10-021 - R TOWN OF PROSPER, TEXAS RESOLUTION NO. 10-021
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, HEREBY ACCEPTING THE TOWN'S 2008-2009
FISCAL YEAR FINANCIAL AUDIT AS PRESENTED BY PINGLETON,
HOWARD & COMPANY, P.C., CERTIFIED PUBLIC ACCOUNTANTS
ON FEBRUARY 23, 2010; AUTHORIZING PUBLICATION OF THE
AUDIT SUMMARY.
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 signed an audit engagement letter on August, 3, 2009 for
Pingleton, Howard and Company P.C. to complete the Town's Fiscal Year 2008-2009
Independent Audit.
WHEREAS, a copy of the Independent Audit for the 2008-2009 Fiscal Year was
received and reviewed by Town Staff.
WHEREAS, the Town Charter requires that upon completion of the audit, the
summary shall be published immediately in the official newspaper of the Town and
copies of the audit 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_l: The Town Council of the Town of Prosper, Texas, hereby accepts the
Town's 2008-2009 fiscal year financial audit as presented by Pingleton, Howard & Company,
P.C., Certified Public Accountants on February 23,2010.
SECTION 2; The summary of the completed audit shall be published immediately in
the official newspaper of the Town and copies of the audit placed on file in the office of
the person performing the duties of Town Secretary, as a public record.
SECTION 3: This Resolution shall take effect immediately upon its passage.
RESOLVED THIS THE 23rd day of February, 2010.
Ray Snflkli,Mayor Pro-Tem
ATTEST TO:
atthe
w D. Denton, TRMC �� mb
Town Secretary � „
µ
Date of Publication AA?� ) Dallas Morning News
PINGLETON, HOWARD & COMPANY, P. C.
CERTIFIED PUBLIC ACCOUNTANTS
P. 0. BOX 148
FRISCO.TEXAS 75034
972-335-9754/FAX 972-335-9758
TOM W.PINGLETON,CPA R.
RANDY HOWARD,CPA AMERICAN INSTITUTE OF CPAS
R,WAYNE NABORS.CPA AICPA DIVISION FOR CPA FIRMS
ROBIN J.TURNBULL.CPA TEXAS SOCIETY OFCPAS
WHITNEY YOUNTS,CPA
December 23, 2009
Honorable Mayor and
:Members of the Town Council
P.O.Box 307
Prosper,Texas 75078
We have audited the financial statements of the Town of Prosper for the year ended September 30,2009,
and have issued our report thereon dated December 23, 2008.Professional standards require that we
provide you with the following information related to our audit,
Out bi!i rider U.S. Cener lly Agggptgd AMditjn,g 5j&ndMd§
As otated in our engagement letter dated July 20,2009,our responoibility,as deaccribcd by profe ional
standards,is to plan and perform our audit to obtain reasonable,but not absolute, assurance that the
financial statements are free of material misstatement and are fairly presented in accordance with U.
S.generally accepted accounting principles. Because an audit is designed to provide reasonable,but not
absolute assurance and because we did not perform a detailed examination of all transactions,there is
a risk that material misstatements may exist and not be detected by us.
As part of our audit, we considered the internal control of the Town of Prosper. Such considerations
were solely for the purpose of determining our audit procedures and not to provide any assurance
concerning such internal control.
Silmi—flopt Accounting PWicips
Management is responsible for the selection and use of appropriate accounting policies. In accordance
with the terms of our engagement letter, we will advise management about the appropriateness of
accounting policies and their application. No new accounting policies were adopted and the application
of existing policies was not changed during 2000, We noted no transactions entered into by the Town
of Prosper during the year that were both significant and unusual,and of which,under professional
standards, we are required to inform you, or transactions for which there is a lack of authoritative
guidance or consensus.
Amuntipg 1" ti.ma es
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to
the financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. We evaluated the key factors and assumptions used to develop the
accounting estimates in determining that they were reasonable in relation to the financial statements
taken as a whole.
Honorable Mayor and
Members of the Town Council
December 23, 2009
Page Two
A,Udit Adiustments
For purposes of this letter,professional standards define an audit adjustment as a proposed correction
of the financial statements that, in our judgment, may not have been detected except through our
auditing procedures. An audit adjustment mayor may not indicate matters that could have a significant
effect on the Town of Prosper's financial reporting process(that is,cause future financial statements to
bo materially rniaetatod). In our judgment,none of tho adjuatmento wo prop000d,oithor individually or
in the aggregate,indicate matters that could have a significant effect on the Town of Prosper's financial
reporting process,
1?iNgree=nt§with Man,Win
e t
For purposes of this letter,professional standards define a disagreement with management as a matter,
whether or not resolved to our satisfaction, concerning a financial accounting,reporting,or auditing
matter that could be significant to the financial statements or the auditor's report. We are pleased to
report that no such disagreements.arose during the course of our audit.
f4' n§UJJAJjoR§with Other Independgat Accountants
In some cases,management maydec.de to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
application ofan accounting principle to the governmental unit's financial statements or a determination
oftha type of widitor"s nninion that may be,eypresaod on those st'Atoments,our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge,there were no such consultations with other accountants.
Jgggpp Dj§M1Md p "or 1p&tgntign-of I ndependent
We generally discuss avariety of matters,including the application of accountingprinciples and auditing
standards,with management each year prior to retention as the Town of Prosper's auditors. However,
these discussions occurredin the normal course of our professional relationship and our responses were
not a condition to our retention.
iT
Igultigs FdncounteredJnX&tbjMqjng
We encounteredno significant difficulties in dealing with management in performing our audit.
This information is intended solely for the use of the Town Council and management of the Town of
Prosper and is not intended to be and should not be used by anyone other than these specified parties_
Very truly yours,
PINGLETON,HOWARD D&COMPANY,P.C.
Tom W. Pingleto PA
RH_mb
TOWN OF PROSPER, TEXAS
Financial Statements
(With Auditor's Report Thereon)
September 30, 2009
TOWN OF PROSPER
Annual Financial Report
For the Year Ended September 30, 2009
Page
Number
Independent Auditor's Report . . . µ . . . . . . . . . . . . . . . . . . . . . . . „ . . , . . . . . . . . . . , . . 1
Management's Discussion and Analysis . , . . . . . . . . , „ . . . . . . . . . . . . . . . . . . . . . . . . 3
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets . . . . . . . . . . „ . . . . . . ., . . . . . . . . . . . . . . . . . . . . 13
Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . „ . . . . . . . . , . . . . . , . . , 14
Fund Financial Statements:
Balance Sheet- Governmental Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Statement of Revenues, Expenditures, and Changes in Fund Balances-
Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities . . . , . . . 22
Statement of Revenues, Expenditures, and Changes in Fund Balances-
Budget and Actual - General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Statement of Revenues, Expenditures, and Changes in Fund Balances-
Budget and Actual -Impact Fee Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Statement of Net Assets -Proprietary Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . „ . . , , . 25
Statement of Revenues, Expenses, and Changes in Fund Net Assets -
Proprietary Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 26
Statement of Cash Flows -Proprietary Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Notes to the Financial Statements . . . . . . . . . . . . . . . . „ . . . . . , , . . . . . . . . . . . 28
Combining and Individual Fund Statements and Schedule:
Combining Balance Sheet- Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . 51
Combining Statement of Revenues, Expenditures and Changes in Fund Balances-
Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Schedule of Revenues, Expenses, and Changes in Fund Net Assets-
Budget and Actual- Enterprise Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Statistical Section
Net Assets by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Governmental Activities Tax Revenues by Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . , . . . 64
Changes in Fund Balances of Governmental Funds . . . . . . . . , , „ , . . . . .. . , . . . . . . . . 66
General Governmental Tax Revenues by Source . . . . . . . . . . . . . . . . , . .. 68
Property Tax Rates-Direct and Overlapping Governments . . . . . . . . . . . . . . . . . . . . . . . 69
Property Tax Levies and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Ratios of Outstanding Debt by Type . . . . . . . . . . . . . . . . . . . , . . , , , . , , , . , , . , . . . . . . 71
Pledged-Revenue Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . < , . . . . , , . . , . , , , . . , . . . , 72
PINGLETON, HOWARD & COMPANY, P. C.
CERTIFIED PUBLIC ACCOUNTANTS
P. O. BOX 148
FRISCO, TEXAS 75034
972-335-9754/FAX 972-335-9758
TOM W. PINGLETON,CPA MEMBERS
RANDY HOWARD,CPA AMERICAN INSTITUTE OF CPAs
R.WAYNE NABORS,CPA AICPA DIVISION FOR CPA FIRMS
ROBIN J.TURNBULL,CPA TEXAS SOCIETY OF CPAs
WH ITN EY YOUNTS,CPA
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor
and Members of the Town Council
Town of Prosper
Prosper, Texas 75058
We have audited the accompanying financial statements of the governmental activities,the business-
type activities,the aggregate 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,
2009,which collectively comprise the Town's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the management of the Town of Prosper. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States
ofAmerica. 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 examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by manage-
ment, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion,the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities,the business-type activities,the aggregate
discretely presented component unit, each major fund, and the aggregate remaining fund information
of the Town of Prosper,Texas,at September 30, 2009, and the respective changes in financial position
and cash flows, where applicable, and the budgetary comparison for the general fund and impact fee
fund for the year then ended in conformity with accounting principles generally accepted in the United
States of America.
Management's discussion and analysis on pages 3 through 10 is not a required part of the basic financial
statements but is supplementary information required by accounting principles generally accepted in
the United States of America. We have applied certain limited procedures,which consisted principally
of inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.
wl-
To the Honorable Mayor
and Members of the Town Council
Page Two
Our audit was conducted for the purpose of forming an opinion on the financial statements that collec-
tively comprise the Town's basic financial statements. The individual fund schedule and statistical
section, listed in the table of contents, are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The individual fund schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,in our opinion,is fairly
stated in all material respects in relation to the basic financial statements taken as a whole. The
statistical section have not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly,we express no opinion on it.
el
December �, 2009
mm2..
Management's Discussion and Analysis
As management of the Town of Prosper,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, 2009. All amounts,unless otherwise indicated, are expressed in actual dollars.
Financial Highlights
• The assets of the Town of Prosper exceeded its liabilities at the close of the most recent fiscal year
by$58,839,023 (net assets). Of this amount, $9,632,962 (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$1,214,376. Most of the increase is due to property
taxes and water/sewer sales.
• As of the close of the current fiscal year, the Town of Prosper's governmental funds reported com-
bined ending fund balances of$29,757,062,an increase of $10,997,106 in comparison with the prior
year.Most of the increase is from bond proceeds. Approximately$6,083,823 is available for spending
at the government's discretion (unreserved undesignated fund balance).
• At the end of the current fiscal year,unreserved fund balance for the general fund was$4,397,604
or 77 percent of total general fund expenditures.
• The Town's long-term debt increased by$13,024,369 during the year due to bond sales..
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town of Prosper's basic
financial statements. The Town of Prosper's basic financial statements comprise three components: 1)
government-wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements themselves.
