Paris Economic Development Corp. FY 2008-09
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Independent Auditors' Report
and Financial Statements
For the Year Ended September 30, 2009
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Table of Contents
September 30, 2009
Independent Auditors' Repo 1
Financial Statements:
Governmental Funds Balance Sheet/Statement of Net Assets 2
Statement of Revenues, Expenditures, and Changes in Fund Balances/
Statement of Activities 3
Notes to Financial Statements 4
Required Supplementary Inf rmation - Budgetary Comparison Schedule -
General Fund 9
Notes to Required Supple me tary Information 10
Continuing Disclosure Info ation (Unaudited) I 1
MCCLANAHAN AND HOLMES, LLP
R. FRANK RAY, CPA CERTIFIED PUBLIC ACCOUNTANTS 228 SIXTH STREET, S.E.
R. E. BOSTWICK, CPA PARIS, TEXAS 75460
STEVEN W. MOHUNDRO, CPA 903-784-4316
GEORGE H. STRUVE, CPA FAX 903-784-4310
ANDREW B. REICH, CPA 304 WEST CHESTNUT
RUSSELL P. WOOD, CPA DENISON, TEXAS 75020
903-465-6070
FAX 903-465-6093
1400 WEST RUSSELL
BONHAM, TEXAS 75418
903-583-5574
FAX 903-583-9453
Independent Auditors' Report Board of Directors
Paris Economic Development Corporation
Paris, Texas
We have audited the acco anying financial statements of Paris Economic Development Corporation (PEDC), a
component unit of the City of Paris, Texas, as of and for the year ended September 30, 2009, as listed in the table of
contents. These financial statements are the responsibility of PEDC's management. Our responsibility is to express
an opinion on these financia statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are fre of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides us with a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of PEDC as of September 0, 2009, and the results of its activities for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The
Continuing Disclosure Info ation is presented for purposes of additional analysis and is not a required part of the
financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the
financial statements, and accordingly, we express no opinion on it.
The budgetary comparison information on Page 9 is not a required part of the financial statements but is
supplementary information required by accounting principles generally accepted in the United States of America.
We have applied certain limited procedures, which consisted principally of inquiries of management regarding the
methods of measurement and presentation of the required supplementary information. However, we did not audit
the information and express no opinion on it.
PEDC has not presented Management's Discussion and Analysis which accounting principles generally accepted in
the United States of America has determined is necessary to supplement, although not required to be part of, the
financial statements.
Certified Public Accountants
February 2, 2010
Paris, Texas
1
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Governmental Funds Balance Sheet/Statement of Net Assets
September 30, 2009
General Debt Service Governmental
Fund Fund Total Adjustments* Activities
ASSETS
Cash and Cash Equivalents $ 1,830,598 $ - $ 1,830,598 $ - $ 1,830,598
Investments 501,762 - 501,762 - 501,762
Accounts Receivable -
Sales Tax 202,286 - 202,286 - 202,286
Accrued Interest Receivable 7,715 - 7,715 - 7,715
Restricted Assets
Bond Debt Service Fund
Cash and Cash Equivalents - 20,333 20,333 - 20,333
Bond Reserve Fund
Cash and Cash Equivalents - 468,012 468,012 - 468,012
Notes Receivable 2,297,282 - 2,297,282 - 2,297,282
Land Development Costs 1,629,155 - 1,629,155 - 1,629,155
Total Assets $ 6,468,798 $ 488,345 $ 6,957,143 $ - $ 6,957,143
LIABILITIES
Accrued Termination Benefits $ 33,770 $ - $ 33,770 $ - $ 33,770
Liabilities Payable
from Restricted Assets
Current Portion of Bonds Payable - - - $ (215,000) $ 215,000
Accrued Interest Payable - - - (13,855) 13,855
Notes Payable -
Due Within One Year - - - (55,644) 55,644
Bonds Payable -
Net of Current Portion - - - (2,345,000) 2,345,000
Total Liabilities 33,770 - 33,770 (2,629,499) 2,663,269
FUND BALANCES/NET ASS TS
Fund Balances:
Reserved for
Long-Term Notes Receivable 2,013,175 - 2,013,175 2,013,175 -
Reserved for Land Development Costs 1,629,155 - 1,629,155 1,629,155 -
Reserved for Debt Service - 488,345 488,345 488,345 -
Unreserved 2,792,698 - 2,792,698 2,792,698 -
Total Fund Balances 6,435,028 488,345 6,923,373 6,923,373 -
Total Liabilities and Fund Balances $ 6,468,798 $ 488,345 $ 6,957,143
Net Assets:
Restricted for Debt Service (259,490) 259,490
Unrestricted (4,034,384) 4,034,384
Total Net Assets $ - $ 4,293,874
*Primarily long-term liabilities of reported in the funds
See accompanying notes to financial statements.
