Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
12-10-14 Meeting of the La Porte Redevelopment Authority minutes
MINUTES OF THE MEETING OF THE LA PORTE REDEVELOPMENT AUTHORITY CITY OF LA PORTE, TEXAS BOARD OF DIRECTORS December 10, 2014 DETERMINE QUORUM; CALL TO ORDER The Board of Directors of the La Porte Redevelopment Authority, City of La Porte, Texas, held a regular meeting, open to the public, on Wednesday, December 10, 2014, at 6:30 p.m., in the Council Chambers of City Hall, 604 West Fairmont Parkway, La Porte, Texas, and the roll was called of the duly appointed members of the Board, to -wit - Peggy Antone, Secretary Position 1 Dave Turnquist Position 2 Alton Porter Position 3 Horace Leopard Position 4 Doug Martin, Vice Chair Position 5 JJ Meza Position 6 Lloyd Graham Position 7 Chester Pool Position 8 Lindsay Pfeiffer, Chair Position 9 and all of the above were present, with the exception of Directors Turnquist, Porter, Graham and Pfeiffer, thus constituting a quorum. Also present were David Hawes, Hawes Hill Calderon, LLP; Scott Livingston, La Porte EDC Director; Alan Mueller, Gromax Development; and Steven Robinson, Port Crossing. The meeting was called to order at 6:47 p.m. CONSIDER APPROVAL OF THE MINUTES OF THE BOARD OF DIRECTORS MEETING HELD ON AUGUST 27, 2014. Upon a motion duly made by Director Pool, and being seconded by Director Leopard, the Board voted unanimously to approve the Minutes of the August 27, 2014, Board meeting, as presented. CONSIDER APPROVAL OF LANDSCAPING BIDS FOR BAYSIDE CROSSING. Mr. Hawes reported bids had been received from three companies and the tabulations were in the Board agenda materials. After review and discussion of the bids received, a motion was duly made by Director Antone, and seconded by Director Pool, and the Board voted unanimously to approve the bid received from Landscape Art for hardscape and landscape work for Bayside Crossing in the total amount of $654,291.00. CONSIDER APPROVAL OR OTHER ACTION WITH REGARD TO AUTHORITY INVOICES. Mr. Hawes went over the Cash Flow Report, FY 2009-2014 and invoices, included in the Board agenda materials. Upon a motion duly made by Director Antone, and being seconded by Director Pool, the Board voted unanimously to approve the Report and payment of invoices, as presented. Mr. Hawes provided handouts of the Annual Financial Report, dated September 30, 2014, a copy is attached as Exhibit A, and the Report on Applying Agreed -Upon Procedures to Construction, Engineering and Related Costs Reimbursable to Port Crossing Land, LP, dated December 10, 2014, a copy is attached as Exhibit B. No action from the Board was required. RECEIVE UPDATES FROM THE CITY, DEVELOPERS AND STAFF WITH REGARD TO DEVELOPMENT WITHIN THE ZONE. There was general discussion regarding updates with regard to development within the zone. No action from the Board was required. BOARD MEMBER COMMENTS a. Matters appearing on agenda, b. Inquiry of staff regarding specific factual information or existing policy. No action from the Board was required. ADJOURNMENT. There being no further business to come before the Board, the meeting was adjourned at 6:52 p.m. Secret List of Exhibits: A. Annual Financial Report, September 30, 2014 B. Report on Applying Agreed -upon Procedures to Construction, Engineering and Related Costs Reimbursable to Port Crossing Land, LP, December 10, 2014 2 TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 1-2 MANAGEMENT'S DISCUSSION AND ANALYSIS k�,;7 . BASIC FINANCIAL STATEMENTS r b STATEMENT OF NET POSITION AND GOVERNMENTAL FUNDS BALAG�E''. a. SHEET M 8 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE ET TO THE STATEMENT OF NET POSITION =F 9 STATEMENT OF ACTIVITIES AND GOVERNMENTAL,, 1639' .REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES" 10 RECONCILIATION OF THE GOVERNMENTAL FIND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN Fb'M BALANCES TO THE STATEMENT OF ACTIVITIES NOTES TO THE FINANCIAL STATEMENTS ' I2-2I REQUIRED SUPPLEMENTARY INFOAIZON SCHEDULE OF REVENUES XP NDI AND CHANGES IN FUND BALANCE-BUDGETUAL-GENERAL FUND 23 a OTHER SUPPLEMENT :ItY Ii FORMATION BOARD MEMBERS AND ZONE ADMINISTRATOR 25 .2MIcCALL GIBSON SWEDLUND BARFOOTPLLC Certified Public Accountants 73100 Wortham Center Drive Suite 235 111 Congress Avenue Houston, Texas 77065-5610 Suite 400 (713) 462-0341 Austin, Texas 78701 Fax (773) 462-2708 (512) 620-2204 E-Mail: mgsb@mgsbpllc.com www.nlybpllc.mm INDEPENDENT AUDITOR'S REPORT Board of Directors La Porte Redevelopment Authority City of LaPorte, Texas We have .audited the accompanying financial statements of the governmental La Porte Redevelopment Authority (the "Authority"), a cmnponent wait oft, as of and for the year ended September 30, 2014, and the related notes to the collectively comprise the Authority's basic financial statements as listed in the Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair pi accordance with accounting principles generally accepted in the design, implementation, and maintenance of internal c presentation of financial statements that are free from mat'( error_ �k Auditor's Responsibility Our responsibility is to express opinions our audit in accordance with auditing Those standards require that we plan eas �}r c the financial statements are free froni,ma of which iek financial statements in -s of America; this includes to the preparation and fair at, whether due to fraud or icial statements based on our audit. We conducted .erally accepted in the United States of America. audit to obtain reasonable assurance about whether An audit involves perforrxming•'j racedures to obtain audit evidence about the amounts and disclosures in, the financial statements. The jioce'clures selected depend on the auditor's judgment, including the assessment of the risks of materi misstatement of the financial statements, whether due to fraud or error. In making those risk�ass�ssmen1s the auditor considers internal control relevant to the entity's preparation and fair presentation -`of e financial statements in order to design audit procedures that are appropriate in the circumstancesbut not for the purpose of expressing an opinion on the effectiveness of the Authority's internal controlA°ccFordingly, we express no such opinion. An audit also includes evaluating the appropriateness; �ol�accounting policies used and the reasonableness of significant accounting estimates made by. nagment, as well as evaluating the overall presentation of the financial statements. We 6elid-ve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Member of .4merican ,Cnstitt r, of Certified Ps;biic A,,fxuntants Texas Socic y gfCsrl fed PkrblicAccounlants Board of Directors La Porte Redevelopment Authority Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of the Authority as of September 30, 2014, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that an4g dnt's Discussion and Analysis on pages 3 through 7 and Schedule of Revenues, Expenditureg axed Changes in Fund Balance — Budget and Actual — General Fund on page 23 be presented to supdp pent the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an esken'tial.part of financial 4 Y tV reporting for placing the basic financial statements in an appropriate operatio al, economic, or historical context. We have applied certain limited procedures to the required suplementary information in accordance with auditing standards generally accepted in the United States o ' erica, which consisted of inquiries of