Government-wide financial statements. The government-wide financial statements are designed
to provide readers with a broad overview of the 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 improv-
ing 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 timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in 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,transportation, and recreation. The business-type activities of the Town of
Prosper include the water and sewer system, as well as sanitation collection and disposal.
-3-
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 separately from the financial information presented for
the primary government itself. The economic development corporation issues separate financial state-
ments.
The government-wide financial statements can be found on pages 13-15 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. All of 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 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 seven 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 funds, all of which are
considered to be major funds. Data from the three other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each 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 16-24 of this report.
Proprietary funds. The Town of Prosper maintains one type of proprietary fund. Enterprise funds are
used to report the same functions presented as business-type activities in the government-wide financial
statements. The Town of Prosper uses enterprise funds to account for its Water, Sewer and Sanitation
operations.
Proprietary funds provide the same type of information as the government-wide financial statements,
only in more detail. The proprietary fund financial statements provide separate information for the
Water,Sewer and Sanitation operations,which is considered to be a major fund of the Town of Prosper.
The basic proprietary fund financial statements can be found on pages 25-27 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes
to the financial statements can be found on pages 28-49 of this report.
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Other information. The combining statements referred to earlier in connection with nonmajor
governmental funds are presented immediately following the notes to the financial statements. The
individual fund schedule provides a budgetary comparison schedule for the enterprise fund. Combining
and individual fund statements and schedules can be found on pages 51-53 of this report.
Government-wide Financial Analysis
As noted earlier,net assets may serve over time as a useful indicator of a government's financial posi-
tion. In the case of the Town of Prosper,net assets exceed liabilities by$58,839,023 at the close of the
most recent fiscal year.
A portion of the Town of Prosper's net assets (69 percent)reflects its investment in capital assets (e.g.
land,building,machinery,and equipment)less any related debt used to acquire those assets that is 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, $9,632,962,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 three
categories of net assets for the government as a whole.
TOWN OF PROSPER - Net Assets
Governmental Activities Business-type Activities Total
2009 2008 2009 2008 2009 2008
Current and other assets $ 30,667,183 17,501,657 6,137,023 8,489,301 36,804,206 25,990,958
Capital assets 41,168,543 45,047,770 19,998,012 15,164,328 61,166,555 60,212,098
Total assets 71,835,726 62,549,427 26,135,035 23,653,629 97,970,761 86,203,056
Long-term liabilities 23,668,590 10,497,250 12,525,050 13,194,300 36,193,640 23,691,550
Other liabilities 2,104,594 4,128,190 833,504 758,669 2,938,098 4,886,859
Total liabilities 25,773,184 14,625,440 13,358,554 13,952,969 39,131,738 28,578,409
Net assets:
Invested in capital assets, net of
related debt 33,918,984 33,421,747 6,803,712 3,320,949 40,722,696 36,742,696
Restricted 8,439,679 9,808,904 43,686 41,700 8,483,365 9,850,604
Unrestricted 3,703,879 4,693,336 5,929,083 6,338,011 9,632,962 11,031,347
Total net assets $46,062,542 47,923,987 12,776,481 9,700,660 58,839,023 57,624,647
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k
TOWN OF PROSPER - Changes in Net Assets
Governmental Activities Business-type Activities Total
2009 2008 2009 2008 2009 2008
Revenues:
Program revenues:
Charges for services $ 921,363 2,505,378 4,720,255 4,506,750 5,641,618 7,012,128
Operating grants and
contributions 1,396,991 451,967 1,396,991 451,967
General revenues:
Property taxes 5,296,120 4,428,507 5,296,120 4,428,507
Othertaxes 1,505,154 1,628,225 1,505,154 1,628,225
Other 896,043 2,538,122 107,384 142,079 1,003,427 2,680,201
Total revenues 10,015,671 11,552,199 4,827,639 4,648,829 14,843,310 16,201,028
Expenses:
General government 1,507,786 975,644 1,507,786 975,644
Police 1,198,529 1,034,071 1,198,529 1,034,071
Court 227,419 186,611 227,419 186,611
Fire 2,130,712 1,450,528 2,130,712 1,450,528
Streets 1,355,747 1,443,744 1,355,747 1,443,744
Parks 444,129 130,282 444,129 130,282
Engineering 141,611 151,263 141,611 151,263
Inspections 486,008 415,299 486,008 415,299
Planning 401,602 323,395 401,602 323,395
Communications 11,198 11,198
Interest on long-term debt 1,275,691 458,709 1,275,691 458,709
Water&Sewer 4,459,700 4,075,748 4,459,700 4,075,748
Total expenses 9,169,234 6,580,744 4,459,700 4,075,748 13,628,934 10,656,492
Increase(decrease) in net assets
before transfers 846,437 4,971,455 367,939 573,081 1,214,376 5,544,536
Transfers (2,707,882) (1,237,049) 2,707,882 1,237,049
Increase(decrease)in net assets (1,861,445) 3,734,406 3,075,821 1,810,130 1,214,376 5,544,536
Netassets-beginning 47,923,987 44,189,581 9,700,660 7,890,530 57,624,647 52,080,111
Netassets-ending $46,062,542 47,923,987 12,776,481 9,700,660 58,839,023 57,624,647
The following key elements influenced the changes in net assets from the prior year:
Governmental Activities:
• Property tax collection increased by$867,613 (19.6 percent) during the year, primarily due to the
continued construction of new single-family homes in the Town.
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• Total governmental activity expenses increased by$2,588,490(39.3 percent)during the year due to
increases in general government, fire department and interest expense.
Business-type Activities
Business-type activities increased the Town of Prosper's net assets by$3,075,821.
• Water and sewer fund operating revenue increased$222,720(4.9 percent)mainly due to increased
water sales.
• Operating expenses increased by$356,450(10.2 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, unreserved fund balance may
serve as a useful measure of a government's net resources available at the end of the fiscal year.
As the end of the current fiscal year, the Town of Prosper's governmental funds reported combined
ending fund balance of$29,757,062,an increase of$10,997,106 from the prior year. Most of the increase
is from bond proceeds. Of the current combined ending fund balance, $16,919,779 is unreserved but
designated for construction, $4,196,527 is unreserved and designated for impact fees, $4,397,604 is
unreserved and undesignated,and$1,686,219 is unreserved but with specific designated uses in special
revenue. The remainder of the fund balance is "reserved"to indicate that it is not available for new
spending because it has already been committed.
The general fund is the chief operating fund of the Town of Prosper. At the end of the current fiscal year,
unreserved fund balance of the general fund was$4,397,604. Total unreserved fund balance represents
77%of total general fund expenditures.
The impact fee fund has a total fund balance of$4,196,527,which is unreserved but designated for uses
in the impact fee special revenue fund. The increase in fund balance of$233,871 is due to current year
impact fee revenue.
The debt service fund has a total fund balance of$828,454, all of which is reserved for payment of debt
service. The increase in fund balance of$206,585 is due to an increase in property tax revenue.
The capital projects fund has a total fund balance of$16,919,779, all of which is unreserved and desig-
nated for construction. The increase in fund balance of$9,724,841 is due to bonds issued during the
year.
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 $5,929,083. The
total increase in net assets of the Enterprise Fund was$3,075,821. The factors concerning the finances
of this fund have already been addressed in the discussion of the Town of Prosper's business type
activities.
.7-
General Fund Budgetary Highlights
During the year,revenues and expenditures were less than budgetary estimates. The budget had called
for a$120,850 increase in fund balance. Better than budget results in expenditures increased the net
change in fund balance to $390,563.
• In total, actual general fund revenues were$355,824 less than budget. Of that amount, prop-
erty taxes were $176,018 greater than budget.
• Overall, actual general fund expenditures were $584,558 less than budget. Of that amount,
police department expenditures were $206,886 under budget.
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, 2009, amounts to $61,165,555 (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$2,472,710. The majority of this activity
was from bond proceeds and was for streets,parks and related infrastructure.
• Capital asset additions in business-type activities totaled$5,335,215. The majority of this activity
was from bond proceeds and was for water storage tanks and water lines.
Additional information on the Town of Prosper's capital assets can be found in Note 3.C.on pages 37-38
of this report.
Long-term debt. At the end of the current fiscal year,the Town of Prosper had bonded debt outstand-
ing of $37,330,000. All of this amount comprises debt backed by the full faith and credit of the
government.
The Town of Prosper's bond rating is A2 as assigned by Moody's. In May 2008, Standard and Poors
upgraded the Town's bond rating two levels from BBB+to A.
Additional information on the Town of Prosper's long-term debt can be found in note 3.G.on pages 40-46
of this report.
Economic Factors and Next Year's Budgets and Rates
There is much uncertainty regarding upcoming property valuations. Commercial property values are
expected to experience a larger decline than residential valuations;Prosper hopes to avoid the heaviest
declines since its values are primarily residential properties. Two high quality multi-family projects
have added 620 units and will increase the Town's population by approximately 1900 residents before
Fiscal Year 2009-2010 ("FY10") ends.
Interest rates are especially low for most investments and there is no growth budgeted in sales tax
collections in the coming year. The Town experienced a decline in residential construction and permit
activity,and this trend is expected to hold for FY10. In light of this,Town management has taken a very
conservative approach to projections in the FY10 Budget.
.8_
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. The rate was discussed at the advertised
rate of $.055 throughout the budget process, but Town Staff was able to make the reductions
necessary to hold the rate at$0.52. Town Council recognized that a tax increase may be necessary
in future years,but voted to adopt a rate of$0.52.
• Projected Sales Tax revenues in FY10 were held equal to the $1.1 million budgeted in FY09. This
represents a decline of approximately 14.3%in sales tax receipts over the last 3 years. The Town's
sales tax collection has seen a continued decline beginning in 2006 when it was at its height com-
pared to the current year. The FY09 actual was only$26,000 less than budgeted,and the Town has
seen the opening of several retail and other commercial spaces in 2009. Staff continues to be
conservative when projecting sales tax because of the downturn in construction related projects.
• Municipal Court Fines and Licenses are projected to increase slightly over the current year's pro-
jected revenues.
• As a result of the continued economic slowdown specifically in the residential construction area,
revenues from building and construction permit fees are projected to decline approximately$440,000
when compared to the FY09 Budget.
• The FY10 Budget includes an increase in ambulance service charges. The change increases the fee
from$400 per incident to$600 per incident. This rate increase is part of a recommended two phase
increase,eventually setting the rate in the FY11 Budget to$800 per transport. The mileage rate per
loaded mile will increase to$10 per loaded mile in FY10 and$12 per loaded mile in FY11.
• The SAFER Grant,which helps to offset the cost of the additional Firefighters hired in FY08 will
reduce by$37,980 in the coming year.
• Street rental and payment in lieu of taxes from the Town's Enterprise Funds are projected to in-
crease in accordance with the Town's adopted Water and Wastewater Utility Comprehensive Busi-
ness Plan and subsequently adopted rate study.
