03-21-2019 AgendaAGENDA
March 21, 2019
The Schertz/Seguin Local Government Corporation (SSLGC) will meet on Thursday, March 21, 2019 at 1:30 PM in
SSLGC Administrative Building located at 108 W. Mountain Street, Seguin, Texas. All agenda items listed below
will be considered for discussion and/or action at said meeting.
1.Call to Order
2.Public Comment
3.Approval of Minutes for the meeting held February 21, 2019
4.General Manager’s Report – Amber Beard, General Manager
a.Water Production
b.Gonzales County
c.Guadalupe County
d.Region L/GMA 13
e.CVLGC
5.SSLGC Operations Report – Trino Pedraza, Operations Manager
6.Presentation of FY2017-2018 Audit Report – Kim Roach, Armstrong, Vaughan & Associates
7.Authorize the General Manager to Accept the Texas Municipal League Intergovernmental Risk Pool
Liability and Property Proposals – Susan Caddell, City of Seguin Finance Director & Amber Beard,
General Manager
8.SSLGC Construction Update – John Winkler, Walker Partners & Trino Pedraza, Operations Manager
9.Legislative Update – Billy Phenix, Legislative Consultant & Amber Beard, General Manager
10.Parallel Pipeline & Guadalupe Project Update – Amber Beard, General Manager & Brent Patterson,
Stateside Right of Way Services
Executive Session Recommended
11.Post Oak Clean Green, Inc. (Landfill) – Patrick Lindner, General Counsel & John Winkler, Walker
Partners & Amber Beard, General Manager
Executive Session Recommended
SSLGC AGENDA 03-21-2019
12. Wholesale Water Contract(s) & Well Permit(s) – Patrick Lindner, General Counsel & Amber Beard,
General Manager Executive Session Recommended
13. Gonzales County & Guadalupe County Carrizo and Wilcox Water Leases and Property Transactions–
Amber Beard, General Manager Executive Session Recommended
14. Executive Session: Called under Chapter 551 Government Code, Section 551.071, to seek the advice
of its attorney on legal matters, Section 551.072, for deliberations regarding real estate
15. Consider and Take Action as a Result of Agenda Item #14
16. Consideration and/or Action on questions and possible items to be placed on the next agenda
17. Adjournment
The listing of an agenda item as a matter to be discussed in open session is not intended to limit or require discussion of that matter in open session if it is otherwise appropriate
to discuss the matter in executive session, such as consultation with its attorneys (Tex. Gov’t Code, section 551.071), deliberations regarding real estate (Tex. Gov’t Code, section
551.072), deliberations regarding a specific officer or employee (Section 551.074), deliberations regarding security (Tex. Gov’t Code, section 551.076), and information relating
to risk or vulnerability assessment (Tex. Gov’t Code, section 418.183(f)). If, during the discussion of any agenda item, a matter is raised that is appropriate for discussion in
executive session the Board may, as permitted by law, adjourn into executive session to deliberate on the matter. The posting of an agenda item as a matter to be discussed in
executive session is not intended to limit or require discussion of that matter in executive session. The Board may discuss in open session any matter for which notice has been
given in this notice of open meeting, including an agenda item posted for executive session. In no event, however, will the Board take action on any agenda item in executive
session, whether it be posted for open or executive session discussion.
MINUTES OF THE
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
THE STATE OF TEXAS §
COUNTY OF GUADALUPE §
SCHERTZ/SEGUIN LOCAL §
GOVERNMENT CORPORATION §
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SSLGC MINUTES 02/21/2019 (6 Pages) SIGNED ORIGINAL(S): 1
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On this the 21st day of February, 2019 the Schertz/Seguin Local Government Corporation (SSLGC)
convened at 1:30 PM at SSLGC Administrative Building located at 108 W. Mountain Street, Seguin,
Texas. The following board members being present and in attendance:
Robin Dwyer President
Charles Kelm Vice-President
David Reiley Secretary
Ken Greenwald Treasurer
Donna Dodgen Assistant Secretary
David Scagliola Ex-Officio
The following members were absent:
Mayor Keil Ex-Officio
constituting a majority of the persons appointed to the Board and a quorum for the transaction of
business, and notice of such meeting having been duly given in accordance with the provisions of Texas
law. Also in attendance were:
Doug Faseler City Manager (City of Seguin)
Rick Cortes Assistant City Manager (City of Seguin)
Tim Howe Director of Water/Wastewater Utilities (City of Seguin)
Susan Caddell Director of Finance (City of Seguin)
Mark Browne City Manager (City of Schertz)
Jimmy Hooks Public Works (City of Schertz)
Patrick Lindner General Counsel (Davidson, Troilo, Ream & Garza)
Steven Siebert San Antonio Water System
John Winkler Consultant (Walker Partners)
Crockett Camp Consultant
Bill Klemt Consultant
Amber Briggs Beard General Manager (SSLGC)
Angie Kleinschmidt Office Administrator (SSLGC)
The first order of business was to Call the Meeting to Order
President Dwyer called the meeting to order at 1:31 PM
The second order of business was Public Comment
Mrs. Beard introduced the new SSLGC Operations Manager, Trino Pedraza.
The third order of business was the Approval of Minutes for the meeting held January 19, 2019
Treasurer Greenwald made a motion to approve the January 19, 2019 meeting minutes.
President Dwyer seconded Upon a vote being called, the motion carried by unanimous
decision.
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The fourth order of business was Presentation of the General Manager’s Report – Amber Beard,
General Manager
Water Production
Seasonal pumping and monthly water sales charts were provided during the board meeting. Water
production for the month of January was 51.7% of the Gonzales County Underground Water
Conservation District’s (GCUWCD) monthly allowable.
GCUWCD
Monthly Meeting
The monthly meeting was held February 12, 2019. A copy of the agenda was included in the board
packet. The next meeting is scheduled for March 12th
GCGCD
Monthly Meeting
The last monthly meeting was held February 14th. The board of directors removed the interim title from
Kelley Vickers named her the new General Manager. The next month’s meeting will be March 14th.
Region L
The last Region L meeting was January 31, 2019. The meeting agenda is included in your board packet.
The identification and evaluation of potential water management strategies continues for the 2021 South
Central Texas Regional Water Plan. The following SSLGC projects are in the draft plan:
SSLGC Expanded Carrizo Project (Guadalupe): SSLGC owns and operates a Carrizo Aquifer well field in
Gonzales county with approximately 17,000 acft/yr of supply. This strategy is the expansion of that
Carrizo Aquifer supply by an additional 6,000 acft/yr of Carrizo-Wilcox Aquifer groundwater from
Guadalupe County within the 2020 decade. The strategy will include documentation of SSLGC’s latest
plans, evaluation of the groundwater supply available to the project in accordance with the MAG,
assessment of the environmental impacts of the project, estimate of cost to develop the water supply,
and documentation of the implementation issues. This information will be summarized in a Water
Management Strategy evaluation.
SSLGC Brackish Wilcox Project (Gonzales): SSLGC owns and operates a Carrizo Aquifer well field in
Gonzales County with approximately 17,000 acft/yr of supply. This strategy is the expansion of that
Carrizo Aquifer supply by adding 5,000 acft/yf of treated brackish groundwater from the Carrizo-
Wilcox Aquifer in Gonzales County within the 2030 decade. The strategy will include documentation
of SSLGC’s latest plans, evaluation of the groundwater supply available to the project in accordance
with the MAG, assessment of the environmental impacts of the project, estimate of cost to develop the
water supply, and documentation of the implementation issues. This information will be summarized
in a Water Management Strategy evaluation.
