of interest to be capitalized is
calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project
with interest earned on invested proceeds over the same period.
Property, plant, and equipment of the primary government is depreciated using the straight line method over the
following estimated useful lives:
Assets Years
Buildings 20-30
System infrastructure 15-45
Street infrastructure 25-30
Equipment 5- 10
Vehicles 5-7
Compensated Absences
It is the government's policy to permit employees to accumulate earned but unused vacation and sick pay benefits.
All vacation and sick pay is 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 resignation and retirements.
Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable governmental activities,
business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as
well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method.
Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, during the current period. The face amount of debt issued is reported as other financing
sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt
issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt
proceeds received,are reported as debt service expenditures.
Fund Eauitv
In the fund financial statements, governmental funds report restrictions of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose. Assignments of
fund balance represent tentative management plans that are subject to change.
-42-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
BudQetary Control
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United
States of America. Annual appropriated budgets are legally adopted for the general fund, impact fee fund and
water and sewer fund. All annual appropriations lapse at fiscal year end. Project length financial plans are
adopted for all capital project funds.
The Town follows these procedures in establishing the budgetary data reflected in the financial statements.
1. Prior to August 16'',the Town Manager submits to the Town Council a proposed operating budget for the
fiscal year commencing the following October 1. The operating budget includes proposed expenditures
and the means of financing them.
2. Public hearings are conducted to obtain taxpayer comments.
3. On the first meeting in September,the budget is legally enacted through the passage of an ordinance.
4. The Town Manager is authorized to transfer budgeted amounts between departments within any fund;
however,any revision that alters total expenditures of any fund must be approved by the Town Council.
5. Formal budgetary integration, using the modified accrual basis, is employed as a management control
device during the year for the General Fund and Impact Fee Fund. Supplemental appropriations were
made during the fiscal year for the General Fund.
6. The budget approved for the Water and Sewer Fund follows similar approval procedures but departs from
accounting principles generally accepted in the United States of America by not including depreciation
and amortization in the approved budget. These amounts are reported at year end as part of the "actual"
column. Supplemental appropriations were made during the year.
7. The Debt Service and Capital Projects Funds do not have formal budgets since all are controlled by
contractual obligations approved at inception or as part of the General Fund on an annual basis. The
nonmajor governmental funds are not budgeted.
Excess Expenditures Over Appropriations
Expenditures exceeded appropriations in the General Fund by$791,712. These over-expenditures were funded by
transfers from the Capital Projects Fund and proceeds from insurance for repairs.
-43 -
i
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 3: DEPOSITS AND INVESTMENTS
Deposits
At September 30, 2011, the Town's deposits and the EDC's deposits were fully covered by federal depository
insurance or collateral held by the pledging financial institution's trust department or agent in the government's
name and/or irrevocable standby letters of credit.
Custodial Credit Risk - Deposits: In the case of deposits this is the risk that, in the event of a bank failure, the
government's deposits may not be returned to it. The government's policy regarding types of deposits allowed
and collateral requirements is: the Depository may be a state bank authorized and regulated under Texas law; a
national bank, savings and loan association, or savings bank authorized and regulated by federal law; or a savings
and loan association or savings bank organized under Texas law;but shall not be any bank the deposits of which
are not insured by the Federal Deposit Insurance Corporation (FDIC) and pledged securities. The government is
not exposed to custodial credit risk for its deposits, as all are covered by depository insurance and pledged securi-
ties.
Investments
The Town may invest in obligations of the U.S. Treasury or the State of Texas, certain U.S. agencies, certificates
of deposit, money market savings accounts, certain municipal securities, repurchase agreements, common trust
funds and other investments specifically allowed by the Public Funds Investment Act of 1987 (Article 842a-2
Vernon's Civil Statutes).
The EDC may invest in obligations of the U.S. Treasury or the State of Texas, certain U.S. agencies, certificates
of deposit, money market savings accounts, certain municipal securities, repurchase agreements, common trust
funds and other investments specifically allowed by the Public Funds Investment Act of 1987 (Article 842a-2
Vernon's Civil Statutes).
In compliance with the Public Funds Investment Act, the government has adopted a deposit and investment
policy.That policy addresses the following risks:
Custodial Credit Risk - Investments: For an investment, this is the risk that, in the event of the failure of the
counterparty, the government will not be able to recover the value of its investments or collateral securities that
are in the possession of an outside party. The Town's investments are with the Texas Local Government
Investment Pool ("TexPool"), the Texas Short-Term Asset Reserve Investment Pool ("TexSTAR'), and in
certificates of deposit. The pools are public funds investment pools created to provide a safe environment for the
placement of local government funds in authorized short-term investments. Local investment pools operate in a
manner consistent with the Security and Exchange Commission's Rule 2a7 of the Investment Company Act of
1940. The reported value of the pool is the same as the fair value of the pool shares. The Texas Comptroller of
Public Accounts exercises oversight responsibility over TexPool. TexSTAR is managed by J.P. Morgan
Investment Management, Inc. and First Southwest Asset Management, Inc. The government is not exposed to
custodial credit risk for its investments.
Credit Risk- This is the risk that an issuer of an investment will be unable to fulfill its obligations. The rating of
securities by nationally recognized rating agencies is designed to give an indication of credit risk. It is the
government's policy to limit its investments to those investments rated at least AAAm. The credit quality rating
for both TexPool and TexSTAR at year end was AAAm by Standard&Poor's.
-44-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 3: DEPOSITS AND INVESTMENTS-continued
Investments-continued
Interest Rate Risk - This is the risk that changes in interest rates will adversely affect the fair value of an
investment. In accordance with its investment policy, the government manages its exposure to declines in fair
values by limiting the weighted average maturity of its investment portfolio to less than one year from the time of
purchase. The maximum allowable maturity for operating funds is 5 years and 2 years for debt service funds. The
weighted average maturity for the government's investment in external investment pools is less than 60 days.
Foreign Currency Risk- This is the risk that exchange rates will adversely affect the fair value of an investment.
The government is not exposed to foreign currency risk.
Concentration of Credit Risk- This is the risk of loss attributed to the magnitude of the government's investment
in a single issuer (i.e., lack of diversification). Concentration risk is defined as positions of 5 percent or more in
the securities of a single issuer. It is the government's policy to not allow for a concentration of credit risk.
Investments issued by the U. S. Government and investments in investment pools are excluded from the 5 percent
disclosure requirement. The government is not exposed to concentration of credit risk.
At year end,the government's investment balances were as follows:
Fair Maturity Less Maturity Greater
Primary Government Value than One Year than One Year
Investment type:
Texas Local Government investment pool S 2,498,335 $ 2,498,335 $ -
TexSTAR investment pool 8,518,230 8,518,230 -
Certificates of deposit 6,800,756 1,700,756 5,100,000
Total $ 17,817,321 $ 12,717,321 $ 5,100,000
Prosper Economic Development Corporation
Investment type:
Texas Local Government investment pool $ 1,323 $ 1,323
TexSTAR investment pool 1,188 1,188
Total $ 2,511 $ 2,511
For the purpose of presentation in the financial statements,Texpool and TexSTAR investments have been included
in cash and cash equivalents due to their highly liquid nature.
NOTE 4: RECEIVABLES
Receivables at September 30,2011 consisted of the following:
Debt Other Internal
General Service Governmental Enterprise Service Total
Property taxes $ 43,536 $ 24,489 $ $ $ $ 68,025
Sales tax 284,252 284,252
Utility bills 864,082 864,082
Interest 6,554 1,399 11,078 19,031
Other receivables 52,071 3,280 5,000 60,351
Gross receivables 386,413 25,888 3,280 875,160 5,000 1,295,741
Less: allowance for
uncollectibles (174,525) (174,525) (174,525)
Net receivables $ 386,413 $ 25,888 $ 3,280 $ 700,635 $ (169,525) $ 1,121,216
-45-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 4: RECEIVABLES-continued
Property taxes are based on the appraised values provided by the Collin County or Denton County Central
Appraisal District, whichever is applicable. Taxes are levied by October 1 of each year. Unpaid property taxes
become delinquent on February 1 of the following year. Penalty is calculated after February 1 up to the date
collected by the government at the rate of 6%for the first month and increased 1%per month up to a total of 12%.