management about the methods of preparing the%information and comparing the information for consistency with management's responses to ouffuiquirie'ss e basic financial statements, and other knowledge we obtained during our audit of the basicfinanojal statements. We do not express an opinion or provide any assurance on the information becaiaseti'e-]'rotted procedures do not provide us with sufficient evidence to express an opinion or provide any asurance. k Supplementary Information Our audit was conducted for the purpose of foiitrii% gpinions on the financial statements that collectively comprise the Authority's basic financial a ��r ents. The other supplementary information is presented for purposes of additional analysis and is knot' "iequired part of the basic financial statements. Such information is the responsibility `of N r, ag ment and was derived from and relates directly to the underlying accounting and other reco �1� used to prepare the financial statements. The supplementary information, excluding that p�ofion zxiarlee"d "Unaudited" on which we express no opinion or provide any assurance, has been subjected to "fife„auditing procedures applied in the audit of the financial statements and certain additional protect zes3 including comparing and reconciling such information directly to the underlying aecountingrand oihez records used to prepare the financial statements or to the financial statements themselves, abd other additional procedures in accordance with auditing standards generally accepted in the U ited Stakes of America. In our opinion, the information is fairly stated in all material respects in relation toFthe financial statements as a whole. McCoy,Gibson Swed"iund Barfoot Certihe'4-Public Accmxatants Deceinber 10, 2014 2 LA PORTE REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30,2014 Management's discussion and analysis of La Porte Redevelopment Authority's (the "Authority") financial performance provides an overview of the Authority's financial activities for the fiscal year ended September 30, 2014. Please read it in conjunction with the Authority's financial statements, which begin on page 8. FINANCIAL HIGHLIGHTS The Authority's liabilities exceeded its assets by $8,238,406 for September 30, 2014. This compares to the previous year, when lip assets by $8,701,513, e total net position deficit of $8,238,406 results primarily fro rn hc-uthority having recorded an amount due to Developers of $7,715,193 for,the T`'�c,fl'ties the Developer constructed and conveyed to the City. The Authority aziticipates that with continued development in the area tax increment revenues will Be,, suf£ient to cover operating costs, and to reimburse the Developer. The Authorrii o'lig bons to the Developer are contingent upon the availability of tax increment fir such as described in Note 4. b� 1 The Authority's governmental funds repoxtecl a` total ending fund balance of $661,210 this year. This compares to the prior year fund balance $917,058, showing d decrease of $255,848 during the current fiscal,:3iear."� USING THIS ANNUAL REPORT , This annual report consists of aeries" of financial statements. The basic financial statements include: (1) combined fund fijii �al'sa'ements and government -wide financial staterraents and (2) notes to the financial statemdnts The combined fund financial statements and government - wide financial statemboth: (1) the Statement of Net Position and Governmental Funds Balance Sheet and (2tlie Statement of Activities and Governmental Funds Revenues, Expenditures, and ,Cklanges -,,,irf Fund Balances. This report also includes other supplementary information in add tOW.to the basic financial statements. FINANCIAL STATEMENTS The A xl ox tye -s annual report includes two financial statements combining the govel ent- wid- Ifingnp al., statements and the fund financial statements. The government -wide portion of it s ifor A ,N; provides both long-term and short-term inforr' ation about he Authority's overdk! h us. ,{Financial reporting at this level uses a perspective similar to that 'T and in the prlvg f�.. with its basis in full accrual accounting anal elimination or reclassification of inLo—r 2a,l activities. - LA PORTE REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 GOVERNMENT -WIDE FINANCIAL STATEMENTS (Continued) The first of the government -wide statements is the Statement of Net Position. This information is found in the Statement of Net Position column on page 8. The Statement of Net Position is the Authority -wide statement of its financial position presenting information that includes all of the Authority's assets and liabilities, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the4f nancial position of the Authority as a whole is improving or deteriorating. Evaluation oflhe overall financial health of the Authority would extend to other non -financial factors. The government -wide portion of the Statement of Activities on pages 10e oils how the Authority's net position changed during the current fiscal year. All c�urrettrevenues and expenses are included regardless of when cash is received or paid. .� Nl� FUND FINANCIAL STATEMENTS r The combined statements also include fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources -tat have been segregated for specific activities or objectives. The Authority has one governmental fund type. The General Fund accounts for resources not accounted for in another f irid tax increment revenues, costs and general expenditures. Governmental funds are reported in each•, ofahe financial statements. The focus in the fund statements provides a distinctive viewAtNllie-Authority's governmental funds. These statements �� gab ..� report short-term fiscal accouniab_#y foci giftg on the use of spendable resources and balances of spendable resources availab ,,6 t The end of the year. They are useful in evaluating annual financing requirements of the A,�tl TAY and the commitment of spendable resources for the near -term. 1 :. Since the government=wide,fibbus includes the long-term view, comparisons between these two ers ectives mayfrov'de insight into the long-term impact of short-term financing decisions. p p Y: g g- p g The adjustments,coluAn , the Reconciliation of the Governmental Funds Balance Sheet to the Statement of Ne4Position on page 9 and the Reconciliation of the Governmental Funds Statement o Revenues, Expenditures and Changes in Fund Balances to the ' Statement of Actiage It explain the differences between the two presentations and assist in understa.;r'i the differences between these two perspectives. 4 - P!! ;£ :' • , sri�rJ.