The next meeting will be held May 2, 2019.
GMA 13
The last GMA 13 meeting was February 1, 2019. The meeting agenda is included in your board packet.
The next meeting is scheduled for May 3rd
CVLGC
The next meeting is scheduled for February 28, 2019.
Operations Report
Mrs. Beard went over the operations report.
The fifth order of business was Presentation of Treasurer’s Report – Susan Caddell, Finance
Director & Amber Beard, Assistant General Manager
a. Financial statements for the quarter ending December 31, 2018
Included in the board packet were the financial reports for the end of the fourth quarter, December 31,
2018. The first two pages are the balance sheets for all the SSLGC funds. The two pages following the
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balance sheet are the income statements for all the SSLGC funds. Finally, following those statements are the
balance sheet and income statement for the SAWS funds. Behind those, you will find the comparative
statement for the SSLGC Operating Fund as well as the working capital chart.
Mrs. Caddell first reviewed the balance sheet for the SSLGC funds. The first column is for the
Operating Fund. This fund consists of cash and investments of $4,849,611.39 The second column was
for the balance of the SWIFT funds. Mrs. Caddell noted that in October, additional escrow funds were
released in the amount of $5,520,000. Once received those funds, the Future Development Fund was
reimbursed in the amount of $1,153,000 and the remaining was placed into Texas Class Investment
Pool. The cash and investment balance in this fund is $4,024,538.21. Also mentioned was notification
that the amounts are still held in escrow for the SWIRFT Funds totaling $61,374,339.78. The third
column is for the Interest and Sinking Fund. The cash and investment balance in this fund is
$3,061,259.07 with receivables of $1,180,967.76. The first bond payment has been made at the
beginning of February and will be reflected in the next quarterly report. The fourth column was for the
Repair and Replacement Fund. The cash and investment balance is now $6,703,354.65. The fifth
column was for the Future Development Fund. The cash and investment balance is $3,176,422.08. As
explained by Mrs. Caddell, this fund now has been reimbursed fully from the SWIRFT funds. The sixth
column was for the Impact Fund. The cash and investment balance in this fund is $5,942,210.61. The
seventh column is for the Reserve Fund. The required amount to maintain in the Reserve Fund
according to bond covenants is $1,275,621.10. The cash and investment balance in this fund is
$1,324,399.59. The eighth column is the 2010 Bond Fund. The cash and investment balance in this
fund is $240,205.23. The ninth column was for the Rate Stabilization Fund. The cash and investment
balance in this fund is $833,121.03. This fund has been established to provide funds in order to prepare
for volatile periods, which can greatly affect the rates the customers pay.
Mrs. Caddell reviewed the income statement for the SSLGC funds. The first column was the Operating
Fund. The net income before transfers is $461,087.03. After the budgeted transfers to the Repair and
Replacement Fund and the Future Development Fund, the net income is $123,587.03. The second
column was income statement for the SWIFT funds. The only expenditures to date are for legal services
in relation to the bond funds, right-of-way acquisition services and preliminary engineering. The third
column was I&S Fund. The expenditures in this fund was an interest payment that was made in
conjunction with the refunding of the 2010 Revenue Bond. The fourth column is for the Repair and
Replacement Fund. The expenditures which have occurred in this fund are the Cathodic Protection –
Phase II. The fifth column is the Future Development Fund. The sixth column is the Impact Fund.
The eighth column is for the 2010 Bond Fund. Finally, the ninth column is interest earnings in the Rate
Stabilization Fund. The total column indicates net income of $3,134,254.39
As indicated earlier, the reports following the SSLGC Fund reports are those for the SAWS I&S Fund.
Also included in the board packet was the Comparative Income Statement for the Operating Fund
towards the back of the report. Revenue has decreased by $401,506.98 with the largest being sales to
SAWS of $283,945.32 Along with this decrease, consumption has decreased for the Cities of Schertz,
Seguin and Selma. Expenditures have decreased by $75,106.75, with the largest decreased being in
professional services in the amount of $61,192.68. The costs from the Landfill Opposition account
lowered by $48,062.29 from this time last year. Our net income before transfers decreased from last
year by $326,400.23.
Finally, the working capital trend chart was enclosed. Working capital has increased since September
30, 2018, by $8,333,704. As mentioned earlier, $5,520,000 in SWIRFT funds were released. This factor,
along with receiving the income from bond payments to be made in February, also caused the increase.
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Assistant Secretary Dodgen made a motion to approve SSLGC’S financial statements for the
quarter ending December 31, 2018. Treasurer Greenwalkd seconded. Upon a vote being called
the motion carried by unanimous decision.
b. Investment report for the quarter ending September 30, 2018
Mrs. Caddell presented the Investment Report for October 1, 2018 through December 31, 2018.
Interest earnings for the quarter ended December 31, 2018 were $100,611.00.
Assistant Secretary Dodgen made a motion to approve SSLGC’S investment report for the
quarter ending December 31, 2018. Vice- President Kelm seconded. Upon a vote being called
the motion carried by unanimous decision.
The sixth order of business was Water Level Measurements – Bill Klemt, Consultant
Mr. Klemt provided a water level measurement report basted on the latest measurements.
The seventh order of business was Approve Contract for Well #10 – Amber Beard, General
Manager
Resolution # SSLGC R19-01 – Well #10
Mrs. Beard advised the board that 5 (five) proposals were received to repair Well #10. With engineer
recommendation, contract will be awarded to Weisinger Incorporated in the amount of $86,720.00
Treasurer Ken Greenwald made a motion to approve Resolution # SSLGC R19-01 to Weisinger
Incorporated in the amount of $86,720. Assistant Secretary Dodgen seconded. Upon a vote
being called the motion carried by unanimous decision.
The eighth order of business was approve annual contract renewal letter for Chlorine from
Brenntag Southwest – Amber Beard, General Manager
Annual increase of 3.75% was projected.
President Dwyer made a motion to approve annual contract renewal for Chlorine with Brenntag
Southwest. Secretary Reiley seconded. Upon a vote being called the motion carried by
unanimous decision.
The ninth order of business was Construction Update – John Winkler, Walker Partners and
Amber Beard, General Manager.
BPS Storage Tank Leak: SSLGC staff noticed what appeared to be additional tears in the liner
while cleaning the interior of the tank to bring it back into service. An update will be provided
at the board meeting.
Venado Crossing Subdivision: A drainage feature over our existing pipeline is required for this
development. Timing of this construction has not yet been established.
Cathodic Protection Phase II: The contractor is currently working near FM78 between Marion
and Cibolo. The contractor hit our pipeline causing a leak on January 31st requiring an
emergency repair. The leak has been repaired and the pipeline was put back into service within
24 hours. An update will be provided at the board meeting.
Potassium Permanganate Tanks- An update was provided at the board meeting.
Well 10- The bid opening for Well 10 was on February 12.
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WTP Office Complex: An update was provided at the board meeting.
