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HomeMy WebLinkAbout1978 04 30 Audited Financial Report - Clearwoods Improvement District AUDIT REPORT CLEAR WOODS IMPROVEMENT DISTRICT HARRIS COUNTY, TEXAS APRIL 30, 1978 a CONTENTS ACCOUNTANT'S REPORT BALANCE SHEET — ALL FUNDS 1 STATEMENT OF REVENUES AND EXPENSE — ALL FUNDS 2 STATEMENT OF FUND BALANCES — ALL FUNDS 3 STATEMENT OF CHANGES IN FINANCIAL POSITION — ALL FUNDS 4 40 GENERAL LONG—TERM DEBT AND DEBT SERVICE REQUIREMENTS 5,6 CERTIFICATES OF DEPOSIT 7 TAXES RECEIVABLE 8 DISTRICT ORGANIZATIONAL COSTS 9 GENERAL FIXED ASSETS 10 NOTES TO FINANCIAL STATEMENTS 11, 12, 13, 14 A Members American Institute of DAVID L. MERRITT & COMPANY Members Texas Society Of Certified Public Accountants Certified Public Accountants Certified Public Accountants 400 F.M. 1960 WEST,SUITE 103 HOUSTON,TEXAS 77090 PHONE: 444-2637 August 31, 1978 Board of Directors Clear Woods Improvement District Harris County, Texas We have examined the Balance Sheets of all Funds of Clear Woods Improvement District, Harris County, Texas, as of April 30, 1978, and all Funds Related Statements of Revenues, Expenses and Fund Balances and Changes in Financial Position for the year ended April 30, 1978. Our examination was made in accord- ance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we con- sidered necessary in the circumstances. IPA In accordance with the suggestions of the Texas Department of Water Resources, the District did not depreciate its general fixed assets. We have observed no departures by the District from the requirements of the Bond Orders except as described in detail in Note 7 of the Notes to Financial Statements. In our opinion, the accompanying financial statements examined by us present fairly the financial position of the Clear Woods Improvement District, Harris County, Texas, for all Funds as of April 30, 1978, and the results of its operations and changes in financial position for the year then ended, in conformity with generally accepted accounting principles applied on a consistent basis. CLEAR WOODS IMPROVEMENT DIS' BALANCE SHEE' APRIL 3 1 General rm Fixed Ind Assets Fund ASS) Cash $ Certificates of Deposit Accrued Interest Receivable Accounts Receivable - Water and Sewer Ser' Prepaid Insurance Taxes Receivable Due from other Funds General Fixed Assets 2,230,255 Unamortized Bond Discount District Organizational Costs 296,805 Amount to be Provided to Retire General L10 Amount to be Provided for Bonded Debt - TOTAL ASSETS 0 $2,527,060 LIABILITIES, RESERVI Liabilities: Accounts Payable $ Contract Retainage Due to other Funds Refundable Customer Deposits Bonds Payable (Note 8) 0 Series 1967 Bond Principal Payable - Cu: Series 1967-A Bond Principal Payable - Series 1972 Bond Principal Payable - Cu:_ Total Liabilities 0 - Reserves and Fund Balances: Reserve For: Uncollected Taxes Interest Earnings Not Transferred (No. Investment in General Fixed Assets 2,527,060 Fund Balances - Total Reserves and Fund Balances _ 2,527,060 TOTAL LIABILITIES, RESERVES AND FUN10 $2,527,060 The accompanying notes are an integral pal CT.FAR WOODS IMPROVEMENT DIS STATEMENT OF REVENUES A FOR THE YEAR ENE ;eneral Fixed ets Fund OPERATING REVENUES: Service revenue (Note 3) Water tap revenue Tax revenue Penalty and interest Total Operating Revenues - OPERATING EXPENSES: Sewer service expense Directors per diem Professional fees Utilities Management of System Office supplies and expense Repairs and maintenance Insurance Board of Equalization Tax Assessor/Collector fees Other Total Operating Expenses NET INCOME FROM OPERATIONS NON-OPERATING REVENUES: Interest Sewer inspection revenue Other Total Non-Operating Revenues - NON-OPERATING EXPENSES: Debt service and related expenses Total Non-Operating Expenses NET INCOME (LOSS) (Note 4) ' The accompanying notes are an integral CLEAR WOODS IMPROVEMENT DIS' STATEMENT OF FUND B. FOR THE YEAR END: neral ixed is Fund FUND BALANCES, MAY 1, 1977 85,354 PRIOR PERIOD ADJUSTMENTS 85,354 ADDITIONS TO FUND BALANCES: Net Income (Note 4) Transferred from Tax Fund Transferred from Debt Service Fund 9,577 Transferred from General Operating Fund10,735 Transferred from Construction Fund 21,394 Increase in investment in uncollected t Total Additions to Fund Balances 41,706 Alk DEDUCTIONS FROM FUND BALANCES: Payment of Bond Principal Transferred to Construction Fund Transferred to General Fixed Assets Transferred to Debt Service Fund Total Deductions from Fund Balances _ NET CHANGES IN FUND BALANCES 41,706 FUND BALANCES, APRIL 30, 1978 27,060 The accompanying notes are an integral pe • CLEAR WOODS IMPROVEMENT DIST STATEMENT OF CHANGES IN