• Revenues for the Water, Sewer and Solid Waste Fund are expected to increase to $5.6M with a
planned rate increase to occur in April 2010. 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.
• The Town of Prosper established its Drainage Utility System in August 2008 and adopted the
ordinance enabling the collection of a Drainage Utility System Fee in July 2009. During FY10,the
Town Staff will be completing a comprehensive Stormwater Utility rate analysis and contracting out
the required engineering studies that will establish the funding parameters for all customers.
Appropriations Budget Highlights
• A onetime lump sum incentive pay distribution was approved in the FY10 Budget in lieu of an across
the board base pay increase for employees. The intent of this strategy was to differentiate the
reward based on performance and also to prevent the additional pay from carrying over into the
FY11 Budget.
.9.
• The Town has elected to pay 10%contributions to the Texas Municipal Retirement System while the
Annual Required Contribution is only 9.23%. This additional.77%is included in the budget to pay
down a fraction of the Town's Unfunded Actuarial Accrued Liability("UAAL")which was at$905,124
as of December 2008. This will increase the Town's assets held by TMRS,draw a better return than
the Town can currently expect and reduce or mitigate the increase of the December 2010 UAAL
calculation.
• The Town of Prosper created its own 911 Dispatch Center which began operations on December 14,
2009. Additional funding will be required to support the five new staff members,constant dispatch
operations and added IT vendor support agreements. Additional public safety services including a
Dispatch Center Operation introduced in the FY10 Budget are expected to place significant pressure
on the property tax rate in future years.
• Park services and related costs will increase resulting from additional park land coming online this
coming fiscal year,including maintenance of Pecan Creek Park located in the La Cima subdivision
and the new Community Park expected to open in the summer of 2010. To help manage this growth,
the Town added a new Parks Supervisor position.
• The Town is taking over the operations of the Community Library from Prosper ISD and included
its costs of $94,000 in the FY10 Budget. The Town also funded for the continued operation of
Prosper ISD's Multi Purpose Facility located at Reynolds Middle School site for seasonal use. This
facility would have otherwise been unavailable and the Town's costs to keep this facility open will
be $22,000.
• The major change in the Interest and Sinking Fund ("I&S Fund") is in the transfer of water and
sewer related debt to the Utility Enterprise Fund. Payments from the I&S Fund totaling$1,289,208
for debt issued in 2008 for First St.,Coit Rd.,Prosper Trail widening and the construction of the first
phase of the Community Park will begin in FY10. This is approximately the same as the amount
of debt the Utility reabsorbed. Each of the four major infrastructure projects funded with 2008 debt
issued will be started during FY 2010.
The Town expects a very rapid demand for services in the next few years as the tension in today's
economy subsides. Much energy and resources have been and will continue to be devoted to business
planning and building efficiencies into each department as the Town sets strategies for the next five
years and beyond.
All these factors were considered in preparing the Town of Prosper's budget for the 2010 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.
-10-
BASIC FINANCIAL STATEMENTS
-11-
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-12-
TOWN OF PROSPER
Statement of Net Assets
September 30, 2009
Component
Primary Government Unit
Governmental Business-type Economic
Activities Activities Total Development
ASSETS
Cash and cash equivalents $ 29,694,323 4,897,786 34,592,109 1,029,741
Investments 251,500
Receivables (net of allowance for
uncollectibles):
Utility bills 388,181 388,181
Delinquent property taxes 145,763 145,763
Sales tax 99,415 99,415 33,138
Other 46,830 46,830
Due from component unit 402 402
Due to/from other funds 250,808 (250,808)
Prepaids 9,642 2,050 11,692 2,149
Inventory 75,140 75,140
Restricted cash and cash equivalents 800,245 800,245
Bond issuance costs 420,000 224,429 644,429
Capital assets not being depreciated:
Land 2,032,649 5,000 2,037,649
Construction-in-progress 1,244,879 1,244,879
Capital assets (net of accumulated
depreciation):
Buildings and systems 2,,748,,91.1 19,642,821 22,391,732 45,856
Equipment 874,,21.5 350,191 1,224,406
Infrastructure 34,267,889 34,267M9
Total assets 71,835,726 26,135,03 97,970,761 L3f� ,384
LIABILITIES
Accounts payable 202,640 39,117 241,757 494
Accrued interest payable 840,071 69,309 909,380
Escrow payable 141,718 141,718
Customer deposits 18,000 18,000
Due to primary government 402
Noncurrent liabilities:
Due within one year 920,165 707,078 1,627,243 14,546
Due in more than one year 2323 6�. 12,525,050 36 193,640
Total liabilities 254773,184 13,358,554 39,131,738 �C442
NET ASSETS
Invested in capital assets, net of related debt 33,918,984 6,803,712 40,722,696 45,856
Restricted for:
Debt service 828,454 43,686 872,140
Public safety 94,859 94,859
Parks &recreation 1,633,620 1,633,620
Impact fees 4,196,527 4,196,527
Other 1,686,219 1,686,219
Unrestricted 3,703,879 5,929,083 9,632,982 1. 3t1� .
Total net assets $ 46,062,542 12,776,481 58,839,023 1,X46„942
The notes to the financial statements are an integral part of this statement.
-13-
TOWN OF PROSPER
Statement of Activities
For the Fiscal Year Ended September 30, 2009
Pro2Tam Revenues
Operating
Charges for Grants and
Functions/Programs Expenses Services Contributions
Primary government:
Governmental activities:
General government $ 1,507,786 172,922 29,548
Police 1,198,529 226,678 17,396
Court 227,419 11,843
Fire 2,130,712 133,306 273,004
Streets 1,355,747 787,552
Parks and recreation 444,129 289,491
Engineering 141,611
Inspections 486,008 376,614
Planning 401,602
Interest and fiscal charges 1,275,691
Total governmental activities 9,169,234 921,363 1,396,991
Business-type activities:
Sanitation 456,612 497,954
Water and sewer 4,003,088 4,222,301
Total business-type activities 4,459,70"O 4,720,255
Total primary government , 5,i41,3.68934 8 1.396,991.
Component unit:
Economic development 275,815
Total component unit $ 275.815
General revenues:
Property taxes
Sales taxes
Franchise taxes
Impact and escrow fees
Unrestricted investment earnings
Miscellaneous revenue
Transfers
Total general revenues and transfers
Change in net assets
Net assets-beginning
Net assets-ending
The notes to the financial statements are an integral part of this statement.
-14-
Net(Expense)Revenue and
Changes in Net Assets
Primary Government Component Unit
Governmental Business-type Economic
Activities Activities Total DeveloRmen
(1,305,316) (1,305,316)
(954,455) (954,455)
(215,576) (215,576)
(1,724,402) (1,724,402)
(568,195) (568,195)
(154,638) (154,638)
(141,611) (141,611)
(109,394) (109,394)
(401,602) (401,602)
(1,275,691) (1,275,691)
6,850,88 (6,850,88
41,342 41,342
219.213 219,213
255 260,555
(6,850,88(1) 260.555 (6,59( ,325)
(275,815)
(275,815)
5,296,120 5,296,120
1,077,127 1,077,127 357,564
428,027 428,027
366,601 366,601
455,815 64,715 520,530 19,622
73,627 42,669 116,296 50
(2,707M2) 2,707,882
4 98 2,8 15 7,801�701 377,236
(1,861,445) 3,075,821 1,214„376 101,421
47,923,98” 9,,700,6 60 X7,6" 4,647 1,245.521
$46,062,542 12,776,481 ; 8 0` 3 1,346,94
-15-
TOWN OF PROSPER
Balance Sheet
Governmental Fund
September 30, 2009
Impact Debt
General Fee Service
Fund Fund Fund
ASSETS
Cash and cash equivalents $ 4,157,030 4,196,527 828,454
Receivables(net of allowance for uncollectibles)
Property taxes 86,000 59,763
Sales tax 99,415
Other 43,829
Due from other funds 282,811
Due from component unit 402
Prepaids 9,642
Total assets $4 67�129 4.196„527 88 7
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 185,468
Due to other funds 10,057
Escrow payable
Deferred revenue _8860[10 59,763
Total liabilities 281,525 59,763
Fund balances:
Reserved for:
Debt service 828,454
Public safety
Parks and recreation
Unreserved and designated:
Reported in the capital projects fund
Reported in the impact fee funds 4,196,527
Unreserved and undesignated:
Reported in general fund 4,397,604
Reported in impact fee fund
Total fund balances 19"x'.604 4,196,527 28,454
Total liabilities and fund balances $ 44 1171) 1116,527' 888„ l 7
The notes to the financial statements are an integral part of this statement.
-16-
Capital Other Total
Projects Governmental Governmental
Funds Funds Funds
16,951,195 3,561,117 29,694,323
145,763
99,415
3,001 46,830
10,141 292,952
402
9.642
M951,195 3.574,259 30,289,327
9,642 7,530 202,640
21,774 10,313 42,144
141,718 141,718
145,763
31.416 159,561 532.265
828,454
94,859 94,859
1,633,620 1,633,620
16,919,779 16,919,779
4,196,527
4,397,604
1,6 6,219 1,686,2,1.9
0 9
,686,2120,9 L19,7 7 9 3,414,698 29�,757,062
1,6M1,195 3.574,259 30 8�)327
-17-
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-18-
TOWN OF PROSPER
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
September 30, 2009
Total Fund Balances -Governmental Funds $ 29,757,062
Capital assets used in governmental activities and unamortized bond
issuance cost are not financial resources, and therefore, are not
reported in governmental funds. At the beginning of the year,the cost
of capital assets was $42,598,087 and the accumulated depreciation
was $2,512,443. In addition, long-term liabilities, including bonds
payable of $10,681,500, capital leases payable of $31,213, and
compensated absences of$254,323, are not due and payable in the
current period, and therefore, are not reported as liabilities in the
funds. The net effect of including the beginning balances for capital
assets (net of depreciation) and long-term debt in the governmental
activities is to increase net assets.
29,118,608
Current year capital outlays of$2,472,710 and long-term debt princi-
pal payments of $484,354 are expenditures in the fund financial
statements, but they should be shown as increases in capital assets
and reductions in long-term debt in the government-wide financial
statements. The net effect of including the current year capital out-
lays and debt principal payments is to increase net assets.
2,957,064
Current year Certificate of Obligation issuance ($13,900,000) and
related bond issuance cost($420,000)are other financing sources and
uses, respectively, in the fund financial statements but they are an
increase in long-term debt and an intangible,amortizable asset in the
government-wide financial statements. The net effect of including the
debt issuance and related cost is to decrease net assets.
