C.A.F.R., FY 2004-05 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2005 V. Other Information (Continued) A. Risk Management (Continued) needed to pay prior and current-year claims and to establish a reserve for catastrophe losses. The claims liability is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the fmancial statements and the amount of the loss can be reasonably estimated. For the fiscal years ended September 30, 2004 and 2005, changes on unpaid claims liability are as follows: 2004 2005 Balance at Beginning of Year $ 301,623 $ 324,787 Claims Incurred During the Year 2,787,981 2,540,077 Payments on Claims (2,764,817) (2,424,915) Balance at End of Year $ 324,787 $ 439,949 B. Related Party 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. C. Water Storage Commitments A contract with the United States of America for water storage space in Pat Mayse Lake entitles the City to utilize one hundred percent of the storage space between elevations 451.0 and 415.0 feet above sea level. Forty percent (43,800 acre-feet) is for present storage and the remaining sixty percent (65,800 acre-feet) is for future water storage. The City is to repay the government the entire amount of construction costs allocated to the water storage right acquired by the City. The City is obligated to pay 9.46% of the ordinary operation and maintenance cost of the project annually and 4.22% of major capital replacements when incurred. Allocated cost for future water storage (60%) is $1,925,722 and the amount to be paid including accumulated interest mentioned below is to be on a pro rata basis as more storage is acquired by the City. Interest at 3.137% has been accumulating on this allocated cost since September 30, 1977, and amounts to $2,667,130 at September 30, 2005. The City may, at its option, pay the interest as it becomes due or allow the interest to continue to accumulate until the storage is used. D. Water Sales The City has contracts extending for several years to sell treated and untreated water to five entities. Total water sales under these contracts to these entities during the year ended September 30, 2005, were approximately $2,332,000. 50