Interest is calculated after February 1 at the rate of 1% per month up to the date collected by the government.
Under state law, property taxes levied on real property constitute a lien on the real property which cannot be
forgiven without specific approval of the State Legislature. The lien expires at the end of twenty years. Taxes
levied on personal property can be deemed uncollectible by the Town. The Town's current policy is to write-off
uncollectible personal property taxes after four years.
At September 30,2011 the EDC had sales tax receivable of$94,751. No allowances for uncollectibles is deemed
necessary.
NOTE 5: CAPITAL ASSETS
Capital asset activity for the year ended September 30,2011 was as follows:
Governmental activities: Balance Balance
October 1, Additions/ Retirements/ September 30,
2010 Completions Adjustments 2011
Capital assets,not being depreciated:
Land $ 2,032,649 $ 32,148 $ $ 2,064,797
Construction in progress 12,710,160 3,053,768 (10,497,727) 5,266,201
Total capital assets,not being depreciated 14,742,809 3,085,916 (10,497,727) 7,330,998
Capital assets being depreciated:
Buildings and improvements 3,235,669 10,386,416 13,622,085
Equipment 3,788,619 1,036,688 (174,161) 4,651,146
Infrastructure 36,406,562 96,218 36,502,780
Total assets being depreciated 43,430,850 11,519,322 (174,161) 54,776,011
Less accumulated depreciation for:
Buildings and improvements 622,842 144,315 767,157
Equipment 1,414,909 332,495 (163,473) 1,583,931
Infrastructure 3,238,420 1,099,819 4,338,239
Total accumulated depreciation 5,276,171 1,576,629 (163,473) 6,689,327
Total capital assets being depreciated,net 38,154,679 9,942,693 (10,688) 48,086,684
Governmental activities capital assets,net $ 52,897,488 $ 13,028,609 $ (10,508,415) $ 55,417,682
-46-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5: CAPITAL ASSETS-continued
Business-tvoe activities: Balance Balance
October 1, Additions/ Retirements/ September 30,
2010 Completions Adjustments 2011
Capital assets,not being depreciated:
Land $ 5,000 $ $ $ 5,000
Total capital assets,not being depreciated 5,000 - - 5,000
Capital assets being depreciated:
Buildings and systems 21,928,706 7,154 21,935,860
Vehicles and Equipment 582,919 (34,705) 548,214
Total assets being depreciated 22,511,625 7,154 (34,705) 22,484,074
Less accumulated depreciation for:
Buildings and systems 2,816,117 568,302 3,384,419
Vehicles and Equipment 289,106 53,073 (31,998) 310,181
Total accumulated depreciation 3,105,223 621,375 (31,998) 3,694,600
Total capital assets being depreciated,net 19,406,402 (614,221) (2,707) 18,789,474
Business-type activities capital assets,net $ 19,411,402 $ (614,221) $ (2,707) $ 18,794,474
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government $ 16,126
Police 60,435
Dispatch 82,525
Fire 199,646
Streets 1,106,700
Parks and recreation 108,183
Inspections 3,014
$ 1,576,629
Business-type activities:
Water and Sewer $ 621,375
$ 621,375
Capital asset activity for the EDC for the year ended September 30,2011 was as follows:
Balance Balance
October 1, Additions/ Retirements/ September 30,
Component unit: 2010 Completions Adjustments 2011
Capital assets being depreciated:
Leasehold improvements $ 113,849 $ $ $ 113,849
Total assets being depreciated 113,849 - - 113,849
Less accumulated depreciation for:
Leasehold improvements 105,943 7,906 113,849
Total accumulated depreciation 105,943 7,906 - 113,849
Total capital assets being depreciated,net 7,906 (7,906) - -
Component unit capital assets,net $ 7,906 $ (7,906) $ - $ -
-47-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 6: CONSTRUCTION COMMITMENTS
At September 30,2011 the Town had the following projects under construction. A summary of the status of these
projects and the related binding contracts with contractors is as follows:
Estimated Scheduled Costs
Contract Cost to Completion Incurred
Project Name Date Complete Date Through 9/30/11
Prosper CR Improvements February,2008 $ 115,000 November,2012 $ 766,836
Boyer Park February,2009 3,075 February,2012 86,615
Prosper Trail Widening September,2009 400,000 June,2012 4,332,306
First St.and Coit Rd.Widening September,2009 7,600,000 September,2013 80,444
Construction in Progress $ 5,266,201
NOTE 7.• INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interf ind balances at September 30,2011 were as follows:
Due to/from other funds:
Fund Due From Due To
General Fund:
Water and Sewer $ 222,590 $ 262,911
Debt Service 2,645
Parks and Recreation 70 400
Impact Fees 27,305 71,068
Capital Projects 9,828
Contributions 1,908
Insurance 30,240
Water and Sewer:
General Fund 262,911 222,590
Insurance 5,956
Contributions 55
Debt Service:
General Fund 2,645
Insurance:
General Fund 30,240
Water and Sewer 5,956
Parks and Recreation:
General Fund 400 70
Impact Fees:
General Fund 71,068 27,305
Contributions:
General Fund 55 1,908
Capital Projects:
General Fund 9,828
Totals $ 634,976 $ 634,976
-48-
i
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 7: INTERFUND RECEIVABLES,PAYABLES AND TRANSFERS—continued
The outstanding balances between funds result mainly from the time lag between the dates that(1)reimbursable
expenditures occur,(2)transactions are recorded in the accounting system,and(3)payments between funds are
made.
Interfund transfers:
Transfers In Transfers Out
General Fund:
Water and Sewer $ 429,400 $
Contributions 24,168
Capital Projects 387,878
Insurance 30,240
Water and Sewer:
General Fund 429,400
Insurance 4,725
Insurance:
General Fund 30,240
Water and Sewer 4,725
Contributions:
General Fund 24,168
Capital Projects 224,679
Capital Projects:
General Fund 387,878
Contributions 224,679
Totals $ 1,101,090 $ 1,101,090
The purpose of the transfers includes funding the share of operating costs from the Water and Sewer Fund to the
General Fund. The General Fund and Water and Sewer Fund transfer funds to the Insurance Fund to cover
insurance liabilities. The Special Revenue - Donations Fund transferred donations as they were received to the
respective departments in the General Fund and the General Fund and Capital Projects funds transferred funds for
capital outlay.
NOTE 8: CAPITAL LEASES
The Town has entered into a capital lease agreement, with Ford Motor Credit Company, for two police vehicles.
As of September 30, 2011, the vehicles had a carrying value of$26,235 which is included in the governmental
activities on the Statement of Net Assets. Capital lease expenditures were $14,567 which included $927 in
interest. The effective interest rate is 6.8%.
The Town entered into a second capital lease agreement for two police vehicles with Ford Motor Credit Company.
As of September 30,2011,the vehicles had a carrying value of$38,646. Capital lease expenditures for 2011 were
$20,663,which included interest of$2,749. The effective interest rate is 7.1%.
The lease activity for the year ended September 30,2011 was as follows:
Balance Balance Due Within
10/1/2010 Issued Retired 10/1/2011 One Year
Governmental Activities:
2008 Crown Victoria Lease $ 13,640 $ $ 13,640 $ - $
2010 Crown Victoria Lease 37,206 17,914 19,292 19,292
$ 50,846 $ $ 31,554 $ 19,292 $ 19,292
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TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 8: CAPITAL LEASES-continued
The following is a schedule of future minimum lease payments as of September 30,2011:
Year Ended
September 30 Principal Interest Total
2012 $ 19,292 $ 1,371 $ 20,663
Total $ 19,292 $ 1,371 $ 20,663
NOTE 9: COMPENSATED ABSENCES
Eligibility for the compensated absences for the employees of the Town is determined by length of service. The
current portion,the amount of the accrual which would normally be liquidated with available expendable financial
resources for Governmental Fund employees, is reflected as a current liability in the General Fund. The liability
for the Enterprise fund is reflected entirely within the Enterprise fund.