FINA FOR THE YEAR ENDE SOURCES OF CASH: Cash receipts from operations Cash disbursements for operations: Sewer service expense Directors per diem Professional fees Utilities Management of System Office supplies and expense Repairs and maintenance Insurance - Board of Equalization -10 Tax Assessor/Collector fees Debt service and related expenses Other Total Cash Disbursements for Opera- Net cash from operations Cash transfers from other Funds Sale of certificates of deposit Other Total Cash Provided APPLICATIONS OF CASH: Payments of accounts payable Purchase of fixed assets Purchase of certificates of deposit Payment of customer deposits Cash transfers to other Funds Total Cash Applied INCREASE (DECREASE) IN CASH CASH BALANCE, MAY 1, 1977 CASH BALANCE, APRIL 30, 1978 The accompanying notes are an integral pc CLEAR WOODS IMPROVEMENT DIST GENERAL LONG-TERM DEBT AND APRIL 3C Debt Service Requirements Year Ending For The Year Ending 30, 1979 April 30, 1980 1 Interest Principal Interest Description $ 30,000 $50,000 $ 27,500 Clear Woods Improvement District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1967 41,400 10,000 40,800 Clear Woods Improvement District f Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1967-A 39,825 5,000 39,488 Clear Woods Improvement District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1972 58,060 10,000 58,060 Clear Woods Improvement District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1974 $169,285 $75,000 $165,848 Totals (Note 8) The accompanying notes are an integral i CLEAR WOODS IMPROVEMENT DIE GENERAL LONG-TERM DEBT ANE APRIL ? Series 1967 Principal Interest Due Total For The Years Due August 1, ue Ending April 30 February 1 February 1 1, Annual Total Requirements ___ 1979 $ 50,000 $ 30,000 $ 58,060 $ 234,285 1980 50,000 27,500 68,060 240,847 1981 50,000 25,000 67,385 241,735 1982 50,000 22,500 66,710 237,285 1983 75,000 20,000 66,035 257,835 1984 75,000 16,250 65,360 252,135 1985 75,000 12,500 74,685 261,485 1986 75,000 8,750 73,335 254,723 1987 75,000 5,000 71,985 253,010 1988 25,000 1,250 80,635 270,960 1989 78,565 236,790 1990 76,465 228,840 1991 74,335 230,860 199210, 72,160 247,160 1993 69,940 236,915 1994 77,690 236,540 1995 74,650 135,575 1996 71,570 129,795 1997 68,490 124,015 1998 65,410 118,235 1999 62,330 122,455 2000 69,250 126,000 2001 65,400 118,775 2002 61,550 61,550 2003 57,700 57,700 2004 53,850 53,850 TOTALS $600,000 $168,750 $: $1,791,605 $4,969,355 The accompanying notes are an integral 6- CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS CERTIFICATES OF DEPOSIT APRIL 30, 1978 Accrued Interest Interest Maturity Face Receivable Rate Date Amount April 30, 1978 DEBT SERVICE FUND Certificates of Deposit: No. 10-0094071 7.75% 7/14/76 $ 62,891 $1,295 10-0094088 7.75% 8/15/78 30,000 658 161752-2 7.25% 9/15/78 1,500 15 161751-4 7.75% 7/15/78 31,548 623 10-0094106 7.75% 7/15/78 4,159 72 Total 130,098 2663 CONSTRUCTION FUND Certificate of Deposit: No. 2847 5.25% 5/8/78 41,508 240 Total 41,508 240 Total - All Funds $171,606 $2,903 The accompanying notes are an integral part of these financial statements. -7- CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS TAXES RECEIVABLE • APRIL 30, 1978 Taxes Receivable, May 1, 1977 $ 12,723 Adjustment (240) 12,483 1977 Original Tax Roll 253,348 Adjustments (305) 253,043 Total To Be Accounted For 265,526 Tax Collections: Current Year 241,114 Prior Year 2,947 244,061 Taxes Receivable, April 30, 1978 $ 21,465 Taxes Receivable By Years: 1969 $ 359 1970 353 1971 425 1972 425 1973 1,193 1974 1,462 1975 2,100 1976 3,219 1977 11,929 $ 21465 Property Valuations: 1977 1976 1975 Land $ 7,939,700 $ 6,573,700 $ 5,939,100 Personal Property 674,000 568,100 439,700 Improvements 30,316,000 23233L100 14,962,600 Total Valuation $38,929,700 $30,374,900 $21,341,400 Tax Rate Per $100 Valuation $0.65 $0.65 $0.65 Tax Year: January 1, 1977 - December 31, 1977 Percent of the assessed valuation to fair market value 100.0% Percent of current taxes collected to current taxes levied 95.3% Percent of current and delinquent taxes collected to current and delinquent taxes outstanding at the beginning of the tax year 91.9% The accompanying notes are an integral part of these financial statements. -8- a CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS DISTRICT ORGANIZATIONAL COSTS APRIL 30, 1978 Balances Balances May 1, 1977 Additions April 30, 1978 Financial Advisors Fees $ 16,250 $ $ 16,250 Discount on Sale of Bonds 2,298 9,577 11,875 Bond Issue Costs 1,286 1,286 Bond Interest (Note 5) 245,349 245,349 Other Costs 3,066 3,066 Interest on Temporary Investments (135,825) (135,825) Legal Fees 