HomeMy WebLinkAbout02-10-16 Regular Meeting of the La Porte Area Water AuthorityLA PO1F:;VTE AREA WATER AUTHORITY
AGENE3A
Notice is hereby given of a Regular Meeting of the La Porte Area Water Authority (LPAWA) -
to be held on Wednesday, February 10, 2016 beginning at 6-00 pm. in the downstairs
Conference Room of the Public Works Service Center, 2963 North 23rd Street, La Porte,
Texas, for the purpose of considering the following agenda items. All agenda items are
subject to action_
1 _ Call to order-
2- Welcome new board member Steven Barr-
3- Election of officers_ Secretary.
4_ Consider approval or other action of minutes from the September 10, 2015 meeting-
5- Consider acceptance or other action of the LPAWA Financial Report for the Year Ended
September 30, 2015_
6_ Eiscussion related City of Houston 2015 True Up and 2016 contested budget related to
the Southeast Houston Water Purification Plant expansion.
7_ General Manager's Report.
a_ Board Comments — Matters appearing on the: Recognition of community members, city
employees, and upcoming events; Inquiry of staff regarding specific factual information or
existing policy_
a. Matters appearing on agenda_
b_ Inquiry of staff requiring a statement of specific factual information or a recitation
of existing policy-
0— Adjournment_ _
In compliance with the American with Llisabilities Act, the City of La Porte will provide reasonable
accommodations for persons attending public meetings. To better serve attendees, requests should be
received 24 hours prior to the meeting_ Please contact Patrice Fogarty, City Secretary, at 281 _470.5019_
CERTIFICATION
I certify t a copy the February 10,- 2016, agenda of items to be considered by the La Porte Area Water
Autho ty as poste on the City Hall uiletin board on February 4, 2016_
Sharo Valiante, Public Works director
1 certify that the attached notice and agenda of items to be considered by the La Porte Area Water Authority
was removed by me from the City Hall bulletin board on the day of 2016_
Signature of person removing from bulletin board
LA PORTE AREA WATER AUTHORITY
MINUTES
September 10, 2015
The meeting was called to order at 6:00 PM by President Kenneth Schlather.
Members Present: Kenneth Schlather, President; Doug Martin, Vice President; Charlie Perry, Secretary; Randy
Woodard
Members Absent: Excused absence: Dennis Steger
Others Present: Corby Alexander, General Manager; David Mick, La Porte Public Works Director
2. The August 06, 2015 minutes were reviewed and unanimously approved with Doug Martin making the motion
to approve and Randy Woodard seconding.
3. David Mick provided the background to the February 28, 2015 invoice submitted by the City of Houston for the
Southeast Water Purification Plant (SEWPP) improvement and expansion project bid in 2007 and constructed
primarily from 2008 through 2010 with some minor construction and warranty work continuing to 2012. The
expansion project true -up invoice is in the amount $293,763.82. The LPAWA share estimated in 2007 was
$891,540 less a $304,980 credit for oversized items previously funded by LPAWA recouped from those entities
that are participating in the 80 mgd expansion. The project, designed to increase the capacity of the SEWPP
from 120 mgd to the current capacity of 200 mgd, was bid at approximately $168-million with a final cost of
$171-million. Total change orders amounted to less than 2% of the contract amount. The co -owning entities
that participated in the plant expansion portion of the project contributed additional funds at the start of the
project equal to a 5% contingency. Those entities are receiving money back. The co -owning entities such as
the La Porte Area Water Authority that did not participate in the plant expansion but did participate in the cost
of enhancements to the previously existing 120 mgd portion of the plant owed additional funds. Staff received
additional information from the City of Houston on several occasions, with the final submittal received
September 4, 2015, as needed for staff to be comfortable recommending payment. Motion to approve staffs
request to pay the $293,763.82 true -up invoice was made by Randy Woodard with Charlie Perry seconding.
Motion was approved unanimously.
4. David Mick presented the background information to the FY 16 Southeast Water Purification Plant (SEWPP)
budget dispute. Continuing discussions initiated in the prior meeting. As the Managing Owner, the City of
Houston prepares the annual budget for the SEWPP. The contract between the co -owners provides a process
for disputing portions of the annual budget provided that: 1) more than 50% of the plant co -owners, with the
vote weighted by the percentage of water consumed over a 12-month period, are in agreement with the dispute,
and 2) the disputed line items are not necessary for the regulatory compliance, health, safety or security. The
board reviewed a summary of budget line items likely to be contested by a majority of the co -owners. The
disputed amount may be as high as $0.1102/1000 gallons pending further information from the City of Houston.
Staff is recommending joining with other co -owners in disputing the FY 16 budget line items totaling
$0.1102/1000 gallons. Staff also recommends increasing the LPAWA FY 16 budget line item for Other
Professional Services by $15,000 for a total budget of $25,000 for consulting and legal fees that may be
associated with the dispute. Staff's best estimate of the worst -case cost exposure to the LPAWA in terms of
legal and consulting fees is $75,000 should the dispute goes through a full trial. Motion to dispute the FY 16
SEWPP budget and to increase the Other Professional Services budget by $15,000 was made by Randy Woodard
and seconded by Doug Martin. The motion was unanimously approved.
5. Corby Alexander indicated that he had no additional comments.
6. There were no additional comments concerning the authority from the board.
7. There being no further business, the meeting adjourned at 6:12 PM.
September 10, 2015 LPAWA Minutes Page 2/2
Secretary
PASSED AND APPROVED
ON THIS DAY
President
DRAFT
PATTILLO, BROWN & HILL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS 4 BUSINESS CONSULTANTS
To the Board of Directors of
The La Porte Area Water Authority
La Porte, Texas
We have audited the financial statements of the La Porte Area Water Authority (the "Authority")
as of and for the year ended September 30, 2015, and have issued our report thereon dated February
2016. Professional standards require that we advise you of the following matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter dated September 25, 2015, our responsibility, as
described by professional standards, is to form and express opinions about whether the financial
statements that have been prepared by management with your oversight are presented fairly, in all
material respects, in accordance with accounting principles generally accepted in the United States of
America. Our audit of the financial statements does not relieve you or management of your respective
responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to
obtain reasonable, rather than absolute, assurance about whether the financial statements are free of
material misstatement. An audit of financial statements includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over
financial reporting. Accordingly, as part of our audit, we considered the internal control of the Authority
solely for the purpose of determining our audit procedures and not to provide any assurance concerning
such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to
communicate to you.
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Governmental Audit
Quality Center
DRAFT
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously
communicated to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, and, as appropriate, our firm have complied with all
relevant ethical requirements regarding independence.
As a part of the engagement we assisted in preparing the financial statements and related notes to
the financial statements of the Authority in conformity with U.S. generally accepted accounting
principles based on information provided by you. These nonaudit services do not constitute an audit
under generally accepted auditing standards and such services were not conducted in accordance with
generally accepted auditing standards.
In order to ensure we maintain our independence for performing these nonaudit services certain
safeguards were applied to this engagement. Management assumed responsibility for the financial
statements and related notes to the financial statements and any other nonaudit services we provided.