During the year ending September 30,2011 activity in compensated absences is as follows:
Balance Balance Due Within
10/1/2010 Additions Retired 10/1/2011 One Year
Governmental Activities:
Compensated absences $ 424,739 $ 24,671 $ 212,370 $ 237,040 $ 118,520
Business-tvve Activities:
Compensated absences 35,952 5,665 25,166 16,451 11,516
$ 460,691 $ 30,336 $ 237,536 $ 253,491 $ 130,036
During the year ending September 30,2011 the following occurred in compensated absences for the EDC:
Balance Balance Due Within
10/1/2010 Additions Retired 10/1/2011 One Year
Component Unit:
Compensated absences $ 993 $ 182 $ 993 $ 182 $ 182
-50-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 10: LONG-TERM DEBT
The government issues general obligation bonds to provide funds for the acquisition and construction of major
capital facilities and equipment. General obligation bonds have been issued for both governmental and business-
type activities. The government also issues revenue bonds where the government pledges income derived from the
acquired or constructed assets to pay debt service. The certificates of obligation will be repaid by the debt service
fund.
Long-term debt activity for the year ended September 30,2011 was as follows:
Balance Balance Amount Due
10/1/2010 Issued Retired 9/30/2011 Within one Year
Governmental Activities:
2001 Certificate of Obligation $ 1,155,750 $ $ 80,400 $ 1,075,350 $ 83,750
2004 Certificate of Obligation 3,431,100 186,200 3,244,900 193,800
2006 Certificate of Obligation 5,162,400 232,800 4,929,600 242,400
2008 Certificate of Obligation 12,510,000 405,000 12,105,000 423,000
2010 Series, Tax Note 2,045,000 2,045,000 280,000
Total Governmental 22,259,250 2,045,000 904,400 23,399,850 1,222,950
Business-tvue Activities:
1996 Certificate of Obligation 365,000 50,000 315,000 55,000
1998 Certificate of Obligation 425,000 45,000 380,000 50,000
2001 Certificate of Obligation 569,250 39,600 529,650 41,250
2004 Certificate of Obligation 5,573,200 303,800 5,269,400 316,200
2006 Certificate of Obligation 5,592,600 252,200 5,340,400 262,600
2008 Certificate of Obligation 1,390,000 45,000 1,345,000 47,000
Total Business-type 13,915,050 735,600 13,179,450 772,050
Total $ 36,174,300 $ 2,045,000 $ 1,640,000 $ 36,579,300 $ 1,995,000
Governmental Activities:
Bond Premium on Issuance $ $ 11,039 $ 1,577 $ 9,462 $ 1,577
-51 -
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 10: LONG-TERM DEBT-continued
Certificates of obligation and tax notes at September 30,2011 are comprised of the following issues for the Debt
Service Fund and Water and Sewer Fund:
Governmental Business-Type
Activities Activities Total
1996 Certificates of Obligation(100%water and sewer
portion)maturing January 15, 1997 to January 15,2016.
Interest payable January 15 and July 15 at rates ranging
from 4.45%to 6.45%. $ $ 315,000 $ 315,000
1998 Certificates of Obligation(100%water and sewer
portion)maturing July 15, 1999 through July 15,2016.
Interest payable January 15 and July 15 at rates ranging
from 3.15%to 4.55%. 380,000 380,000
2001 Certificates of Obligation(67%debt service fund
portion and 33%water and sewer portion)issued October
25,2001 and maturing August 15,2003 to August 15,
2021.Interest payable February 15 and August 15 at rates
ranging from 4.15%to 5.00% 1,075,350 529,650 1,605,000
2004 Certificates of Obligation(38%debt service fund
portion and 62%water and sewer portion)issued March
11,2004 and maturing August 15,2007 to August 15,
2024.Interest payable February 15 and August 15 at rates
ranging from 4.00%to 4.50% 3,244,900 5,269,400 8,514,300
2006 Certificates of Obligation(48%debt service fund
portion and 52%water and sewer portion)issued
September 21,2006 and maturing August 15,2007 to
August 15,2026.Interest payable February 15 and August
15 at rates ranging from 4.00%to 4.50%. 4,929,600 5,340,400 10,270,000
2008 Certificates of Obligation(90%debt service fund
portion and 10%water and sewer portion)issued
December 2,2008 and maturing February 15,2011 to
February 15,2029.Interest payable February 15 and
August 15 at rates ranging from 3.75%to 6.0%. 12,105,000 1,345,000 13,450,000
Tax Notes,Series 2010(100%debt service fund portion)
issued October 1,2010 and maturing February 15,2012 to
February 15,2017. Interest payable February 15th and
August 15th at rates ranging from 1.15%to 1.85%.
2,045,000 2,045,000
$ 23,399,850 $ 13,179,450 $ 36,579,300
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TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 10: LONG-TERM DEBT- continued
The annual requirements to amortize the combined debt outstanding for the Debt Service Fund and Water and
Sewer Fund as of September 30,2011 are as follows:
Governmental Activities Business-Type Activities
Year Ended Total Total Total
September 30 Principal Interest Principal Interest Principal Interest Obligation
2012 $ 1,222,950 $ 1,110,858 $ 772,050 $ 586,351 $ 1,995,000 $ 1,697,209 $ 3,692,209
2013 1,320,350 1,041,635 804,650 553,008 2,125,000 1,594,643 3,719,643
2014 1,370,800 994,880 839,200 517,958 2,210,000 1,512,838 3,722,838
2015 1,423,850 944,325 871,150 481,265 2,295,000 1,425,590 3,720,590
2016 1,479,550 889,987 910,450 442,832 2,390,000 1,332,819 3,722,819
2017-2021 6,815,150 3,559,672 4,584,850 1,634,488 11,400,000 5,194,160 16,594,160
2022-2026 6,810,700 1,847,199 4,068,600 596,298 10,879,300 2,443,497 13,322,797
2027-2031 2,956,500 273,105 328,500 30,345 3,285,000 303,450 3,588,450
Total $ 23,399,850 $ 10,661,661 $ 13,179,450 $ 4,842,545 $ 36,579,300 $ 15,504,206 $ 52,083,506
NOTE 11: RESTRICTED ASSETS
The balances of the restricted asset accounts in the enterprise funds are as follows:
Customer deposits $ 24,000
Revenue bond service requirements 44,155
$ 68,155
NOTE 12: RISK MANAGEMENT
The government is exposed to various risks of loss related to torts;theft of, damage to, and destruction of assets;
errors and omissions; injuries to employee; and natural disasters. The government is a participant in the Texas
Municipal League Workers' Compensation Joint Insurance Fund (WC Fund) and the Texas Municipal League
Joint Self-Insurance Fund (Property-Liability Fund), a public entity risk pool operated by the Texas Municipal
League Board for the benefit of individual governmental units located with Texas. The government pays an
annual premium to the Funds for its workers' compensation and property and liability insurance coverage. The
WC Fund and Property-Liability Fund are considered self-sustaining risk pools that provide coverage for its
members for up to$2,000,000 per insured event. There were no significant reductions in insurance coverage from
the previous year. Settled claims for risks have not exceeded insurance coverage in any of the past three years.
NOTE 13: TEXAS MUNICIPAL RETIREMENT SYSTEM
Plan Description
The Town provides pension benefits for all of its eligible employees through a nontraditional,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 Town are within
the options available in the governing state statutes of TMRS.
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 by
writing to TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is
available on TMRS' website at www.TMRS.com.
- 53 -
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 13: TEXAS MUNICIPAL RETIREMENT SYSTEM-continued
The plan provisions are adopted by the governing body of the Town, within the options available in the state
statutes governing TMRS. Plan provisions for the Town were as follows:
Employee deposit rate 7.0%
Matching ratio(City to employee) 2 to 1
Years required for vesting 5
Service retirement eligibility
(expressed as age/years of service) 60/5,0/20
Updated service credit 100%repeating,transfers
Annuity increase to retirees 70%of CPI,repeating
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 Town contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the Town make
contributions monthly. Since the Town 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.