(13,480,000)
Interest is accrued on outstanding debt in the government-wide finan-
cial statements, whereas in the fund financial statements, interest
expenditures are reported when due. The net effect of including ac-
crued interest is to decrease net assets. (840,071)
The current year depreciation expense increases accumulated depreci-
ation. The net effect of the current year's depreciation is to decrease
net assets. (1,389,811)
Various other reclassifications and eliminations are necessary to con-
vert from the modified accrual basis of accounting to accrual basis of
accounting. These include recognizing$145,763 of deferred revenue
as revenue, reclassifying the proceeds of capital leases of$40,979 as
an increase in long-term debt, and recognizing the liabilities associ-
ated with compensated absences of$165,094. The net effect of these
reclassifications is to decrease net assets. (60,310)
Net Assets of Governmental Activities $ 4 ,Qb 42
The notes to the financial statements are an integral part of this statement.
-19-
TOWN OF PROSPER
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended September 30, 2009
Impact Debt
General Fee Service
Fund Fund Fund
REVENUES
Taxes:
Property $ 3,060,078 2,172,820
Sales 1,077,127
Franchise 428,027
Licenses,fees and permits 549,536
Charges for services 133,306
Intergovernmental
Impact fees 536,721
Escrow income
Grants 275,469
Investment income 92,728 37,236 101,447
Fines,warrants and seizures 226,678
Contributions
Miscellaneous 73,087
Total revenues 5 91� 573,957 2,274,267
EXPENDITURES
Current:
General government 939,080
Police department 1,072,158
Court 213,807
Fire department 1,897,490
Streets 257,066
Parks and recreation 159,729
Engineering 137,741
Inspection 4692804
Planning 390,628
Capital outlay 159,656
Debt service:
Principal 38,,554 445,800
Interest and fiscal charges 470,712
Total expendituresL7 T.3 2 916,512
Excess (deficiency) of revenues over
(under) expenditures 178,297 573,957 1,357,755
OTHER FINANCING SOURCES (USES)
Capital leases 40,979
Bonds issued
Transfers in 199,502
Transfers out (28,215) ;'40 086) (1,151,170)
Total other financing sources (uses) 212,266 (340,086) (1,151,170)
Net change in fund balances 390,563 233,871 206„535
Fund balances,beginning 4.007,011 3,962,65 62"l. 6
Fund balances, ending $4,397.604 4 1. T27 8L28 454
The notes to the financial statements are an integral part of this statement.
-20-
Capital Other Total
Projects Governmental Governmental
Funds Funds Funds
5,232,898
1,077,127
428,027
549,536
133,306
306,343 306,343
272,990 809,711
311,089 311,089
2,000 277,469
207,049 17,355 455,815
11,843 238,521
58,980 58,980
540 73,627
513,392 674,797 9,Q5 4„449
64,339 1,962 1,005,381
23,824 1,095,982
7,402 221,209
13,942 1,911,432
257,066
219,361 379,090
137,741
469,804
390,628
2,783,359 2,943,015
484,354
420,000 892,738
3,267,698 2(&411 10,188,440
(2 7�6i) 408,306 (235.991)
40,979
13,900,000 13,900„000
32,940 232;412
1�0-,8,x3) (2,940,324}
12,479,14 32,940 11,233,097
9,724,841 441,246 101,997,106
7,194,931 2,973,45' 1 5 5
16,119.779 33 41 698 L2%751062
-21-
TOWN OF PROSPER
Reconciliation of the Statement of Revenues,Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
September 30, 2009
Total Net Change in Fund Balances - Governmental
Funds $ 10,997,106
Current year capital outlays of$2,472,710 are expenditures in
the fund financial statements, but they should be shown as
increases in capital assets and reductions in long-term debt in
the government-wide financial statements. The net effect of
including the current year capital outlays is to increase net
assets. 2,472,710
The issuance of long-term debt ($13,900,000) provides current
financial resources to governmental funds,while the repayment of
the principal of long-term debt ($484,354) consumes the current
financial resources of governmental funds. Neither transaction,
however, has any effect on net assets. Also, governmental funds
report the effect of issuance costs,premiums,discounts,and simi-
lar items when debt is first issued ($420,000), whereas these
amounts are deferred and amortized in the statement of activities.
This amount is the net effect of these differences in the treatment
of long-term debt and related items. (12,995,646)
Interest is accrued on outstanding debt in the government-wide
financial statements, whereas in the fund financial statements,
interest expenditures are reported when due. The net effect of
including accrued interest is to increase net assets. (802,953)
Depreciation is not recognized as an expense in governmental
funds since it does not require the use of current resources. The
net effect of the current year's depreciation is to decrease net as-
sets. (1,389,811)
Various other reclassifications and eliminations are necessary to
convert from the modified accrual basis of accounting to accrual
basis of accounting. These include recognizing$63,222 of deferred
revenue as revenue,reclassifying the proceeds of capital leases of
$40,979 as an increase in capital leases and recognizing the liabili-
ties associated with compensated absences of$165,094. The net
effect of these reclassifications is to decrease net assets. (142,851)
Change in Net Assets of Governmental Activities $ (1,8614455)
The notes to the financial statements are an integral part of this statement.
-22-
TOWN OF PROSPER
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual- General Fund
For the Fiscal Year Ended September 30, 2009
Variance
Original With Final
and Budget
Final Actual Positive
Budet, Amounts (Dative)
REVENUES
Taxes:
Property $ 2,884,060 3,060,078 176,018
Sales 1,103,045 1,077,127 (25,918)
Franchise 344,494 428,027 83,533
Licenses, fees, and permits 1,043,200 549,536 (493,664)
Charges for services 165,700 133,306 (32,394)
Grants 358,001 275,469 (82,532)
Fines,warrants and seizures 205,575 226,678 21,103
Investment income 100,000 92,728 (7,272)
Miscellaneous 67,785 73,087 5,302
Total revenues 6,27L86 7L0 5,916M (355,824)
EXPENDITURES
General government 923,653 939,080 (15,427)
Police department 1,279,044 1,072,158 206,886
Court 206,716 213,807 (7,091)
Fire department 2,023,059 1,897,490 125,569
Streets 298,482 257,066 41,416
Parks and recreation 260,483 159,729 100,754
Inspections 613,774 469,804 143,970
Planning 386,048 390,628 (4,580)
Engineering 175,926 137,741 38,185
Debt service 40,580 40,580
Capital outlay 114,532 159,656 (45,12
Total expenditures 6,322,297 5,737,739 584,55
Excess of revenues over expenditures (50,437) 178,297 228,734
OTHER FINANCING SOURCES (USES)
Capital leases 40,979 40,979
Transfers in 199,502 199,502
Transfers out2( 8,215) (28,215)
Total other financing sources(uses) 171,287 212,216 40,979
Net change in fund balances 120,850 390,563 269,713
Fund balances,beginning 4,007,041 4007,041.
Fund balances, ending $ 4,127 91 4,397604 269,713
The notes to the financial statements are an integral part of this statement.
-23-
TOWN OF PROSPER
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual-Impact Fee Fund
For the Fiscal Year Ended September 30, 2009
Variance
Original With Final
and Budget
Final Actual Positive
Budge Amounts (1f� ativ )
REVENUES
Impact fees $ 775,000 536,721 (238,279)
Investment income 81,00037,236 (43,764)
Total revenues 85� 573,957 (282,048)
EXPENDITURES
Capital outlay 19� 1:95,049
Total expenditures 19� 195,049
p _ 86�)
Excess o revenues over expenditures 660°3�1 573,957
OTHER FINANCING SOURCES (USES)
Transfers out 340.086) (340,086)
Total other financing sources(uses) 340 086) (340.086)
Net change in fund balances 660„951 233,871 (427,080)
Fund balances,beginning 3,962,656 36 56
Fund balances, ending $4,623„607 4 19y 6 `7 (427,080)
The notes to the financial statements are an integral part of this statement.
-24-
TOWN OF PROSPER
Statement of Net Assets
Proprietary Fund
September 30, 2009
ASSETS
Cash and cash equivalents $ 4,897,786
Receivables (net of allowance of uncollectibles):
Utility bills 388,181
Prepaid items 2,050
Inventory 75,140
Restricted cash and cash equivalents 800 2_4':x5
Total current assets 6,163,,40
Noncurrent assets:
Bond issuance costs 224,429
Capital Assets:
Land 5,000
Buildings and systems 21,,892,449
Equipment 582,019
Less: accumulated depreciation (2,482,3 fa)
Total capital assets(net of accumulated depreciation) 1.9.998,012
Total noncurrent assets 20;,222,441
Total assets 2 38543
LIABILITIES
Current liabilities:
Accounts payable 39,117
Deposits 18,000
Accrued interest 69,309
Due to other funds 250,808
Compensated absences payable 37,828
Current portion of bonds payable 669 250
Total current liabilities 1.031-2
Noncurrent liabilities:
Bonds payable X525,050
Total noncurrent liabilities 12,,5` 5,050
Total liabilities 13,609,36
NET ASSETS
Invested in capital assets,net of related debt 6,803,712
Restricted for:
Debt service 43,686
Unrestricted 5,929,083
Total net assets $ 12',776.481
The notes to the financial statements are an integral part of this statement.
-25-
TOWN OF PROSPER
Statement of Revenues,Expenses, and Changes in Fund Net Assets
Proprietary Fund
For the Fiscal Year Ended September 30, 2009
OPERATING REVENUES
Water and sewer charges $ 4,032,768
Sanitation charges 497,954
Water and sewer connections 155,563
Service initiation 33,970
Miscellaneous 42.669
Total operating revenues 4,762,924
OPERATING EXPENSES
Personnel services 588,248
Materials and supplies 220,606
Contractual services 2,517,599
Depreciation 501,531
Total operating expenses 3,827,984
Operating income (loss) 9,34,940
NONOPERATING REVENUES (EXPENSES)
Interest revenue 64,715
Interest expense and fiscal charges (631,716)
Total nonoperating revenues(expenses) (567,001)
Net income (loss)before transfers 367,939
TRANSFERS
Transfers in 2,912,109
Transfers out (204.227)
Total transfers 2,707,882
Change in net assets 3,075,821.
Net assets,beginning A. 79 ( !
Net assets, ending $ 12
.776,481
The notes to the financial statements are an integral part of this statement.
-26-
TOWN OF PROSPER
Statement of Cash Flows
Proprietary Fund
For the Fiscal Year Ended September 30, 2009
Cash flows from operating activities:
Cash received from customers and users $4,,629,342
Cash payments to suppliers for goods and services (2,797,580)
Cash payments to employees for services 566 X398)
Net cash provided (used)by operating activities 1,265,36
Cash flows from noncapital financing activities:
Transfers to other funds (204,227)
Transfers from other funds 2,912,109
Advances to other funds (1,420,853)
Advances from other funds 47,733
Net cash provided(used) for noncapital financing activities 1,334,762
Cash flows from capital and related financing activities:
Acquisition and construction of capital assets (373,090)
Principal paid on bonds (619,200)
Interest paid on bonds (598,26 )
Net cash provided(used) for capital and related financing activities (1,590,555)
Cash flows from investing activities:
Interest on deposits and investments .715
Net cash provided(used)by investing activities 664�,,715
Net increase (decrease)in cash and cash equivalents 1,„074,„286
Cash and cash equivalents,beginning 4,623,74.5
Cash and cash equivalents, ending $5 660,31..