The tenth order of business was Legislative Update – Billy Phenix, Legislative Consultant &
Amber Beard, General Manager
Mrs. Beard gave a brief update
The eleventh order of business was Parallel Pipeline Project Update – Brent Patterson,
Stateside ROW & Amber Beard, General Manager
Action taken
The twelfth order of business Post Oak Clean Green, Inc. (Landfill) – Patrick Lindner, General
Counsel & John Winkler, Walker Partners & Amber Beard, General Manager
No action requested/No action taken
The thirteenth order of business was Wholesale Water Contract(s) & Well Permits – Patrick
Lindner, General Counsel & Amber Beard, General Manager
No action requested/No action taken
The fourteenth order of business was Gonzales County & Guadalupe County Carrizo and
Wilcox Water Leases and Property Purchases– Amber Beard, General Manager and Crockett
Camp, Consultant
No action requested/No action taken
The fifteenth order of business was Executive Session called under Chapter 551 Government
Code, Section 551.071, to seek the advice of its attorney on legal matters, and Section 551.072,
for Deliberations Regarding Real Estate and 551.074 for Deliberations Regarding a Specific
Officer or Employee
President Dwyer closed General Session at 2:21 PM.
Executive Session was held from 2:30 PM to 3:12 PM.
The fourteenth order of business was Consider and Take Action as Result of Agenda Item
Number Thirteen
President Dwyer reopened General Session at 3:14 PM.
Agenda Item #11
Assistant Secretary Dodgen made a motion to ratify GU(II) 36 & 38 as presented. Treasurer
Greenwald seconded the motion. Upon a vote being called the motion carried by unanimous
decision.
Agenda Item #12
No action requested/No action taken
Agenda Item #13
No action requested/No action taken
Agenda Item #14
No action requested/No action taken
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The fifteenth order of business was Consideration and/or Action on Questions and Possible
Items to be placed on the Next Agenda
The next board meeting was scheduled for Thursday, March 21st, in the SSLGC
Administrative Building at 1:30PM.
Hal Baldwin Building Dedication
Audit Review
The sixteenth order of business was Adjournment
President Dwyer declared the meeting adjourned at 3:17 PM.
MINUTES APPROVED THIS 21st DAY OF MARCH 2019
__________________________________
David Reiley, Secretary
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MEMORANDUM
Date: March 15, 2019
To: SSLGC Board of Directors
From: Amber Beard, General Manager
Trino Pedraza, Operations Manager
Re: Board of Directors Meeting Memorandum
4.General Manager’s Report – Amber Beard, General Manager
a.Water Production: SSLGC’s water production for the month of February will be provided
at the board meeting.
b.Gonzales County Underground Water Conservation District: The last monthly meeting
was held March 12, 2019. A copy of the agenda is included in the board packet. The next
monthly meeting will be April 9, 2019.
c.Guadalupe County Groundwater Conservation District: The last monthly meeting was
March 14, 2019. A copy of the agenda is included in the board packet. The next monthly
meeting will be April 11, 2019.
d.Region L: The next meeting will be held May 2, 2019.
GMA 13: The last GMA 13 meeting was February 1, 2019. The meeting agenda is included
in your board packet. The next meeting is scheduled for May 3, 2019.
e.CVLGC: The last monthly meeting was January 24, 2019. A copy of the agenda is included
in your board packet. The next monthly meeting is scheduled for February 28, 2019.
5.Operations Report – Trino Pedraza, Operations Manager
The monthly operations report will be provided at the board meeting.
Briefing on issues identified
o Current work in progress reports
Future projects
6.Presentation of FY2017-2018 Audit Report – Kim Roach, Armstrong, Vaughan & Associates
Staff recommends approval.
7.Authorize the General Manager to Accept the Texas Municipal League Intergovernmental Risk
Pool Liability and Property Proposals
A memo from the City of Seguin Finance Director is included in your board packet. An update
will be provided at the board meeting.
Staff recommends approval.
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8. SSLGC Construction Update – John Winkler, Walker Partners & Trino Pedraza, Operations
Manager
BPS Storage Tank Leak: Preload completed the repairs on March 1st. The repairs require a 14 day
cure time. SSLGC staff will prepare the tank and begin filling the tank on March 18th. An update
will be provided at the board meeting.
Venado Crossing Subdivision: A drainage feature over our existing pipeline is required for this
development. Timing of this construction has not yet been established.
Cathodic Protection Phase II: The contractor is currently working near FM78 and 3009 inside of
the Lockaway Storage facility. The contractor has approximate 2 miles of pipeline remaining. An
update will be provided at the board meeting.
Potassium Permanganate Tanks- An update will be provided at the board meeting.
Well 10- An update will be provided at the board meeting.
WTP Office Complex: SSLGC advertised for RFPs in the Seguin Gazette in the Northeast Herald.
The bid opening for the WTP Office Complex will be on April 2, 2019.
9. Legislative Update – Billy Phenix, Legislative Consultant & Amber Beard, General Manager
An update will be provided at the board meeting.
10. Parallel Pipeline & Guadalupe Project Update – Amber Beard, General Manager & Brent
Patterson, Stateside Right of Way Services
An update will be provided at the board meeting.
11. Post Oak Clean Green, Inc. (Landfill) – Patrick Lindner, General Counsel & John Winkler,
Walker Partners & Amber Beard, General Manager
An update will be provided at the board meeting.
12. Wholesale Water Contract(s) & Well Permit(s) – Patrick Lindner, General Counsel & Amber
Beard, General Manager
An update will be provided at the board meeting.
13. Gonzales County & Guadalupe County Carrizo and Wilcox Water Leases and Property
Transactions– Amber Beard, General Manager
An update will be provided at the board meeting.
14. Executive Session
15. Consider and Take Action as a Result of Agenda Item #14
16. Consideration and/or Action on Questions and Possible Items to be Placed on Next Agenda
17. Adjournment
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AGENDA
GCGCD
REGULAR MEETING OF THE
GUADALUPE COUNTY GROUNDWATER
CONSERVATION DISTRICT
Thursday, March 14, 2019
4:30 P.M.
TAKE NOTICE that the Guadalupe County Groundwater Conservation District’s Board of Directors
shall hold a meeting on Thursday, March 14, 2019 at 4:30 P.M @122 W. Ireland, Seguin, Texas. All
agenda items listed below will be considered for discussion and/or action at said meeting.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
DETERMINE A QUORUM
1.Invitation of citizens or Directors to speak in advance of District’s regular business limited to 3
minutes each (items not on agenda)
2.Approve Minutes of regular meeting on February 14, 2019
3.Approve Financial Reports for February 2019
4.Review Palmer Drought Index, TWDB Drought Report and Rain Fall in GCGCD area
5.Review Production data
6.Adopt Resolution No. 03142019 re: new voting equipment for Guadalupe County
7.Discussion and Action regarding approving 2018 Managers Report
8.Discussion and Action regarding adopting Personnel Policy Manual
9.Designation of Local Government Records Management Officer in accordance with 13 TAC
§7.125(a)(1)
10.REPORTS
A.Kelley Vickers: GCGCD Report
B.Hydrologist (William Klemt)
C.CRWA Wells Ranch
D.SSLGC & CVLGC
E.SHWSC Mesa Trails Well Field
F.CCSUD
11.Frederick, Perales, Allmon & Rockwell, P.C. - Update on POCG (Conference Call)
12.Discussion and Action regarding salary/benefits for the General Manager
13.ADJOURNMENT
NOTE: The Board reserves the right to retire into executive session concerning any of the items listed on this Agenda whenever it is considered necessary and legally justified under the Opens Meeting Act (Chapter 551 of the Texas Government Code). POSTED ON WEB SITE www.gcgcd.org Date of Posting: March 11, 2019 12:00 PM By: Kelley Vickers
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AGENDA
February 28, 2019
The Cibolo Valley Local Government Corporation will meet on Thursday, February 28, 2019 at 9:00
AM in the Council Chambers of the City of Cibolo located at 200 South Main, Cibolo, Texas. All
agenda items listed below will be considered for discussion and/or action at said meeting.