Management acknowledged in the management representation letter our assistance with the preparation of
the financial statements and related notes to the financial statements and that these items were reviewed and
approved prior to their issuance and accepted responsibility for them. Further, the nonaudit services were
oversaw by an individual within management that has the suitable skill, knowledge, or experience;
evaluated the adequacy and results of the services; and accepted responsibility for them.
Qualitative Aspects of the Entity's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary
of the significant accounting policies adopted by the Authority is included in Note I to the financial
statements. There have been no initial selection of accounting policies and no changes in significant
accounting policies or their application during the current fiscal year. No matters have come to our
attention that would require us, under professional standards, to inform you about (1) the methods used
to account for significant unusual transactions and (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
SignificantAccounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's current judgments. Those judgments are normally based on knowledge
and experience about past and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the financial statements and because
of the possibility that future events affecting them may differ markedly from management's current
judgments.
2
DRAFT
The most sensitive accounting estimates affecting the financial statements are:
Management's estimate of the useful lives of capital assets is based on the expected lifespan of the
asset in accordance with standard guidelines. We evaluated the key factors and assumptions used to
develop the estimate of useful lives in determining that it is reasonable in relation to the financial
statements taken as a whole and in relation to the opinion unit.
Management's estimate of the allowance for receivables is based on historical collections. We
evaluated the key factors and assumptions used to develop the allowance for uncollectible
receivables in determining that it is reasonable in relation to the financial statements taken as a
whole and in relation to the opinion unit.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive
because of their significance to financial statement users. The most sensitive disclosures affecting the
Authority's financial statements relate to the net pension liability. The disclosures in the financial
statements are neutral, consistent, and clear.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the
performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known
and likely misstatements identified during the audit, other than those that we believe are trivial, and
communicate them to the appropriate level of management. Further, professional standards require us to
also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes
of transactions, account balances or disclosures, and the financial statements as a whole and each
applicable opinion unit. Management has corrected all identified misstatements.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit procedures.
None of the misstatements identified by us as a result of our audit procedures and corrected by
management were material, either individually or in the aggregate, to the financial statements taken as a
whole or applicable opinion units.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or
auditing matter, which could be significant to the Authority's financial statements or the auditor's report.
No such disagreements arose during the course of the audit.
3
DRAFT
Representations Requested from Management
We have requested certain written representations from management, which are included in the
management representation letter dated February _, 2016.
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management informed us that, and to our knowledge, there were no consultations
with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the Authority, we generally discuss a
variety of matters, including the application of accounting principles and auditing standards, operating
and regulatory conditions affecting the entity, and operational plans and strategies that may affect the
risks of material misstatement. None of the matters discussed resulted in a condition to our retention as
the Authority's auditors.
This report is intended solely for the information and use of the Board of Directors and
management of the Authority and is not intended to be and should not be used by anyone other than
these specified parties.
Waco, Texas
February _, 2016
4
DRAFT
a
LA PORTE AREA WATER AUTHORITY
HARRIS COUNTY, TEXAS
ANNUAL FINANCIAL REPORT
September 30, 2015
DRAFT
LA PORTE AREA WATER AUTHORITY
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2015
Page
Exhibit Number
IndependentAuditors' Report...................................................................
1-3
Management's Discussion and Analysis.......................................................
4-7
Basic Financial Statements
Statement of Net Position..........................................................................
8
Statement of Revenues, Expenses and
Changesin Net Position .............................................. ............................
9
Statementof Cash Flows .......... ................ ......................................................
10
Notes to the Financial Statements..................................................................
11 —17
Texas Supplemental Information
Supplemental Schedules Included Within this Report ................................... 18
Schedule of Service and Rates....................................................................... 1 19
Schedule of Enterprise Fund Expenses.......................................................... 2 20
Schedule of Temporary Investments............................................................. 3 21
Long -Term Debt Service Requirements by Years............ ............................. 5 22
Changes in Long -Term Bonded Debt............................................................ 6 23
Comparative Schedule of Revenues and Expenses — Enterprise
Fund— Five Years........................................................................................ 7 24 — 25
Board Members, Key Personnel and Consultants .......................................... 8 26 — 27
Schedule of Revenues, Expenses and Changes in Net Position —
Budget and Actual — Budgetary Basis ........................................................ 9 28
. 1
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PATTILLO, BROWN & HILL, L.L.P_
CERTIFIED PUBLIC ACCOUNTANTS ! BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
The La Porte Area Water Authority
La Porte, Texas
Report on Financial Statements
We have audited the accompanying basic financial statements of the La Porte Area Water
Authority (the "Authority"), a component unit of the City of LaPorte, Texas as of and for the year
ended September 30, 2015, and the related notes to the financial statements, as listed in the table of
contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the. design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
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505.266.5cXM
AIC
Governmental Audit
Quality Center
Alzam
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of ,the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the
effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the Authority, as of September 30, 2015, and the respective changes
in financial position and cash flows thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 4 through 7 be presented to supplement the basic
financial statements. Such information, although not part of the basic financial statements, is required by
the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operations, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Authority's basic financial statements. The Texas Supplementary Information
listed in the table of contents, are presented for purposes of additional analysis and are not a required
part of the basic financial statements.
2
DRAFT
The Texas Supplementary Information listed in the table of contents, is the responsibility of
management and was derived from and relate directly to the underlying accounting and other records
used to prepare the financial statements. The information, unless marked "unaudited", has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the information, unless marked "unaudited", is fairly
stated in all material respects in relation to the financial statements as a whole.
The Texas Supplementary Information that is marked "unaudited" has not been subjected to the
auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not
express an opinion or provide any assurance on the Supplementary Information that is marked
"unaudited".
Waco, Texas
12015
7
DRAFT
LA PORTE AREA WATER AUTHORITY
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the La Porte Area Water Authority, we offer readers of the Water Authority's
financial statements this narrative overview and analysis of the financial activities of the Water
Authority for the fiscal year ended September 30, 2015.
Financial Highlights
• The assets of the La Porte Area Water Authority exceeded its liabilities and deferred inflows of
resources at the close of the most recent fiscal year by $8,235,165 (net position). Of this amount,
$2,639,726, unrestricted net position, may be used to meet the government's ongoing obligations
to citizens and creditors in accordance with the Water Authority's fund designation and fund
policies.
• The government's total net position increased by $203,125.
• The Water Authority's total bonded debt decreased by $650,000 during the current fiscal year.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction of the Water Authority's basic
financial statements. The La Porte Area Water Authority is considered a component unit of the City of
La Porte, Texas since the Water Authority provides approximately 86% of its services for the exclusive
benefit of the City of La Porte. The Water Authority's basic financial statements are comprised of the
fund financial statements and notes to the financial statements. This report also contains other
supplementary information in addition to the basic financial statements themselves.
Fund financial statements — The operations of the Water Authority are recorded in a proprietary
(enterprise) fund. A fund is a grouping of related accounts that is used to maintain control over resources
that have been segregated for specific activities or objectives. The Water Authority, like other state and
local governments, uses fund accounting to ensure and demonstrate compliance with finance -related
legal requirements.
The statement of net position presents information on all the Water Authority's assets, liabilities and
deferred inflows of resources, with the difference between the three reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial position of
the Water Authority is improving or deteriorating.
