Paris Economic Development Corp. FY 2011-12

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Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements (Continued) September 30, 2012 Note 3: Deposits and Investments PEDC maintains accounts in several fmancial institutions. At September 30, 2012, the carrying amount of demand deposits and certificates of deposit was $768,850 and the bank balance was $792,137, which was covered by federal depository insurance for $697,137. Note 4: Public Funds Investment Pools Public funds investment pools in Texas (Pools) 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 AAA-m or an equivalent rating by at least one nationally recognized rating service; and 3) maintain the market value of its underlying investment portfolio within one-half of one percent of the values of its shares. PEDC's investments in Pools are reported at an amount determined by the fair value per share of the Pool's underlying portfolio, unless the Pool is 2a7-like, in which case they are reported at share value. A 2a7-like Pool is one which is not registered with the Securities and Exchange Commission (SEC) as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Temporary investments at September 30, 2012, are invested in Lone Star Investments, $390,863, (Texas Political Subdivisions Investment Pool) and MBIA Municipal Investors Service Corp., $2,370,911. These investments are reported with the bank accounts as Cash and Cash Equivalents. Note 5: Bonds Payable PEDC has outstanding Paris Economic Development Corporation Sales Tax Revenue Refunding Bonds, Series 2010, originally issued at $2,685,000, bearing interest at 2.32% to 439%. Principal payments are due serially in varying annual amounts to September l, 2018, from $290,000 to $340,000. Sales and Use Taxes (one-quarter of one percent) levied by the City of Paris, Texas, within its boundaries under the Development Corporation Act of 1979, are pledged for payment of bonds and interest. The resolution authorizing the issuance of the bonds requires that monthly deposits be made to the Debt Service Fund in an amount sufficient to pay the next maturing bonds and interest. A Reserve Fund is required to be maintained with a balance of at least $346,192, the average annual principal and interest requirements of the bonds. At September 30, 2012, the balances in the Debt Service Fund and Reserve Fund are $73,964 and $470,977, respectively.