2
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities
For the Year Ended September 30, 2009
Debt Statement
General Service of
Fund Fund Total Adjustments* Activities
Revenues:
Sales Tax $ 1,288,374 $ - $1,288,374 $ - $ 1,288,374
Investment Earnings 183,187 4,343 187,530 - 187,530
Total Revenues 1,471,561 4,343 1,475,904 - 1,475,904
Expenditures:
Industrial Support and Incenti es 69,520 - 69,520 - 69,520
Office Supplies and Postage 9,970 - 9,970 - 9,970
Communications 2,896 - 2,896 - 2,896
Car Allowance 9,000 - 9,000 - 9,000
Special Service Fees 26,540 - 26,540 - 26,540
Insurance and Bonds 4,834 - 4,834 - 4,834
Travel Expenses 33,584 - 33,584 - 33,584
Public Notices 525 - 525 - 525
Contractual Associations 7,871 - 7,871 - 7,871
Promotional Advertising 43,943 - 43,943 - 43,943
Administration Fee 15,000 - 15,000 - 15,000
Personnel Compensation 226,276 - 226,276 - 226,276
Sundry Charges 3,596 - 3,596 - 3,596
All Utilities 15,266 - 15,266 - 15,266
Equipment 4,019 - 4,019 - 4,019
Building Maintenance 9,941 - 9,941 - 9,941
Debt Service
Principal 217,917 200,000 417,917 (417,917) -
Interest 8,583 179,761 188,344 (2,107) 186,237
Total Expenditures 709,281 379,761 1,089,042 (420,024) 669,018
Excess (Deficit) of Revenues
Over Expenditures 762,280 (375,418) 386,862 420,024 806,886
Other Financing Sources/Uses:
Transfers - Internal Activities (365,000) 365,000 - - -
Excess of Revenues and Other ources
Over Expenditures and Other Uses 397,280 (10,418) 386,862 420,024 806,886
Fund Balances/Net Assets:
Beginning of the Year 6,037,748 498,763 6,536,511 (3,049,523) 3,486,988
End of the Year $ 6,435,028 $ 488,345 $6,923,373 $ (2,629,499) $ 4,293,874
*Primarily long-term liabilities of reported in the funds
See accompanying notes to financial statements. 3
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements
September 30, 2009
Note 1: Organization
The Paris Economic Development Corporation (PEDC) is a governmental non-profit corporation
established July 19, 1993, funded by a quarter percent sales tax. PEDC was organized exclusively
for the purpose of benefiting and accomplishing public purposes of the City of Paris, Texas, by
promoting, assisting, and enhancing economic development activities as provided by the
Development Corporation Act of 1979. PEDC is a component unit of the City of Paris, Texas, and
the business and affairs are managed by a five-member board of directors appointed by the governing
body of the City of Paris, Texas.
Note 2: Summary of Significant Accounting Policies
A. Measurement Focus, Basis of Accounting, and Basis of Presentation
The accounting policies of PEDC conform to accounting principles generally accepted in the United
States of America as applicable to governments. The following is a summary of the more significant
accounting pol ties:
Financial Statements - Combined Governmental Funds and Government-Wide Statements
PEDC's financial statements include both government-wide (reporting the unit as a whole) and
fund financial statements (reporting PEDC's major funds).
In the Statement of Net Assets, the governmental activities column is reported on a full accrual,
economic r source basis, which recognizes all long-term assets and receivables as well as long-
term debt nd obligations, if any. Net assets are reported in two parts - restricted for debt
expense an unrestricted net assets.
The Statement of Activities reports both the gross and net cost of PEDC's function (economic
development). Economic development is supported by general government revenues (sales tax,
interest on investments, etc.).