The statement of revenues, expenses, and changes in net position presents information showing how the
government's net position changed during the fiscal year. All changes in net position are reported when
the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
This, revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g., uncollected receivables and accounts payable due to suppliers).
4
DRAFT
The fund financial statements can be found on pages 8 — 10 of this report.
Notes to the Financial Statements — The notes provide additional information that is essential to a full
understanding of the data provided in the fund financial statements. The notes to the financial statements
can be found on pages 11 —17 of this report.
Other Information — In addition to the basic financial statements and accompanying notes, this report
also presents certain supplementary information concerning the Water's Authority's operations.
Supplementary information can be found on pages 18 — 28 of this report.
Financial Analysis of the Government's Funds
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. In the case of the La Porte Area Water Authority, assets exceeded liabilities and deferred
inflows of resources by $8,235,165 at the close of the fiscal year.
The largest portion of the Water Authority's net position $4,864,589 reflects its investment in capital
assets (e.g., water production and distribution system), less any related debt used to acquire those assets
that are still outstanding. The City uses these capital assets to provide water services to the participants;
consequently, these assets are not available for future spending. Although the Water Authority's
investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
AUTHORITY'S NET POSITION
Current and other assets
Capital assets
Total Assets
Current liabilities
Noncurrent liabilities
Total Liabilities
Total Deferred Inflows of Resources
Net investment in capital assets
Restricted
Unrestricted
Total Net Position
5
Business -Type Activities
2015 2014
$ 3,756,312 $ 3,423,506
5,879,827 6,344,826
9,636,139 9,768,332
1,052,749 698,711
345,238 1,032,550
1,397,987 1,731,261
2,987 5,031
4,864,589 4,657,245
730,850 1,147,160
2,639,726 2,227,635
$ 8,235,165 $ 8,032,040
DRAFT
An additional portion of the Authority's net position (8.87%) represents resources that are subject to
external restrictions for debt service. The remaining balance of unrestricted net position of $2,639,726
represents funds available to meet other ongoing obligations to participants and/or creditors.
Analysis of the Water Authority's Operations -- the following table provides a summary of the Water
Authority's operations for the year ended September 30, 2015.
AUTHORITY'S CHANGE IN NET POSITION
Revenues
Charges for services
Total revenues
Operating expeneses
Supplies
Purchased water
Services and charges
Depreciation
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses)
Income (loss) before contributions
Capital contributions
Change in net position
Net position - beginning
Net position - ending
Business -Type Activities
2015 2014
$ 1,106,779
1,106,779
$ 1,195,886
1,195,886
7,985
1,015
829,346
850,142
379,535
95,976
464,999
465,000
1,681,865
1,412,133
( 575,086) (
216,247)
( 9,074) { 33,784)
( 584,160) (
250,031)
787,285
784,737
203,125
534,706
8,032,040
7,497,334
$ 8,235,165 $
8,032,040
Total net position increased by $203,125 in 2015. The actual water revenue for fiscal year ended
September 30, 2015, of $1,106,779 was-$77,133 lower than the amount budgeted of $1,183,912.
Capital Assets and Debt Administration
Capital Assets — The La Porte Area Water Authority's investment in capital assets as of September 30,
2015 amounts to $4,864,589 (net of accumulated depreciation).
There were not any additions or retirements of capital assets during the current fiscal year. The only
activity is current depreciation in the amount of $464,999. Capital assets at year end consisted of water,
sewer and drainage facilities for water production and distribution in the amount of $15,435,810.
Additional information of the La Porte Area Water Authority's capital assets can be found in Note V on
page 14 of this report.
in
DRAFT
Debt Administration — At the end of the fiscal year, the La Porte Area Water Authority had bonded
debt payable of secured solely by water and sewer revenues. The revenue bonds have been rated "AA"
by Standard & Poor's, Fitch, and Moody's rating agencies.
Additional information on the Water Authority's long-term debt can be found in Note VII on page 15 —
16 of this report.
Economic Facts and Next Year's Budgets and Rates
The Water Authority has benefited from a strong and expanding economy from the past several years. In
the coming fiscal year the Water Authority's budget is expected to remain relatively consistent with the
prior year.
Request for Information
This financial report is designed to provide a general overview of the La Porte Area Water Authority's
finances for all those with an interest in the government's finances. Questions concerning any of the
information provided in this report of requests for additional information should be addressed to the
Director of Finance, 604 West Fairmont Parkway, LaPorte, Texas, 77571.
7
DRAFT
LA PORTE AREA WATER AUTHORITY
STATEMENT OR NET POSITION
SEPTEMBER 30, 2015
Assets
Current assets:
Cash
Investments
Accounts receivable, net of
allowance for doubtful accounts
Accrued interest receivable
Total current assets
Noncurrent assets:
Water production and distribution system
Less: accumulated depreciation
Total noncurrent assets
Total Assets
Liabilities
Current liabilities:
Accounts payable
Current liabilities
Current portion of revenues bonds
Accrued interest
Total current liabilities
Noncurrent liabilities:
Revenue bond, net of current portion
Total Liabilities
Deferred Inflows of Resources
Deferred gain on refunding
Total Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for debt service
Unrestricted
Total Net Position
$ 2,023,597
1,568,207
162,898
1,610
3,756,312
15,435,810
9,555,983}
5,979,827
9,636,139
381,378
670,000
1,371
1,052,749
345,238
1,397,987
2,987.
2,987
4,864,589
730,850
2,639,726
$ 8,235,165
The notes to the financial statements are an intergral part of this statement.
8
DRAFT
LA PORTE AREA WATER AUTHORITY
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Operating Revenues
Charges for services
$ 1,106,779
Total Operating Revenues
1,106,779
Operating Expenses
Supplies
7,985
Purchased water
829,346
Other services and charges
379,535
Depreciation
464,999
Total Operating Expenses
1,681,865
Operating income (loss)
( 575,086)
Nonoperating Revenues (Expenses)
Interest income
12,663
Interest expense and other charges
( 21,737)
Total Nonoperating Revenue (Expenses)
( 9,074)
Income (loss) before contributions
( 584,160)
Capital Contributions
787,285
Change in net position
203,125
Net Position - Beginning
8,032,040
Net Position - Ending
$ 8,235,165
The notes to the financial statements are an intergral part of this statement.
9
LA PORTE AREA WATER AUTHORITY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and service providers
Net Cash Provided by Operating Activities
Cash Flows from Capital and Related Financing Activities
Payments received from participants for debt service
Payments received from participants for capital recovery
Principal payments on revenues bonds
Interest paid on revenue bonds
Net Cash Provided by Capital and Related Financing Activities
Cash Flows from Investing Activities
Proceeds from sale of investments
Interest on investments
Net Cash Provided by Investing Activities
Net increase in cash and cash equivalents
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
Reconciliation of Operating Income (Loss) to Net Cash Provided
by Operating Activities:
Operating income (loss)
Adjustments to reconcile operating income to net cash provide (used)
by operating activities:
Depreciation expense
(Increase) decrease in accounts receivable
Increase (decrease) in accounts payable
Net Cash Provided by Operating Activities
The notes to the financial statements are an intergral part of this statement.