1.Call to Order
2.Pledge of Allegiance
3.Public Comment
4.Approval of Minutes for the meeting held January 24, 2019
5.Executive Director’s Report – Amber Beard, Executive Director
a.SSLGC
b.Guadalupe County
c.Evergreen UWCD
d.Region L/GMA-13/RWA
e.Financial Reports
6.Cibolo Valley Local Government Corporation Investment Policy - Public Funds
Investment Act, Texas Government Code, Chapter 2256 –Amber Beard, Executive
Director
Resolution # CVLGC2019-01
7.Cibolo Valley Local Government Corporation’s Brokers/Dealers list –Amber Beard,
Executive Director
Resolution # CVLGC2019-02
8.Approve Work Authorization #5 HRM Land Acquisition Solutions – Amber Beard,
Executive Director
9.Consider and Possible Action on a Resolution Supporting Certain Legislative Initiatives
Regarding Groundwater Production and Transportation – Amber Beard, Executive
Director
Resolution # CVLGC2019-03
10.Water Level Measurements – Bill Klemt, Consultant
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CVLGC AGENDA 02-28-2019
11. Legislative Update – Billy Phenix, Legislative Consultant & Amber Beard, Executive
Director
12. Executive Session: Called under Chapter 551 Government Code, Section 551.071, to
seek the advice of its attorney on legal matters, Section 551.072, for deliberations
regarding real estate
13. Review and Discuss CVLGC Business Plan – Amber Beard, Executive Director
Executive Session Recommended
14. Location/Update Acquisition of Potential Well Site - Amber Beard, Executive
Director & Mr. Rene Moulinet, Jr., HRM Land Acquisitions
Executive Session Recommended
15. Consider and Take Action as a Result of Agenda Item # 12
16. Consideration and/or Action on questions and possible items to be placed on the next
agenda
17. Adjournment
The listing of an agenda item as a matter to be discussed in open session is not intended to limit or require discussion of that matter in
open session if it is otherwise appropriate to discuss the matter in executive session, such as consultation with its attorneys (Tex.
Gov’t Code, section 551.071), deliberations regarding real estate (Tex. Gov’t Code, section 551.072), deliberations regarding a specific
officer or employee (Section 551.074), deliberations regarding security (Tex. Gov’t Code, section 551.076), and information relating to
risk or vulnerability assessment (Tex. Gov’t Code, section 418.183(f)). If, during the discussion of any agenda item, a matter is raised
that is appropriate for discussion in executive session the Board may, as permitted by law, adjourn into executive session to deliberate
on the matter. The posting of an agenda item as a matter to be discussed in executive session is not intended to limit or require
discussion of that matter in executive session. The Board may discuss in open session any matter for which notice has been given in
this notice of open meeting, including an agenda item posted for executive session. In no event, however, will the Board take action
on any agenda item in executive session, whether it be posted for open or executive session discussion.
Communication with Those Charged with Governance
To the Chairman and Board of Directors
Schertz/Seguin Local Government Corporation
We have audited the basic financial statements of the Schertz/Seguin Local Government Corporation, as of
and for the years ended September 30, 2018 and 2017, and have issued our report thereon dated
February 26, 2019. Professional standards require that we advise you of the following matters relating to
our audit.
Our Responsibility under Generally Accepted Auditing Standards
As communicated in our engagement letter dated August 9, 2018, our responsibility, as described by
professional standards, is to plan and perform our audit to form and express an opinion about whether the
financial statements that have been prepared by management with your oversight are presented fairly, in all
material respects, in conformity with accounting principles generally accepted in the United States of
America. Our audit of the financial statements does not relieve you or management of your respective
responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial
reporting. Accordingly, as part of our audit, we considered the internal control of Schertz/Seguin Local
Government Corporation solely for the purpose of determining our audit procedures and not to provide any
assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to
communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.
Compliance with All Ethical Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant
ethical requirements regarding independence.
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Qualitative Aspects of the Entity’s Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the
significant accounting policies adopted by Schertz/Seguin Local Government Corporation is included in
Note A to the financial statements. As described in Note A to the financial statements, No new
accounting policies were adopted and the application of existing policies was not changed during 2018.
No matters have come to our attention that would require us, under professional standards, to inform you
about (1) the methods used to account for significant unusual transactions and (2) the effect of significant
accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance
or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s current judgments. Those judgments are normally based on knowledge and
experience about past and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the financial statements and because of
the possibility that future events affecting them may differ markedly from management’s current
judgments.
The most sensitive accounting estimate affecting the financial statements is the estimated useful life of the
water utility system and its components.
The useful lives of the depreciable assets are based on past history, engineering estimates, and industry
standards. We evaluated the key factors and assumptions used to develop this estimate and determined
that it is reasonable in relation to the financial statements taken as a whole.
Significant Difficulties Encountered during the Audit
We encountered no difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely
misstatements identified during the audit, other than those that we believe are trivial, and communicate
them to the appropriate level of management. Further, professional standards require us to also
communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of
transactions, account balances or disclosures, and the financial statements as a whole and each applicable
opinion unit. The effect of the following uncorrected financial statement misstatements in the current and
prior periods, as determined by management, are immaterial, both individually and in the aggregate, to
the financial statements taken as a whole and each applicable opinion unit:
Expenses were understated by $31,284 as vacation accruals are not billed as part of the Management
Services Agreement until paid.
Construction in Progress was understated by $23,580 related to easement purchases that was not
accrued as of year-end.
Impact Fee Revenues were understated by $26,502 due to correction of a prior year accrual.
3
In addition, professional standards require us to communicate to you all material, corrected misstatements
that were brought to the attention of management as a result of our audit procedures. None of the
misstatements detected as a result of audit procedures and corrected by management were material, either
individually or in the aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditor's report. We are pleased to report that no
such disagreements arose during the course of our audit.
Representations Requested from Management
We have requested certain representations from management that are included in the management
representation letter dated February 26, 2019.
Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters. Management informed us that, and to our knowledge, there were no consultations with other
accountants regarding auditing and accounting matters.
Public Funds Investment Act
In accordance with the Public Funds Investment Act, we have performed a review of the Corporation’s
compliance with the requirements of the Act. We found that the Corporation was in compliance with all
material respects with the provisions of the Act.
Other Significant Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the Corporation’s auditors.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
With respect to the required supplementary information accompanying the financial statements, we made
certain inquiries of management and evaluated the form, content, and methods of preparing the
information to determine that the information complies with accounting principles generally accepted in
the United States of America, the method of preparing it has not changed from the prior period, and the
information is appropriate and complete in relation to our audit of the financial statements. We compared
and reconciled the supplementary information to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
This information is intended solely for the use of Board of Directors and management and is not intended
to be and should not be used by anyone other than these specified parties.
It has been our pleasure to provide these services to the Schertz/Seguin Local Government Corporation.
We urge you to contact us is we can be of further assistance.