•�.. .. z; a ui . .. LA PORTE REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 NOTES TO THE FINANCIAL STATEMENTS The accompanying notes to the financial statements provide information essential to a full understanding of the government -wide and fund financial statements. The notes to the financial statements can be found on pages 12 through 21 in this report. GOVERNMENT -'WIDE FINANCIAL ANALYSIS �-�, �r Net position may serve over time as useful indicator of the Authority's financlalmp&' iltion I'n the case of the Authority, liabilities exceeded assets by $8,238,406 as of Septem...... k201"4. The followin table rovides a summ g p ary of the Authority's net position ,aso September 30, 2014, and September 30, 2013: 2014 of Changes in the Q 13 �"".,. , 927,058 ofiNet Position ' Change Positive (Negative} $ (262,848) $ (3,000) 1,193,590 109,349 8,230,071 514,878 10,000 10,000 194,910 94,728 9,628,571 $ 725,955 (9,701,513) $ 463,107 (8,701,513) $ 463,107 LA PORTE REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 GOVERNMENT -VIDE FINANCIAL ANALYSIS (Continued) The following table provides a summary of the Authority's operations for the fiscal years ending September 30, 2014, and September 30, 2013: Summary of Changes in the Statement of Activities Change Positive 1- 3 2014 2013 Revenues: Tax Increment Revenues $ 1,698,270 $ 1,222,397 $ Interest Revenues 511 581 Total Revenues $ 1,698,781 $ 1,222,978 4 Expenses for Services $ 1,235,674 $ 599,08 i$ 6 Change in Net Position $ 463,107 $ : 01 90I $ (160,783) Net Position Beginning of Year {8,701,513) �9,325,403 623,890 Net Position, End of Year 238 406)` : 701,513) $ 463,107 FINANCIAL ANALYSIS OF THEITHORITY'S GOVERNMENTAL FUNDS The Authority's fund balance as,o 4. eptember 30, 2014, was $661,210, a decrease of $255,848 from the prior year. ,'�` The General Fund fund balance decreased by $255,848 due to tax increment revenue being less than operating costs`apitai�6utlay and certain costs to fund the Authority's debt obligations. -6.. LA PORTE REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30,2014 GENERAL FUND BUDGETARY HIGHLIGHTS The Board of Directors did not amend the budget for the fiscal year ending September 30, 2014. Actual revenues were $400,092 more than budgeted and actual expenditures were $411,309 more than budgeted. See the budget to actual comparison on page 23. CAPITAL ASSETS_ s= When capital projects are completed, the costs of the projects are recorded as,a tfansfe�r. to the City since the maintenance and operations of the facilities will not be the ruspoiis bilftt of the Authority. During the current fiscal year, $1,125,875 was paid to the Dgveldpers for projects including interest. See Note 4 for additional information. LONG-TERM DEBT ACTIVITY As of September 30, 2014, the Authority had no bond debt As of September 30, 2014, the Authority owed interest of $100,182. See Note 8 for more inforn The Sylvan Beach Restoration Project 2014 is $422,241, including interest of $ CONTACTING THE This financial report is d Questions concerning any information should be add Box 22167, Houston, TX�, 1 ens. ' A. City of La Porte, Texas plus Harris County, Texas at September 30, e 9 for more information. pvide a general overview of the Authority's finances. oration provided in this report or requests for additional Porte Redevelopment Authority, c/o David Hawes, P. 0. uj Cat)1---.�. Assets; Wt..- . LA PORTE REDEVELOPMENT AUTHORITY STATEMENT OF NET POSITION AND GOVERNMENTAL FUNDS BALANCE SHEET SEPTEMBER 30, 2014 ASSETS Cash, Note 3 Due from Developer TOTAL ASSETS LIABILITIES Accounts Payable Accrued Interest Payable - City of LaPorte Note 8 Due to Developer, Note 4 Long -Term Liabilities: Note Due After One Year, Notes 8 and 9 TOTAL LIABILITIES FUND BALANCE Assigned to 2015 Budget Deficit, Note 2 Unassigned TOTAL FUND BALANCE TOTAL LIABILITIES AND : s} FUND BALANCE.,<k NET POSITION Unrestricted s' . TOTAL NET POSITION"= C Z Statement of General Fund Adjustments Net Position $ 662,290 662,290 1,920 .0 1,920 $ 664,210 $ - W '��;�,$, 664,210 $ 3,000 yjM` $ 3,000 r srti�Q0;182 ' 100,182 -14�74715,193 { 7,715,193 F :•�,' 1,084,241 1,084,241 $ 3,00 8,899,616 $ 8,902,616 1 119,104 $ (119,104) $ - ",54.2,106 (542,106) 661,210 $ (661,210) 10 (8,238,406) $ (8,238,406) The accompa ykig notes to the financial F ataments are an inmegral part of this report. (8,238,400) $ (8,23.8,406) LA PORTE REDEVELOPMENT AUTHORITY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION SEPTEMBER 30, 2014 Total Fund Balance — Governmental Fund $ 466 �210 Y 4;a Amounts reported for governmental activities in the Statement of Net Position are different because: Long-term liabilities for notes payable are not due and payable in the current peiiod, w„ and, therefore, are not reported as assets in the governmental funds. ?,`r = ' (I,084,241) The long-term obligation to the Developer is not recorded in the Nnd�� na&ial statement but is a liability to the Developer in the government -wide i ity. (7,715,193) F5 Accrued interest on notes payable is not payable with current financial resources and therefore is not reported in the governmental funds. _ �N6:. (100.1$2) Total Net Position — Governmental Activities 8.238.406 ' .. 1 11ff J. The accompanying notes to the financial statements are an integral p-r'L of this report. I&M LA PORTE REDEVELOPMENT AUTHORITY STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED SEPTEMBER 30, 2014 REVENUES Tax Increment Revenue (Net of Adminstrative Costs) Interest Revenues TOTAL REVENUES EXPENDITURES/EXPENSES Service Operations Contracted Services Professional Services Other Capital Outlay Debt Service: Interest Expense, City of LaPorte, Note 8 Interest Expense, Harris County, Note 9 Note Payment - Harris County, Note 9 Note Payment - City of LaPorte, Note 8 Developer Interest, Note 4 Developer Principal, Note 4 ,ram TOTAL EXPENDITURES/EXPEN NET CHANGE IN FUND J3' ANCI CHANGE IN NET POSITION;' 'k FUND BALANCE7NETOSITION - OCTOBER 1, 2013` FUND BALANCE1 GENERAL FUND ADJUSTMENTS $ 1,698,270 $ - 511 $ 1,699,781 $ ,1 ` 'r $ 53,512 s.P''avl �,� "mot $ - 49,20y7_ �:hyiJ tha F 1Y' 465;000 '' 35,772 21,151 13©,500 (130,500) 's 30,500 (130,500) 7 844,402 (421,190) 281.473 (93,688) 1,954,629 $ (718,955) $ (255,848) $ 255,848 463,107 STATEMENT OF -;' A JTMTIES $ 1,698,270 511 $ 1,698,781 $ 53,512 49,207 35 465,000 35,772 21,151 0 0 423,212 187,785 $ 1,235,674 463,107 917,058 (9,618,571) (8,701,513) NET POSITION - 2014 $ 661,210 $ (8,899,616) The a�xompanying notes fo -Lhe financial statem.mits are an. integral ixgt of this mport. -10- $ (8,238,406) LA PORTE REDEVELOPMENT AUTHORITY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2014 f �.md4 2 Net Change in Fund Balance --- Governmental Fund $^'<, (25 ,j948) Amounts reported for governmental activities in the Statement of Activities ate different because: e; Governmental funds report interest expenditures as expenditures in the-I.YeP.,,paiti. However, in the Statement of Activities, interest is accrued on notes'fhroug fiscal year end. i'' �L � (56,923) Governmental funds report note principal payments as expendi res:',-Iowever, in the Statement of Net Position, note principal payments ate repoT,t oas decreases in liabilities, and the Statement of Activities is not affected:„ a._.� 354,688 In the Statement of Activities, the cost of interest expense is adjusted to the amount of the current period accrued expense. 