Reconciliation of Operating Income to Net Cash Provided (Used)
by Operating Activities
Operating income (loss) $ 994
Adjustments to reconcile operating income to net cash
provided (used)by operating activities:
Depreciation expense 501,531
(Increase) decrease in accounts receivable (115,582)
(Increase) decrease in prepaids 11,735
(Increase)/decrease in inventory (75,140)
Increase (decrease)in accounts payable 4,030
Increase (decrease)in compensated absences 21,850
Increase (decrease)in customer deposits (18,00
Total adjustments 330,424
Net cash provided (used)by operating activities $ 1,26155
1
The notes to the financial statements are an integral part of this statement.
-27-
TOWN OF PROSPER
Notes to the Financial Statements
September 30, 2009
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Prosper, Texas, have been prepared in conformity with
accounting principles generally accepted (GAAP) in the United States of America as applied to
government 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.
A. Reporting Entity
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 finan-
cial statements present the government and its component units,entities for which the government
is considered to be financially accountable. Each discretely presented component unit is reported
in a separate column in the government-wide financial statements to emphasize it is legally sepa-
rate from the government. Each discretely presented component unit has a September 30 year end.
Discretely 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 geo-
graphic boundaries of the government. The EDC is presented as a governmental fund type.
Complete financial statements for the individual component unit may be obtained at the entity's
administration office,Prosper Economic Development Corporation,P.O.Box 1060,Prosper,Texas
75078.
B. 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 intergov-
ernmental revenues, are reported separately from business-type activities, which rely to a signifi-
cant extent on fees and charges for support. Likewise,the primary government is reported sepa-
rately from certain legally separate component units for which the primary government is finan-
cially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given func-
tion or segment are offset by program revenues. Direct expenses are those that are clearly identifi-
able 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.
-continued-
-28-
TOWN OF PROSPER
Notes to the Financial Statements
September 30, 2009
-continued-
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. 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 imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources mea-
surement 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,franchise taxes,licenses,and interest 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 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 projects 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 fund:
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 accountabil-
ity. The government's enterprise fund is for water and sewer operations.
-continued-
-29-
TOWN OF PROSPER
Notes to the Financial Statements
September 30, 2009
-continued-
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
C. Measurement focus,basis of accounting, and financial statement presentation
(continued)
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 limita-
tion. 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.
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. Operat-
ing 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 operat-
ing 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.
D. Assets,liabilities, and net assets or equity
1. Deposits and Investments
Cash and cash equivalents includes cash on hand,demand deposits,and short-term invest-
ments 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.
2. Short-term Interfund Receivables/Payables
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."
-continued-
-30-
TOWN OF PROSPER
Notes to Financial Statements
` September 30, 2009
-continued-
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
D. Assets,liabilities, and net assets or equity(continued)
3. Prepaid Items
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.
4. 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.
5. 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.
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 40
System infrastructure 40
Equipment 5-10
Vehicles 5
6. 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 resignations and retirements.
-continued-
-31-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
D. Assets,liabilities, and net assets or equity(continued)
7. Long-term Obligations
In the government-wide financial statements,and proprietary fund types in the fund finan-
cial 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.
8. Fund equity
In the fund financial statements, governmental funds report reservations of fund balance
for amounts that are not available for appropriation or are legally restricted by outside
parties for use for a specific purpose. Designations of fund balance represent tentative
management plans that are subject to change.
NOTE 2. STEWARDSIIIP COMI'L1ANCE AND ACCOUNTABILITY
A. Budgetary Information
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 projects funds.
The Town follows these procedures in establishing the budgetary data reflected in the financial
statements.
1. Prior to August 16th,the Town Manager submits to the Town Council a proposed operating
budget for the fiscal year commencing the following October 1. The operating budget in-
cludes 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.
-continued-
-32-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 2. STEWARDSHIP COMPLIANCE-AND ACCOUNTABILITY(continued)
A. Budgetary Information(continued)
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 manage-
ment control device during the year for the General Fund and Impact Fee Fund. No supple-
mental appropriations were made during the fiscal year.
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 in the approved budget. These amounts are reported at year end
as part of the"actual"column. No 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.
Encumbrances for goods or purchased services are documented by purchase orders or contracts.
Encumbered amounts lapse at year end. At year end, encumbrances are canceled or
reappropriated as part of the following year budget.
B. Budget/GAAP Reconciliation
The following schedule reconciles the amounts on the Statement of Revenues, Expenses and
Changes in Fund Net Assets-Budget and Actual to the amounts on the Statement of Revenues,
Expenses and Changes in Fund Net Assets-Enterprise Fund:
Water and Sewer Fund
Net assets (budget) $ 13,278,012
Depreciation (501,531)
Net assets (GAAP) $ 12776,481
NOTE 3. DETAILED NOTES ON ALL FUNDS
A. Deposits and 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).
-continued-
-33-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS(continued)
A. Deposits and Investments(continued)
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).
At September 30, 2009,the Town's carrying amount of deposits was$18,084,559 and the bank
balance was $18,653,843. Of the bank balance, $303,860 was covered by federal depository
insurance and$18,349,983 was covered by collateral held by the pledging financial institution's
trust department or agent in the government's name.
The carrying amount of deposits for the EDC, a discretely presented component unit, was
$937,461 and the bank balance was $937,461. Of the bank balance, $41,253 was covered by
federal depository insurance and$896,208 was covered by collateral held by the pledging finan-
cial institution's trust department or agent in the government's name
In compliance with the Public Funds Investment Act,the government has adopted a deposit
and investment policy. That policy addresses the following risks:
a. 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.
b. 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 Government investments are with the Texas Local Government Investment
Pool ("TexPool"), and the TexStar Investment Pool ("TexStar"). 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 oper-
ate in a manner consistent with the Security and Exchange Commission's Rule 2a7 of
the Investment Company Act of 1940. The Texas Comptroller of Public Accounts exer-
cises oversight responsibility over TexPool. Administration of TexStar is performed by
a Board of Directors,which is an administrative agency created under the Interlocal Act.
The government is not exposed to custodial credit risk for its investments.
-continued-
-34-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS (continued)
A. Deposits and Investments (continued)
c. 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 TexPool at year
end was AAAm by Standard&Poor's. The credit quality rating for TexStar at year end
was Aaa by Moody's Investor Service.
d. Interest Rate Risk-This is the risk that changes in interest rates will adversely affect
the fair value of an investment. 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 weighted average maturity for the govern-
ment's investment in external investment pools is less than 60 days.
e. 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.
f. 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
Investment type: Value
Texas Local Government investment pool $ 5,734,203
TexStar investment pool 11,521.1.37
Total $ 17,30'1-53 9 0
At year end,the EDC's investment balances were as follows:
Fair
Investment type: Value
Certificates of deposit $ 251,500
Texas Local Government investment pool 71,105
TexStar investment pool 21,125
Total $ 343,730
. t
-continued-
-35-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS(continued)
B. Receivables
Receivables at September 30, 2009 consisted of the following:
Special Debt Water and
General Revenue Service Sewer Total
Delinquent taxes $ 86,000 59,763 145,763
Sales tax 99,415 99,415
Accounts 3,001 537,619 540,620
Franchise tax 42,563 42,563
Mixed beverage tax 1,266 1,266
Gross receivables 229,244 3,001 59,763 537,619 829,627
Less: allowance for uncollectibles (149,438) (149,4'38)
Net receivables $ 229,244 3,001 59,763 388,181 680� L9
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, 2009, the EDC had sales taxes receivable of $33,138. No allowance for
uncollectibles has been made.
-continued-
-36-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS (continued)
C. Capital Assets
Capital asset activity for the year ended September 30, 2009 was as follows:
Primary Government
Beginning Ending
Balance Additions Retirements Balance
Governmental activities:
Capital assets not being depreciated:
Land $ 2,032,649 2,032,649
Construction-in-progress 5,424,203 782,80 (4,962,12 1,244,879
Total capital assets not being
depreciated4� 78� (4,962,12 ) 3.277.528
Capital assets being depreciated:
Building&improvements 2,132,213 1.,103,456 3,235,669
Equipment 2,053,150 97,888 (70,889) 2,080,149
Infrastructure 35,917,998 488,564 36,406,562
Total capital assets being depreciated 40,1.03,361 „689,908 70 889) 41,722,380
Less accumulated depreciation for:
Buildings &improvements (398,001) (88,757) (486,758)
Equipment (1,060,588) (216,235) 70,889 (1,205,934)
Infrastructure 1053 854) (1,084,81. ) (2,138,673)
Total accumulated depreciation (2,512,443) (1,3119,81.1) 70,889, (3,831,365)
Total capital assets being
depreciated, net 3 90,913 300,097 0 37,891,01.5
Governmental activities capital
assets, net $ 45,047,770 1..082,899 (4.962'.126) 41,168,55443
Beginning Ending
Balance Additions Retirements Balance
Business-type activities:
Capital assets not being depreciated:
Land $ 5,000 5.000
Total capital assets not being
depreciated 5,000 5,000
Capital assets being depreciated:
Building and system 16,590,237 5,302,212 21,892,449
Equipment 549,916 33,003 582,919
Total capital assets being depreciated 17,140,153 5,335,215 22 475 363
Less accumulated depreciation for:
Building and system (1,804,648) (444,980) (2,249,628)
Equipment (176.177) (56,551) (232.728)
Total accumulated depreciation 1 8r 5,) 501 5;11,) (2,482,3515;1
Total capital assets being
depreciated, net 15,159,328 4,.833,684 1:93,012
Business-type activities capital
assets, net $ 15,164.328 4,833»684 19 998
-continued-
-37.
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON AL.I,FUNDS (continued)
C. Capital Assets (continued)
Depreciation expense was charged to functions/programs of the primary government as follows:
Government activities:
General government $ 3,540
Police 71,777
Fire 165,615
Parks and recreation 54,399
Streets 1,091,466
Inspections 3,014
Total depreciation expense -government activities $ 1 3811
Business-type activities:
Water and sewer $ 501,531
Total depreciation-expense-business-type activities $ 501,531
Capital asset activity for the EDC for the year ended September 30, 2009 was as follows:
Beginning Ending
Balance Additions Retirements Balance
Component unit:
Capital assets being depreciated:
Leasehold improvements and furniture $ 113,849 113,a4 99
Total capital assets being depreciated 113,849 113.849
Less accumulated depreciation for:
Leasehold improvements and furniture3( 0,043) (37,950) (67,993)
Total accumulated depreciation (30,043) (37,950) (67,993)
Component unit capital assets, net $ 0 37 950) 45,856
D. Construction Commitments
At September 30,2009,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:
Scheduled
Completion Contract Costs Incurred
Proiect Name Date Date Through gL3Q1 ,
Prosper Trail Elevated Tank 4,600
Prosper CR Improvements 680,220
LaCima Sewer 36,257
Unified communication 3,300
Dispatch renovations 84,237
Community park 355,677
Bayer park 11,599
Prosper Trail 68,989
-continued-
-38-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS (continued)
E. Interfund Receivables, Payables,and Transfers
Interfund balances at September 30, 2009 are as follows:
Due to/from other funds:
Receivable Fund Payable and Amount
General Parks& Recreation $ 9,292
General Donations 1,021
General Capital Projects 21,774
General Water and Sewer 250,724
Donations Water and Sewer 84
Insurance General 10,057
Total $292,952
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:
Transfer In:
General Nonmajor Water& Sewer
Transfer Out: Fund Governmental Fund Total
General Fund $ 28,215 28,215
Impact Fee 340,086 340,086
Debt Service 1,151,170 1,151,170
Capital Projects 1,420,853 1,420,853
Water& Sewer 199,502 4,725 204,227
Total $ 199,502 32,940 2,912 109 3,144,551
Purpose of'4"ransfers
To pay its share of operating costs, the Water and Sewer Fund transferred $199,502 to the
General Fund. The General Fund and Water and Sewer Fund transferred$28,215 and$4,725,
respectively, to the Insurance Fund to fund liability and property insurance. The Water and
Sewer Fund received transfers from the Impact Fee Fund for impact fees relating to the enter-
prise fund, and transfers from the Capital Projects Fund for capital assets. The Debt Service
Fund transferred funds to the Water and Sewer Fund for specific debt payments.