10
$ 1,126,432
( 882,083)
244,349
691,785.
95,500.
( 650,000)
( 41,838)
95,447
124,745
12,726
137,471
477,267
1,546,330
2,023,597
$( 575,086)
464,999
19,653
334,783
$ 244,349
DRAFT
LA PORTE AREA WATER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
I. CREATION OF AUTHORITY
The LaPorte Area Water Authority (the "Authority) was created on May 30, 1981 by Chapter 729,
Page 2678, Acts of the 67 h Legislature of the State of Texas. This bill authorizes the Authority to
purchase, construct or otherwise acquire waterworks systems, sanitary sewer systems, storm sewer
systems and drainage facilities or parts of such systems of facilities and to operate and maintain
such facilities. The Authority is authorized to set rates for services related to the aforementioned
systems and facilities, and issue revenue bonds for the purpose of acquiring and maintaining such
systems. The Authority comprises approximately 20,600 acres in Harris County, Texas.
II. SUMMARY OF SIGINIFICANT ACCOUNTING POLICIES
The accounting policies of the Authority conform with generally accepted accounting principles.
The following is a summary of the most significant policies:
A. Reporting Entity
Generally accepted accounting principles for local governments include those principles
prescribed by the Governmental Accounting Standards Board (GASB), the American Institute
of Certified Public Accountants in the publication entitled Audits of State and Local
Governmental Units and by the Financial Accounting Standards Board (when applicable).
GASB Statement 62, Codification of Accounting and Financial Reporting Guidance Contained
in Pre -November 30, 1989 FASB and AICPA Pronouncements ("GASB 62"), which
incorporates into the GASB's authoritative literature certain accounting and financial reporting
guidance that is included in the following pronouncements issued on or before November 30,
1989, which does not conflict on contradict GASB pronouncements: 1) Financial Accounting
Standards Board (FASB) Statements and Interpretations; 2) Accounting Principles Board
Opinions; 3) Accounting Research Bulletins of the American Institute of Certified Public
Accountants' (AICPA) Committee on Accounting Procedure. Implementation of GASB 62 is
reflected in the financial statements and notes to the financial statements.
Consideration regarding the potential for inclusion for other entities, organizations or functions
in the Authority's financial reporting entity is based on criteria prescribed by generally
accepted accounting principles. These same criteria are evaluated in considering whether the
Authority is a part of any other governmental or other type of reporting entity. Criteria for
determining component unit status under generally accepted accounting principles included
considerations pertaining to organizations for which the primary government is financially
accountable and considerations pertaining to other organizations for which the nature and
significance of their relationship with the primary government are such that exclusion would
cause the reporting entity's financial statements to be misleading or incomplete.
11
DRAFT
The La Porte Area Water Authority is considered a component unit of the City of La Porte,
Texas by virtue of meeting the criteria noted above. The primary factor in determining
component unit status is that the Authority provides approximately 86% of its services for the
exclusive benefit of the City of LaPorte. The Authority's financial operations are included as
an Enterprise Fund in the City's Comprehensive Annual Financial Report as a blended
component unit. The City of La Porte is referred to as "Primary Government" throughout the
Authority's financial statements.
B. Fund Accounting
The operations of the Authority are recorded in an enterprise fund. Enterprise funds are used to
account for operations (a) that are financed primarily through user charges or (b) where the
governing body has decided that determination of net income is appropriate. The enterprise
fund is a proprietary fund type.
C. Basis of Accounting
Enterprise Funds are accounting for on a flow of economic resources measurement focus. With
this measurement focus, all assets and all liabilities associated with the operation of these funds
are presented on the statement of net position is a classified format to distinguish between
current and long-term assets and liabilities. Net position is presented in three components: net
investment in capital assets; restricted; and unrestricted. Enterprise fund operating statements
present increases (e.g., revenues), decreases (e.g., expenses) and changes in net position.
D. Cash Equivalents
For purposes of the statement of cash flows, the Authority considers cash held in demand
accounts and all short-term investments with a maturity date of purchase of three months or
less to be cash equivalents.
E. Physical Facilities and Depreciation
Fixed assets, which consist of a water production and distribution system, are shown at original
cost. Interest paid during construction of facilities, if any, is also included in this cost.
Depreciation has been provided for the Authority's water production and distribution system
using the straight-line method over a 30-year estimated useful life.
III. CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent the Authority's equity interest in the City's consolidated cash
and cash equivalents account consisting of demand accounts and short-term investments with a
maturity at date of purchase of three months or less. State statutes require that all fund in
depository institutions be covered by federal depository insurance and/or be secured in the manner
provided by law for security of funds. Cash and cash equivalent balances held by the City were
entirely covered by federal depository insurance or security as required at September 30, 2015.
12
DRAFT
IV. TEMPORARY INVESTMENTS
Temporary investments represent the Authority's equity interest in the City's investment pool. At
year end a portion of the Authority's cash and temporary investments were restricted as follows:
The carrying amount for temporary investments, at September 30, 2015, was $1,568,207, which is
fair value. This represents 8.03% of the City's total portfolio.
Pooled investments with the City consist of obligations of the United States and its agencies and
investment pools in accordance with state statutes and the City's investment policies. Securities are
registered and held by their agent in the City's name. Interest earnings are allocated on a pro-rata
basis. The investment pool is not registered with the SEC or subject to any regulatory oversight.
The fair value of the position in the pool is the same as the value of pool shares. The City had
adopted GASB Statement No. 31, which establishes accounting and reporting standards for all of
the City's investments. In accordance with Statement No. 31, the City reports all investments at
fair value, except for "money market investments" and "2a7-like pools." Money market
investments, which are short-term highly liquid debt instruments that may include U.S. Treasury
and agency obligations, are reported at amortized costs. Investment positions in external
investment pools that are operated in a manner consistent with the SEC's Rule 2a7 of the
Investment Company Act of 1940, such as TexPool and LOGIC, are reported using the pool's
share price.
Interest Rate Risk
The Authority's investment policy specifies that the maximum stated maturity, from the date of
purchase for any individual investment may not exceed 5 years and the maximum dollar -weighted
overage maturity for the pooled fund group may not exceed 2 years. At year end, the Authority's
dollar -weighted average maturity of the investment portfolio was as follows:
Weighted Average
Investment Type Maturity (months)
Public funds investment pools 1.6
Federal Home Loan Mortgage Corporation (FHLMC) 30.54
Federal Farm Credit Bank (FFCB) 26.3
Federal Home Loan Bank (FHLB) 27.8
Portfolio Weighted Average Maturity 21.6
13
DRAFT
Concentration of Credit Risk
The Authority's investment policy places no limit on the amount the government may invest in
any one issuer. At September 30, 2015, the Authority's investment portfolio consisted of the
following investments:
Percentage of
Investment Type Total Portfolio
Public funds investment pools
US Agency securities
Credit Risk
66.00 %
34.00 %
100.00 %
At year end balances in TexPool, a privately managed public fund investment pool, was rated
AAAm by Standard & Poor's and balances in LOGIC, a privately managed public funds
investment pool was rated AAAM by Standards & Poor's.