The financial transactions of PEDC are reported in two individual funds in the combined financial
statements. These funds are accounted for by providing a separate set of self-balancing accounts
that compr se their assets, liabilities, fund equity, revenues, and expenditures/expenses. The
focus of t e governmental funds' measurement (in the fund statements column) is upon
determinate n of financial position and changes in financial position (sources, uses, and balances
of financia resources) rather than upon net income. PEDC considers all revenues available if
they are co ected within 60 days after year end and expenditures are recognized when the related
liability is ' incurred. The following is a description of the governmental funds of PEDC:
General F d - The General Fund is the general operating fund and is used to account for all
financial resources except those required to be accounted for in another fund.
Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources
for, and the payment of, general long-term debt.
B. Assets, Liabilities, and Net Assets
1) Depose and Investments
Cash arid cash equivalents are considered to be cash on hand, demand deposits, and short-
term investments with original maturities of three months or less from the date of acquisition.
Investments are stated at market value.
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements (Continued)
September 30, 2009
Note 2: Summary of Significant Accounting Policies (Continued)
B. Assets, Liabilities, and Net Assets (Continued)
2) Restr cted Assets and Fund Balance Reserves
Certain resources set aside for repayment of revenue bonds and related interest are
classified as restricted assets on the balance sheet because their use is limited by applicable
bon covenants. The Debt Service Fund is used to accumulate resources for debt service
payments over the next twelve months. Governmental funds report reservations of fund
balances for amounts that are not considered a current financial resource.
The Reserve Fund is accumulated for the purpose of retiring the last of any bonds as they
become due or for debt service when the Debt Service Funds are insufficient.
3) Lan Development Cost - Industrial Park
PE has acquired land and added improvements to develop an industrial park which is to
be divided and sold to businesses wanting to locate their facilities in such an area. Land
and dded improvements are not depreciated because they are expected to be sold and are
not used in PEDC's ongoing activities.
4) Use of Estimates
The reparation of financial statements in conformity with accounting principles generally
accepted in the United States of America, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
5) Excess of Expenditures Over Appropriations
Forte year ended September 30, 2009, expenditures exceeded budgeted amounts in the
General Fund in Insurance and Bonds ($4,834), Special Service Fees ($26,540), All Utilities
($266), Personnel Compensation ($27,603), Equipment ($1,019), and Principal ($184).
Note 3: Deposits and Investments
PEDC mainta s accounts in several financial institutions. At September 30, 2009, the carrying
amount of demand deposits and certificates of deposit was $907,639 and the bank balance was
$922,285, which was covered by federal depository insurance in the amount of $643,017 leaving
$279,268 which was exposed to custodial credit risk since all deposits were not insured.
Note 4: Public Funds Investment Pools
Public funds vestment 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
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements (Continued)
September 30, 2009
Note 4: Public Funds I vestment Pools (Continued)
not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a
continuous rati g of no lower than AAA or AAA-m or an equivalent rating by at least one nationally
recognized rat g service; and 3) maintain the market value of its underlying investment portfolio
within one-hal 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 20-like, in which case they are reported at share
value. A 20-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, 2009, are invested in Lone Star Investments, $390,964,
(Texas Political Subdivisions Investment Pool) and MBIA Municipal Investors Service Corp.,
$1,526,331. These investments are reported with the bank accounts as Cash and Cash Equivalents.
Note 5: Notes Receivable
PEDC has ante receivable bearing interest at 7.00% from a corporation located in Paris, Texas, to
assist with the urchase of an existing business. The note is due in monthly installments of principal
and interest of 32,000 through April 15, 2017, at which time the remaining principal is due. This
note is secure by a security agreement, which lists PEDC as having a subordinate interest in all
respects to the financial institution involved and to other individuals as listed in the security
agreement. T balance of this note at September 30, 2009, was $2,247,281.
In past years, EDC granted incentives to a company to assist in locating a business locally and who
did not compl with the terms of the incentive agreement. As a result, the company is repaying a
portion of the i centive $6,000 monthly. The balance remaining at September 30, 2009, is $50,000.
Note 6: Notes and Bon Is Payable
PEDC has ante payable to a bank to provide funding for an industrial park and other purposes.
This note bear interest at a rate of 4.942% with principal and interest payments due on a monthly
basis. The not is secured by a tax assignment and security agreement. It also contains, to the extent
permitted by law, a right of setoff in all accounts PEDC has with the lender. The balance of the note
at September 3), 2009, was $55,644.
PEDC has ou standing Paris Economic Development Corporation Taxable Sales Tax Revenue
Bonds, Series 998 originally issued at $4,200,000, bearing interest at 6.25% to 6.625°/x. Principal
payments are due serially in varying annual amounts to September 1, 2018, from $215,000 to
$365,000.