F. Capital Leases
The Town has entered into a capital lease agreement,with Ford Motor Credit Company,for two
police vehicles. As of September 30, 2009, the vehicles had a carrying value of$49,555 which
is included in the governmental activities on the Statement of Net Assets. Capital lease expendi-
tures for 2009 were $14,568,which included no interest. The effective interest is 6.8%.
-continued-
-39-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS (continued)
F. Capital Leases (continued)
The Town entered into a capital lease agreement for a police vehicle with Ford Motor Credit
Company. As of September 30,2009,the vehicle had a carrying value of$14,110. Capital lease
expenditures for 2009 were$7,703,which included$924 interest. The effective interest rate is
6.6%.
Pursuant to the terms of the capital lease agreements,the Town will be required to make future
minimum payments as follows:
Year Ending
September 30, Lease #1. Lease#2 Total
2010 $ 14,568 7,703 22,271
2011 1.4„567 14,567
Future minimum lease payments 29,135 7,703 36,838
Less: amount representing interest &724) 476) (3,200)
Present value of future minimum
lease payments $26,411 7,227 33,638
G. Long-term Debt
Long-term debt activity for the year ended September 30, 2009 was as follows:
Beginning Ending Due Within
Balance Additions Retirements Balance One Year
Governmental activities:
Capital leases $ 31,213 40,979 (38,554) 33,638 19,998
Compensated absences 254,323 419,417 (254,323) 419,417 419,417
Certificates of Obligation 1.0 6�C1 13X0.000 (44�0) 24 135 7010, 480,750
Totals $ 1.0 9�0.-:.-..3' 14 360.396 738 677) 24,588.7555, 920,165
The capital leases will be repaid by the general fund. The certificates of obligation will be
repaid by the debt service fund. Compensated absences will be liquidated by the general
fund.
Certificates of obligation at September 30,2009 are comprised of the following issues for the
debt service fund:
2001 Certificates of Obligation (67% debt service fund por-
tion)issued October 25, 2001 maturing August 15, 2003 to
August 15,2021. Interest payable February 15 and August
15 at rates ranging from 4.15%to 5.00%. $ 1,232,800
2004 Certificates of Obligation (38% debt service fund por-
tion) issued March 11, 2004 maturing August 15, 2007 to
August 15,2024. Interest payable February 15 and August
15 at rates ranging from 4.00%to 4.50%. $ 3,617,300
-continued-
-40-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON,SLI:,FUNDS (continued)
G. Long-term Debt (continued)
2006 Certificates of Obligation (48%debt service fund portion)
issued September 21,2006 maturing August 15,2007 to August
15, 2026. Interest payable February 15 and August 15 at rates
ranging from 4.00%to 4.50%. $ 5,385,600
2008 Certificates of Obligation issued December 2,2008 matur-
ing February 15, 2011 to February 15, 2029. Interest payable
February 15 and August 15 at rates ranging from 3.75%to 6.0%.
$ 13� CJ00!0
Combined debt $241 00
The annual requirements to amortize the combined debt outstanding for the debt
service fund as of September 30, 2009, are as follows:
2001 Certificates of Obligation
Year Ending
,September 30, Primo Interest, Total
2010 $ 77,050 57,404 134,454
2011 80,400 54,206 134,606
2012 83,750 50,870 134,620
2013 90,450 47,310 137,760
2014 93,800 43,376 137,176
2015 97,150 39,155 136,305
2016 103,850 34,686 138,536
2017 110,550 29,805 140,355
2018 113,900 24,499 138,399
2019 120,600 18,974 139,574
2020 127,300 13,065 140,365
2021 1.34,000 6,700 140,700
Total $ 1,232.800 420,050 1,652,850
2004 Certificates of Obligation
Year Ending
September 30, Principal Interest Total
2010 $ 180,500 151,468 331,968
2011 186,200 144,248 330,448
2012 193,800 136,800 330,600
2013 201,400 129,048 330,448
2014 209,000 120,992 329,992
2015 216,600 112,632 329,232
2016 226,100 103,968 330,068
2017 235,600 94,641 330,241
2018 $ 245,100 84,628 329,728
-continued-
-41-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOT.E8 ON ALL FUND (continued)
G. Long-term Debt (continued)
2004 Certificates of Obligation (continued)
Year Ending
Seotember 30, Principal Interest, Total
2019 $ 254,600 74,212 328,812
2020 266,000 63,391 329,391
2021 277,400 52,086 329,486
2022 290,700 40,297 330,997
2023 304,000 27,578 331,578
2024 330,300 1.4,864 345,164
Total $ 617,3011 1,350,853 4,'968,153
2006 Certificates of Obligation
Year Ending
Setember M, l"rincip
1 InterestTotal,
2010 $ 223,200 231,425 454,625
2011 232,800 221,939 454,739
2012 242,400 212,045 454,445
2013 252,000 201,742 453,742
2014 264,000 191,033 455,033
2015 273,600 179,813 453,413
2016 285,600 168,185 453,785
2017 297,600 156,047 453,647
2018 309,600 144,142 453,742
2019 324,000 131,372 455,372
2020 336,000 117,764 453,764
2021 350,400 103,484 453,884
2022 364,800 88,416 453,216
2023 381,600 72,456 454,056
2024 398,400 55,762 454,162
2025 415,200 38,232 453,432
2026 434,400 19,548 448
Total $5,385,600 2,333,405 77 7119 00
2008 Certificates of Obligation
Year Ending
Se teniae° 10 Principal Interest Total
2010 $ 1,289,208 1,289,208
2011 450,000 747,450 1,197,450
2012 470,000 729,613 1,199,613
2013 485,000 709,906 1,194,906
2014 510,000 688,125 1,198,125
2015 535,000 663,944 1,198,944
2016 $ 560,000 637,238 1,197,238
-continued-
-42-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALI,FUNDS (continued)
G. Long-term Debt(continued)
2008 Certificates of Obligation (continued)
Year Ending
September 30 Principal Interest, Total
2017 $ 590,000 608,487 1,198,487
2018 620,000 578,237 1,198,237
2019 650,000 545,675 1,195,675
2020 690,000 509,638 1,199,638
2021 725,000 470,725 1,195,725
2022 770,000 428,650 1,198,650
2023 815,000 383,081 1,198,081
2024 860,000 334,925 1,194,925
2025 915,000 282,750 1,197,750
2026 970,000 226,200 1,196,200
2027 1,030,000 166,200 1,196,200
2028 1,095,000 102,450 1,197,450
2029 1,160,000 34,80 , 1..,l 800
Total $ 1&900,000 10,137,302 24.037.302
During the year ended September 30, 2009, the following changes occurred in long-term debt
reported in the Water and Sewer Fund:
Beginning Ending Due Within
Balance Additions Retirements Balance One Year
Business-type activities:
Compensated absences $ 15,978 37,828 (15,978) 37,828 37,828
Certificates of Obligation 13,813,500 (6�.9�200) 113 194,300 609,250
Totals $ 13,829,478 37,828 635 17 8) 23232„128 707„078
Certificates of obligation at September 30, 2009, are comprised of the following individual
issues for the Water and Sewer Fund:
1996 Certificates of Obligation maturing January 15, 1997
to January 15, 2016. Interest payable January 15 and July
15 at rates ranging from 4.45%to 6.45% $ 415,000
1998 Certificates of Obligation maturing July 15, 1999
through July 15, 2016. Interest payable January 15 and
July 15 at rates ranging from 3.15%to 4.55%. $ 470,000
-continued-
-43-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTE'S ON ALL FUNDS (continued)
G. Long-term Debt(continued)
2001 Certificates of Obligation (33%water and sewer por-
tion)maturing August 15,2003 to August 15,2021. Interest
payable February 15 and August 15 at rates ranging from
4.15%to 5.00%. $ 607,200
2004 Certificates of Obligation (62% water and sewer por-
tion)maturing August 15,2007 to August 15,2024. Interest
payable February 15 and August 15 at rates ranging from
4.00%to 4.50%. 5,867,700
2006 Certificates of Obligation (52% water and sewer por-
tion)issued September 21,2006,maturing August 15, 2007
to August 15, 2026. Interest payable February 15 and Au-
gust 15 at rates ranging from 4.00%to 4.5%. 5 0'
Combined debt $ "13,194,300
The annual requirements to amortize the combined debt outstanding for the Water and Sewer
Fund as of September 30, 2009, are as follows:
1996 Certificates of Obligation
Year Ending
S-e)tein er 30. Principal Interest Total
2010 $ 50,000 24,817 74,817
2011 50,000 21,705 71,705
2012 55,000 18,410 73,410
2013 60,000 14,773 74,773
2014 65,000 10,787 75,787
2015 65,000 6,611 71,611
2016 70,000 2,258 72,258
Totals $ 415000 99,361 514,361
1998 Certificates of Obligation
Year Ending
Se ten.iber 30 Principal Interest Total
2010 $ 45,000 20,790 65,790
2011 45,000 18,922 63,922
2012 50,000 17,010 67,010
2013 50,000 14,835 64,835
2014 50,000 12,635 62,635
2015 55,000 10,410 65,410
2016 55,000 7,935 62,935
2017 60,000 5,460 65,460
2018 6000 2,730 62,730
Total $47� 110,727 580,727
-continued-
-44-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON ALL FUNDS(continued)
G. Long-term Debt (continued)
2001 Certificates of Obligation
Year Ending
September 30. Principal Interest Total
2010 $ 37,950 28,274 66,224
2011 39,600 26,699 66,299
2012 41,250 25,055 66,305
2013 44,550 23,302 67,852
2014 46,200 21,364 67,564
2015 47,850 19,285 67,135
2016 51,150 17,084 68,234
2017 54,450 14,680 69,130
2018 56,100 12,066 68,166
2019 59,400 9,346 68,746
2020 62,700 6,435 69,135
2021 b000 3,300 69,300
Total $6
07,200 206.890 814,090
2004 Certificates of Obligation
Year Ending
September 30. Pri�1. Interest Total
2010 $ 294,500 247,132 541,632
2011 303,800 235,352 539,152
2012 316,200 223,200 539,400
2013 328,600 210,552 539,152
2014 341,000 197,408 538,408
2015 353,400 183,768 537,168
2016 368,900 169,632 538,532
2017 384,400 154,415 538,815
2018 399,900 138,078 537,978
2019 415,400 121,082 536,482
2020 434,000 103,428 537,428
2021 452,600 84,983 537,583
2022 474,300 65,747 540,047
2023 496,000 44,997 540,997
2024 504.700 22,711 527,411
Total $ 5,x67,700 2,202,485 8,070,185
-continued-
-45-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 3. DETAILED NOTES ON AL1..FUNDS(continued)
G. Long-term Debt(continued)
2006 Certificates of Obligation
Year Ending
September 30 �°ill Interest Total
2010 $ 241,800 250,710 492,510
2011 252,200 240,434 492,634
2012 262,600 229,715 492,315
2013 273,000 218,555 491,555
2014 286,000 206,952 492,952
2015 296,400 194,797 491,197
2016 309,400 182,200 491,600
2017 322,400 169,051 491,451
2018 335,400 156,155 491,555
2019 351,000 142,319 493,319
2020 364,000 127,577 491,577
2021 379,600 112,107 491,707
2022 395,200 95,785 490,985
2023 413,400 78,495 491,895
2024 431,600 60,408 492,008
2025 449,800 41,418 491,218
2026 470,600 21,177 49177_7
Total $ 5,8 4 1100 2,527,8553162,255,
Restrictions of Bonded Debt
There are a number of limitations and restrictions contained in the various bond ordinances.