421,190 Change in Net Position — Governmental Activities sr Al uw'; j Th.e accompanying notes to the financial stzterneats are an integral part of this report. LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 1. CREATION OF CORPORATION The City of LaPorte, Texas (the "City") authorized the creation of the La Porte Redevelopment Authority (the "Authority") by the Resolution No. 2000-19 passed on December 11, 2000. The Authority was created and organized as a local government corporation pursuant to provisions of Chapter 394 of the Texas Local Government Code. The Authority is organized as a pubic non- profit corporation for the purpose of aiding, assisting, and acting on behalf of the G' din the performance of its governmental function to promote the common good and genergil 'afar4' of the Tax Increment Reinvestment Zone (the "Zone") and neighboring areas; to proonzite 'V - elop, encourage and maintain housing, educational facilities, employment, commerce On economic development in the City. The Authority receives incremental tax revenues on developed property. The Authority has participation agreements with the City o-La,�.brte, La Porte Independent School District and Harris County to receive certain profit tax increments. The • , Authority may issue bonds with consent of City Council. The A ' or, �s anaged by a Board of Directors consisting of nine members who are appointed byhe Ma ,ar with the approval of City Council. y 9. NOTE 2. SIGNIFICANT ACCOUNTING POLI�G�ES� The accompanying financial statements have•` een prepared in accordance with accounting principles generally accepted in the United States of America as promulgated by the Governmental Accounting Standards Board { GApW ). The GASB has established the criteria. determining whether or not a given entity is a component unit. The criteria are,: {i� th potential component unit a legally separate entity, (2) does the primary government appat avohng majority of the potential component units hoard, (3) is the primary government able�to°impose its will on the potential component unit, (4) is there ship. The Authority was created as an instrumentality of the a financial benefit or burieri relation City. The Authority $does rnee; the criteria for inclusion as a component unit of the City.. Copies of the financial statements for the City may be obtained from the City Secretary's office. These fmanc 4l afatements have been prepared in accordance with GASB Codification of Goverditfntal-Xccoun.'dng, and Financial Reporting Standards Part 11, Financial Reporting: The�GASB Codifi'a-ation sets bth standards for external financial reporting for all state and local goveent edtitics, which include. a requirement for a Statement of Net Position and a Statement It requires the classification of net position into three components: Ner Investment Restricted; and Unrestricted. These classifications- are defined as follows: -12- . LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial Statement Presentation (Continued) Net Investment in Capital Assets — This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowi g thatare attributable to the acquisition, construction, or improvements of those assetsd' • Restricted Net Position — This component of net position consists of eonstr&irits%aced on the use of assets through external constraints imposed by creditors, (such,�a hrough debt covenants), grantors, contributors, or laws or regulation of otter :governments or t�h constraints imposed by law through constitutional provisions,,or eabhng legislation. • Unrestricted Net Position — This component of net position con s of assets that do not meet the definition of Restricted or Net Investment in CatA&' 1,A�ssets. When both restricted and unrestricted resources are av ilable for use, generally it is the Authority's policy to use restricted resources first. `Y Government -Wide -Financial Statements The Statement of Net Position and the�;Sta&nani of Activities display information about the Authorityas a whole. The Authori " ty'{Su;Stnt of Net Position and Statement of Activities are combined with the governmental fund f in aI statements. The Authority is viewed as a special purpose government and has the t on o£combinina these financial statements. The Statement of Net Posi#ioiri is reported by adjusting the governmental fund types to report on the full accrual basis, e�cortomc resource basis, which recognizes all long -terra assets and receivables as well Is` long --term debt and obligations. Any amounts recorded due to and due from other fundsgare eliminated in the Statement of Net Position. !4•, ,V - - The StatemehLof.-tivities is reported by adjusting the governmental fund types to report only items related kto "-urrent year revenues and expenditures. Items such as capital outlay are allocated, over ;their estimated useful lives as depreciation expense. Internal activities between go :M{ 0n,tal funds, if any, are eliminated by adjustment to obtain net total revenue and expense in i ig A emm.ent-wide Statement of Activities. Fund Financial Statements �E,discussed �Aove, the Authority's fund financial statements are combined with the i $;narz3ment-wis'catements. The fund financial statements include a Balance Sheet alad Statement of Retren�acs, Expenditures and Changes in Fund Balances. -13- -'" LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 201.4 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental Funds The Authority has one major governmental fund. General Fund -- To account for all resources not required to be accounted for in another 'd; .Basis of Accounting The Authority uses the modified accrual basis of accounting for governmenta n types. The modified accrual basis of accounting recognizes revenues when both "rr�}easVr ble and available." Measurable means the amount can be determined. Available means toll tce able within the current period or soon enough thereafter to pay current liabilities. T� Authority considers revenues reported in the governmental funds to be available if tieyeollectable within sixty (60) days after year-end. Also, under the modified accrual basiso;accounting, expenditures are recorded when the related fund liability is incurred, except o , Jnoipal and interest on long-term debt, which are recognized as expenditures when payment f due; Capital Assets' Capital assets are transferred to the City upo fcomplejtion. Bud etin In compliance with the govern, nn accounting principles, the Authority's board members should annually adopt an unappropr�zated budget for the General Fund. During the current fiscal year, the Authority did not,, inendUt e budget. Measurement Focus � •}i -T, Measurement £acus is aAerm used to describe which transactions are recognized within the ,< various financial"statements. In the government -wide Statement of Net Position and Statement of Activities;igernmental activities are reported using the economic resources measurement focus lie accounting objectives of this measurement focus are the determination of operating incom 'N ilatrges in net position, financial position, and cash flows. All assets and liabilities assgpiA, d ;with the activities are reported, regardless of the timing of related cash flows. Fund equftkis''classifted as net position. -14- LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus (Continued) Governmental fund types are accounted for on a spending or financial flow measurement focus. Accordingly, only current assets and current liabilities are included on the balance sheet !and the reported fund balances provide an indication of available spendable or appropriable fisonrces. Aerating statements of governmental fund types report increases and decreases"ift "'W 'ble spendable resources. Fund Balances GASB Statement No. 54, Fund Balance Reporting and Governm tc� un�d--type Definitions, requires the classification of fund balances in governmental funds wj'ng_ heY oilowing hierarchy: Nonspendable: amounts that cannot be spent either because_ the%rei in nonspendable form or because they are legally or contractually required to be main t ned intact. The Authority does not have any nonspendable fund balances. Restricted: amounts that can be spent only fof� n' pecific purposes because of constitutional fl ix provisions, or enabling legislation, or because�of 06pristraints that are imposed externally. The Authority does not have any restricted fund lalances. Committed amounts that can be spe. 