4
Very truly yours,
Armstrong, Vaughan & Associates, PC
February 26, 2019
SCHERTZ/SEGUIN
LOCAL GOVERNMENT CORPORATION
ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2018 and 2017
i
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
CORPORATE OFFICIALS
SEPTEMBER 30, 2018
PRESIDENT.......................................................................................................................ROBIN DWYER
VICE-PRESIDENT ........................................................................................TIMOTHY “JAKE” JACOBS
SECRETARY .....................................................................................................................DAVID REILEY
ASSISTANT SECRETARY.............................................................................................CHARLES KELM
DIRECTOR...................................................................................................................KEN GREENWALD
GENERAL MANAGER.....................................................................................AMBER BRIGGS BEARD
ii
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2018
INTRODUCTORY SECTION
PAGE
Corporate Officials.........................................................................................................................................i
Table of Contents ..........................................................................................................................................ii
FINANCIAL SECTION
Independent Auditor’s Report.......................................................................................................................1
Management’s Discussion and Analysis.......................................................................................................3
Basic Financial Statements ...........................................................................................................................8
Comparative Statements of Net Position ....................................................................................................9
Comparative Statements of Revenues, Expenses and Changes in Net Position .......................................11
Comparative Statements of Cash Flows ...................................................................................................12
Notes to Financial Statements...................................................................................................................14
1
INDEPENDENT AUDITOR’S REPORT
Members of the Board of Directors
Schertz/Seguin Local Government Corporation
Report on the Financial Statements
We have audited the accompanying financial statements of the Schertz/Seguin Local Government
Corporation as of and for the years ended September 30, 2018 and 2017,and the related notes to the
financial statements, which collectively comprise the Schertz/Seguin Local Government Corporation’s
basic financial statements as listed in the Table of Contents.
Management’s Responsibility for the Financial Statements
Schertz/Seguin Local Government Corporation’s management is responsible for the preparation and fair
presentation of these financial statements in accordance with accounting principles generally accepted in
the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these basic financial 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 free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Schertz/Seguin Local Government Corporation, as of September 30, 2018 and
2017, and the changes in its financial position and its cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
2
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management’s
discussion and analysis on pages 3 through 7 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management regarding the methods of preparing the information and comparing the information for
consistency with management’s response to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Armstrong, Vaughan & Associates, P.C.
February 26, 2019
3
MANAGEMENT’S DISCUSSION AND ANALYSIS
Our discussion and analysis of the Schertz/Seguin Local Government Corporation’s financial
performance provide an overview of the Corporation’s financial activities for the fiscal year ended
September 30, 2018. Please read it in conjunction with the Corporation’s financial statements.
HIGHLIGHTS
Financial Highlights
The Corporation’s net position was $21.0 million at September 30, 2018.
Total operating revenues were $18.4 million, while total operating expenses were $9.7 million.
Corporation Highlights
The Corporation currently owns approximately 4,361 acres of land and leases water rights to
another 15,147 acres in Gonzales County where the wells and treatment plant are located.
SSLGC is permitted to produce 19,362 acre-feet of water per year from twelve wells.
The Corporation currently owns approximately 1,494 acres of land and leases water rights to
another 12,511 acres in Guadalupe County. SSLGC is permitted to produce for a total of
4,032.52 acre feet of water per year from the Carrizo aquifer and 1,290.4 acre feet from the
Wilcox aquifer.
USING THIS ANNUAL REPORT
This annual report consists of two parts:Management’s Discussion and Analysis and Financial
Statements. The financial statements also include notes that explain in more detail some of the
information in the financial statements.
Required financial statements
The Financial Statements of the Corporation report information about the Corporation using accounting
methods similar to those used by private sector companies. These statements offer short-and long-term
financial information about its activities. The Statement of Net Position includes all of the Corporation’s
assets, deferred outflows of resources, deferred inflows of resources, and liabilities and provides
information about the nature and amounts of investments in resources (assets) and obligations to creditors
(liabilities). It also provides the basis for computing rate of return, evaluating the capital structure of the
Corporation and assessing the liquidity and financial flexibility of the Corporation. All of the current
year’s revenues and expenses are accounted for in the Statement of Revenues, Expenses, and Changes in
Net Position. This statement measures the success of the Corporation’s operations over the past year and
can be used to determine whether the Corporation has successfully recovered all its costs through its user
fees and other charges, profitability, and credit worthiness. The final required financial statement is the
Statement of Cash Flows. The primary purpose of this statement is to provide information about the
Corporation’s cash receipts and cash payments during the reporting period. The statement reports cash
receipts, cash payments, and net changes in cash resulting from operations as “from where did the cash
come? “for what was cash used?’ and “what was the change in cash balance during the reporting period?’
4
FINANCIAL ANALYSIS OF THE CORPORATION AS A WHOLE
One of the most important questions asked about the Corporation’s finances is “Is the Corporation, as a
whole, better off or worse off as a result of the year’s activities?” The Statement of Net Position and the
Statement of Revenues, Expenses and Changes in Net Position report information about the Corporation’s
activities in a way that will help answer this question. These two statements report the net position of the
Corporation and changes in them. You can think of the Corporation’s net position—the difference
between assets, deferred outflows of resources, deferred inflows of resources,and liabilities—as one way
to measure financial health or financial position. Over time, increases or decreases in the Corporation’s
net position is one indicator of whether its financial health is improving or deteriorating. However, you
will need to also consider other non-financial factors such as changes in economic conditions, population
growth, and new or changed legislation.
The Corporation’s total net position is $21.0 million. Our analysis below focuses on the Corporation’s
net position (Table 1) and changes in net position (Table 2) during the year.
2018 2017 2016
Current Assets 17,184,732$ 15,279,192$ 13,527,427$
Restricted Assets 76,029,551 73,947,779 7,359,879
Net Property, Plant & Equipment 93,336,414 95,008,923 95,187,724
Other Assets 7,597 28,653 108,809
TOTAL ASSETS 186,558,294 184,264,547 116,183,839
Deferred Charge on Refunding 2,277,401 2,412,138 2,546,875
TOTAL DEFERRED OUTFLOWS 2,277,401 2,412,138 2,546,875
Current Liabilities 6,656,284 5,522,205 4,858,647
Revenue Bonds Payable 161,215,523 164,983,651 100,976,449
TOTAL LIABILITIES 167,871,807 170,505,856 105,835,096
Net Investment in Capital Assets (2,296,656) (1,956,872) (2,288,897)
Restricted 7,559,142 6,255,257 5,364,082
Unrestricted 15,701,402 11,872,444 9,820,433
TOTAL NET POSITION 20,963,888$ 16,170,829$ 12,895,618$
Schertz-Seguin Local Government Corporation's
Table 1
Net Position
Net Income before contributions was $4.8 million.
Changes in the Corporation’s net position can be determined by reviewing the following condensed
Statement of Revenue, Expenses, and Changes in Net Position for the year.
5
2018 2017 2016
Total Operating Revenues 18,447,823$ 17,668,511$ 16,010,417$
Interest Income 1,190,130 772,494 85,829
TOTAL REVENUES 19,637,953 18,441,005 16,096,246
Total Operating Expenses 9,684,983 9,119,651 9,304,597
Interest Expense & Fiscal Agent Fees 5,201,020 5,131,266 4,313,689
Other Nonoperating Expenses (41,109) 914,877 -
TOTAL EXPENSES 14,844,894 15,165,794 13,618,286
Net Income (Loss)4,793,059 3,275,211 2,477,960
Net Position at Beginning of Year 16,170,829 12,895,618 10,417,658
TOTAL NET POSITION 20,963,888$ 16,170,829$ 12,895,618$
Net Position
Changes in Schertz-Se guin Local Governme nt Corporation's
Table 2
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of Fiscal year 2018, the Corporation had $93.3 million, net of depreciation, invested in capital
assets, including water treatment plants, water transmission and distribution mains, water storage
facilities, pump stations as well as land. This is a decrease of $1.7 million due to current depreciation in
excess of current year additions. Several projects are still ongoing resulting in a balance of Projects in
Progress of $6.3 million. Accumulated Depreciation increased by $2.4 million.
