10 - PEDC 2015-2016 ANNUAL AUDIT REPORT

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PARIS ECONOMIC DEVELOPMENT CORPORATION (A Component Unit of the City of Paris, Texas) Notes to the Financial Statements (Continued) September 30, 2016 11. Detailed Notes on All Activities and Funds (Continued) A. Cash Deposits with Financial Institutions (Continued) in certificates of deposits in institutions that are domiciled in the State of Texas. Collateral agreements must be approved prior to deposit of fiords as provided by law. As of September 30, 2016, PEDC was not exposed to custodial credit risk since deposits are insured or collateralized with securities pledged held in the name of the entity. The entity's carrying amount of demand deposits was $1,984,101 and the bank balance was $1,994,359. B. Investments The public funds investment pools in Texas are established under authority of the Interlocal Cooperation Act, Chapter 79 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act (the Act), Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the Pool and other persons who do not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a continuous rating of no lower than AAA or AAAm or an equivalent rating by at least one nationally recognized rating service; 3) maintain the market value of its underlying investment portfolio within one -half of one percent of the values of its shares. Investments at September 30, 2016, are invested in Lone Star Investments, $372,560, (Texas Political Subdivisions Investment Pool) and Texas CLASS, $570,912. These investments are reported with the bank accounts as Cash and Cash Equivalents. Investments in the Lone Star investment pool and Texas CLASS investment pool are not insured or guaranteed by the FDIC or any other government agency_ Statutes authorize PEDC to invest in obligations of the U.S. Treasury, direct obligations of the State of Texas, other obligations guaranteed or insured by the State of Texas or the United States, obligations of states and political subdivisions of any state meeting certain rating requirements, certificates of deposit, and fully collateralized direct repurchase agreements having a defined termination date. C. Receivables PEDC reports Taxes Receivable for sales tax collected by the State Comptroller. D. Pension Plan PEDC contributes to a simplified employee pension plan for the Director, administered by Edward Jones. The contribution rate is 10% and amounted to $8,079 during the year ended September 30, 2016. E. Commitments PEDC has extended several incentive agreements to various companies and other commitments: 1. Commercial Dairy - The incentive is to provide cash payments for creating 150 new jobs in Paris and Lamar County for five years. This amount is estimated to be $664,300 and expected to begin in 2017. 2. Producer — In September 2015, the Board of Directors reached an incentive agreement with a producer of engineered glass materials for training reimbursement and cash for capital investment in manufacturing space and new equipment and new jobs for $45,000, of which $24,000 remains outstanding at September 30, 2016.