'All, lfpr purposes determined by a formal action of the Board of Directors. The Board.=%s1tha. highest level of decision -making authority for the Authority. This action must be4fladehno4l-ater than the end of the fiscal year. Commitments may be established, modified, or.yescinded='only through ordinances or resolutions approved by the Board. The Authority does:p&oave any committed fund balances. Assigned: amounts:, iat do not'. meet the criteria to be classified as restricted or committed, but that are intended,t&be�used for specific purposes. The Authority has not adopted a formal policy regarding the Ws ignmen of fund balances. As of September 30, 2014, the District has assigned $119,104 of�thwe leneral Fund Balance to cover a budget deficit for the fiscal year ending September 30,,;2 15: other spendable arnounts'iri the General Fund. Whe f�,,expenditures are incurred for twhidh restricted, committed, assigned or unassigned fund balances are available, the Authority considers amounts to have been spent first out of restricted Total ; funds, then committed fiords, then assigned fiinds,. and.finally unassigned funds. . ,tY ?�;G.i•f',.1: .. '\��Y�tiii l$ i�i. .�: _t�� ci: LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of A ntJ4 ent assets and liabilities at the date of the financial statements and the reported amountsrQr e e es and expenditures during the reporting period. Actual results could differ from th�s11esfuar�tes. NOTE 3. DEPOSITS AND INVESTMENTS`~ Deposits Custodial credit risk is the risk that, in the event of the fa lures a depository financial institution, a government will not be able to recover deb si�s� or will not be able to recover collateral securities that are in the possession of an outsclearty The Authority's deposit policy for custodial credit risk requires compliance with the promisioris of Texas statutes. Texas statutes require that any cash bal Federal Deposit Insurance Corporation pledge to the Authority of securities eli€ Authority, having an aggregate markef, uninsured cash balance in the fundvcJ the carrying amount of the Audioty same. Of the bank balance, $250;0 00 balance was covered by collate ai pledg( depository., s� .nee in�ai y;,,fund shall, to the extent not insured by the or Ats successor, be continuously secured by a valid itleun the laws of Texas to secure the funds of the e; p lading accrued interest, at all times equal to the icl%such securities are pledged. At the fiscal year end, eposits was $662,290 and the bank balance was the was covered by federal depository insurance and the d in the name of the Authority and held in a third party The carrying values bf the deposits are included in the Governmental Funds Balance Sheet and the Statement o 9t Position at September 30, 2014, as listed below: Wit 63 .l .r SCi ` lilt I : part -16- _0. LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 3012014 NOTE 3. DEPOSI<'TS AND INVESTMENTS (Continued) Investments Under Texas statute, the Authority is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity and that address investment diversification, yield, maturity, and the quality and capability of investment managemeik#d all ". Authority hands must be invested in accordance with the following investment abje'ctives: understanding the suitability of the investment to the Authority's financial requipemeeSs,yfirst; preservation and safety of principal, second; liquidity, third; marketability of t�I -1tments if the need arises to liquidate the investment before maturity, fourth; ,di' sification of the investment portfolio, fifth; and yield, sixth. Authority's investments a "with judgment and care, under prevailing circumstances, that a person of prtadence, discretion, and intelligence would exercise in the management of the person's owi�i aw rr s 'not for speculation, but for investment, considering the probable safety of capitalhind theyprobable income to be derived." No person may invest Authority funds without ^expr�'s written authority from the Board of Directors.'* Texas statutes include specifications for and limitations applicable to the Authority and its authority to purchase investments as defined intithe Public Funds Investment Act. Authorized investments are summarized as follows: 1 lilt �at� ons of the United States or its agencies and ( )to g � �., g instrumentalities, (2) direct obligations of the, State,ohexas or its agencies and instrumentalities, (3) certain collateralized mortgage obligatio is (! )lother obligations, the principal of and interest on which are unconditionally guarante'ed''oT, insured by the State of Texas or the United States or its agencies and instrumentalities?,=' cludin g/©bligations that are fully guaranteed or insured by the Federal Deposit Insurance Copp.. raf oz or by the explicit full faith and credit of the United States, (5) certain A rated or hzgber_o'bligations of states, agencies, counties, cities, and other political subdivisions of axy'tate (6) bonds insured, assumed or guaranteed by the State of Israel, (7) insured or do,llateral zed certificates of deposit, (8) certain fully collateralized repurchase agreemggts secured by delivery, (9) certain bankers' acceptances with limitations, (10) commercialn.,p4penratedA-1 or P-1 or higher and a maturity of 270 days or Iess, (11) no- load money. akbt mutual funds and no-load mutual funds with limitations, (12) celtain guaranteed investment contracts (I3) certain qualified governmental investment pools and (14) a qualified_secutles lending program. 2014, the Authority held no investments. -17- LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 4. DUE TO DEVELOPERS The Redevelopment Authority is a party to several agreements with Developers who own property in the La Porte Tax Increment Reinvestment Zone No. 1. The Authority is obligated to repay the Developers for public improvements made on the property up to the amount of incremental tax value gained. .` The Authority has entered into agreements with the following Developers: Port CM'8szng,Land, LP; 65 La Porte, Ltd.; and Retreat at Bay Forest, LP. Port Crossing Land, LP hgs `0orri1),oted the public improvements detailed in the agreement with the Authority. Port Crossing Land, LP's reimbursable expenditures totaled $12,096,48& including interest at May 27, 2009. In the current fiscal year, the Developer was reimb rse�d $4,075.875. To date, reimbursements in the amount of $6,337,328 have been made t Qr sing Land, LP for incremental tax value gained. Interest was recalculated, and p; nts ere applied to interest first, then principal. The amount due Port Crossing, LP as of September 30, 2014 is calculated as follows: �. Principal -Interest Total Due � Balance Due Developer at 9/30/2012 $ 8,855,5,41yK-- , 25,233 $ 8,880,774 Fiscal Year 2013 Interest Fiscal Year 2013 Payment Balance Due Developer at 9/30/2013 Fiscal Year 2014 Interest (Adjusted) Fiscal Year 2014 Payment Balance Due Developer at 9/30/2014 Retreat at Bay Forest, $36,885 for the pilot interest will be dub it $50,000 was appl�ed;to calculated asJollo rs: 283,652 283,652 s ;67�) Y"' (258,630) 934 355 $ 8,119..,81.5 $ 50,255 8 23Q 071 r,Ar 386,327 386,327 (268,358) 807 5IJ7 1 075 875 7.91 L458 37Q.935 23 s seilursable expenditures totaled $224,670, including interest of neJAn.d excavation costs as of November 20, 2013. No additional the agreement. During the current fiscal year, a reimbursement of rest first, then principal. The amount due as of September 30, 