Federal Home Loan Mortgage Corporation notes, Federal Home Loan Banks bonds, Farmer Mac
and Federal Farm Credit Bank notes were rated AA+ by Standard & Poor's.
All credit rating met acceptable levels required by legal guidelines prescribed in both the PFIA and
the Authority's investment policy.
V. CAPITAL ASSETS
An analysis of changes in physical facilities for the year ended September 30, 2015 follows:
Capital assets being depreciated:
Water production and distribution system
Less accumulated depreciation:
Water production and distribution system
Total capital assets being depreciated, net
Investment in capital assets from:
Contribution by participants
Beginning Ending
Balance Additions Deletions Balance
$ 15,435,810 $ - $ - $ 15,435,810
( 9,090,984) { 464,999) - { 9,555,983)
$ 6,344,826 $L LG4,999 $ - $ 5,879,827
$ 6,3d4,826 $( 464.999) $ - $ 5,879,827
* Depreciation expense of $464,999 charged to water services function/program.
14
DRAFT
VI. SOUTHEAST WATER PURIFICATION PLANT
The Authority and the City of Houston, Texas have entered into a Cost Sharing Water Project
Contract (the "Contract") wherein the Authority, the Cities of La Porte, Morgan's Point, and
Shoreacres agree to jointly finance the construction and operation of the Southeast Water
Purification Plant (Southeast Plant). Under the terms of the Contract, the Authority purchased 4.2
million gallons per day production and 5.25 million gallons per day pumping capacity. The Cities
of La Porte, Morgan's Point, and Shoreacres have agreed to demand and pumping allocations of
the Authority's purchase of water from the Southeast Plant.
The required funds for the undivided interest in the Southeast Plant and the construction of a
transmission and distribution system to transport water from the Southeast Plant were provided by
issuance of $9.8 million revenues bonds.
The water rate to be set by the Authority will not be less than an amount sufficient to provide for
payment of all expenses in producing, treating, and pumping the water in connection with
transmission and distribution systems and to provide payment for the interest and principal of all
bonds when the bonds become due and payable.
VII. CONTRACT REVENUE BONDS PAYABLE, DEBT SERVICE REQUIREMENTS AND
BOND RESOLUTION REQUIREMENTS
On May 13, 2010, the La Porte Area Water Authority issued $4.085 million in Contract Revenue
Refunding Bonds, Series 2010, with an average interest rate of 2.773% to purchase U.S.
Government State and Local Government Series securities that were placed in an irrevocable trust
for the purpose of generating resources for all future debt service payments for $2.95 million of
unlimited tax bonds. As a result, the refunded bonds are considered to be defeased and the liability
has been removed from the statement of net position. The bonds are payable from the net revenue
of the Authority. The bonds are in $5,000 denominations. Interest is payable on March 15 and
September 15 each year to maturity. The Authority is in compliance with all significant
requirements and restrictions contained in the bond resolution. None of the Refunded Bonds are
outstanding at September 30, 2015.
Bonds payable at September 30, 2015, are comprised of the following issue:
Amount Interest Maturity Payment
Outstanding Rate Date Dates
990,000 2.25-4.00% March 15, 2017 March 151
September 15
15
DRAFT
Bonds payable activity for the year ended September 30, 2015 was as follows:
Amounts
Beginning
Retirements &
Ending
Due Within
Bonds Payable Balance Additions
Adjustments
Balance
One Year
Contract revenue refunding $ 1,640,000 $ -
$ 650,000 $
990,000
$ 670,000
Premium on bonds 42,550 -
17.312
25,238
-
$ 1,682,550 $ -
$ 667,312 $
1,015,238
$ 670,000
As of September 30, 2015, the debt service requirements on contract revenue bonds outstanding
are as follows:
Fiscal Year
Total
Ending
Principal
Interest
Requirements
2016 $
670,000 $
22,850
$ 692,850
2017
320,000
6,400
326,400
$
990,000 $
29,250
$ 1,019,250
VIII. NET POSITION
The Authority provides surface water to the City of La Porte, Texas (the "City") and the Cities of
Shoreacres and Morgan's Point in order for these entities to comply with certain requirements
imposed by the Harris County Subsidence District. The City retains the rights to approximately
86% of the water capacity of the Authority with the Cities of Shoreacres and Morgan's Point
retaining the rights to the remaining 14%. The City, Shoreacres, and Morgan's Point have agreed
to service the debt on the Authority's contract revenue bonds and to fund operations of the
Authority in relation to their capacity rights and to purchase water based on actual consumption.
As part of debt service requirements, the participants are billed to build a reserve for future debt
service requirements as set forth in the contract revenue bonds of the Authority. During the year,
Authority's billings were applied as follows:
Water supplied and operating costs (user fees) $ 1,106,779
Debt service billings/charges 691,785
Capital recovery billings 95,500
Total billings $ 1,894,064
16
DRAFT
IX. RISK MANAGEMENT
The Authority is exposed to various risks of loss related to torts; theft of, damage to and
destruction of assets; errors and omissions; and natural disasters for which the Authority
participates (through an endorsement on the City of La Porte's contract) along with other entities
in the Texas Municipal League's Intergovernmental Risk Pool. The pool purchases commercial
insurance at group rates for participants in the pool. Neither the Authority nor the City has
additional risk or responsibility to the pool, outside of payment of insurance premiums. Neither the
Authority nor the City had significantly reduced insurance coverage or had settlements that
exceeded coverage amounts for the post three fiscal years.
X. ECONOMIC DEPENDENCY
The Authority receives all of its support from three municipalities, with the City of La Porte being
the largest contributor at approximately 86%. In addition, the Authority contracts with the City of
La Porte to provide administrative oversight and operate the Authority's transmissions system.
17
4
DRAFT
LA PORTE AREA WATER AUTHORITY
SUPPLEMENTAL SCHEDULES INCLUDED WITHIN THIS REPORT
SEPTEMBER 30, 2015
(Schedules included are checked or explanatory notes provided for omitted schedules.)
® 1. Schedule of Services and Rates
® 2. Schedule of Enterprise Fund Expenses
® 3. Schedule of Temporary Investments
❑ 4. Taxed Levied and Receivable (Omitted - no tax levy)
® 5. Long -Term Debt Service Requirements by Years
® 6. Changes in Long -Term Bonded Debt
® 7. Comparative Schedule of Revenues and Expenses — Enterprise Fund — Five Years
® 8. Board Members, Key Personnel and Consultants
® 9. Schedule of Revenues, Expenses and Changes in Net Position — Budget and Actual,
Budgetary Basis
DRAFT
LA PORTE AREA WATER AUTHORITY
SCHEDULE OF SERVICE AND RATES
YEAR ENDED SEPTEMBER 30, 2015
1. Services provided by the District:
Retail Water X Wholesale Water Drainage
Retail Sewer Wholesale Sewer Irrigation
Parks/Recreation Fire Protection Security
Solid Waste/Garbage Flood Control Roads
Participants in joint venture, regional system, and/or wastewater service (other than
emergency interconnect)
Other
2. Total Water Consumption during the Fiscal Year:
(You may omit this information if you district does not provide water)
Water Accountability Ratio:
Gallons pumped into system 1,416,946,00.0 (Gallons billed/Gallons pumped)
Gallons billed to customers: 1,393,787,000 98.4%
3. Standby fees: Does the District assess standby fees? Yes No X
4. Location of District
County in which the District is located: Harris County
Is the District located entirely within one county? Yes X No
Is the District located within a City? Entirely Partly X Not at all
City in which the District is located: Morgan's Point, Shoreacres, and La Porte
Is the Authority located within a city's extra territorial jurisdiction (ETJ)?
