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<br />CITY OF LA PORTE, TEXAS
<br />Notes to the Financial Statements
<br />September 30, 2008
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<br />5. Long Term Liabilities - Continued
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<br />Bonds Authorized and Unissued -
<br />
<br />As of September 30,2008, the City had $4,100,000 in Certificate of Obligations Bonds which were
<br />authorized and unissued.
<br />
<br />Defeased Bonds Outstanding -
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<br />In 1994, the City defeased certain general obligation and revenue bonds by placing the proceeds of the new
<br />bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly,
<br />the trust account assets and the liability for the defeased bonds are not included in the City's financial
<br />statements.
<br />
<br />On October 6, 1999, the La Porte Area Water Authority issued $8.08 million in Contract Revenue Refunding
<br />Bonds, Series 1999, with an average interest rate of 5.159 percent to refund $8.08 million in outstanding
<br />Water Supply Contract Revenue Bonds, Series I and II, 1998 with an average interest rate of 6.94 percent.
<br />The Authority completed the current refunding to reduce its total debt service payments over the next 18
<br />years by $1.476 million and to obtain an economic gain (difference between the present values of the old
<br />and new debt service payments) of $1.048 million. The bonds are payable from the net revenues of the
<br />Authority. The bonds are in $5,000 denominations. The Authority is in compliance with all significant
<br />requirements and restrictions contained in the bond resolution. As of September 30, 2008, $2,970,000 of
<br />the refunded bonds has been paid and $5,110,000 remain outstanding.
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<br />6. Pension Benefits
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<br />Plan Descriptions
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<br />The City provides pension benefits for all of its full-time employees through a non-traditional, joint
<br />contributory, hybrid defined benefit plan (the "Plan") in the statewide Texas Municipal Retirement System
<br />(TMRS), one of 827 administered by TMRS, an agent multiple-employer public employee retirement system.
<br />All assumptions for the December 31,2007, valuations are contained in the 2007 TMRS Comprehensive
<br />Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas
<br />78714-9153. In addition, the city provides pension benefits to its volunteer firemen through the Texas
<br />Statewide Emergency Services Personnel Retirement Fund, one of 150 administered by the Fire Fighters'
<br />Pension Commissioner, a cost sharing multiple employer pension system. That report may be obtained by
<br />writing to Firefighters Pension Commission, P.O. Box 12577, Austin, Texas 78711. Both Plans are more
<br />fully described below.
<br />
<br />Texas Municipal Retirement System
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<br />Benefits depend upon the sum of the employee's contributions to the Plan, with interest, and the City
<br />financed monetary credits, with interest. At the date the Plan began, the city granted monetary credits for
<br />service rendered before the Plan began of a theoretical amount equal to two times what would have been
<br />contributed by the employee, with interest, prior to the establishment of the Plan. Monetary credits for
<br />service since the Plan began are a percentage (100%, 150% or 200%) of the employee's accumulated
<br />contributions. In addition, the City can grant annually another type of monetary credit referred to as an
<br />updated service credit which is a theoretical amount which, when added to the employee's accumulated
<br />contributions and the monetary credits for service since the Plan began, would be the total monetary credits
<br />and employee's contributions accumulated with interest if the employee's contribution rate and City's
<br />matching percentage had always been in existence and if the employee's salary had always been the
<br />average of his salary in the last three years and that are one year before the effective date. At retirement,
<br />the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the
<br />employer-finance monetary credits with interest were used to purchase an annuity.
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<br />Members can retire at ages 60 and above with 10 or more years of service or with 20 years of service
<br />regardless of age. The Plan also provides death and disability benefits. A member is vested after 10 years.
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