1988-02-22 Public Hearing and Regular Meeting

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,mmPeat ~rwick e Certified Public Accountants Peat Marwick Main & Co. 1 Corporate Plaza 2525 Bay Area Boulevard Houston. TX 77058 Telephone 713 280 0460 February 19, 1988 Mr. Robert T. Herrerra City Manager City of La Porte 604 W. Fairmont Parkway La Porte, Texas 77571 Dear Bob: We have applied certain agreed-upon procedures, as discussed below, to assist you in connection with the proposed annexation of Bayshore Municipal Utility District (Bay MUD). It is understood that this report is solely for your information and is not to be referred to or distributed for any purpose to anyone who is not a member of management or of the City Council of the City of La Porte. Our procedures and findings are as follows: a. We reviewed the audited financial statements of Bay MUD as of September 30, 1987. During our review, we noted that Bay MUD was operating at a cash loss as of September 30, 1987. We also noted that at September 30, 1987, the District did not have insurance covering the water system which is not in compliance with the Bond Order. b. We reviewed the audit supporting work papers for the year ended September 30, 1987 provided to us by Bay MUD's independent auditor, Mr. Eugene Hovey, for the following areas: o contingent liabilities o long-term debt o search for unrecorded liabilities c. We inquired of Mr. Hovey as to the collectibility of the tax revenues. He stated that the historical collection rate has always been outstanding. Additionally, the tax base has remained stable. It is composed of numerous single family homeowners and small businesses. No single taxpayer accounts for a significant portion of the tax revenues. rlI~:. I"'" I' PI ,'f. f':'~"" Member Firm of L ;.. ..'. ,'i', Klynveld Peat Marwick Goerdelef