25.1 - ACFR 9-30-2022 with Continuing Disclosure Tables

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CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) N. Restricted Net Position and Restricted Asset Accounts In order to safeguard the financial integrity of the water and sewer system, the City Council approved a resolution establishing and maintaining funds comparable to those required by the revenue bonds refunded in 2010. At September 30, 2022, these accounts, shown as cash and investments on the Statement of Net Position — Proprietary Funds, are as follows: Reserve Fund Contingency Fund $ 9,646,661 925,405 Collections of notes receivable are restricted by grant agreements to be used for building rehabilitation. The balances of the City's restricted asset accounts are as follows: Cash and Cash Equivalents Grants Receivable $ - Lake Crook 3,861 Contingency 716,214 Loan 33,745 Bond Reserves and Sinking Funds 3,881,284 Construction 3,040,507 Other 606,462 Total Restricted Assets $ 8,282,073 O. Related Party Certificates of Deposit and Other Investments 209,191 5,765,376 34,437,006 Other Receivables $ 716,543 $ 40,411,573 $ 716,543 The City Council appoints the governing board of an entity which is legally separate from the City. The City is not able to impose its will on this entity, and a financial benefit/burden relationship is not present; therefore, it is considered a related organization. P. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. The City has incurred certain asset retirement obligations related to the operation of its wastewater utility system. The U.S. Environmental Protection Agency and the Texas Commission on Environmental Quality regulates wastewater utility system closure and post closure requirements. Environmental engineers calculated the asset retirement obligation based on the estimated current cost of remediation and removal of the contamination and contaminated sludge and dirt in the wastewater treatment facilities. The estimated liability of 73