|
Paris Economic Development Corporation
<br />(A Component Unit of the City of Paris, Texas) ry r ra a rI V 7"T; A;7?
<br />Notes to Financial Statements (Continued)
<br />September 30, 2011
<br />Note 3: Deposits and Investments
<br />PEDC maintains accounts in several financial institutions. At September 30, 2011, the carrying
<br />amount of demand deposits and certificates of deposit was $868,607 and the bank balance was
<br />$908,248, which was covered by federal depository insurance in the amount of $632,344 leaving
<br />$275,904, which was exposed to custodial credit risk since all deposits were not insured.
<br />Note 4: Public Funds Investment Pools
<br />Public funds investment pools in Texas (Pools) are established under authority of the Interlocal
<br />Cooperation Act, Chapter 79 of the Texas Government Code, and are subject to the provisions of the
<br />Public Funds Investment Act (the Act), Chapter 2256 of the Texas Government Code. In addition to
<br />other provisions of the Act designed to promote liquidity and safety of principal, the Act requires
<br />Pools to: 1) have an advisory board composed of participants in the Pool and other persons who do
<br />not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a
<br />continuous rating of no lower than AAA or AAA-m or an equivalent rating by at least one nationally
<br />recognized rating service; and 3) maintain the market value of its underlying investment portfolio
<br />within one-half of one percent of the values of its shares.
<br />PEDC's investments in Pools are reported at an amount determined by the fair value per share of the
<br />Pool's underlying portfolio, unless the Pool is 2a7-like, in which case they are reported at share
<br />value. A 2a7-like Pool is one which is not registered with the Securities and Exchange Commission
<br />(SEC) as an investment company, but nevertheless has a policy that it will, and does, operate in a
<br />manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940.
<br />Temporary investments at September 30, 2011, are invested in Lone Star Investments, $391,759,
<br />(Texas Political Subdivisions Investment Pool) and MBIA Municipal Investors Service Corp.,
<br />$3,796,418. These investments are reported with the bank accounts as Cash and Cash Equivalents.
<br />Note 5: Notes Receivable
<br />A note receivable outstanding at the beginning of the year from a corporation located in Paris, Texas,
<br />to assist with the purchase of an existing business was paid off during the year.
<br />Note 6: Bonds Payable
<br />PEDC has outstanding Paris Economic Development Corporation Sales Tax Revenue Refunding
<br />Bonds, Series 2010, originally issued at $2,685,000, bearing interest at 1.76% to 4.39%. Principal
<br />payments are due serially in varying annual amounts to September 1, 2018, from $280,000 to
<br />$340,000.
<br />Sales and Use Taxes (one-quarter of one percent) levied by the City of Paris, Texas, within its
<br />boundaries under the Development Corporation Act of 1979, are pledged for payment of bonds and
<br />interest. The resolution authorizing the issuance of the bonds requires that monthly deposits be made
<br />to the Debt Service Fund in an amount sufficient to pay the next maturing bonds and interest.
<br />A Reserve Fund is required to be maintained with a balance of at least $346,192, the average annual
<br />principal and interest requirements of the bonds. At September 30, 2011, the balances in the Debt
<br />Service Fund and Reserve Fund are $108,709 and $470,228, respectively.
<br />
|