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LA PORTE AREA WATER AUTHORITY <br />NOTES TO FINANCIAL STATEMENTS <br />NOTE 4 - TEMPORARY INVESTMENTS <br />EXHIBIT B-4 <br />Temporary investments represent the Authority's equity interest in the City's investment pool. At year end a <br />portion of the Authority's temporary investments were restricted as follow: <br />Restricted for retirement of current debt service liablities <br />and reserve requirements per bond covenents $ 689,162 <br />Total Restricted Temporary Investments $ 689,162 <br />The carrying amount for temporary investments, at September 30, 2011 was $1,352,469 , which is fair value. This <br />represents 7.46% of the City's total portfolio. <br />Pooled investments with the City consist of obligations of the United States and its agencies, certificates of deposit <br />and investment pools in accordance with state statutes and the City's investment policies. Securities are registered <br />and held by their agent in the City's name. The Authority's portion of the investment pool is 3.72%. Interest <br />earnings are allocated on the same pro-rata basis. The investment pool is not registered with the SEC or subject to <br />any regulatory oversight. The fair value of the position in the pool is the same as the value of pool shares. The <br />City has adopted GASB Statement No. 31, which establishes accounting and reporting standards for all of the <br />City's investments. In accordance with Statement No. 31, the City reports all investments at fair value, except for <br />"money market investments" and "20-like pools". Money market investments, which are short-term highly liquid <br />debt instruments that may include U.S. Treasury and agency obligations, are reported at amortized costs. <br />Investment positions in external investment pools that are operated in a manner consistent with the SEC's Rule 2a7 <br />of the Investment Company Act of 1940, such as TexPool and TexStar, are reported using the pools' share price. <br />Interest Rate Risk <br />The Authority's investment policy specifies that the maximum stated maturity, from the date of purchase, for any <br />individual investment may not exceed 5 years and the maximum dollar -weighted average maturity may not exceed <br />2 years. At year end, the Authority's dollar -weighted average maturity of the investment portfolio was as follows: <br />Weighted Average <br />Investment Type Maturity (Days) <br />Federal Home Loan Mortgage Corporation (FHLMC) <br />Federal National Mortgage Association (FNMA) <br />Federal Home Loan Bank (FHLB) <br />Portfolio Weighted Average Maturity <br />15 <br />110 <br />27 <br />14 <br />33 <br />