Three Year Trend Information
Fiscal Annual Actual Percent Net Pension
Year Pension Contribution of APC Obligation
Ending Cost(APC) Made Contributed (NPO)
2009 $ 307,279 $ 307,279 100% $ -
2010 346,903 368,094 106% (21,191)
2011 389,749 407,378 105% (17,629)
-54-
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 13: TEXAS MUNICIPAL RETIREMENT SYSTEM-continued
The required contribution rates for fiscal year 2011 are determined as part of the December 31, 2008 and 2009
actuarial valuations. Additional information as of the latest actuarial valuation,December 31,2010,also follows:
Actuarial Assumptions
Valuation Date 12/31/2008 12/31/2009 12/31/2010 prior 12/31/2010
to Restructure Restructured
Projected Unit Projected Unit Projected Unit Projected Unit
Actuarial Cost Method Credit Credit Credit Credit
Level Percent of Level Percent of Level Percent of Level Percent of
Amortization Method Payroll Payroll Payroll Payroll
24 years- 23.3 years-Closed 22.6 years-Closed 22.5 years-Closed
Remaining Amortization Period Closed Period Period Period Period
Amortization Period for 25 Years 25 Years 25 Years 25 Years
New Gains/Losses
10-Year Smoothed 10-Year Smoothed 10-Year Smoothed
Asset Valuation Method Amortized Cost Market Market Market
Investment Rate of Return* 7.5% 7.5% 7.5% 7.0%
Varies by age Varies by age and Varies by age and Varies by age and
Projected Salary Increases* and service service service service
*Includes Inflation at 3.00% 3.00% 3.00% 3.00%
Cost-of-Living Adjustments 2.1% 2.1% 2.1% 2.1%
Funded Status and Funding Progress
In June, 2011, SB 350 was enacted by the Texas Legislature,resulting in a restructure of the TMRS funds. This
legislation provided for the actuarial valuation to be completed,as if restructuring had occurred on December 31,
2010. In addition, the actuarial assumptions were updated for the new fund structure, based on an actuarial
experience study that was adopted by the TMRS Board at their May,2011 meeting(the review compared actual to
expected experience for the four-year period of January 1, 2006 through December 31, 2009). For a complete
description of the combined impact of the legislation and new actuarial assumptions, including the effects on
TMRS city rates and funding ratios,please see the December 31, 2010 TMRS Comprehensive Annual Financial
Report(CAFR).
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.
-55 -
TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 13: TEXAS MUNICIPAL RETIREMENT SYSTEM-continued
The schedule of funding progress below presents multi-year trend information about whether the actuarial value
of the plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
Schedule of Funding Progress for the Retirement Plan
For the Employees of the Town of Prosper
Actuarial Unfunded UAAL as a
Actuarial Accrued (Overfunded) Percentage
Actuarial Value of Liability AAL Funded Covered of Covered
Valuation Assets (AAL) (UAAL) Ratio Payroll Payroll
Date (a) (b) (b=a) (alb) -a/c
12/31/2008 $ 1,624,228 $ 2,529,352 $ 905,124 64.2% $ 3,321,607 27.2%
12/31/2009 2,288,445 3,343,417 1,054,972 68.4% 3,719,393 28.4%
12/31/2010(1) 3,070,169 4,268,064 1,197,895 71.9% 3,828,422 31.3%
12/31/2010(2) 3,175,249 4,606,199 1,430,950 68.9% 3,828,422 37.4%
(1) Actuarial valuation performed under the original fund structure
(2) Actuarial valuation performed under the new fund structure
NOTE 14: FUND BALANCE
The Town classifies governmental fund balances in accordance with Government Accounting Standards Board
(GASB) Statement No. 54,Fund Balance Reporting and Governmental Fund Type Definitions:
Nonspendable fund balance includes amounts that either(a)are not in a spendable form or(b)are legally or
contractually required to be maintained intact. At September 30, 2011, the Town had $576 in
nonspendable fund balance for prepaids.
Restricted fund balance includes amounts for which constraints have been placed on the use of the
resources either (a) externally imposed by creditors (such as through a debt covenant), grantors,
contributors, or laws or regulations of other governments, or(b) or imposed by law through constitutional
provisions or enabling legislation. At September 30,2011 the restricted fund balance includes fund balance
restricted for debt service of$737,259 and fund balance restricted for capital projects of$13,969,582.
Committed fund balance includes amounts that can be used only for the specific purposes determined by a
formal action of the government's highest level of decision-making authority, the Town Council.
Commitments may be changed or lifted only by the government taking the same formal action that imposed
the constraint originally. In accordance with Town Charter, an amount equal to twenty percent of total
general fund expenditures has been identified as committed. At September 30, 2011 the committed fund
balance includes contingency funds of$1,608,828.
Assigned fund balance includes amounts intended to be used by the government for specific purposes. The
Town has designated the Town Manager or his/her designee as the official authorized person to assign fund
balance. In governmental funds other than the general fund, assigned fund balance represents the amount
that is not restricted or committed. At September 30, 2011 the Town had assigned fund balances for
specific purposes including parks and recreation in the amount of$1,549,498.
Unassigned fund balance is the residual classification of the general fund and includes all amounts not
contained in the other classifications. The unassigned fund balance remaining in the General Fund at
September 30,2011 was$3,959,464.
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TOWN OF PROSPER,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 14: FUND BALANCE-continued
The Town uses restricted amounts first when both restricted and unrestricted fund balances are available.
Additionally, the Town would use restricted, committed, then assigned and lastly unassigned amounts of
unrestricted fund balance when expenditures are made.
The Town's financial goal is to achieve and maintain an unassigned fund balance in the general fund equal to
twenty-five percent of budgeted expenditures, but may be reduced down to ten percent in unusual financial
circumstances with a corrective five-year plan to restore the fund balance back to twenty-five percent.
NOTE 15: PRIOR PERIOD ADJUSTMENTS
During the performance of audit procedures sales tax was found to be understated due to the two month difference
between the time that sales tax is earned and reported and the time in which the comptroller distributes the sales
tax. In order to correct the beginning sales tax receivables and prior year sales tax revenue, an adjustment was
made to increase the general fund balance for$102,734 and to increase the Economic Development Corporation
fund balance for$34,245.
Internal service funds utilized by the Town should be classified as proprietary funds and included in the
proprietary fund financial statements along with the utility fund. We have reclassified the internal service fund
from the governmental funds to proprietary funds. This reclassification increases the beginning net assets of the
proprietary funds,and decreases the fund balance of governmental funds by$55,893.
NOTE 16:SUBSEQUENT EVENTS
Subsequent to September 30, 2011 the Town issued General Obligation Refunding and Improvement Bonds,
Series 2011, in the amount of$2,645,000. The bonds were issued to refund a portion of the Town's outstanding
debt in order to lower the overall debt service requirements of the Town, to purchase park equipment and to pay
for bond issuance costs. The Town's obligation is scheduled to be repaid over a 7 year period and bears interest
rates ranging from 1.75%—2.00%.