2014 is Principal Interest Total Due i3eveloper at 11/20/13 $ 187,785 $ 36,885 $ 224,670 614 Payment d.13.1;:5' (36,885) (50,000) Developer at 9/30/2014 $ 174.67 =--- 0 $ 174.670 i8 _ LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 4. DUE TO DEVELOPERS (Continued) In addition, two Developers have signed Development Agreements but have not submitted costs for reimbursement of their projects. Estimated costs, based on the agreement, are as follows; 65 LaPorte, Ltd. $ 7,103,500 Beazer Homes Texas LP $ 2,097,297 Under the agreements, the amount shown is not a payable debt if the tracts do notgen°ikite tax increment sufficient to pay the accrued amount. �; NOTE 5. TAX INCREMENTS The City has agreed to deposit their tax increments into the Tax IncrernenFun�d established for the Zone. - Pry Via,. The amount of a Participant's tax increment for a year is the aznc ant oft property taxes levied and collected by the Participant for that year on the Captured_: pra s'ed Value of real property taxable by the Participant and located in the Zone. �Tl%e Captured Appraised Value of real property taxable by a Participant for a year is the totaliappra-�e& alue of all real property taxable by the Participant and located in the Zone for that Year less,; the Tax Increment Base, which is the total appraised value of all real property taxabj&,,by the Participant and located in the Zone on January 1 of the year in which the Zone %v as des}gnated as such under the Tax Increment Financing Act (the "TIF Act"). In the event,property is annexed into the Zone by ordinance of the City, the Tax Increment Base for axed'-'ro}erty is the value of all real property taxable by ,p ,,p a Participant and located in the anrie' urea on January 1 of the year of annexation. No Participant is required to deposit..,* in hements derived from property annexed into the Zone unless the Participant has agreedrQ-1 .?> so. Each participant is required`�.`to collect taxes on property located with the Zone in the same manner as other taxes afb-u .ollecled. The Participant is required to pay into the tax increment fund the collected tax - increments by the first day of each calendar quarter or pursuant to the terms of the participati'q� set forth in their respective interlocal agreements. NOTE 6. '`!0TV0F LA PORTE TAX INCREMENTS The City -land the Zone have established the Tax Increment Fund, a separate fund in the City Treas y r '--which tax increments will be deposited. r. Dur hg,the current fiscal year, tax incz° -ments of $795,627 were recorded from the City of La Porte, and $607,293 from the schoo distneg based on collected taxes. -19- LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 NOTE 7. HARRIS COUNTY TAX INCREMENTS The Commissioners Court of Harris County (the "County") approved an agreement to participate in the Zone. The amount of participation from years 2001 through 2029 will be 75% of the tax increment attributed to the capture appraised value. Harris County's participation and use of fiend is limited to projects described in the agreement. s, During the current fiscal year, tax increments of $295,350 were collected from the Cduntt- . � r NOTE 8. DUE TO CITY OF LA PORTE, TEXAS The Authority entered into a Reimbursement Agreement with the City )Ma "Porte. The City financed capital improvements on behalf of the Authority. They; .,:A, eeme�V§tates that the City will be repaid from available funds subject to certain. conditions, Inter", accrues at a rate of the Prime Commercial Lending rate of Chase Manhattan Banlc, 1Vo its successors, plus one percent per annum compounded semi -annuals on the a �1 balance. Prior payments were P P P Y� PPY applied to accrued interest. ., 5a As of September 30, 2014, the Authority has recorded a due"to the City of $662,000 plus interest calculated at $100,182. Accrued interest on thiC o-Zligation in the current fiscal year is $35,772, with a payment of $130,500 applied to the o utstanding balance. y' NOTE 9. DUE TO HARRTS4TJN`IY; TEXAS In accordance with a Developiftont_".. eement dated December 14, 2010, Harris County, Texas advanced £ands in the a o a`qt of� 00,000 for the Sylvan Beach Restoration Project. The Authority agreed to reiM6.urse�t -e advances plus interest from available tax increment, subject to certain priorities established iA the agreement. The project was undertaken by the City of La Porte through a c�aoperative$agreement with the Texas General Land Office, where the state granted funds prov 4ed 4n equal au -punt of local match was raised to fund the project. Interest accrttes'aMA Se prime rate of JP Morgan Chase plus 1%, compounded semi-annually. The total it f A to date is calculated as of September 30, 2014 at $119,335, and payment of $13,0 S,QN*a'applied, bringing Mzl,- total a ount due to $422,241. 4. The'i=ollowing is a summary of transactions for the Sylvan Beach Restoration Project: ,.' :=.3 Due Total Due cxw°�r 1, `?D13 Payment Interest �September 30,2014 Sylvan Beach Restoration Project ( 500 _$_ 2I 151 24 As ,.i goo Future pay ^:: s:5 will be based { 3L LA PORTE REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS S£fT£MIBFk30, 2014 NOTE10. ANNEXATION DEPOSIT During the prior fiscal year, a developer submitted a annexation pos \ and costs were applied, leaving a Eneo $1%00 % Annexation Gm paid by the authority i2 thecurrent fiscal year of $!$O O have been applied to thedeposit, leaving a balance of zero at year en % -21- LA PORTE REDEVELOPM[ENT AUT-ORITY .ya , REQUIRE pSUPPLE 9T O ƒƒON SEPT£MIBf 30, kN \ � } ~\ « yeeEed 6! ?' LA PORTE REDEVELOPMENT AUTHORJTY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -- BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 REVENUES Tax Increment Revenue Interest Income TOTAL. REVENUES Original and Final Budgct $ 1,298,169 520 $ 1,298,689 General Fund Posifive Actual `= - (Ne�afive) $ 9P.8,2f10 $400,101 x' s ` (9) $ §1698,781 $ 400,092 EXPENDITURES `t$ Professional and Other Services $ 11117W,= 102,7I9 Capital Improvements 1,431;�20; ="=• ' 1,851.910 TOTAL EXPENDITURES $ 1,543,320 4 ` '' $ 1,954,629 NET CHANGE IN FUND BALANCE $ (44;631) $ (255,848) FUND BALANCE - OCTOBER 1, 2013 ;T , ._ 917,058 917,058 FUND BALANCE - SEPTEMBER 30 2014 t. i 674427 $ 66I,210 -L See acwn • anying independent auditor's report. $ 8,981 _(420,290) $ (411,30) $ (I1,217) 0 $ 11,217) 23 LAPORTE REDEVE LOPM OTHER SUPPLEMENTARY I SEPTEMBER 30{ LA PORTE REDEVELOPMENT AUTHORITY BOA MEMBERS AND ZONE ADMMSTP-ATOR SEPT£MBER 30,2014 Authority Mailing Address - £a Porte Redevelopment Aut6ty o David Hawes P. O Bo 22167 Houston, TX 7 \ w ,Y Authority Telephone No. Position Board Members I § ] § 5 - (7I3)541-047 Peggy Anm — Seoretary/Treasurer ^ � � . yy� Alton Porter y\ �2 Horace Leopard \. Doug Martin Vlcc: in — o ia 2 6 JJ Meza �\ Dave. Turnquits 7 LaGa6 R eke" pool 9 x £+ Pfeiffer - Chairm Execkive Director Doi / 7s >�.. . Meer./A�7m&*mmlosm�& : . . -25- 12f� 1 ,� raft Sub'ect to change.