2018 2017 2016
Land 15,349,657$ 15,471,540$ 15,471,540$
Water Distribution System 92,511,668 91,067,482 91,067,482
Buildings and Improvements 943,377 943,377 935,492
Equipment and Vehic les 608,891 608,891 549,266
Accumulated Depreciation (22,414,736) (19,969,980) (17,555,328)
86,998,857 88,121,310 90,468,452
Projects in Progress 6,337,557 6,887,613 4,719,272
Net Property, Plant & Equipment 93,336,414$ 95,008,923$ 95,187,724$
Schertz-Seguin Local Government Corporation's Assets
Table 3
6
Bond Ratings
The Corporation’s
bonds presently carry
“AAA” ratings with
underlying ratings as
follows: Fitch “AA-”
and Standard &
Poors “A-“.
Long Term Debt
At year-end, the Corporation had a total of $163.0 million bonds outstanding as compared to $165.4
million the previous year. No new bonds were issued during the current year.
2018 2017 2016
Bonds Payable 163,030,000$ 165,440,000$ 101,245,000$
Total Bonds Payable 163,030,000$ 165,440,000$ 101,245,000$
Table 4
Schertz-Se guin Local Government Corporation's
Long-Term Debt
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The Corporation has secured SWIFT funding in the amount of $66,500,000 for its current
expansion project that includes the Guadalupe project and a parallel pipeline from the booster
pump station in Seguin to the terminus in Schertz. The Corporation owns property in Guadalupe
County that includes well sites, a treatment plant site and one existing Carrizo well. Permits for
production of groundwater from the Carrizo-Wilcox aquifer have been issued by the local
groundwater conservation district. The Corporation is currently acquiring the additional
easements for the parallel pipeline. The design phase is scheduled to be completed in 2020.
Construction of this project is projected to begin in 2020 with completion in 2022.
Phase one of the cathodic protection project is complete providing adequate coverage for the 42
inch and 30 inch pipeline segments from the water treatment plant to the City of Seguin. The
second stage for the 36 inch pipeline from Seguin to Schertz is under construction.
Removal of obsolete chemical tanks at water treatment plant one has been completed along with
the installation of additional doors to provide improved access to the original building.
Evaluation is under way to determine the best utilization of that space.
The Corporation plans to construct a Water Treatment Plant Office beginning with a request for
bids in April 2019.
CONTACTING THE CORPORATION’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, customers, and creditors with a general overview
of the Corporation’s finances and to demonstrate the Corporation’s accountability for the money it
receives. If you have questions about this report or need additional financial information, contact the
Schertz-Seguin Local Government Corporation, General Manager, P. O. Box 833, Seguin, Texas
78156-0833.
7
BASIC FINANCIAL STATEMENTS
The accompanying notes are an integral part of these statements.
8
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
COMPARATIVE STATEMENTS OF NET POSITION
SEPTEMBER 30, 2018 AND 2017
2018 2017
ASSETS
Current Assets:
Cash and Cash Equivalents 15,434,928$ 13,198,159$
Accounts Receivable 1,638,090 1,859,907
Other Receivables 48,699 158,111
Inventory 63,015 63,015
Total Current Assets 17,184,732 15,279,192
Restricted Assets:
Cash and Cash Equivalents 76,029,551 73,947,779
Total Restricted Assets 76,029,551 73,947,779
Property, Plant & Equipment:
Land 15,349,657 15,471,540
Water Distribution System 92,511,668 91,067,482
Buildings & Improvements 943,377 943,377
Equipment & Vehicles 608,891 608,891
Projects in Progress 6,337,557 6,887,613
Accumulated Depreciation (22,414,736) (19,969,980)
Net Property, Plant & Equipment 93,336,414 95,008,923
Other Assets:
Lease Acquisition Costs (Net of Amortization of
$846,397 and $825,341)7,597 28,653
Total Other Assets 7,597 28,653
Total Assets 186,558,294 184,264,547
DEFERRED OUTFLOWS OF RESOURCES
Deferred Charge on Refunding 2,277,401 2,412,138
Total Defe rre d Outflows of Resources 2,277,401$ 2,412,138$
The accompanying notes are an integral part of these statements.
9
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
COMPARATIVE STATEMENTS OF NET POSITION (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
LIABILITIES 2018 2017
Current Liabilities:
Accounts Payable - Trade 2,048,151$ 1,969,279$
Accounts Payable - Construction Projects - 91,235
Accrued Interest Payable 856,981 861,197
Unearned Revenue 66,152 190,494
Current Portion of Revenue Bonds 3,685,000 2,410,000
Total Current Liabilities 6,656,284 5,522,205
Revenue Bonds Payable (Less Current Maturities and
Net of Unamortized Discounts and Premiums)161,215,523 164,983,651
Total Liabilities 167,871,807 170,505,856
NET POSITION
Net Investment in Capital Assets (2,296,656) (1,956,872)
Restricted:
Debt Servic e 1,240,116 882,168
Repairs and Replacement 500,000 500,000
Impact Fees 5,819,026 4,873,089
Unrestricted 15,701,402 11,872,444
Total Net Position 20,963,888$ 16,170,829$
The accompanying notes are an integral part of these statements.
10
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
YEARS ENDED SEPTEMBER 30, 2018 AND 2017
2018 2017
Operating Revenue
Water Usage Fees 17,168,285$ 16,415,653$
Rents, Royalties & Leases 133,668 76,975
Impact Fees 883,005 849,289
Management Services Provided 120,456 121,823
Miscellaneous Fees 142,409 204,771
Total Operating Revenue s 18,447,823 17,668,511
Operating Expenses
Operations & Maintenance:
Personnel Costs 1,127,255 981,171
Professional Services 379,430 267,438
Technical Services 371,865 368,381
Utilities 1,805,388 1,668,305
Repairs and Maintenance 408,379 295,016
General Supplies 513,840 505,013
Insurance 63,912 46,000
Other Operating Costs 69,213 56,949
Total Operations & Maintenance 4,739,282 4,188,273
Other Operating Expenses:
Amortization of Lease Acquisition Costs 21,056 80,156
Annual Lease Payments - Water Rights 2,479,889 2,414,771
Depreciation 2,444,756 2,436,451
Total Other Operating Expenses 4,945,701 4,931,378
Total Operating Expenses 9,684,983 9,119,651
Operating Income (Loss)8,762,840 8,548,860
Nonoperating Revenues (Expe nses):
Interest Income 1,190,130 772,494
Gain on Sale of Assets 41,109 1,414
Interest Expense and Fiscal Fees (5,201,020) (5,131,266)
Bond Issuance Costs - (916,291)
Total Nonoperating Revenues (Expenses)(3,969,781) (5,273,649)
Change in Net Position 4,793,059 3,275,211
Net Position - Beginning of Year 16,170,829 12,895,618
Net Position - End of Year 20,963,888$ 16,170,829$
The accompanying notes are an integral part of these statements.