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I
TOWN OF PROSPER,TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-
BUDGET(GAAP BASIS)AND ACTUAL-IMPACT FEE FUND
YEAR ENDED SEPTEMBER 30,2011
Variance
Impact Fee Fund With Final
Final Budget
Original Amended Positive
Budget Budget Actual (Negative)
REVENUES:
Impact fees $ 650,000 $ 650,000 $ 1,592,139 $ 942,139
Investment income 25,000 25,000 30,666 5,666
Total revenues 675,000 675,000 1,622,805 947,805
EXPENDITURES:
Streets 1,300,000 1,300,000 966,204 333,796
Total expenditures 1,300,000 1,300,000 966,204 333,796
Excess of revenues over expenditures (625,000) (625,000) 656,601 1,281,601
OTHER FINANCING SOURCES (USES)
Transfers out - _ - _
Total other financing sources(uses) - - - _
Change in fund balances (625,000) (625,000) 656,601 1,281,601
Fund balances,beginning 6,238,857 6,238,857 6,238,857
Fund balances,ending $ 5,613,857 $ 5,613,857 $ 6,895,458 $ 1,281,601
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TOWN OF PROSPER,TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30,2011
Total
Special Revenue Nonmajor
Parks& Governmental
Recreation Contributions Funds
ASSETS:
Cash and cash equivalents $ 1,549,168 $ 2,066,212 $ 3,615,380
Receivables 3,280 3,280
Due from other funds 400 55 455
Total Assets $ 1,549,568 $ 2,069,547 $ 3,619,115
LIABILITIES:
Escrow payable $ $ 341,666 $ 341,666
Due to other funds 70 1,908 1,978
Total Liabilities 70 343,574 343,644
FUND BALANCES:
Restricted for:
Capital projects 1,725,973 1,725,973
Assigned 1,549,498 1,549,498
Total Fund Balances 1,549,498 1,725,973 3,275,471
TOTAL LIABILITIES AND FUND BALANCES $ 1,549,568 $ 2,069,547 $ 3,619,115
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i
TOWN OF PROSPER,TEXAS
COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30,2011
Total
Special Revenue Nonmajor
Parks& Governmental
Recreation Contributions Funds
REVENUES:
Escrow income $ $ 53,351 $ 53,351
Investment income 7,811 7,811
Fines,warrants and seizures 7,095 7,095
Contributions 5,940 65,232 71,172
Total Revenues 13,751 125,678 139,429
EXPENDITURES:
Current:
General government 3,188 3,188
Police department 28,116 28,116
Court 15,697 15,697
Fire department 17,262 17,262
Parks and recreation 29,497 23,975 53,472
Capital outlay 409,119 409,119
Total Expenditures 438,616 88,238 526,854
Excess(deficiency)of
Revenues over expenditures (424,865) 37,440 (387,425)
OTHER FINANCING SOURCES(USES):
Transfers in _
Transfers out (248,847) (248,847)
Total Other Financing Sources(Uses) - (248,847) (248,847)
Net change in fund balances (424,865) (211,407) (636,272)
Fund balances,beginning 1,974,363 1,937,380 3,911,743
Fund balances,ending $ 1,549,498 $ 1,725,973 $ 3,275,471
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TOWN OF PROSPER,TEXAS
SCHEDULE OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS-
BUDGET AND ACTUAL-UTILITY FUND
YEAR ENDED SEPTEMBER 30,2011
Variance
Utility Fund With Final
Final Actual Budget
Original Amended Budget Positive
Budget Budget Basis (Negative)
OPERATING REVENUES
Water and sewer charges $ 4,791,410 $ 4,791,410 $ 5,904,939 $ 1,113,529
Sanitation charges 580,000 580,000 681,480 101,480
Storm drainage utility fees 168,000 168,000 192,350 24,350
Water and sewer connections 135,000 135,000 425,714 290,714
Service initiation 18,000 18,000 33,670 15,670
Miscellaneous 16,600 16,600 47,267 30,667
Total Operating Revenue 5,709,010 5,709,010 7,285,420 1,576,410
OPERATING EXPENSES
Personnel services 575,945 575,945 555,837 20,108
Materials and supplies 386,075 386,075 263,689 122,386
Contractual services 2,951,980 2,951,980 3,212,791 (260,811)
Storm drainage 140,000 140,000 87,465 52,535
Total Operating Expenses 4,054,000 4,054,000 4,119,782 (65,782)
Operating Income(Loss) 1,655,010 1,655,010 3,165,638 1,510,628
NON-OPERATING REVENUES
(EXPENSES)
Interest revenue 40,200 40,200 53,242 13,042
Interest expense and fiscal charges (1,353,465) (1,353,465) (553,913) 799,552
Total nonoperating revenues
(Expenses) (1,313,265) (1,313,265) (500,671) 812,594
INCOME BEFORE TRANSFERS 341,745 341,745 2,664,967 2,323,222
TRANSFERS
Net transfersin/(out) (434,125) (434,125) (434,125) -
Total Transfers (434,125) (434,125) (434,125) -
Change in net assets $ (92,380) $ (92,380) 2,230,842 $ 2,323,222
Reconciliation to generally accepted
accounting principles(GAAP)
Depreciation (621,375)
Amortization (16,546)
Change in net assets(GAAP basis) 1,592,921
Net assets,beginning 11,737,787
Net assets,ending $ 13,330,708
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STATISTICAL
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STATISTICAL SECTION
This part of the Town of Prosper'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 66
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 76
These schedules contain information to help the reader assess the government's
most significant local revenue source,the property tax.
Debt Capacity 82
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 88
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 90
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.
Source: Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial
reports for the relevant year.
-65-
TOWN OF PROSPER,TEXAS
Net Assets by Component
Last Eight Fiscal Years
(accrual basis of accounting)
(amounts expressed in thousands)
Fiscal Year
2004 2005 2006 2007
Governmental activities
Invested in capital assets,net of related debt $ 587 $ 1,119 $ 1,225 $ 706
Restricted 131 223 12,226 8,150
Unrestricted 1,246 3,221 (6,941) 1,861
Total governmental activities net assets $ 1,964 $ 4,563 $ 6,510 $ 10,717
Business-type activities
Invested in capital assets,net of related debt $ 2,728 $ 2,765 $ 3,750 $ 4,609
Restricted 33 32 40 39
Unrestricted 945 1,199 2,862 3,242
Total business-type activities net assets $ 3,706 $ 3,996 $ 6,652 $ 7,890
Primary government
Invested in capital assets,net of related debt $ 3,315 $ 3,884 $ 4,975 $ 5,315
Restricted 164 255 12,266 8,189
Unrestricted 2,191 4,420 (4,079) 5,103
Total primary government net assets $ 5,670 $ 8,559 $ 13,162 $ 18,607
Source: Town financial statements
Note: Fiscal Year 2004 was the initial year of implementation of GASB Statement No. 34.
Additional amounts will be added each year until ten years are reported.
-66-
2008 2009 2010 2011
$ 33,422 $ 33,919 $ 37,271 $ 37,347
9,809 8,440 5,952 9,359
4,693 3,704 8,410 7,332
$ 47,924 $ 46,063 $ 51,633 $ 54,038
$ 3,321 $ 6,804 $ 5,704 $ 5,615
42 44 - -
6,338 5,929 6,034 7,716
$ 9,701 $ 12,777 $ 11,738 $ 13,331
$ 36,743 $ 40,723 $ 42,975 $ 42,962
9,851 8,484 5,952 9,359
11,031 9,633 14,444 15,048
$ 57,625 $ 58,840 $ 63,371 $ 67,369
-67-
TOWN OF PROSPER,TEXAS
Changes in Net Assets
Last Eight Fiscal Years
(accrual basis of accounting)
(amounts expressed in thousands)
Fiscal Year
Expenses 2004 2005 2006 2007
Governmental activities:
General government $ 638 $ 934 $ 1,229 $ 1,492
Public Safety 1,285 1,601 1,805 2,089
Transportation 414 230 236 417
Culture and Recreation 17 49 244 125
Interest on long-term debt 195 276 252 516
Total governmental activities expenses 2,549 3,090 3,766 4,639
Business-type activities:
Water, Sewer and sanitation 1,534 2,381 2,652 3,889
Total business-type activities expenses 1,534 2,381 2,652 3,889
Total primary government expenses 4,083 5,471 6,418 8,528
Program Revenues
Governmental activities:
Charges for services:
General government 802 1,318 1,852 2,363
Public Safety 348 348 304 159
Transportation 293 221 412 1,047
Culture and Recreation 21 115 98 680
Operating grants and contributions 123 559 266 547
Total governmental activities program revenues 1,587 2,561 2,932 4,796
Business-type activities:
Charges for services:
Water,sewer and sanitation 1,522 2,243 3,603 3,444
Total business-type activities program revenues 1,522 2,243 3,603 3,444
Total primary government program revenues 3,109 4,804 6,535 8,240
Net(expense)revenue
Governmental activities (962) (529) (834) 157
Business-type activities (12) (138) 951 (445)
Total primary government net expense $ (974) $ (667) $ 117 $ (288)
continued
-68-
2008 2009 2010 2011
$ 2,063 $ 2,764 $ 2,193 $ 2,722
2,485 3,329 3,869 4,108
1,444 1,356 1,609 2,370
130 444 917 747
459 1,276 895 1,139
6,581 9,169 9,483 11,086
4,076 4,460 5,140 5,312
4,076 4,460 5,140 5,312
10,657 13,629 14,623 16,398
1,440 561 672 826
162 360 397 400
485 - - -
418 - - -
452 1,397 2,224 3,258
2,957 2,318 3,293 4,484
4,507 4,720 5,393 7,238
4,507 4,720 5,393 7,238
7,464 7,038 8,686 11,722
(3,624) (6,851) (6,190) (6,602)
431 260 253 1,926
$ (3,193) $ (6,591) $ (5,937) $ (4,676)
continued
-69-
TOWN OF PROSPER,TEXAS
Changes in Net Assets
Last Eight Fiscal Years
(accrual basis of accounting)
(amounts expressed in thousands)
Fiscal Year
General Revenues and Other Changes in Net Assets 2004 2005 2006 2007
Governmental activities:
Taxes
Property taxes $ 870 $ 1,574 $ 1,686 $ 3,015
Sales taxes 971 1,407 1,509 1,208
Franchise taxes 162 206 201 304
Impact fees and escrow fees - - - -
Investment income 79 289 574 1,107
Miscellaneous 59 63 376 79
Gain/(Loss)on sale of capital asset - (5) - -
Transfers (284) (406) (1,565) (1,553)
Total governmental activities 1,857 3,128 2,781 4,160
Business-type activities:
Investment income 12 23 58 132
Miscellaneous income 12 - 82 33
Gain/(Loss)on sale of capital asset - - - -
Transfers 284 406 1,565 1,553
Total business-type activities 308 429 1,705 1,718
Total primary government 2,165 3,557 4,486 5,878
Change in Net Assets
Governmental activities 895 2,599 1,947 4,317
Business-type activities 296 291 2,656 1,273
Total primary government $ 1,191 $ 2,890 $ 4,603 $ 5,590
Source: Town financial statements
Note: Fiscal Year 2004 was the initial year of implementation of GASB Statement No. 34.