�V.fcCALL GIBSON SW�EDLD BA0OT PLLC Certified Public Accountants 13100 Worthanz Center Drive Suite 235 Houston, Texas 77065 56To (713) 462-0341 Fax (713) 462 2708 E-Mail; E f b llc core December 10, 2014 Board of Directors La Porte Redevelopment Authority City of LaPorte, Texas 111 Congress Awme Suite 400 Austitz, Texas 78701 (512) 6I02209 wanvan sb Ilegyr In planning and performing our audit of the financial statements of the La Porte Redevelopment Authority (the "Authority") as of and for the year ended September 30, 2014, in accordance with auditing standards generally accepted in the United States of America, we considered the Authority's internal control over financial reporting ("internal control") as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the Purpose of expressing an opinion on the effectiveness of the Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control. Our consideration of internal control was for the Iimited purpose described in the preceding paragaph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements of the Authority's financial statements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Last year, and again this year, we observed the following deficiencies in the Authority's internal control that we consider to be material weaknesses. Material Weaknesses The Authority's management consists of an appointed Board of Directors ("Directors"). Day-to-day operations are perforated by private companies ("Consultants") under contract with the Authority. The Directors supervise the performance of the Consultants; however, although the Consultants can be part of the Authority's system of internal control, the Consultants are not members of management. Ultimately, the Directors are responsible for design and implementation of the system of internal control. Member of Anzerimn Institute of Certified Public Accountants Texas Society of Certified Public Accotnttants Board of Directors La Porte Redevelopment Authority Material Weaknesses (Continued) Draft - Subject to change December 10, 2014 Page 2 As is common within the system of internal control of most small organizations, the accounting function of the Authority does not include preparation of the financial statements complete with footnotes in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Authority has not established internal controls over the preparation of its financial statements. This condition is considered to be a material weakness of the Authority's system of internal control over financial reporting. During the course of perfornning an audit, the auditor prepared journal entries to present the financial statements on the government -wide basis of accounting. Management's reliance upon the auditor to detect and make these necessary adjustments is considered to be a material weakness in internal control. Auditing standards do not make exceptions for reporting deficiencies that are adequately mitigated with nonaudit services rendered by the auditor or deficiencies for which the remedy would be cost prohibitive. We agree with the objective to inform an organization of all the conditions in its internal control that interfere with its ability to record financial data reliably and issue financial statements free of material misstatement. Communication of the material weaknesses above helps to emphasize that the responsibility for financial reporting rests entirely with the organization and not the auditor. Management's Response The Authority's Board of Directors is appointed from the general population and do not necessarily have governmental accounting expertise. The Board engages consultants who possess industry knowledge and expertise to provide financial services, as well as legal services. Based on the auditor's unmodified opinion and after reading the financial statements, the Board believes the financial statements are materially correct. The Board does not think that the addition of an employee or consultant to oversee the annual financial reporting process is necessary nor would it be cost effective. Conclusion Management's written response to the material weaknesses identified in our audit has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on it. This communication is :intended solely for the information and use of the Board of Directors and is not intended to be and should not be used by anyone other than these specified parties. Sincerely, McCall Gibson Swedlund Barfoot PLLC Certified Public Accountants �X uraft - Subject to change LA PORTE REDEVELOPMENT AUTHORITY REPORT ON APPLYING AGREED -UPON PROCEDURES TO CONSTRUCTION, ENGINEERING AND RELATED COSTS REIMBURSABLE TO PORT CROSSING LAND, LP (DEVELOPER) DECEMBER 10, 2014 WALL GIBSON SWEDLUND BARFOOT PLLC Certified Public Accountants Draft - Subject to change LA PORTE REDEVELOPMENT AUTHORITY REPORT ON APPLYING AGREED -UPON PROCEDURES TO CONSTRUCTION, ENGINEERING AND RELATED COSTS RERABURSABLE TO PORT CROSSING LAND, LP (DEVELOPER) DECEMBER 10, 2014 Draft - Subject to change TABLE OF CONTENTS SCHEDULE INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED -UPON PROCEDURES SCHEDULE OF CONSTRUCTION, ENGINEERING AND RELATED COSTS REIMBURSABLE TO PORT CROSSING LAND, LP (DEVELOPER) A SCHEDULE COMPARING ACTUAL REMBURSABLE COSTS WITH EXHIBIT B OF DEVELOPMENT AGREEMENT B r. - Subject to change McCALL GIBSON SWEDLUND BA.R'U4TPLLC Certified Public Accountants 13100 Wortham Center Drive State 235 111 Congress Avetwe Houston, Texas 77065-5610 Suite 400 (713) 462-0341 Austin, Texas 78701 Fax (713) 462 2708 (512) 610-2209 E-Mail. tugshftWbpllc.cont www.vnttsballc.mn€ December 10, 2014 Board. of Directors La Porte Redevelopment Authority City of La Porte, Texas Harris County, Texas Independent Accountant's Re art on Applying A eed-LT on Procedures We have performed the procedures enumerated below, which were agreed to by the Board of Directors of the La Porte Redevelopment Authority (the "Authority"), solely to assist you with respect to the Construction, Engineering and Related Costs to be paid by the City of LaPorte, Texas Reinvestment Zone No. 1 to Port Crossing Land, LP ("Developer") as of November 30, 2014, as set forth in the accompanying schedule. The below listed procedures were performed solely to assist you in determining the amount to be reimbursed to the Developer involved and to facilitate the preparation of a comparison of the actual costs incurred with the Capital Improvement Budget as documented as Exhibit B in the Public Improvement Development Agreement. This agreed -upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the Board of Directors of the Authority. Consequently, we make no representation regarding the sufficiency of the procedures either for the purpose for which this report has been requested or for any other purpose. The procedures performed are summarized as follows: A. We reviewed certain schedules and supporting invoices submitted by the Developer in substantiation of the costs to be reimbursed. Our review included all documentation supporting items, amounts, and proof of payment for which reimbursement is requested. In addition, we reviewed all agreements relative to the reimbursement request. B. We calculated the Developer's interest based upon the terms of the Reinvestment Zone ;= Dumber One, City of La Porte, Texas ("La Porte Zone") agreement with the Developer for interest in accordance with the agreement dated May 24, 2006 and the amendment dated April 27, 2011. Uchoker of American Institute of Cwfjiec x=ublicAccountants Texas Society of ,',2rt3hed ' d� icAarountants La Porte Redevelopment Authority Draft .Subject to change December l0, 20i4 City of La Porte, Texas Page 2 C. We verified the mathematical accuracy of the engineering invoices greater than $5,000.00. We tested the completeness of the engineering invoices based upon the total engineering invoices billed. D. We reviewed the computation of certain costs to gain assurances that the amounts required to be paid 100% by the Developer, in accordance with the Development Agreement, are