11
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
COMPARATIVE STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2018 AND 2017
2018 2017
Cash Flows From Operating Activities
Cash Received From Customers 18,654,710$ 17,230,873$
Cash Paid to Suppliers (7,140,299) (6,405,704)
Net Cash Provide d (Used) by Operating Activities 11,514,411 10,825,169
Cash Flows From Capital and Relate d
Financing Activities
Payments Toward Projects in Progress (952,182) (2,137,607)
Purchase of Building & Improvements (33,183) (7,885)
Purchase of Equipment and Vehic les - (81,424)
Proceeds from Sale of Assets 162,992 1,414
Proceeds from Contract Revenue Bonds - 65,583,709
Bond Interest and Fiscal Fees Paid (5,153,627) (4,925,047)
Bond Principal Payment (2,410,000) (2,305,000)
Net Cash Provide d (Used) by Capital and Relate d
Financing Activities (8,386,000) 56,128,160
Cash Flows From Investing Activities
Interest Received 1,190,130 772,494
Net Cash Provide d (Used) by Investing Activities 1,190,130 772,494
Net Increase (Decrease) In Cash and
Cash Equivalents 4,318,541 67,725,823
Cash and Cash Equivalents at Beginning of Period 87,145,938 19,420,115
Cash and Cash Equivalents at End of Period 91,464,479$ 87,145,938$
Cash and Cash Equivalents as Reported on Balance Sheet:
Cash and Cash Equivalents 15,434,928$ 13,198,159$
Restricted Cash and Cash Equivalents 76,029,551 73,947,779
91,464,479$ 87,145,938$
The accompanying notes are an integral part of these statements.
12
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
COMPARATIVE STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 2018 AND 2017
2018 2017
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating Income (Loss)8,762,840$ 8,548,860$
Adjustments to Reconcile Operating Income (Loss) to Net Cash
Provided by Operating Activitie s:
Amortization of Lease Acquisition Costs 21,056 80,156
Depreciation 2,444,756 2,436,451
(Increase) Decrease in Accounts Receivable 221,817 (495,572)
(Increase) Decrease in Other Receivables 109,412 (131,960)
(Increase) Decrease in Inventory - 13,690
Increase (Decrease) in Accounts Payable 78,872 183,650
Increase (Decrease) in Unearned Revenue (124,342) 189,894
Net Cash Provide d (Used) by Operating Activities 11,514,411$ 10,825,169$
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Historical Cost of Equipment Disposed -$ 21,799$
Accumulated Depreciation - (21,799)
Net Book Value -$ -$
13
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2018 AND 2017
NOTE A --SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.Financial Reporting Entity
The Schertz/Seguin Local Government Corporation was incorporated December 23,1998 pursuant to the
provisions of the Texas Transportation Corporation Act and the Texas Local Government Code. The
Corporation was organized to aid, assist, and act on behalf of the Cities of Schertz and Seguin,
collectively, in acquiring, constructing, improving or extending, and maintaining and operating a water
utility system for public use.
The Corporation meets the criteria of a joint venture between the cities of Schertz and Seguin with an
ongoing financial responsibility. The Cities have pledged revenues from existing water utility systems to
finance the operations and long-term debt of the Corporation, either through purchasing water from the
Corporation or subsidizing through direct payments (reflected as “Contributions from Participating
Governments”). The Corporation continues to actively pursue the development of alternate water
sources.
The financial statements of the Corporation have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to government units. The Government Accounting Standards
Board (GASB) is the accepted standard-setting body for establishing governmental accounting and
financial reporting principles.
2.Enterprise Fund
The Corporation is an enterprise fund. Enterprise funds are proprietary funds used to account for
business-type activities provided to the general public. The activities are financed primarily by user
charges and the measurement of financial activity focuses on net income measurement similar to the
private sector.
3.Basis of Accounting
The statements are presented on a flow of economic resources measurement focus. With this
measurement focus, all assets and all liabilities associated with the operation of these funds are included
on the balance sheet. Operating statements present increases (e.g., revenues) and decreases (e.g.,
expenses) in net total assets. The accrual basis of accounting is used whereby revenues are recorded
when earned and expenses are recorded at the time liabilities are incurred.
4.Cash and Cash Equivalents
Cash and cash equivalents include cash deposits and investments with a maturity date within three
(3) months of the date acquired by the Corporation. Cash and cash equivalents also include investments
in local government pools because the pools seek to maintain a $1 per share value and average dollar
weighted maturity of not more than 90 days (see also Note A-5).
14
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE A --SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.Investments
Investments consist of certificates of deposit; investments in TexPool and MBIA Asset Management
Group (public funds investment pools); and obligations of the U.S. government and its agencies.
Investments are recorded at fair value, except for short-term (one year or less to maturity at time of
purchase) participating interest-earning investment contracts which are reported at amortized cost. In
addition, non-participating contracts (such as nonnegotiable certificates of deposit) are reported at
amortized cost.
Following Statement No. 72, “Fair Value Measurement and Application,” the Corporation categorizes its
fair value measurements within the hierarchy established by generally accepted accounting principles.
The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs
are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable
inputs; and Level 3 inputs are significant unobservable inputs.
Public funds investment pools in Texas are established under the authority of the Interlocal Cooperation
Act, Chapter 791 of the Texas Government Code, and are subject to the provisions of the Public Funds
Investment Act, Chapter 2256 of the Texas Government Code. In addition to the 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 value of its
shares.
6.Accounts Receivable
Accounts receivable consists of amounts due from member entities and customers. Management
considers all outstanding amounts to be collectible and has not recorded an allowance for doubtful
accounts.
7.Inventory
Inventory of replacement parts for the water distribution system are valued at cost on a first-in, first-out
basis.
8.Restricted Assets
Certain proceeds of bonds, as well as certain resources set aside for their repayment, are classified as
restricted assets on the balance sheet because their use is limited by applicable bond covenants. Funds are
segregated to report those proceeds of revenue bond issuances that are restricted for construction. Funds
are also segregated to provide for debt service as provided under bond indenture agreements.
Part of the agreement for bond proceeds from the Texas Water Development Board required reserve
funds to be kept in a restricted bank account to serve as collateral. These funds are shown as Investments
Held in Escrow and included as Cash and Cash Equivalents under the Restricted Assets on the Statement
of Net Position.
15
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE A --SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
9.Property, Plant & Equipment
All purchased property, plant and equipment is valued at cost if purchased, and donated property is valued
at the estimated fair market value on the date received. The costs of normal maintenance and repairs that
do not add to the value of the asset or materially extend asset lives are not capitalized. Depreciation of
exhaustible plant and equipment is charged as an expense against operations when the asset is placed in
service and accumulated depreciation is reported on the balance sheet. Depreciation is provided in
amounts sufficient to relate the cost of fixed assets to operations over their estimated service lives using
the straight-line method. Estimated useful lives are as follows:
Useful Life
Fixed Asset (Years)
Utility Water System 10 - 50
Building and Improvements 40
Equipment and Vehicles 5 - 20
For the years ended September 30, 2018 and 2017, depreciation in the amount of $2,444,756 and
$2,436,451, respectively, was recognized.
10.Lease Acquisition and Lease Costs
Costs incurred to purchase or lease property for its water rights are capitalized. Those costs include
amounts paid to landowners to enter into the leases, and legal costs. The costs are being amortized over
the 10 year minimum lease term.