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 Fu is required to be maintained with a balance of at least $388,708, the average annual
principal and interest requirements of the bonds. At September 30, 2009, the balances in the Debt
Service Fund a d Reserve Fund are $20,333 and $468,012, respectively.
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements (Continued)
September 30, 2009
Note 6: Notes and Bonds Payable (Continued)
Debt Service requirements related to these bonds and the notes are as follows for the years ended
September 30:
Bonded Debt Requirements Note Payable
Years Principal Interest Principal Interest Total
2010 $ 215,000 $ 166,261 $ 55,644 $ 393 $ 437,298
2011 230,000 152,716 - - 382,716
2012 245,000 138,111 - - 383,111
2013 265,000 122,431 - - 387,431
2014 280,000 105,206 - - 385,206
2015 300,000 87,006 - - 387,006
2016 320,000 67,506 - - 387,506
2017 340,000 46,706 - - 386,706
2018 365,000 24,181 - - 389,181
$ 2,560,000 $ 910,124 $ 55,644 $ 393 $ 3,526,161
A summary of lo rig-term liability transactions for the year ended September 30, 2009, is as follows:
Balance Balance Due
September 30, September 30, Within
2008 Additions Reductions 2009 One Year
Bonded Debt $ 2,760,000 $ - $ 200,000 $ 2,560,000 $ 215,000
Note Payable 273,561 - 217,917 55,644 55,644
Total $ 3,033,561 $ - $ 417,917 $ 2,615,644 $ 270,644
Note 7: Commitments
In past years, EDC entered into two incentive agreements, one with a company that operates a call
center facility. The agreement expires December 31, 2012, and is payable periodically over the life
of the contra t. The amount of the incentive is based on the number of employees and a
reimbursement for equipment purchased and tenant improvement. The contract also provides for
refunds should a default by the company occur. Maximum amount of incentive payments under the
contract is $72 ,000 of which $325,000 has been paid. The other approved by the Board of Directors
is an expansion incentive agreement with a food manufacturer for training and the addition of new
employees not to exceed $477,500.
During the year, the Board approved another incentive package for a food manufacturer for up to
$100,000 for training and $100,000 for net gain of employees. The Board also approved $30,000 for
participation o an incubator project.
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements (Continued)
September 30, 2009
Note 8: Risk Management and Subsequent Events
PEDC is exposed to various risks of loss and has obtained insurance related to general liability, loan
enforcement liability, errors and omissions liability, and automobile liability.
Management as evaluated subsequent events through February 2, 2010, the date on which the
financial statements were available to be issued.
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Required Supplementary Information
Budgetary Comparison Schedule - General Fund
For the Year Ended September 30, 2009
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues:
Sales Tax $ 1,000,000 $ 1,000,000 $ 1,288,374 $ 288,374
Investment Earnings 233,324 233,324 183,187 (50,137)
Total Revenues 1,233,324 1,233,324 1,471,561 238,237
Expenditures:
Industrial Support and Incentives 2,041,278 2,016,278 69,520 1,946,758
Office Supplies and Postage 12,000 12,000 9,970 2,030
Commuications - Telephone 4,500 4,500 2,896 1,604
Car Allowance 9,000 9,000 9,000 -
Insurance and Bonds - - 4,834 (4,834)
Special Service Fees - - 26,540 (26,540)
Travel Expenses 35,000 35,000 33,584 1,416
Public Notices 1,000 1,000 525 475
All Utilities 15,000 15,000 15,266 (266)
Miscellaneous 1,000 1,000 - 1,000
Contractual Associations 10,000 10,000 7,871 2,129
Promotional Advertising 45,000 45,000 43,943 1,057
Consultants 25,000 25,000 - 25,000
Chamber Administration Fee 15,000 15,000 15,000 -
Personnel Compensation 198,673 198,673 226,276 (27,603)
Sundry Charges 6,050 6,050 3,596 2,454
Equipment 3,000 3,000 4,019 (1,019)
Building Maintenance - 25,000 9,941 15,059
Debt Service
Principal 217,733 217,733 217,917 (184)
Interest 8,767 8,767 8,583 184
Total Expenditures 2,648,001 2,648,001 709,281 1,938,720
Excess (Deficit) of Re enues
Over Expenditures (1,414,677) (1,414,677) 762,280 2,176,957
Other Financing Sources/U es:
Transfer to Debt Service F nd (379,000) (379,000) (365,000) 14,000
Net Change in Fund Balan es (1,793,677) (1,793,677) 397,280 2,190,957
Fund Balances/Beginning o the Year 6,037,748 6,037,748 6,037,748 -
Fund Balances/End of the Year $ 4,244,071 $ 4,244,071 $ 6,435,028 $ 2,190,957
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Required Supplementary Information
September 30, 2009
Budgetary Data
PEDC's fiscal year commences October 1st and ends September 30th. A budget for the forthcoming
fiscal year sha 1 be submitted to, and approved by the Board of Directors in June and delivered to the
City of Paris n or before June 30th. After Board approval, the budget on appropriate forms is
submitted tote City Manager for inclusion in the annual budget of the City of Paris. The budget is
to include projected operating expenses and such other budgetary information as shall be useful to or
appropriate for the Board and the City.
