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• • <br />LA PORTS AREA WATER AUTHORITY <br />Notes to Financial Statements <br />September 30, 1990 _~ ~` ~ - ~- ~ `~`~ ~ ' ~ -~ ' ~ ~_ - .. <br />(1) Formation <br />The La Porte Area Water Authority (the Authority) was created on May 30, 1981 by <br />Chapter 729, page 2678, Acts of the 67th Legislature of the State of Texas. This bill <br />authorizes the Authority to purchase, construct, or otherwise acquire waterworks systems, <br />sanitary sewer systems, storm sewer systems and drainage facilities or parts of such <br />systems or facilities and to operate and maintain such facilities. The Authority is authorized <br />to set rates for services related to the aforementioned systems and facilities, and to issue <br />revenue bonds for the purpose of acquiring and maintaining such systems. The Authority <br />comprises approximately 20,600 acres in Harris County, Texas. <br />The Authority's primary operations have consisted of purchasing an undivided interest in <br />the Southeast Water Purification Plant (the Southeast Plant) under construcrion by the City <br />of Houston and planning the construction of transmission and distribution systems to <br />transport water from the Southeast Plant to the customers of the Authority. <br />(2) Summary of Significant Accounting Policies <br />The following is a summary of the significant accounting policies followed by the La Porte <br />Area Water Authority: <br />(a) Reporting Entity <br />The financial statements of the Authority include all funds and operations which are <br />controlled by or dependent on the Authority. The criteria considered in determining <br />governmental activities to be reported within the Authority's financial statements <br />include the degree of oversight responsibility exercised by the Board of Directors over <br />an organization, activity or function, the Authority's accountability for the activity's <br />fiscal matters, its scope of public service, and the nature of any special financing <br />relationships which may exist between the Authority and a given governmental activity. <br />These criteria are based upon and consistent with those promulgated by the <br />Governmental Accounting Standards Board. <br />The City of La Porte is the lowest level of government exercising oversight <br />responsibility and controls over all activities related to the acquisition, operation, and <br />maintenance of waterworks and sewer systems within the boundaries of the La Porte <br />Area Water Authority. The Authority is iiScluded in the financial statements of the City <br />of La Porte, due to the reporting entity concept as defined by the Governmental <br />Accounting Standards Board, since the Board of Directors is appointed by the City <br />Council of the City of La Porte, and has the ability to significantly influence operations, <br />and primary accountability for fiscal matters. <br />(Continued) <br />