Additional amounts will be added each year until ten years are reported.
-70-
W
2008 2009 2010 2011
$ 4,429 $ 5,296 $ 5,505 $ 5,986
1,288 1,077 1,309 1,321
341 428 399 425
1,828 367 2,688 53
596 456 338 155
114 74 116 530
(1,237) (2,708) 15 434
7,359 4,990 10,370 8,904
109 65 74 53
33 43 39 47
1,237 2,708 (15) (434)
1,379 2,816 98 (334)
8,738 7,806 10,468 8,570
3,735 (1,861) 4,180 2,302
1,810 3,076 351 1,592
$ 5,545 $ 1,215 $ 4,531 $ 3,894
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w
TOWN OF PROSPER,TEXAS
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
(amounts expressed in thousands)
Fiscal Year
2002 2003 2004 2005 2006 2007
General Fund
Reserved $ 1,550 $ 1,468 $ - $ - $ 74 $ 59
Unreserved 453 580 1,181 1,821 2,855 3,034
Total general fund $ 2,003 $ 2,048 $ 1,181 $ 1,821 $ 2,929 $ 3,093
All other g overnmental funds
Reserved $ 74 $ 79 $ 131 $ 223 $ 315 $ 581
Unreserved,reported in:
Capital Project funds - - 3,604 3,819 10,011 3,160
Impact Fee Funds - - 478 1,624 1,826 4,290
Special revenue funds - - - - -
Total all other governmental funds $ 74 $ 79 $ 4,213 $ 5,666 $ 12,152 $ 8,031
i
x enditures and Changes in Fund balances-Governmental Funds
Source: Statements of Revenues,E g
P
tables in Town CAFRs
i
I
1
-72-
2008 2009 2010 2011
$ 18 $ - $ 3 $ 1
3,989 4,398 4,968 5,568
$ 4,007 $ 4,398 $ 4,971 $ 5,569
$ 622 $ 2,557 $ 577 $ 737
2,233 16,920 5,337 5,348
6,936 5,883 6,239 6,895
- - 3,968 3,276
$ 9,791 $ 25,360 $ 16,121 $ 16,256
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TOWN OF PROSPER,TEXAS
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
(amounts expressed in thousands)
Fiscal Year
2002 2003 2004 2005 2006 2007
Revenues
Taxes $ 1,389 $ 1,455 $ 2,005 $ 3,186 $ 3,383 $ 4,500
Licenses and permits 198 295 1,124 1,876 2,429 3,964
Intergovernmental 39 393 111 276 33 500
Charges for services - - 243 245 304 156
Fines and forfeitures - - 98 93 106 131
Investment Earnings 59 30 79 289 574 1,107
Contributions 13 - 12 72 61 45
Miscellaneous 4 7 59 63 376 79
Grants - - - - -
Total Revenues 1,702 2,180 3,731 6,100 7,266 10,482
Expenditures
General government 530 588 624 819 1,178 1,466
Public safety 545 859 1,099 1,342 1,594 1,871
Transportation 172 168 176 165 210 177
Culture and recreation - 48 7 26 29 92
Capital outlay 455 425 1,942 770 378 8,338
Debt service
Principal 40 80 181 189 221 386
Interest 74 88 184 336 257 493
Other charges - - - - - -
Total Expenditures 1,816 2,256 4,213 3,647 3,867 12,823
Excess of revenues over(under) (114) (76) (482) 2,453 3,399 (2,341)
expenditures
Other financing sources(uses)
Transfer in - - 292 250 - -
Transfer out (260) (256) (576) (656) (1,565) (1,553)
Proceeds from insurance - - - - -
Proceeds from debt issuance 1,899 325 4,003 - 5,760 -
Premium(discount)on debt issuance
Bonds issued
Capital Leases 56 30 45 - 48
Net other financing sources(uses) 1,639 125 3,749 (361) 4,195 (1,505)
Net change in fund balances $ 1,525 $ 49 $ 3,267 $ 2,092 $ 7,594 $ (3,846)
Debt service as a percentage of
noncapital expenditures 8.4% 9.2% 16.1% 18.2% 13.7% 19.6%
Source: Statement of Revenues,Expenditures,
and Changes in Fund Balance for Governmental Funds
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2008 2009 2010 2011
$ 6,034 $ 6,738 $ 7,264 $ 7,757
3,925 550 672 670
452 584 1,109 1,109
161 976 2,858 1,809
247 239 227 393
596 456 339 154
50 59 45 272
64 74 116 115
- 278 1,070 285
11,529 9,954 13,700 12,564
2,003 2,225 2,173 2,750
2,194 3,007 3,648 3,879
352 257 503 1,269
97 379 814 653
2,108 2,943 13,174 4,112
399 484 527 936
481 893 1,600 1,101
- - - 59
7,634 10,188 22,439 14,759
3,895 (234) (8,739) (2,195)
- 232 2,460 1,066
(1,237) (2,940) (2,445) (667)
- - 426
- 13,900 - 2,045
11
14 41 58
(1,223) 11,233 73 2,881
$ 2,672 $ 10,999 $ (8,666) $ 686
15.9% 19.0% 23.0% 19.1%
-75-
I
TOWN OF PROSPER,TEXAS
General Governmental Tax Revenues By Source
Last Eight Fiscal Years
(modified accrual basis of accounting)
(amounts expressed in thousands)
Fiscal Property Sales Franchise
Year Tax Tax Tax Total
2004 $ 870 $ 971 $ 162 $ 2,003
2005 1,574 1,407 206 3,187
2006 1,686 1,507 201 3,394
2007 3,015 1,208 304 4,527
2008 4,429 1,288 341 6,058
2009 5,296 1,077 428 6,801
2010 5,504 1,309 399 7,212
2011 $ 6,012 $ 1,321 $ 424 $ 7,757
Source: Town CAFRs and detailed financial records
Note: Fiscal Year 2004 was the initial year of implementation of GASB Statement No.34.
Additional amounts will be added each year until ten years are reported.
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r
TOWN OF PROSPER,TEXAS
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
(amounts expressed in thousands)
a
Total Taxable Assesed
Fiscal Total Estimated Estimated Estimated Less: Total Taxable' Direct Value as a%
Year Market Value Market Value Market Value Tax Exempt Assessed Tax of Estimated
Ended as Assessed Real Property Personal Property Real Property Value Rate Market Value
2002 $ 192,829 $ 174,996 $ 17,833 $ 35,396 $ 157,433 0.36000 81.64%
2003 269,961 253,923 16,038 50,097 219,864 0.32410 81.44%
2004 315,804 303,034 12,770 59,605 256,199 0.47970 81.13%
2005 389,550 373,458 16,092 76,950 312,600 0.40539 80.25%
2006 562,960 541,335 21,625 156,664 406,296 0.49882 72.17%
2007 922,056 895,671 26,385 353,017 569,039 0.52000 61.71%
2008 1,280,490 1,249,228 31,262 461,769 818,721 0.52000 63.94%
2009 1,502,656 1,470,009 32,647 507,992 994,664 0.52000 66.19%
2010 1,549,887 1,516,169 33,718 503,338 1,046,549 0.52000 67.52%
2011 1,651,676 1,618,179 33,497 504,888 1,146,788 0.52000 69.43%
Source: Collin and Denton County Appraisal District Certified Totals and Collin County Tax Assessor-Collector Tax Rolls
'Taxable Assessed Values are net of local option over-65 exemptions, state mandated agricultural exemptions, and
disabled veterans'exemptions. This amount may include senior tax freeze ceiling amounts.
