City of La Porte Comprehensive Annual Financial Report 1997

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La Porte Area Water Authority - The La Porte Area Water Authority was created by the Texas State Legislature in 1981 to assist the Bayshore Area in its conversion to surface water, which was mandated by the Harris Galveston County Subsidence District. The purpose of the Authority is to provide potable surface water to three customers; the cities of La Porte, Shoreacres and Morgan's Point. The Authority accomplished its mission by participating in the construction of a water purification plant and the construction of a 17 mile transmission system. The City of La Porte started receiving water from the Authority in 1991 and is its largest customer, utilizing 90% of its production. The Authority ended the year with a working capital balance of $763,098. The Authority has contracted its managerial and operational services to the City of La Porte. Internal Service Funds. The City has two internal service funds, which it utilizes to provide services to its internal operations. Each wi"1I be discussed below. . Motor Pool Fund - The motor pool fund is used to account for the revenues and cost of providing vehicles of all types to City departments. This fund provides for maintenance, fuel, lubrication and replacement for these vehicles. The working capital for this fund at the end of the year was $2,702,547. Because this fund contains amounts necessary to replace vehicles, the goal of the working capital balance is to have sufficient funds to replace vehicles once they have reached their expected useful life. The City believes this goal is being met. ' Computer Fund - At September 30, 1993, the City created the computer fund to account for the maintenance and replacement of computer systems. The majority of the assets that were transferred to the newly created fund were previously reported in the General Fixed Asset Account Group. Beginning in fiscal year 1994, each operating division that utilized computer technology paid lease and maintenance fees into the computer fund. The fund ended the year with $197,341 in working capital. Debt Administration. The debt issues outstanding at the end of the year included $10,225,000 in general obligation bonds and $12,985,000 in revenue bonds. The City currently has an A rating from Moody's Investor Service and an A+ from Standard & Poor's Corporation on its general obligation bond issues. Current state statutes limit total tax rate, including general obligation bond indebtedness to $2.50 per $100 appraised valuation. Debt per capita at September 30, 1997, was $311. Cash Management. Cash temporarily idle during the year was invested in demand deposits, certificates of deposit and obligations of the U. S. Treasury. For the fiscal year the City earned interest revenue of $1,392,216 on all investments. The average yield on investment!:? was 5.76% for the fiscal year. The City's policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, deposits were either insured by federal depository insurance or collateralized. All collateral on deposits was held either by the City, its agent or a financial institution's trust department in the City's name. Risk Management. The City has actively managed its risk. Liability insurance premiums have continually decreased. The City attributes this long term reduction to the impact of the Incident Review Board and the Safety Committee, both internal committees, which have been very active during the past eight years and have successfully increased the safety awareness of employees. 8 I I I I I 'I I I I I I I I I I I . !!!