154,804 154,804 41004 Total (Note 6) $287,228 $9,577 $296,805 Amounts Provided By: Debt Service Fund $9,577 The accompanying notes are an integral part of these financial statements. -9- r CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS GENERAL FIXED ASSETS APRIL 30, 1978 Balances Balances May 1, 1977 Additions April 30, 197 Drainage System $ 608,329 $ $ 608,329 Sewer System 664,939 21,394 686,333 Water System 643,065 10,735 653,800 Engineering 252,171 252,171 Land 29,622 29,622 Total $2,198,126 $32,129 $2,230,255 Amounts Provided By: Construction Fund $21,394 Operating Fund 10735 $32,129 The accompanying notes are an integral part of these financial statements. -10- CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS APRIL 30, 1978 Note 1: Creation of District Clear Woods Improvement District, Harris County, Texas, was created by Acts of the 59th Legislature of the State of Texas, Regular Session, 1965. The Board of Directors held its first meeting on August 10, 1965, and the first bonds were sold on March 21, 1967. Note 2: Accounting Methods The financial statements and supplemental information contained in this report were prepared in accordance with the accrual method of accounting except for the Statement of Changes in Financial Position, All Funds, which was prepared on the cash basis. Furthermore, tax revenues and bond interest are not accrued and the amounts shown for these items reflect cash basis accounting treatment. The District capitalizes all costs associated with the creation of the District. All costs directly associated with the sale of bonds are being capitalized. From the date of sale of bonds, through the date of the completion of related improvements, interest revenues and interest expenditures related to the bond proceeds are being capitalized. These amounts are shown on the Balance Sheet as District Organizational Costs. In accorance with the requirements of the Texas Departmentof Water -Resources, these amountsare not being amortized. The District capitalizes the cost of meters and boxes and residential lines as a part of the water system in General Fixed Assets. The District does not maintain detailed fixed asset records, and thus detailed cost information on individual assets are not reaily available. In accordance with the requirements of the Texas Department of Water Resources, fixed assets are not being depreciated. Accordingly, replacements of fixed assets and repairs are not capitalized. The full cost of facilities owned by the District is capitalized; funds provided by others are shown as contributions in the Balance Sheet. Bond discounts are capitalized and are being amortized over the life of the applicable bond issue in relation to the principal amount outstanding. The District requires water and sewer service customers to pay a deposit which will be refunded or applied against accounts receivable upon termination of service. These refundable deposits are considered to be an adequate allowance for uncollectible accounts and accordingly, no separate allowance is recorded. Amounts paid by one fund for another fund are transferred to the appropriate fund by adjusting fund balance. Any subsequent repayment is reported as a contra-adjustment of fund balance. Loans by one fund to another fund are reported as inter-fund receivables and payables in the Balance Sheet if there is intent to repay the amount and if the debtor fund has the ability to repay the advance timely. -11- CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS APRIL 30, 1978 Note 3: Water and Sewer Service Rates The District has established the following rates effective December 1, 1975: Water Service Residential and Commercial Monthly Charge: First 8,000 Gallons of Water Used (Minimum Bill) $ 7.00 Each 1,000 Gallons of Water Used Thereafter .65 Apartment Monthly Charge: Total Number of Gallons Used X 85% X Residential Rate Total Number of Units in Project Sewer Service Residential and Commercial Monthly Charge: Aft First 50,000 Gallons of Water Used (Minimum Bill) 4.00 Each 1,000 Gallons of Water Used Thereafter .25 Apartment Monthly Charge (Per Unit) 4.00 Tap Fees Residential Tap Fee (3/4" Tap) 275.00 The above fee includes the cost of meter, box and installation. For connections of over 3/4 inch, the District will establish tapping charges by separate order or agreement. Commercial tap-on fee shall be a negotiated amount per square foot of land in addition to the cost of meter, box and installation. Residential and commercial sewer inspection fee 5.00 Deposits Per Customer 15.00 Note 4: Pledge of Tax and Operating Revenues The bonds are payable from the proceeds of