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TOWN OF PROSPER,TEXAS
Property Tax Rates'
Direct and Overlapping'Governments
(per$100 of assessed value)
Last Ten Fiscal Years
Town of Prosper Tax Rate Overlapping Tax Rates
Fiscal General Debt Prosper Collin Collin Denton
Year Government Service Total ISD County College County
2002 0.244698 0.115302 0.360000 1.760960 0.250000 0.091946 0.248970
2003 0.218440 0.105660 0.324100 1.819900 0.250000 0.091932 0.247170
2004 0.188440 0.291260 0.479700 1.951500 0.250000 0.090646 0.254800
2005 0.184549 0.220836 0.405385 1.975310 0.250000 0.089422 0.246480
2006 0.184549 0.314268 0.498817 1.800000 0.245000 0.087683 0.231920
2007 0.275075 0.244925 0.520000 1.670000 0.245000 0.086984 0.235890
2008 0.305011 0.214989 0.520000 1.670000 0.242500 0.086493 0.235770
2009 0.314084 0.205916 0.520000 1.640000 0.242500 0.086300 0.249800
2010 0.334742 0.185258 0.520000 1.630000 0.240000 0.086300 0.273900
2011 0.316937 0.203063 0.520000 1.670000 0.240000 0.086300 0.277357
Source: Collin County and Denton County Appraisal Districts
'Tax rate is per$100 of taxable assessed value
'Overlapping rates are those of local and county governments that apply to property owners within the Town of Prosper.
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1
i
I
Total Direct Total Direct
&Overlapping &Overlapping
Rates Rates
Collin County Denton County
2.462906 2.369930
2.485932 2.391170
2.771846 2.686000
2.720117 2.627175
2.631500 2.530737
2.521984 2.425890
2.518993 2.425770
2.488800 2.409800
2.476300 2.423900
2.516300 2.467357
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TOWN OF PROSPER,TEXAS
Property Tax Levies and Collections
Last Ten Fiscal Years
Collections within the
Total Tax Fiscal Year of the Levy Total Collections to Date
Fiscal Year Levy for Percentage Collections in Percentage
Ended Fiscal Year Amount of Levy Subsequent Years Amount of Levy
2002 $ 570,374 $ 546,714 95.85% $ 23,327 $ 570,041 99.9%
2003 693,398 684,901 98.77% 8,163 693,064 100.0%
2004 860,692 846,098 98.30% 13,670 859,768 99.9%
2005 1,561,979 1,550,274 99.25% 9,245 1,559,519 99.8%
2006 1,664,728 1,643,724 98.74% 17,635 1,661,359 99.8%
2007 2,920,145 2,871,131 98.32% 45,127 2,916,258 99.9%
2008 4,345,264 4,279,374 98.48% 62,336 4,341,710 99.9%
2009 5,218,951 5,149,015 98.66% 50,676 5,199,691 99.6%
2010 5,404,368 5,338,109 98.77% 32,758 5,370,867 99.4%
2011 $ 5,932,358 $ 5,898,857 99.44% $ - $ 5,898,857 99.4%
Note: Taxes stated are for General Fund and Debt Service Funds.
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r
TOWN OF PROSPER,TEXAS
Principal Property Taxpayers
Fiscal Year End 2011 and 2002
2011 2002
Percentage of Percentage of
Taxable Total Taxable Taxable Total Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Western Rim Investors $ 36,970,550 1 3.22%
Prosper Land Company 9,872,357 2 0.86% $ 8,805,841 3 5.59%
Saddle Creek Investments LTD 7,841,324 3 0.68%
Five SAC Self-Storage Corp. 6,543,640 4 0.57%
HCB Real Holdings LLC 6,528,556 5 0.57%
CC Joint Ventures 6,150,139 6 0.54%
Sanders Deion 5,363,960 7 0.47% 9,232,725 2 5.86%
First Texas Homes Inc 5,119,228 8 0.45%
Preston Development LTD 4,904,163 9 0.43%
Beazer Homes 4,747,486 10 0.41%
183 Land Corporation 9,958,158 1 6.33%
Mustang-Midway Plano 5,999,434 4 3.81%
Godwin Investments 3,654,480 5 2.32%
Wells Fargo Bank NA 3,378,515 6 2.15%
2002 Tuscany Partner 3,368,043 7 2.14%
Shaddock Developers 3,338,750 8 2.12%
Jobe Properties 3,335,620 9 2.12%
Lattimore Materials 3,319,774 10 2.11%
Totals $ 94,041,403 8.20% $ 54,391,340 34.55%
Source: Collin and Denton County Appraisal Districts
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TOWN OF PROSPER,TEXAS
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(amounts expressed in thousands,except per capita amount)
Governmental Activities Business Type Activities
General
Fiscal Obligation Certificates of Capital Revenue
Year Bonds Obligation Notes Leases Bond Notes
2002 $ - $ 1,682 $ 217 $ - $ 2,228 $ 61
2003 - 1,642 503 56 2,144 47
2004 - 5,584 403 50 8,546 33
2005 - 5,521 298 74 8,444 17
2006 - 11,214 188 31 14,581 -
2007 - 10,993 71 30 14,272 -
2008 - 10,682 - 31 13,813 -
2009 - 24,136 - 34 13,194 -
2010 - 22,259 - 51 13,915 -
2011 $ - $ 21,355 $ 2,045 $ 21 $ 13,179 $ -
Note: Details regarding the Town's outstanding debt can be found in the notes to the financial statements.
' See the Schedule of Demographic and Economic Statistics for personal income and population data.
N/A: Data not available at the time of this publication
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M
Total Percentage
Primary of Personal Per
Government Income' Capita'
$ 4,188 4.3% $ 1,745
4,392 4.0% 1,627
14,616 11.2% 4,715
14,354 7.8% 3,501
26,014 10.8% 4,955
25,366 8.8% 4,193
24,526 7.8% 3,862
37,364 11.5% 5,263
36,225 N/A 3,844
$ 36,600 N/A $ 3,469
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TOWN OF PROSPER,TEXAS
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
(amounts expressed in thousands,except per capita amount)
Percentage of
General Certificates Other Actual Taxable
Fiscal Obligation of Notes or Value of Per
Year Bonds Obligation Obligations Total Property' Capita`
2002 $ - $ 1,682 $ 217 $ 1,899 1.21% $ 791
2003 - 1,642 559 2,201 1.00% 815
2004 - 5,584 453 6,037 2.36% 1,947
2005 - 5,521 372 5,893 1.89% 1,437
2006 - 11,214 219 11,433 2.81% 2,178
2007 - 10,993 101 11,094 1.95% 1,834
2008 - 10,682 31 10,713 1.31% 1,687
2009 - 24,136 34 24,170 2.43% 3,404
2010 - 22,259 51 22,310 2.13% 2,368
2011 $ - $ 21,355 $ 2,066 $ 23,421 2.04% $ 2,220
Note:Details regarding the Town's outstanding debt can be found in the notes to the financial statements.
' See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property for property value data.
2 Population data can be found in the Schedule of Demographic and Economic Statistics
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TOWN OF PROSPER,TEXAS
Direct and Overlapping Governmental Activities Debt
As of September 30,2011
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable' Debt
Debt repaid with property taxes:
Prosper Independent School District $ 237,591,623 64.82% $ 154,006,890
Collin County 387,580,000 1.82% 7,053,956
Collin College 45,690,000 1.82% 831,558
Denton County 478,020,000 0.15% 717,030
Subtotal-overlapping debt 1,148,881,623 162,609,434
Town of Prosper direct debt $ 23,399,850 100% 23,399,850
Total direct and overlapping debt $ 186,009,284
Source: Outstanding data for other entities provided by Municipal Advisory Council of Texas as of 07/15/2011.
