03-22-21 Regular Meeting of the La Porte City Council

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CITY OF LA PORTE, TEXAS Exhibit A-10 NOTES TO FINANCIAL STATEMENT Note 1 Î Summary of Significant Accounting Policies The City of La Porte, Texas (the ÐCityÑ) was incorporated under the laws of the State of Texas on August 10, 1892. The City operates under a ÐCouncil-ManagerÑ form of government and provides the following services as authorized by its charter: public safety, development services, public health and welfare, culture and recreation and waterworks. The accounting and reporting policies of the City relating to the funds included in the accompanying basic financial statements conform to U.S. generally accepted accounting policies (GAAP) applicable to state and local governments which include the principles prescribed by the Governmental Accounting Standards Board (GASB), the American Institute of Certified Public Accountants and the Financial Accounting Standards Board. The more significant accounting policies of the City are prescribed below. A. Reporting Entity The CityÓs basic financial statements include the accounts of all City operations. The City, with its elected governing body of mayor and eight council members, is considered a primary government. As required by GAAP, the basic financial statements include the City and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are in substance, part of the governmentÓs operations. All component units have been included as blended component units because of the significance of their operations and financial relationships with the City. The La Porte Area Water Authority (the ÐAuthorityÑ) is governed by a five-member board appointed by the City Council. Although it is a legally separate entity, the Authority provides services almost exclusively for the CityÓs water operations, and is in substance a part of the CityÓs primary operations. The Authority was created by the City to finances the operations involved in obtaining surface water supplies and converting these supplies to potable water. This water is sold primarily to the City (86%) with the remainder being sold to other neighboring political subdivisions. The operations of the Authority are reported as a proprietary fund type. The La Porte Redevelopment Authority is governed by a nine-member board appointed by the Mayor with the approval of City Council. The La Porte Redevelopment Authority provides benefits exclusively for the City through reinvestment financing of ad valorem taxes, which are utilized for capital improvements for the City. The La Porte Redevelopment Authority is presented as a governmental fund type. The Section 4B Sales Tax Corporation provides services that exclusively benefits the City and is governed by a seven-member board appointed by City Council. The Section 4B Sales Tax Corporation is presented as a governmental fund type. The Emergency Service District (the ÐDistrictÑ) provides public safety services exclusively to the City. The District is governed by a seven member board appointed by City Council. The District is a governmental fund type. The Street Maintenance Component Unit provides infrastructure improvements exclusively to the City. City Council directs staff operations through the annual budget process. Complete financial statements for each of the individual component units may be obtained through the City. Draft 3-12-21 35 Fiscal Year 2020 Annual Report