Entirely Partly X Not at all
City in which the Authority is located: Morgan's Point, Shoreacres, and La Porte
Is the general membership of the Board appointed by an office outside the Authority?
Yes X No
If yes, by whom? La Porte City Council
19
LA PORTE AREA WATER AUTHROITY
SCHEDULE OF ENTERPRISE FUND EXPENSES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Professional Fees
Auditing
Other
Purchased Service for Resale
Bulk water purchase
Contracted Services
Management/operations (primary government)
Administrative Expenses
Supplies
Other administrative
Other Expenses
Depreciation
Total Expenses
Number of persons employed by the Authority
20
DRAFT
EXHIBIT 2
$ 6,000
293,764
829,346
68,312
7,985
11,459
464,999
$ 1,681,865
DRAFT
EXHIBIT 3
LA PORTE AREA WATER AUTHORITY
SCHEDULE OF TEMPORARY INVESTMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Balance Accrued
Interest Maturity at End Interest
Rate* Date of Year Receivable
Equity interest in City of
La Porte's investment pool 0.085% Demand $ 1,568,207 $ 1,610
Pooled investments with the City of La Porte consist of obligations of the United States and its agencies and investment
pools in accordance with state statues and the City of La Porte's investment policies.
* Approximate return for September 2015.
21
DRAFT
EXHIBIT 5
LA PORTE AREA WATER AUTHORITY
LONG-TERM DEBT SERVICE REQUIREMENTS BY YEARS
SEPTEMBER 30, 2015
Due During
Fiscal Year Annual Requirement for All Bond Series
Ending
9/30 Principal Due Interest Due Total
2016 $ 670,000 $ 22,850 $ 692,850
2017 320,000 6,400 326,400
$ 990,000 $ 29,250 $ 1,019,250
22
DRAFT
EXHIBIT 6
LA PORTE AREA WATER AUTHORITY
CHANGES IN LONG-TERM BONDED DEBT
SEPTEMBER 30, 2015
Series
2010
Total
Interest rate
2.24% to 4.0%
N/A
Dates interest payable
03115; 09/15
N/A
Maturity dates
03/15/11-03/15/17
N/A
Beginning bonds outstanding
$ 1,640,000
$
1,640,000
Bonds sold during the fiscal year
-
-
Bonds retired during the fiscal year
( 650,000)
(
650,000).
Ending bonds outstanding
$ 990,000
$
990,000
Interest paid during the fiscal year
$ 41,838
$
41,838
Paying Agent's Name and City:
Refunding Bonds Series 2010 the Bank of New York Mellon Trust Company, N.A.-Dallas, Texas
Contract
Tax
Revenue
Refunding
Bond Authority Bonds*
Bonds
Bonds
Amount authorized by votes $ -
N/A
N/A
Amount issued -
-
4,085,000
Remaining to be issued $ -
$ -
$
-
* Includes all bonds secured with tax revenue. Bonds in this category may also be secured with other
revenues in combination with taxes.
Cash and temporary investment balances as of September 30, 2015:
$
3,591,804
Average annual debt service payment (principal and interest) for remaining
term of all debt:
$
339,750
23
DRAFT
LA PORTE AREA WATER AUTHORITY
COMPARATIVE SCHEDULE OF REVENUES AND EXPENSES - ENTERPRISE FUND - FIVE YEARS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
2015 2014 2013 2012 2011
Operating Revenues
User fees
$ 1,106,779
$ 1,195,886
$ 1,213,334
$ 1,294,479
$ 1,246,186
Operating Expenses
Supplies
7,985
1,015
8,090
4,207
5,343
Purchased water
829,346
850,142
999,647
1,264,050
1,006,229
Services and charges
379,535
95,976
95,106
107,012
81,110
Depreciation
464,999
465,000
464,999
462,938
460,877
- - Total Operating Expenses
1,681,865
1,412,133
1,567,842
1,838,207
1,553,559
Operating Income (Loss)
{ 575,086)
( 21.6,247)
( 354,508)
( 543,728)
( 307,373)
Nonoperating Revenues (Expenses)
Interest income
12,663
4,854
4,362
5,945
25,167
Interest expense and other
( 21,737)
( 38,638)
( 53566)
( 128,217)
( 112,713)
Total Nonoperating Revenues
(Expenses) (
9,074)
( 33,784) (
49,2U4)
( 122,272)
87,546)
Income (Loss) Before Contributions (
584,160)
( 250,031) (
403,712)
( 666,000)
( 394,919)
Capital Contributions
787,285
784,737
793,854
752,242
791,435
Net Income (Loss) $�203,1_25
$ 534,706 $�390,142
$ 86,242
$ 3963516
24
DRAFT
EXHIBIT 7
2015
2014
2013
2012
2011
100.00 %
100.00 %
100.00 %
100.00 %
100,00 %
0.72 %
8.00 %
0.67 %
0.32 %
a
0.43 %
74.93 %
71.09 %
82.39 %
97.65 %
80.74 %
34.29 %
8.03 %
7.84 %
8.27 %
6.51 %
42.01 %
38.88 %
38.32 %
35.76 %
36.98 %
151.96 %
118.07 %
129.22 %
142.00 %
124.67 %
( 51.96)%
( 18.07)% (
29.22)% (
42.00)% (
24.67)%
1.14%
0.41%
0.36%
0.46%
2.02%
( 1.96)%
( 3.23)% (
4.41)% (
9.90)% (
9.04)%
( 0.82)%
( 2.84)% (
4.06)% (
9.45)%° (
7.03)%
( 52.78)%
( 20.19)% (
33,27)% (
51.45)% (
31.69)%
71.13 %
65.62 %
65.43 %
58.11 %
63.51 %
18.35%
44.71%
32.15%
6.66%
31.81%
25
DRAFT
EXHIBIT 8
LA PORTE AREA WATER AUTHORITY
BOARD MEMBERS, KEY PERSONNEL, AND CONSULTANTS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Authority's Mailing Address: City of La Porte
Michael Dolby
604 W. Fairmont Parkway
LaPorte, Texas 77571
Authority's Business Phone Number: (281) 471-5020
Term of Office/
Appointed/ Expense
Title at
Name and Address
Expires Reimbursements
Year End
Board Members
Charlie Perry
8/30/2014 $ -
President
129 N 4th Street
Yes
Position 4
LaPorte, TX 77571
8/31/2016
Doug Martin
8/31/2015 -
Secretary
1103 Oak Leaf
Yes
Position 3
LaPorte, TX 77571
8/31/2017
Randy Woodard
8/31/2015 -
Member
2601 S. Broadway
Yes
Position 1
LaPorte, TX 77571
8/31/2017
Ken Schlather
8/30/2014 -
Vice President
9811 Catlett
Yes
Position 5
LaPorte, TX 77571
8/31/2016
Stephen Barr
8/30/2015 -
Member
810 Fairfield
Yes
Position 2
LaPorte, TX 77571
8/31/2017
Key Administrative Personnel
Corby Alexander General Manager
Michael Dolby Director of Finance
Note: No director has any business or family relationship (as defined by the Texas Water Code) with major landowners in
the Authority or with any of the Authority's consultants.