The Town is in compliance with all significant limitations and restrictions.
H. Restricted Assets
The balances of the restricted asset accounts in the enterprise funds are as follows:
Customer deposits $ 18,000
Accrued interest 69,309
Revenue bond reserve requirements 43,686
Current bonds payable 069,25
Total restricted assets $aQO,,245
-continued-
-46-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 4. OTHER INFORMATION
A. 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 employees; 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 reduction in insurance coverage from the previous year.
Settled claims for risks have not exceeded insurance coverage for the past three years.
B. Retirement System
Plan Description
The Town provides pension benefits for all of its full-time employees through a non-traditional,
joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement
System (TMRS), an agent multiple-employer public employee retirement system. Each of the
municipalities have an annual,individual actuarial valuation performed. All assumptions for
the December 31, 2008 valuations are contained in the 2008 TMRS Comprehensive Annual
Report, a copy of which may be obtained by writing to P. O.Box 149153,Austin, Texas 78714-
9153.
Benefits depend upon the sum of the employee's contributions to the plan,with interest,and the
Town-financed monetary credits,with interest. At the date the plan began,the Town granted
monetary credits for service rendered before the plan began of a theoretical amount equal to two
times what would have been contributed by the employee,with interest,prior to establishment
of the plan. Monetary credits for service since the plan began are a percent of the employees
accumulated contributions. In addition,the Town can grant,as often as annually,another type
of monetary credit referred to as an updated service credit which is theoretical amount which,
when added to the employee's accumulated contributions and the monetary credits for service
since the plan began,would be the total monetary credits and employee contributions accumu-
lated with interest if the current employee contribution rate and Town matching percent had
always been in existence and if the employee's salary had always been the average of his salary
in the last three years that are one year before the effective date. At retirement,the benefit is
calculated as if the sum of the employee's accumulated contributions with interest and the
employer-financed monetary credits with interest were used to purchase an annuity.
Members can retire at ages 60 and above with 5 or more years of service or with 20 years of
service regardless of age. A member is vested after 5 years. The plan provisions are adopted by
the governing body of the Town, within the options available in the state statutes governing
TMRS and within the actuarial constraints also in the statutes.
-continued-
-47-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 4. OTHER INFORMATION (continued)
B. Retirement System(continued)
Contributions
The contribution rate for the employees is 7%, and the Town matching ratio is currently 2 to 1,
both as adopted by the governing body of the Town. Under the state law governing TMRS,the
actuary annually determines the Town contribution rate. This rate consists of the normal cost
contribution rate and the prior service contribution rate, both of which are calculated to be a
level percent of payroll from year to year. The normal cost contribution rate finances the cur-
rently accruing monetary credits due to the Town matching percent,which are the obligation
of the Town as of an employee's retirement date, not at the time the employee's contributions
are made. The normal cost contribution rate is the actuarially determined percent of payroll
necessary to satisfy the obligation of the Town to each employee at the time his/her retirement
becomes effective. The prior service contribution rate amortizes the unfunded (overfunded)
actuarial liability(asset)over the remainder of the plan's 25-year-closed period-amortization
period using the level percent of payroll amortization period. When the government periodically
adopts updated service credits and increases its annuities in effect, the increased unfunded
(overfunded)actuarial liability(asset)is to be amortized over a new 25-year period. Currently,
the unfunded actuarial liability is being amortized over the 25-year period which began January,
2008. The projected unit credit actuarial cost method is used for determining the government
contribution rate. Contributions are made monthly by both the employees and the government.
Since the government needs to know its contribution rate in advance for budgetary purposes,
there is a one-year delay between the actuarial valuation that is the basis for the rate and the
calendar year when the rate goes into effect.
Annual Pension Cost
For the year ended September 30, 2009,the Town's annual pension cost of$307,279 for TMRS
was equal to the Town's required and actual contributions. The required contribution was
determined as part of the December 31,2007 actuarial valuation using the unit credit actuarial
cost method. The actuarial assumptions included (a) 7%investment rate of return, (b)no pro-
jected salary increases, and (c) 2.1% cost-of-living adjustment. A 3.0%inflation amount was
used in computing(a)and(b). The actuarial value of TMRS assets was determined using amor-
tized cost.
Three Year Trend Information for TMRS
Fiscal Year Annual Contributions Net Pension
Ended Penion `�it�A Made Obligatioi
09/30/07 $ 119,506 119,506 0
09/30/08 $ 156,603 156,603 0
09/30/09 $307,279 307,279 0
-continued-
-48-
TOWN OF PROSPER
Notes to Financial Statements
September 30, 2009
-continued-
NOTE 4. OTHER INFORMATION(continued)
B. Retirement System(continued)
Schedule of Funding Progress for TMRS
U.A.A.L. as a
Actuarial Actuarial Unfunded Percentage
Actuarial Value of Accrued AAL Funded Covered of Covered
Valuation Assets Liability (UAAL) Ratio Payroll Payroll
Date (a) (AAL)(b) (b)-(a) _ (a)/(b) (c) f(b)-(a)/(01
12/31/06 $ 838,979 927,275 88,296 90.5% $ 1,873,454 4.7%
12/31/07 $ 1,174,250 1,786,376 612,126 65.7% $ 2,343,834 26.1%
12/31/08 $ 1,624,228 2,529,352 905,124 64.2% $ 3,321,607 27.2%
New actuarial cost method and assumptions were adopted by the TMRS Board of Trustees at
their December, 2008 meeting,to be effective for the December 31, 2008 valuation.
-49-
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND SCHEDULES
-50-
TOWN OF PROSPER
Combining Balance Sheet
Nonmajor Governmental Funds
September 30, 2009
Parks&
Recreation Donations Insurance Total
ASSETS
Cash and cash equivalents $ 1,642,912 1,892,104 26,101 3,561,117
Receivables 3,001 3,001.
Due from other funds 84 10,057 1.0,14.
Total assets $ 1.,642,912 1 8� 36,158 3,574,259
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 7,530 7,530
Escrow payable 141,718 141.,718
Due to other funds 9,292 1,021
Total liabilities 9,292 150,269 159,561
Fund balances:
Unreserved and designated
Reported in impact fee
funds 1,633,620 1,744,920 36,158 L3�4�14698
Total fund balances 1 63� 1,744.920 36,158 3,414,698
Total liabilities and fund balances $ 1 84,9912 1,8 5,189 36,158 3,574,259
The notes to the financial statements are an integral part of this statement.
-51-
TOWN OF PROSPER
Combining Statement of Revenues,Expenditures, and Changes
in Fund Balances-Nonmajor Governmental Funds
For the Year Ended September 30, 2009
Parks&
Recreation Donations Insurance Total
REVENUES
Impact fees $ 272,990 272,990
Police grant 2,000 2,000
Investment income 16,765 590 17,355
Contributions 58,980 58,980
Escrow income 311,089 311,089
Fines,warrants and seizures 11,843 11,843
Miscellaneous 540 540
Total revenues 289,755 383,912 1,130 674,797
EXPENDITURES
General government 1,962 1,962
Police department 23,824 23,824
Fire department 13,942 13,942
Parks and recreation 194,216 25,145 219,361
Court 7,402 7,402
Total expenditures 194,216 70,313 1,962 266,491.
Excess (deficiency)of revenues over
(under)expenditures 95,539 313,599 832) 408,306
OTHER FINANCING SOURCES (USES):
Transfers in 32,940 32,940
Total other financing sources(uses) 32,940 32,940
Net change in fund balances 95,539 31.3,599 32,108 441,246
Fund balances,beginning 155 3 (78:1. 1,411,321 4,050 2,973,452
Fund balances, ending $ 1. 6� 1,744„920 36,158 3 414 698
The notes to the financial statements are an integral part of this statement.
-52-
TOWN OF PROSPER
Schedule of Revenues, Expenses, and Changes in Fund Net Assets
Budget and Actual -Enterprise Fund
For the Fiscal Year Ended September 30, 2009
Variance
With Final
Original and Budget
Final Actual Positive
Bud et, Amounts (Ne ative
OPERATING REVENUES
Water and sewer charges $ 3,160,800 4,032,768 871,968
Sanitation charges 424,900 497,954 73,054
Water and sewer connections 200,000 155,563 (44,437)
Service initiation 14,000 33,970 19,970
Miscellaneous 3,293 42,669 39,376
Total operating revenue 3,802„993 4,762,92 959,931
OPERATING EXPENSES
Personnel services 592,729 588,248 4,481
Materials and supplies 461,420 220,606 240,314
Contractual services 2.,569,310 2.517.599 51,711
Total operating expenses 3,623,459 3,3� 29�0�5,
Operating income.(loss) 179,534 1,436,471 1,256,937
NONOPERATING REVENUES (EXPENSES)
Interest revenue 93,000 64,715 (28,285)
Interest expense and fiscal charges (67,660) (631.716) (564,056)
Total nonoperating revenues
(expenses) 25,340 (567,001) (592,341)
Net income (loss)before operating
transfers 204,874 869,470 664,596
TRANSFERS
Transfers in 2,912,109 2,912,109
Transfers out (204,227) (204,227)
Total transfers (204,227) 2,707
882 -2,912,10'9
Change in net assets 647 3„577,352 3,576,705
Net assets,beginning 9,700,66
Net assets, ending $ 9 707 13, 78012 3,576,705
-53-
This page left blank intentionally,
-54-
STATISTICAL SECTION
-55-
TOWN OF PROSPER
Net Assets by Component
Last Six 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 1.2,226 8,150
Unrestricted 1,246 3,221 ) 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 (4,07 ) 5,103
Total primary government net assets $ 5,670 8,559 1.3,1.62 18,,607
Note: The Town of Prosper implemented Governmental Accounting Standards Board Statement
Number 34 for the fiscal year ended September 30,2004. Additional amounts will be added each
year until ten years are reported.