Note:
Overlapping governments are those that coincide, at least in part,with the geographic boundaries of the Town. This schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of
the Town of Prosper. This process recognizes that,when considering the government's ability to issue and repay long-term debt,
the entire debt burden borne by the residents and businesses should be taken into account. However,this does not imply that
every taxpayer is a resident,and therefore responsible for repaying the debt,of each overlapping government.
'The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages
were estimated by determining the portion of the government's taxable assessed value that is within the government's boundaries
and dividing it by the government's total taxable assessed value.
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TOWN OF PROSPER,TEXAS
Legal Debt Margin Information
Last Ten Fiscal Years
(rates rounded to 4 places)
Fiscal Year
2002 2003 2004 2005 2006 2007
Tax Rate Limit $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50
Total Tax Rate 0.3600 0.3241 0.4797 0.4054 0.4988 0.5200
Available Tax Rate $ 1.1400 $ 1.1759 $ 1.0203 $ 1.0946 $ 1.0012 $ 0.9800
Note: The Town Charter does not provide for a debt limit.
For FY 2002-FY 2007,under Article XI, Section 4 of the Texas Constitution,the maximum tax rate under general
law charter is$1.50 per$100 assessed valuation.
For FY 2008-Present,under Article XI, Section 5 of the Texas Constitution,the maximum tax rate under a home
rule charter is$2.50 per$100 assessed valuation.
No direct bond debt limitation is imposed on the Town under current state law or the Town's Charter.
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2008 2009 2010 2011
$ 2.50 $ 2.50 $ 2.50 $ 2.50
0.5200 0.5200 0.5200 0.5200
$ 1.9800 $ 1.9800 $ 1.9800 $ 1.9800
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TOWN OF PROSPER,TEXAS
Demographic and Economic Statistics
Last Ten Fiscal Years
Personal Per
Income Capita
Fiscal (expressed in Personal School Unemployment
Year Population' thousands) IncomeZ Enrollment3 Rate
2002 2,400 $ 98,294 $ 40,956 901 6.1%
2003 2,700 110,419 40,896 962 6.0%
2004 3,100 130,721 42,168 1,300 5.0%
2005 4,100 183,942 44,864 1,475 4.6%
2006 5,250 241,064 45,917 1,825 4.3%
2007 6,050 289,704 47,885 2,100 3.9%
2008 6,350 313,963 49,443 2,800 4.6%
2009 7,100 325,776 45,884 3,220 7.3%
2010 9,423 N/A N/A 3,575 7.5%
2011 10,550 N/A N/A 3,627 7.0%
'Population data estimates from the North Central Texas Council of Governments
2Per capita personal income data not available specific to Prosper.Used Collin County data from Bureau of Economic
Analysis to estimate
3Enrollment data comes from Prosper ISD
4Annual Unemployment Rate from the Texas Workforce Commission
N/A: Data not available at the time of this publication
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TOWN OF PROSPER,TEXAS
Principal Employers
Current Year
2011
Percentage
of Total Town
Emnlover Emnlovees Rank EmDlovment
Prosper ISD 502 1 41.49%
Town of Prosper 72 2 5.95%
Cornerstone Automation Systems,Inc 64 3 5.29%
Gentle Creek 50 4 4.13%
Prosper Bank 35 5 2.89%
ProBuild 30 6 2.48%
Lattimore Materials 30 7 2.48%
Dairy Manufacturers, Inc. 30 8 2.48%
Mahard Egg Farm 30 9 2.48%
CVS 20 10 1.65%
Total 863 71.32%
Source: Prosper Chamber of Commerce,Self-reported by Employers, Staff Estimate
N/A: Data not available for 2002 at the time of this publication
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TOWN OF PROSPER,TEXAS
Operating Indicators by Function/Program
Last Ten Fiscal Years
(dollar amounts below expressed in thousands)
Fiscal Year
Function/Pro2ram 2002 2003 2004 2005 2006 2007
General Government
Building Inspection Permits
Commercial Construction
Number of Units N/A N/A N/A N/A 15 14
Total dollar value of permits issued N/A N/A N/A N/A $ 5,630 $ 14,410
Average Value N/A N/A N/A N/A $ 375 $ 1,029
Residential Construction
Number of Units N/A N/A 177 310 340 338
Total dollar value of permits issued N/A N/A N/A N/A $ 125,180 $ 109,141
Average Value N/A N/A N/A N/A $ 368 $ 323
Public Safety
Police
Physical Arrests 8 18 32 47 48 64
Traffic Collisions 40 69 95 115 128 99
Fire
Total Incidents/Calls for Service N/A N/A 613 784 901 576
Fire N/A N/A 28 43 66 34
Overpressure/Explosion N/A N/A - - - I
Rescue&EMS N/A N/A 484 544 613 292
Hazardous Condition N/A N/A 21 25 24 53
Service Call N/A N/A 23 60 57 91
Good Intent Call N/A N/A 21 49 66 55
False Alarm&False Call N/A N/A 27 42 46 45
Severe Weather&Natural Disaster N/A N/A - 3 - 2
Special Incident N/A N/A 9 18 29 3
Fire Marshal
Fire Inspections N/A N/A N/A N/A N/A N/A
Fire Safety Programs N/A N/A N/A N/A N/A N/A
Municipal Court
Number of cases filed N/A N/A 882 887 1,059 1,123
Number of cases closed N/A N/A 796 678 825 979
Public Works
Water& Sewer
Water Customers 934 1,044 1,277 1,656 2,013 2,380
Wastewater Customers 614 733 867 1,173 1,493 1,842
Source: Town of Prosper Department Staff
N/A: Data not available at the time of this publication. The software for tracking Fire Marshal stats changed
in late FY 2011. Staff is still merging and compiling data.
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i
2008 2009 2010 2011
23 14 8 12
$ 6,195 $ 4,721 $ 3,150 $ 36,359
$ 269 $ 337 $ 394 $ 3,030
227 204 299 346
$ 99,110 $ 62,870 $ 79,232 $ 128,987
$ 437 $ 308 $ 265 $ 373
90 88 150 109
72 92 138 151
646 747 776 1,046
56 45 42 63
1 - - 1
334 379 399 441
38 36 30 38
104 116 147 234
59 80 61 85
52 87 95 107
2 3 2 64
i - 13
N/A 94 112 N/A
N/A 37 42 N/A
1,762 1,743 2,050 2,025
1,707 1,592 1,504 1,833
2,664 2,883 3,080 3,431
2,007 2,137 2,333 2,672
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TOWN OF PROSPER,TEXAS
Full-time Equivalent Town Government Employees by Function
Last Ten Fiscal Years
Fiscal Year
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
GENERAL FUND
Administration 3 3 3 4 4 5 5 5 5.5 5.5
Code Enforcement - - - 1 1 1 1 I 1 1
Court 1 1 1 I 1 1 1 1 1 1
Dispatch - - - - - - - 1 6 7
Engineering - - - - - 1 1 1 1 1
Fire 4.5 4.5 5.5 8.5 8.5 8.5 12.5 18.5 18.5 18.5
Fire Marshal - - - - - I 1 1 I 1
Inspections 1 1 2 3 4 6 7 8 6 6
Library - - - - - 1 1 1 1 I
Parks - - - - 1 1 2 2 4 4
Planning - - - 1 1 1 2 3 3 2
Police 4 6 6 6 7 9 8 11 10 11
Streets 1 1 1 2 2 2 2 2 2 2
Total General Fund 15 17 19 27 30 38 44 56 60 61
ENTERPRISE FUNDS
Storm Drainage - - - - - - - - - I
Utility Billing - - - - 1 1 2 2 2 2
Wastewater 1 1 1 2 4 5 5 5 5 5
Water I 1 1 2 3 2 2 2 2 2
Total General Fund 2 2 2 4 8 8 9 9 9 10
CAPITAL PROJECTS FUND - - - - - - - 1 1 1
17 19 21 31 38 46 53 66 70 72
Source:Town of Prosper Annual Budget
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