02-02-11 Regular Meeting of the La Porte Area Water Authority

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8. FUND NET ASSETS (Continued) As part of the debt service requirements, the participants are billed to build a reserve for future debt service requirements as set forth in the contract revenue bonds of the Authority. During the year, the Authority's billings were applied as follows: Water supplied and operating costs (user fees) $ 929,497 Debt service billings /charges 758,532 Capital recovery billings 101,772 Total billings $ 1,789,801 9. RISK MANAGEMENT The Authority is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Authority participates (through an endorsement on the City of La Porte's contract) along with other entities in the Texas Municipal League's Intergovernmental Risk Pool. The pool purchases commercial insurance at group rates for participants in the pool. Neither the Authority nor the City had significantly reduced insurance coverage or had settlements that exceeded coverage amounts for the past three fiscal years. 10. ECONOMIC DEPENDENCY The Authority receives all of its support from three municipalities, with the City of La Porte being the largest contributor at approximately 86 %. In addition, the Authority contracts with the City of La Porte to provide administrative oversight and operate the Authority's transmissions system. 16