an ad valorem tax levied upon all taxable property subject to taxation within the District, without limitation as to rate or amount, and are further payable from and secured by a lien on and pledge of the net revenues to be received from the operation of the District's waterworks and sanitary sewer system. -12- CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS APRIL 30, 1978 Note 5: Bond Interest Reserve In accordance with the Bond Orders, a portion of the bond proceeds was deposited into the Debt Service Fund and reserved for the payment of bond interest during the construction period. This bond interest is being capitalized as a district organizational cost as it is paid and the reserve account reduced accordingly. Note 6: Equipment Lease Agreements The District is leasing one temporary sewage treatment plant. This lease is summarized as follows: Date of Lease September 19, 1976 Term of Lease 5 years Renewable Option 6 months Minimum Annual Lease Payments for fiscal years ending April 30, 1979 $17,820 1980 11,880 Total $29,700 This lease has not been capitalized in the financial statements since it does not meet the criteria for capitalization. Note 7: Engineering Report The bond Orders state that a complete engineering inspection report of the operations and physical conditions of the plant and system shall be made each year by an independent qualified engineer. At the Balance Sheet date said report had not been made. Note 8: Redemption of Bonds The outstanding bonds of Clear Woods Improvement District, Harris County, Texas, are callable for redemption prior to maturity at the option of the District. The bonds may be called in whole or in part in inverse numercial order for the purpose of retirement or refunding, or both, at par in addition to unpaid accrued interest. Bonds of the Series 1967, Series 1967-A, Series 1972 and Series 1974 may be called on February 1, 1982, August 1, 1982, April 1, 1987 and September 1, 1989, respect- ively, or any interest date thereafter. Note 9: Water and Sewer Service Customers The following is a comparison of the number of metered water and sewer service customers serviced by the District: April 30, 1978 1,021 April 30, 1977 987 -13- CLEAR WOODS IMPROVEMENT DISTRICT - HARRIS COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS APRIL 30, 1978 Note 10: Operating and Tax Fund Payments to Debt Service Fund The Bond Orders state that the District is to transfer on a monthly basis to the Debt Service Fund, commencing when any part of the water and sewer system is placed in operation, an amount not less than one-sixth of the next maturing installment of interest and an amount not less than one-twelfth of the next maturing installment of principal. In addition, a sum equal to 20% of such monthly payments is to be paid to the Debt Service Fund until the fund balance is equal to the total principal and interest requirements for the current year and the next succeeding year. At the Balance Sheet date, the Operating and Tax Fund revenues have not been sufficient to make all payments required by the Bond Order. However, the ad valorem tax levied by the District has been sufficient to meet the annual bond principal and interest payments, not provided by funds from the bond sales. Note 11: Restricted Cash and Temporary Investments The following balances were restricted by the Bond Orders as of April 30, 1978: Restricted For Servicing of Acquisition of Bonded Debt Fixed Assets • Cash $ 81 $31,926 Temporary Investments 130,098 41,508 $130,179 $73,434 Note 12: Insurance The Bond Orders state that so long as any of the bonds are outstanding, the District agrees to maintain insurance for the benefit of the holders of bonds, on the system of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business. The District has physical damage coverage of $142,900 with an 80% coinsurance provision and flood coverage of $20,000. The District has comprehensive general liability coverage with a maximum limit of $300,000. Since no objective criteria have been established for insurance coverage, a determination could not be made whether or not the District complied with the requirement. Note 13: Interest Earnings In accorance with the Water District Accounting Manual, which is effective for the District's fiscal year beginning May 1, 1975, all interest on construction fund investments should be transferred to the Debt Service Fund when received. Transactions for the current year are summarized as follows: Interest received not transferred, May 1, 1977 $6,093 Interest received, current year 240 Reserve for interest earned not transferred, $6,333 April 30, 1978 -14-