26
LA PORTE AREA WATER AUTHORITY
BOARD MEMBERS, KEY PERSONNEL, AND CONSULTANTS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Name and Address Date Hired
Consultants
City of La Porte
604 W. Fairmont Parkway
LaPorte, TX 77571
Pattillo, Brown & Hill, L.L.P.
401 West Hwy 6
Waco, Texas 76710
The Bank of New York
Global Corporate Trust
2001 Bryan Street, loth Floor
Dallas, TX 75201
DRAFT
EXHIBIT 8
Fees and Expense
Reimbursements Title
1981 $ 67,007 Management/Operator
2015 6,000 Auditor
1999 - Paying Agent
27
DRAFT
EXHIBIT 9
LA PORTE AREA WATER AUTHORITY
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
BUDGET AND ACTUAL - BUDGETARY BASIS
Revenues
Water revenue billing
Total Revenues
Operating Expenses
Supplies
Purchased water
Other services and charges
Depreciation
Total Operating Expenses
Operating Income (Loss)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Actual Variance From
Budget (Budgetary Final Budget
Original Final Basis) Over (Under)
$ 1,183,912 $
1,183,912 $
1,106,779
$( 77,133)
1,183,912
1,183,912
1,106,779
( 77,133}
8,400
8,400
7,985
415
990,821
990,821
829,346
161,415
108,260
395,524
379,535
15,989
-
-
464,999
( 464,999)
1,107,481
1,394,745
1,681,865
287,120)
76,431 { 210,833) ( 575z086) ( 364,253)
Nonoperating Revenues (Expenses)
Interest income
5,000
5,000
12,663
7,663
Interest expense and other charges
( 691,839
( 691,838)
( 21,737)
670,101
Total Nonoperating Revenues (Expenses)
( 686,838)
( 686,838)
( 9,074)
677,764
Income (Loss) Before Contributions
( 610,407)
( 897,671)
( 584,160)
313,511
Capital Contributions
787,285
787,285
787,285
-
Change in Net Position
176,878
( 110,386)
203,125
313,511
Net Position - Beginning
8,032,040
8,032,040
8,032,040
-
Net Position - Ending
$ 8,208,918
$ 7,921,654
$ 8,235,165 $
313,511
28
City of Houston
Department of Public Works and Engineering
Financial Management Branch - Fiscal Services
FY 2015 SouthEast Water Treatment Plant 0 & M Expenses Allocation
For The Period July 1, 2014 - June 30, 2015
FY 2015 SEWPP - SCHEDULE 2
Adopted Budget YTD
A
Water taken by the Co -Participant (in Thousand Gallons)
21,900,000
19,046,542
B
Total Treated Water Produced by the SouthEast Water Plant (in
Thousand Gallons
37,321,250
29,410,320
C
Total C&M costs for the SouthEast Water Plant (dollars)
$
15,268,450
$
14,327,019
D
All costs incurred by COH for 0&M of Untreated Water Facilities
dollars (includingCWA C&M$
$
31,596,466
29,171,601
D1
CWAO&M
$
24,834,963
$
23,741,030
D2
CWA Debt Services - All Others (SEWPP Only)
$
6,761,503
$
5,430,571
D3
CWA Debt Service - Pasadena (SEWPP Only)
$
5,914,428
$
4,599,694
E
Total amount of untreated surface water sold to Houston's water
customers in Thousand Gallons
196,187,886
187,306,322
F
Total to be allocated Debt Services of CWA 96" Line (SEWPP Only)
$
2,447,356
$
2,447,356
G
Total Cost of Line Repair Expenses
$
-
$
-
Rate - Baybrook, Gulf Coast, Harris County Mud #55
Raw Water Rate 0&M (D1/ E) Per thousand gallons
Raw Water Rate DS (D2/ E) Per thousand gallons
0&M Rate (C / B) per thousand gallons
Subtotal
Total Rate (including contingency 2.5%)
Rate - Friendswood, S. Houston, Webster, Clear Brook, Clear Lake, LaPorte
Raw Water Rate 0&M (D1/ E) Per thousand gallons
Raw Water Rate DS (D2/ E) Per thousand gallons
0&M Rate (C / B) per thousand gallons
Total Rate (excluding contingency 2.5%)
Rate - Pasadena
Raw Water Rate 0&M (D1/ E) Per thousand gallons
Raw Water Rate DS (D3/ E) Per thousand gallons
0&M Rate (C / B) per thousand gallons
Total Rate (excluding contingency 2.5%)
FYI SEWPP YE - December Accounting (preliminary) 151229
Schedule 2 - Summary
$
0.1266
$
0.1267
$
0.0345
$
0.0290
$
0.4091
$
0.4871
$
0.5702
$
0.6429
$
0.5844
$
0.6590
$
0.1266
$
0.1267
$
0.0345
$
0.0290
$
0.4091
$
0.4871
$
0.5702
$
0.6429
$
0.1266
$
0.1267
$
0.0301
$
0.0246
$
0.4091
$
0.4871
$
0.5658
$
0.6384
12/29/2015 5:51 PM
Page 1 of 3
CITY OF HOUSTON
DEPARTMENT OF PUBLIC WORKS & ENGINEERING
RESOURCE MANAGEMENT DIVISION
FINANCIAL MANAGEMENT BRANCH
FISCAL SERVICES SECTION
FY 2015 SEWPP - SCHEDULE 3
SOUTHEAST WATER PURIFICATION PLANT EXPENDITURES FROM SAP
FOR THE PERIOD JULY 2014 - JUNE 2015
Adopted Budget
YTD
Plant Operation
Personnel Expenditures:
$ 2,410,232.00
$ 2,279,724.94
Other Expenditures:
Plant Operation
511010 Chem/Gas & Spcl Flui
2,614,500.00
2,633,574.85
511015 Cleaning & Sanitary Supplies
2,000.00
2,113.85
511020 Construction Materials
10,000.00
480.46
511025 Electrical Hardware & Parts
50,000.00
109,132.10
511030 Mechanical Hardware & Parts
80,000.00
66,716.14
511035 Meters, Hydr & Plum
10,000.00
2,824.10
511040 Audiovisual Supplies
300.00
1,118.00
511045 Computer Supplies
200.00
369.97
511050 Paper & Printing Supplies
1,000.00
282.10
511055 Pub & Printed Mated
6,000.00
4,247.50
511060 Postage
300.00
511070 Miscellaneous Office Supplies
5,000.00
3,404.06
511080 General Laboratory Supplies
6,000.00
1,491.15
511090 Medical & Surgical Supplies
500.00
2,292.49
511095 Sm Tech & Scien Equi
5,000.00
511110 Fuel
16,100.00
18,391.07
511115 Veh Repair & Maint S
7,000.00
14,693.48
511120 Clothing
11,000.00
8,226.42
511145 Small Tools & Minor Equipment
10,000.00
9,095.89
511150 Miscellaneous Parts & Supplies
20,000.00
2,479.04
520101 Janitorial Services
72,400.00
59,209.95
520109 Med, Dental & Lab S
1,000.00
952.52
520114 Miscellaneous Support Services
489.73
520118 Refuse Disposal
751,000.00
792,817.26
520121 Application Services
1,200.00
520123 Veh & Motor Equip Sv
5,694.99
520124 Other Equipment ServicesS
21,000.00
29,703.39
520141 Engineering Services
890.22
520147 Mgmt Initiative/Cons
30,806.16
520170 Generator Equipment Services