-56-
2008 2009
33,422 33,919
9,809 8,440
4,69 3,70
47,92 46,063
...................
3,321 6,804
42 44
6.,338 5,929
�9701 �12 777
36,743 40,723
9,851 8,484
1.1,031 9�,63
15 7�62 5 58,840
-57-
TOWN OF PROSPER
Changes in Net Assets
Last Six Fiscal Years
(Accrual basis of accounting)
(Amounts expressed in thousands)
Fiscal Year
2004 2005 2006 2007
EXPENSES
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-
-58-
2008 2009
2,063 2,764
2,485 3,329
1,444 1,356
130 444
459 1,276
6,581 9,169
4,076 4,460
4,076 4,460
10,657 13,629
1,440 561
162 360
485
418
452 1,397
2,957 2,318
4,507 4,720
4,507 4,720
7,464 7,038
(3,624) (6,851)
431 260
(3,193 (6,591
-59-
TOWN OF PROSPER
Changes in Net Assets
Last Six Fiscal Years
(Accrual basis of accounting)
(Amounts expressed in thousands)
(continued)
Fiscal Year
2004 2005 2006 2007
GENERAL REVENUES AND OTHER CHANGES
IN NET ASSETS
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
Investment earnings 79 289 574 1,107
Miscellaneous 59 63 376 79
GainAloss) on sale of capital asset (5)
Transfers 284) 406) 1565) 1553)
Total governmental activities 1,857 3,128 2,781 4,160
Business-type activities:
Investment earnings 12 23 58 132
Miscellaneous 12 82 33
Gain 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
Note: The Town of Prosper implemented Governmental Accounting Standards Board Statement
Number 34 for the fiscal year ended September 30, 2004. Additional amounts will be added
each year until ten years are reported.
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2008 2009
4,429 5,296
1,288 1,077
341 428
1,828 367
596 456
114 74
1( ,237) 2( ,708)
7,359 4,990
109 65
33 43
1,237 2,708
1,379 2,816
8,738 7,806
3,735 (1,861)
1,810 3,076
5,545 1,215
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TOWN OF PROSPER
Governmental Activities Tax Revenues By Source
Last Six Fiscal Years
(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
Note: The Town of Prosper implemented Governmental Accounting Standards Board Statement
Number 34 for the fiscal year ended September 30, 2004. Additional amounts will be added
each year until ten years are reported.
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TOWN OF PROSPER
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified accrual basis of accounting)
(Amounts expressed in thousands)
Fiscal
2000 2001 2002 2003
General fund
Reserved $ 2 1,550 1,468
Unreserved 332 493 453 580
Total general fund $332 495 2,003 2,048
All other governmental funds
Reserved $ 88 58 74 79
Unreserved,reported in:
Impact fee funds
Capital projects funds
Total all other governmental funds $ 88 58 74 79
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Year
2004 2005 2006 2007 2008 2009
74 59 18
1,181 1,821 2,855 3,034 3,989 4,398
1,181 1,821 2,929 3,093 4,007 4,398
131 223 315 581 622 2,557
478 1,624 1,826 4,290 6,936 5,883
3,604 3,819 10,011 3,160 2,233 16,920
4,213 5,666 12,152 8,031 9,791 25,360
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TOWN OF PROSPER
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified accrual basis of accounting)
(Amounts expressed in thousands)
Fiscal
2000 2001 2002 2003
REVENUES
Taxes $ 814 1,043 1,389 1,455
Licenses and permits 94 282 198 295
Intergovernmental 7 39 393
Charges for services
Fines
Investments earnings 23 19 59 30
Contributions 14 26 13
Miscellaneous _ 41 4 7
Total revenues 945 1,418 1,702 2,180
EXPENDITURES
General government 127 252 530 588
Public safety 100 395 545 859
Transportation 145 218 172 168
Culture and recreation 48
Capital outlay 158 213 455 425
Debt service:
Principal 56 37 40 80
Interest 9 5 74 88
Total expenditures 595 1,120 1,816 2,256
Excess of revenues over/(under) expenditures 350 298 114) 76)
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out (115) (168) (260) (256)
Note issued 217 325
Bonds issued 1,682
Capital leases 56
Total other financing sources(uses) (115) (168) 1,639 125
Net change in fund balances $ 235 130 1,525 49
Debt service as a percentage of
noncapital expenditures 15.0% 4.0% 6.7% 9.1%
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Year
2004 2005 2006 2007 2008 2009
2,005 3,186 3,383 4,500 6,034 6,738
1,124 1,876 2,429 3,964 3,925 550
111 276 33 500 452 584
243 245 304 156 161 1,254
98 93 106 131 247 239
79 289 574 1,107 596 456
12 72 61 45 50 59
59 63 376 79 64 74
3,731 6,100 7,266 10,482 11,529 9,954
624 819 1,178 1,466 2,003 2,225
1,099 1,342 1,594 1,871 2,194 3,007
176 165 210 177 352 257
7 26 29 92 97 379
1,942 770 378 8,338 2,108 2,943
181 189 221 386 399 484
184 336 257 493 481 893
4,213 3,647 3,867 12,823 7,634 j-0 1 188
(482) 2,453 3,399 (2,341) 3,895 (234)
292 250 232
(576) (656) (1,565) (1,553) (1,237) (2,940)
4,003 5,760 13,900
30 45 48 14 41
3,749 361 4,195 (1,505) 1223) 11,233
3,267 2,092 7,594 3 84 6) 2,672 10,999
14.2% 17.3% 12.8% 18.6% 15.9% 17.8%
f
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TOWN OF PROSPER
General Governmental Tax Revenues By Source
Last Ten Fiscal Years
(Modified accrual basis of accounting)
(Amounts expressed in thousands)
Fiscal Property Sales Franchise
Year Tax Tax Tax Total
2000 $ 295 473 46 814
2001 417 535 91 1,043
2002 588 683 118 1,389
2003 740 562 153 1,455
2004 872 971 162 2,005
2005 1,572 1,407 207 3,186
2006 1,673 1,509 201 3,383
2007 2,988 1,208 304 4,500
2008 4,406 1,287 341 6,034
2009 $5,233 1,077 428 6,738
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TOWN OF PROSPER
Property Tax Rates
Direct and Overlapping Governments
(Per$100 of Assessed Value)
Last Ten Fiscal Years
Town of Prosper Prosper Collin
Debt Independent County
Fiscal General Service School Collin College
Year Fund Funds Total Dis rict County District Total
2000 $ .192768 .167232 .360000 1.539522 .250000 .096723 2.246245
2001 .244389 .115611 .360000 1.522197 .250000 .094049 2.226246
2002 .226001 .133999 .360000 1.720249 .250000 .092843 2.423092
2003 .244698 .115302 .360000 1.760960 .250000 .091946 2.462906
2004 .218440 .105660 .324100 1.819900 .250000 .091932 2.485932
2005 .188440 .291260 .479700 1.951500 .250000 .090646 2.771846
2006 .184549 .220836 .405385 1.975310 .250000 .089422 2.720117
2007 .184549 .314268 .498817 1.800000 .242500 .087683 2.629000
2008 .275075 .244925 .520000 1.670000 .242500 .086984 2.519484
2009 .305011 .214989 .520000 1.670000 .242500 .086493 2.518993
Source: Applicable taxing entities.
t
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TOWN OF PROSPER
Property Tax Levies and Collections(1)
Last Ten Fiscal Years
Ratio of
Current Percent Delinquent Total Total Tax
Fiscal Total Tax of Levy Tax Tax Collections
Year Tax Levy Collections Collected Collections Collections to Tax Levu
2000 $ 293,598 289,995 98.77% $ 1,059 291,054 99.13%
2001 412,100 408,388 99.10 3,799 412,187 100.02
2002 570,374 546,714 95.85 23,961 570,675 100.05
2003 693,398 684,901 98.77 23,843 708,744 102.21
2004 860,692 846,098 98.30 7,632 853,730 99.19
2005 1,561,979 1,550,274 99.30 5,426 1,555,700 99.60
2006 1,664,728 1,643,724 98.70 10,680 1,654,404 99.38
2007 2,920,145 2,871,131 98.32 73,528 2,944,659 100.83
2008 4,345,264 4,279,374 98.48 66,065 4,345,439 100.00
2009 $5,218,951 5,149,015 98.66% $ 83,883 5,232,898 100.27%
Notes: (1) Includes general and debt service funds.
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TOWN OF PROSPER
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(Amounts expressed in thousands, except per capita amount)
Governmental Activities Business-Type Activities
General Total
Fiscal Obligation Capital Revenue Primary
Year Bonds Notes Leases Bonds Notes Government
2000 $ 77 1,555 89 1,721
2001 40 1,480 76 1,596
2002 1,682 217 2,228 61 4,188
2003 11642 503 56 2,144 47 4,392
2004 5,584 403 50 8,546 33 14,616
2005 5521 298 74 8,444 17 14,354
2006 11,214 188 31 14,581 26,014
2007 10,993 71 30 14,272 25,366
2008 10,682 31 13,813 24,526
2009 $ 24,136 34 13,194 37,364
Note: Details regarding the Town's outstanding debt can be found in the notes to the financial state-
ments.
'See the Schedule of Demographic and Economic Statistics on page 99 for personal income and
population data.
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TOWN OF PROSPER
Pledged-Revenue Coverage
Last Ten Fiscal Years
(Amounts expressed in thousands)
Water and Sewer Revenue Bonds
Less: Net
Fiscal Charges Operating Available Debt Service
Year and Other Expenses Revenue �ra� Interest Coverage
2000 $ 590 577 13 61 91 0.09
2001 976 790 186 88 86 1.07
2002 1,819 902 917 95 114 4.39
2003 1,711 1,509 202 85 112 1.03
2004 1,546 1,144 402 109 108 1.85
2005 2,266 1,835 431 117 491 0.71
2006 3,742 2,101 1,641 120 369 3.36
2007 3,609 2,932 677 310 657 0.70
2008 4,649 3,088 1,561 458 588 1.49
2009 $4,828 3,326 1,502 619 598 1.23
Note: Details regarding the government's outstanding debt can be found in the notes to the financial
statements. Charges and other includes investment earnings. Operating expenses do not include
depreciation.
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