deleted from the amounts to be reimbursed. E. For construction contracts, we footed the final pay estimates and calculated extensions for any line item greater than $5,000.00. F. We obtained verbal confirmation from Angel Brothers Enterprises, Ltd. that the construction contracts have been paid in full and that there are no additional claims against the La Porte Zone or Developer. G. We prepared a reimbursement report for the benefit of the Authority including the accountant's report and schedule of amounts reimbursable to the Developer and have compared the amounts in the operating and capital improvement budgets with the actual reimbursable costs to complete the projects. H. We were available to attend a meeting to present the report, and to answer questions relating to the report. The attached Schedule A titled "Schedule of Construction, Engineering and Related Costs Reimbursable to Port Crossing Land, LP (Developer)", sets forth their reimbursable costs. This reimbursement is in accordance with the terms and conditions of the Development Agreement by and among the Reinvestment Zone Number One, City of LaPorte, Texas, La Porte Redevelopment Authority and Port Crossing Land, LP dated May 24, 2006. That agreement was amended April 27, 2011 to extend the maximum interest date on reimbursable amounts to eight years from the payment date. Port Crossing Land., LP originally submitted schedules and invoices totaling $60,112.67. We have revised the reimbursable amount to $67,714.42 including interest calculated through November 30, 2014. The following changes were made to the original schedule: A. We calculated interest through November 30, 2014 at the prime commercial lending rate of J. P. Morgan Chase Bank. That resulted in an increase of $9,818.32. B. We deducted $617.50 for sales taxes on costs for electrical work for the fountain. The Authority is not subject td.sales- tax. xa,i�A. C. We deducted $1,599.07 for sales tax-f6r the.�ountain assembly. The Authority is not subject to sales tax. raft - Subject to change La Porte Redevelopment Authority December 10, 2014 City of La Porte, Texas page 3 According to the Development Agreement, the Developer is to be paid interest on the reimbursable amount at the prime commercial lending rate of J. P. Morgan Chase Barak per annum. Interest was calculated on the per annum basis of a year being 365 days. The following details the interest rates used for the periods included: Dates Prime Rate June 5, 2009 to November 30, 2014* 3.25%a *Assumes no change in prime rate In addition to the current amount reimbursable of $67,714,42, the Developer has a principal balance due from the 2009 report of $7,495,141.23, with interest calculated through August 27, 2014 of $22,690.77. We also calculated interest from August 28, 2014 through November 30, 2014 of $62,733.31. That brings the total reimbursable through November 30, 2014, to $7,648,279.73. We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion on the aforementionedreimbursable mbursable costs. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the .Board of Directors and is not intended to be and should not be used by anyone other than this specified party. However, this report is a matter of public record and its distribution is not limited. This report should not be associated with the presentation of any financial data of the District except to comply with filing requirements as specified by the parties to the agreement. McCall Gibson Swedlund Barfoot PLLC Certified Public Accountants 2014 Report AUP Draft - Subject to change LA PORTE REDEVELOPMENT AUTHORITY SCHEDULE OF CONSTRUCTION, ENGINEERING AND RELATED COSTS REIMBURSABLE TO PORT CROSSING LAND, LP (DEVELOPER) DECEMBER 10, 2014 (SEE ACCOMPANYING DISCLAIMER OF OPINION AND EXPLANATION OF AGREED -UPON PROCEDURES PERFORMED) DESCRIPTION Angel Brothers IEEnterprises, Ltd. Construction Port Crossing - Infrastructure Development Amount Paid by Developer $ 6,616,616,10 Less: Amount Reimbursed in 2009 6,591,616.I0 Jones & Carter, hie, Engineering - Port Crossing Drainage Study Amendment Amount Paid by Developer $ 19,897.60 Less: Amount Reimbursed in 2009 17,144.00 Harry D. bane Associates Engineering - Re -Inspection for Final Approval by Harris County Port Crossing Amount Paid by Developer Davidson Electric Co. Electrical Connections for Fountain Port Crossing Amount Paid by Developer Less: Sales Tax Not Reimbursable Lake Management Services Fountain Assembly and Installation Port Crossing $ 10,497-50 617.50 TOTAL 25,000.00 2,753.60 380,00 9,880.00 Amount Paid by Developer $ 21,481.57 Less: Sales Tax Not Reimbursable 1,599.07 19,982.50 Schedule A Page I of 2 Draft W Subject to change LA FORTE REDEVELOPMENT AUTHORITY SCHEDULE OF CONSTRUCTION, ENGINERRING AND RELATED COSTS REIMBURSABLE TO PORT CROSSING LAND, LP (DEVELOPER) DECEMBER 10, 2014 (SEE ACCOMPANYING DISCLAIMER OF OPINION AND EXPLANATION OF AGREED -UPON PROCEDURES PERFORMEb) DESCRIPTION TOTAL TOTAL AMOUNT REIMBURSABLE TO PORT CROSSING LAND, LP AS OF NOVEMBER 30, 2014 $ 57,896.14 Developer Interest 9,91$.32 TOTAL AMOUNT PAYABLE TO PORT CROSSING LAND, LP AS Ol, NOVEMBER 30, 2014 $ 67,714.42 Interest is calculated based upon the J.P. Morgan Chase Banc prune commercial lending rate in accordance with the Development Agreement. Schedule A Page 2 of 2 = . Draft - Subject to change LA PORTE REDEVELOPMENT AUTHORITY SCHEDULE COMPARING ACTUAL REIMBURSABLE COSTS WITH EXHIBIT B OFTHE DEVELOPMENT AGREEMENT DECEMBER 10, 20t4 (SEE ACCOMPANYING DISCLAIMER OF OPINION AND EXPLANATION OF AGREED -UPON PROCEDURES PERFORMED) REIMBURSED REIMBURSABLE COSTS TO COSTS TO ENGINEERING PORTCROSSING PORT CROSSNG ESTIMATE LAND, LP DESCRIPTION LAND, IP EXHIBITI3 ATMAY27,2009 AS OFNOVEMBER 30,2014 CAPITAL IMPROVEMENT BUDGET DESCRIPTION AND ESTIMATED COSTS Streets with Storm Systems Powell Road (IOV ROW) $ 1,795,000 Powell Road (60' ROW) 841,000 Abandon Powell Road Wharton Weems Boulevard 968,000 McCabe Road 225,000 SUBTOTAL $ 3,829,000 $ 3,560,057 $ Water 1%iS#r3lintl8n System 12" Public Mains $ 320,000 Offsite Segment Crossing SH 146 (12') 351,000 SUBTOTAL $ 671,000 $ 383,756 $ Sanitary Sewer System Lift Station I Force Main $ 137.000 Public Mains 8" -12" 308,000 Olfisite Public Mains 66,000 SUBTOTAL $ 511,000 $ 95s,S73 $ _ .Drainage Projects Storinwater Detention / Drainage -Acquisition of 32 Acres $ 2,300,000 $ 2,304,431 $ -Construction: Excavation 1,360 000 # 002 032 -Construction: Storm Sewer 1,232,000 841,284 25,000 SUBTOTAL $ 4,892,000 $ 4,147.747 $ 250QQ Sidewalks Sidewalks / Pedestrians Trails along Major Roadways / Drainageways $ 120,000 $ 45,44E $ Landscaping Along Major Roadways $ 300,000 $ 630,279 $ 29,763 Clearing Public ROW and Easements $ 120,000 $ 182,001 Engineering $ 1,303,000 $ 831,299 $ 3,133 Developer Interest $ _ $ `li:. j 3 'r':, , 1,360,327 $ 9,818 TOTAL $ 11,746;00,0 $. 67,714 Schedule B Page I of 2 Draft - Subject to change TOTAL ACTUAL COSTS � TO DATE ACTUAL VARIANCE ESTIMATED AND ESTIMATED OVER OVER ADDMONAL COST ADDITIONAL COST (UNDER) (UNDER) TO COMPLETE TO COMYLHTE ESTIMATE ESTIMATE 3,560,057 -7.02% $ $ $ (268,943) 383,756 42.814'o $ $ $ (2871244) 955,573 97.00% $ $ 444,573 $ $ 2,304,431 $ 4,431 0.19% 1,002,032 (357,968) -26.32% 966,284 (365.716) -29.68% $ - $ 4,172,747 $ (719,253) -14,70% $ - $ 45,448 $ (74,552) -62.13% $ - $ 660,042 $ 360,042 120.01910 $ - $ 182,001 $ 62,001 51.67% $ - $ 834,432 $ (468,568) -35.96% $ - $ 1,370,145 $ 1,370,145 $ $ $ 418,201 Schedule B Page 2 of 2