578,900.00
579,205.88
520510 Mail/Delivery Services
300.00
520515 Print Shop Services
500.00
647.31
520520 Printing & Reprod Sv
1,000.00
520605 Advertising Services
2,000.00
2,309.24
520710 State/Federal Inspection Fees
7,000.00
8,957.64
520765 Membership & Professional Fees
2,900.00
2,050.14
520805 Education & Training
11,200.00
3,285.00
520905 Travel - Training Related
9,800.00
9,132.72
520910 Travel - Non -Training Related
3,700.00
252.04
521405 Building Maintenance Services
81,400.00
37,111.24
521505 Electricity
2,278,800.00
2,390,387.10
521515 Elect Fran Fee Exp
31,800.00
26,435.44
521605 Data Services
800.00
521610 Voice Services
7,200.00
30.34
521620 Voice Equipment
100.00
521625 Voice Labor
500.00
275.40
FYI SEWPP YE - December Accounting (preliminary) 151229
12/29/2015 5:51 PM
Schedule 3 - O&M Costs
Page 2 of 3
CITY OF HOUSTON
DEPARTMENT OF PUBLIC WORKS & ENGINEERING
RESOURCE MANAGEMENT DIVISION
FINANCIAL MANAGEMENT BRANCH
FISCAL SERVICES SECTION
FY 2015 SEWPP - SCHEDULE 3
SOUTHEAST WATER PURIFICATION PLANT EXPENDITURES FROM SAP
FOR THE PERIOD JULY2014-DUNE 2015
521635 Voice Services - Wireless
521705 Equipment Rental
521715 Office Equipment Rental
521725 Other Rental
521735 Hobby Parking Space Rental
522305 Freight Charges
522405 Management Savings
522430 Misc Other Svcs & Ch
522722 Intfd KRONOS Svc Chr
522795 Other Interfund Services
522845 Interfund Vehicle Services
551015 Non -Capital Computer Equipment
551020 Non -Cap Comm/Electr
551025 Non -Cap Scientific/M
551030 Non -Cap Mach & Equip
Property and Terrorism Insurance Premium
TCEQ Fees
Security
Audit Service
Subtotal Plant Operation
Adopted Budget
YTD
7,200.00
7,582.16
12,500.00
1,624.35
3,000.00
3,330.06
1,900.00
707.28
300.00
6,000.00
35.18
2,074.24
1,500.00 1,301.77
500.00 315.59
20,000.00 17,050.74
570.00
69,500.00
32,866.33
4,000.00
6,500.00
9,326.30
134, 62 8.16
111, 609.5 3
101.05
92.45
331,914.67
291,199.04
7,000.00
5,147.00
Direct Operation Support (WQ, WM, ENG,_UCS)
Allocated Personnel 1,330,110.49 1,133,485.12
Allocated Supplies & Services 2,010,039.85 1,575,230.98
Subtotal Direct Operation Support
Direct Management Support (PUD, DWO)
Allocated Personnel 1,090,427.99 711,552.73
Allocated Supplies & Services 415,662.03 574,765.79
Subtotal Direct Management Support
Personnel
Supplies & Services
Total Operation
Admin Costs*:
Grand Total
*Admin cost is calculated at FY14 Admin Cost + 2.8% CPI for 2015.
FYI SEWPP YE - December Accounting (preliminary) 151229
Schedule 3 - O&M Costs
4,830,770.48 4,124,762.79
9,751,345.76 9,496,705.17
14, 582,116.23 13,621,467.96
686,333.94 705,551.29
$ 15,268,450.17 $ 14,327,019.25
12/29/2015 5:51 PM
Page 3 of 3
CITY OF HOUSTON
Annise D. Parker
Department of Public Works & Engineering Mayor
Date A. Rudick, P.E.
Director
P.O. Box 1582
Houston, Texas 77251-1562
T. 832 395-2500
F. 832-395-2483
www.houstontx.gov
December 10, 2015
Mr. Don Pennel
Assistant Director of Public Works
City of La Porte
2963 North 23" St
La Porte, TX 77571
Via Certified Mail, Return Receipt Requested
Re: Official Notice — Non -Renewal of the Addendum to Operations and Maintenance for the
Southeast Water Purification Plant
Dear Co -Participant:
This letter serves as the notification that the City of Houston has decided not to renew the Addendum to
Operations and Maintenance for the Southeast Water Purification Plant.
Under Section D of the Addendum to the 2006 Cost Sharing Agreement, the Service Term is renewable for
successive five year terms unless either the Managing Participant Director or a majority of the Participant
Directors gives six months' notice of non -renewal.
We appreciate our past working relationship and we look forward to the initiation of a process that will
result in a new service agreement for the operation and maintenance of the SEWPP.
Sincerely,
Dale A. Rudick, P.E.
Council Members: Brenda Stardig Jerry Davis Ellen R. Cohen Dwight A. Boykins Dave Marlin Richard Nguyen Oliver Pennington Edward Gonzalez
Robert Gallegos Mike Laster Larryv. Green Stephen C. Costello David W: Robinson Michael Kubosh C.Q. 'Brad' Bradford Jack Christie
Controller. Ronald C. Green
La Porte Area Water Authority
PHONE 281.471.5020 • 604 W. FAIRMONT • LA PORTE, TEXAS 77571
September 15, 2015
Mr. Dale A. Rudick, PE, Director
City of Houston Public Works
611 Walker St., 25th Floor
Houston, Texas 77002
RE: FY 2016 Budget for the Southeast Water Production Plant
Dear Mr. Rudick:
This letter constitutes official notice on behalf of the. La Porte Area Water Authority (LPAWA) in
advising the City of Houston as the "Managing Participant" of the Southeast Water Purification Plant
(SEWPP) that the LPAWA hereby objects to the final FY 2016 budget for the SEWPP. The non-
compliant portions of the FY 2016 budget are identified in the attachment to this letter.
The LPAWA anticipates that the City of Houston and representatives of the SEWPP co -participants
will be able to come to a successful resolution concerning the contested budget items in the very near
future. In the meantime, the LPAWA will submit payment to the City of IIouston for the entire
amount of the LPAWA's September 2015 invoice including the disputed portion of the invoice. The
disputed portion of the invoice will be considered by the LPAWA at a later date.
Thank you for your consideration of this matter.
Sincerely,
LA PORTE AREA WATER AUTHORITY
CORBY D. ALEXANDER, GENERAL MANAGER
David S. Mick
Public Works Director, City of La Porte, Texas
c: Corby Alexander, City Manager, City of La Porte; General Manager LPAWA
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