The proposed budget shall contain such classifications and shall be in such form as may be
prescribed fro time to time by the Council of the City of Paris. The budget shall not be effective
until it has been approved by the City Council.
The Budgetary Comparison Schedule presented as Required Supplementary Information for the
General Fund is presented to provide a meaningful comparison of actual results with the budget. For
the year ended September 30, 2009, expenditures exceeded budgeted amounts in the General Fund in
Insurance and Bonds, Special Service Fees, All Utilities, Personnel Compensation, Equipment, and
Debt Service rincipal.
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Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Continuing Disclosure Information
September 30, 2009
(Unaudited)
Sales Tax Collections
The following table shows Sale Tax Collections for the Paris Economic Development Corporation's 1/4% sales tax for the
five years ended September 30:
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2008-09 2007-08 2006-07 2005-06 2004-05
October $ 88,922.2 $ 83,464.96 $ 84,238.04 $ 78,521.27 $ 70,285.42
November 110,970.1 99,241.92 115,618.43 101,335.94 100,256.78
December 94,350.4 86,341.92 85,747.00 78,925.11 67,281.60
January 97,226.8 71,512.24 79,007.32 76,474.78 72,957.02
February 153,829.7 117,965.74 124,953.39 122,263.65 118,587.03
March 99,611.2 81,093.26 77,448.73 77,196.42 69,789.83
April 97,990.3 81,133.33 79,522.92 62,161.14 68,029.22
May 118,995.6 104,144.40 112,034.88 110,259.06 101,310.24
June 104,476.2 98,082.39 81,031.99 87,009.11 73,271.56
July 84,222.5 91,465.06 86,879.45 82,354.41 77,849.58
August 115,161.6 120,089.43 106,314.87 109,883.37 100,414.56
September 108,494.8 115,500.00 88,526.17 87,089.96 80,952.28
Totals $1,274,251.9 $ 1,150,034.65 $1,121,323.19 $1,073,474.22 $1,000,985.12
Pro Forma Bonded Debt Service Coverage
Maximum Annual Debt Service Requirement (2018) $ 389,181
Projected Annual Sales Tax Rec ipts 2009-10 $ 1,000,000
(Pledged Revenues are gross 14 cent sales tax)
Estimated Pro Forma Coverage 2.57 x
Average Annual Remaining Debt Service at September 30, 2009 $ 385,569
Projected Annual Sales Tax Rec ipts 2009-10 $ 1,000,000
(Pledged Revenues are gross 1 4 cent sales tax)
Estimated Pro Forma Coverage 2.59 x
Condensed Corporation Operating Statement
Fiscal Year Ended September 30,
2009 2008 2007 2006 2005
Operating Revenues:
Sales Taxes $ 1,288,374 $ 1,139;115 $ 1,134,833 $ 1,080,270 $ 1,013,371
*Other Income (Loss) 1,293 35,846 38,288 (7,367) (43,268)
Total Revenues 1,289,667 1,174,961 1,173,121 1,072,903 970,103
Operating Expenses:
Projects 69,520 646,545 27,208 107,725 464,422
Administration and
Promotion 413,261 335,036 248,667 247,977 209,611
Total Expenditures 482,781 981,581 275,875 355,702 674,033
Net Available for Additional
Economic Incentives or
Debt Service $ 806,886 $ 193,380 $ 897,246 $ 717,201 $ 296,070
Source: Information received fr m the Issuer.
* The net of interest income, interest expense, and gain or loss on the sale of assets.
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