11.Deferred Outflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows of resources,
represents a consumption of net position that applies to a future period(s) and so will not be recognized as
an outflow of resources (expense/expenditure) until then. The Corporation only has one item that
qualifies for reporting in this category: deferred charge on refunding reported in the statement of position.
A deferred charge on refunding results from the difference in the carrying value of refunded debt and its
reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or
refunding debt.
12.Unearned Revenue
Unearned revenues arise when assets are recognized before revenue recognition criteria have been
satisfied. The Corporation does not recognize revenues for Impact Fees until a work order has been
approved. Therefore, fees received in advance of approved work orders are reflected as unearned
revenue.
13.Long-Term Obligations
Long-term obligations are reported as liabilities in the Corporation’s balance sheet. Bond premiums and
discounts are amortized over the life of the bonds. Bonds payable are reported net of the applicable bond
premium or discount.
16
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE A --SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
14.Equity Classifications
Equity is classified as net position and displayed in three components:
a.Net Investment in Capital Assets –Consists of capital assets (net of accumulated depreciation)
and lease acquisition costs (net of accumulated amortization) and reduced by the outstanding
balances of bonds (net of premiums and discounts) and short-term notes that are attributable to
the acquisition, construction or improvement of those assets. As of September 30, 2018, total
outstanding debt exceeded investment in capital assets due to annual depreciation and
amortization charges exceeding principal repayments on bonded debt in early years of debt
issuance schedules.
b.Restricted net position –Consists of net position with constraints placed on the use either by (1)
external groups such as creditors, grantors, contributors, or laws or regulations of other
governments; or (2) law through constitutional provisions or enabling legislation. Bond
covenants require a Repairs and Replacement fund be maintained and funds restricted for that
purpose. Additionally, the Impact Fee Resolution requires that fees be separated and restricted
(along with investment earnings) to finance water facilities generated by new development.
c.Unrestricted net position –All other net position that does not meet the definition of “restricted”
or “net investment in capital assets”.
15.Operating Revenues and Expenses
Operating revenues are those revenues that are generated directly from the primary activity of the
enterprise. For the Corporation, those revenues are charges for water provided to customers, and charges
for use of property. Operating expenses are the necessary costs incurred to provide the service that is the
primary activity. Revenues and expenses not meeting these definitions are reported as nonoperating.
16.Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent 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.
NOTE B --DEPOSITS AND INVESTMENTS
Various restrictions on deposits and investments are imposed by statutes. These restrictions are
summarized in the following paragraphs.
Deposits –All deposits with financial institutions must be fully collateralized. The collateral must be
held by the pledging financial institution’s trust department or equivalent. As of September 30, 2018, the
carrying amount of the Corporation’s deposits was $20,590 and the bank balance was $46,709. The bank
balance was fully collateralized.
17
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE B --DEPOSITS AND INVESTMENTS (Continued)
Investments –The Corporation is required by Government Code Chapter 2256, the Public Funds
Investment Act, to adopt, implement, and publicize an investment policy. That policy must address the
following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable
investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated
maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the
stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation
preferences for certificates of deposit.
The Public Funds Investment Act (“Act”) requires an annual audit of investment practices. Audit
procedures in this area conducted as a part of the audit of the basic financial statements disclosed that in
the areas of investment practices, management reports and establishment of appropriate policies, the
Corporation adhered to the requirements of the Act. Additionally, investment practices of the
Corporation were in accordance with local policies.
The Act determines the types of investments which are allowable for the Corporation. These include,
with certain restrictions, 1) obligations of the U.S. Treasury, U.S. agencies, and the State of Texas,
2) certificates of deposit, 3) certain municipal securities, 4) securities lending program, 5) repurchase
agreements, 6) bankers acceptances, 7) mutual funds, 8) investment pools, 9) guaranteed investment
contracts, and 10) commercial paper.
As of the end of the year (respectively), the Corporation had the following investments:
2018 2017
Investment Type Carrying Value Carrying Value
Local Government Investment Pools 15,340,654$ 19,745,833$
Federal Bonds 9,500,000 -
FIMM Govt. Portfolio - Held in Escrow 66,603,235 65,810,203
Certificates of Deposit - 1,496,000
91,443,889$ 87,052,036$
All of the Corporation’s investments are valued using prices quoted in active markets (Level 1 inputs)
except for Certificates of Deposit which are recorded at amortized cost.
Credit Risk. The Corporation’s investment policy limits investments to obligations of the United States
or its agencies and instrumentalities (maximum 95% of funds); direct obligations of the State of Texas;
obligations of states, agencies, contracts, cities, and other political subdivisions rated as to investment
quality of not less than AAA by a nationally recognized investment firm.
The Corporation may also invest up to 100% of its funds in government investment pools provided the
pool maintains a AAA rating, the pool maintains a stable asset value, and the average dollar weighted
maturity does not exceed 90 days. As of September 30, 2018, the Corporation had investments in
TexPool and MBIA Texas Class Portfolio Holdings. The escrowed funds are invested in Fidelity
Investments Money Market Government Portfolio –Class II, which also maintains a stable asset value
($1 per share) and has an average dollar weighted maturity of less than 90 days. TexPool,MBIA Texas
Class Portfolio Holdings, and FIMM Govt. Portfolio –Class II are rated AAAm by Standard and Poors.
18
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE B --DEPOSITS AND INVESTMENTS (Continued)
Custodial Credit Risk –Investments. For an investment, this is the risk that, in the event of the failure of
the counterparty, the government will not be able to recover the value of its investments or collateral
securities that are in the possession of an outside party. As of September 30, 2018, the Corporation was
not subject to custodial credit risk.
NOTE C--PROPERTY, PLANT & EQUIPMENT, AND LEASE ACQUISITION COSTS
The Corporation has acquired land and land leases for the purpose of establishing well sites and water
treatment facilities. The Corporation has acquired over 4,000 acres to date for this purpose.
Changes in Land, Equipment & Vehicles, Projects in Progress, and Lease Acquisition costs are as
follows:
Balance Balance
10/1/2017 Additions (Retirements)9/30/2018
Land and Rights of Way 15,471,540$ -$ (121,883)$ 15,349,657$
Water Distribution System 91,067,482 1,444,186 - 92,511,668
Buildings & Improvements 943,377 - - 943,377
Equipment and Vehicles 608,891 - - 608,891
Projects in Progress 6,887,613 860,947 (1,411,003) 6,337,557
Accumulated Depreciation (19,969,980) (2,444,756) - (22,414,736)
95,008,923 (139,623) (1,532,886) 93,336,414
Water Lease Acquisition Costs 853,994 - - 853,994
Less Accumulated Amortization (825,341) (21,056) - (846,397)
Total Property, Plant & Equipment and
Lease Acquisition Costs (Net)95,037,576$ (160,679)$ (1,532,886)$ 93,344,011$
Land and Rights of Way as well as Projects in Progress are not depreciated.
19
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE D --BONDS PAYABLE
Following is a summary of the Corporation’s long-term debt transactions for the year ended
September 30, 2018:
Balance (Payments)/Balance
10/1/2017 Additions Amortization 9/30/2018
Revenue Bonds, Series 2001
Original Issue $41,040,000
3.70% to 5.375%10,000,000$ -$ -$ 10,000,000$
Less Unamortized Discount (41,206) - - (41,206)
Revenue Bonds, Series 2010
Original Issue $22,140,000
3.00% to 4.75%20,275,000 - (505,000) 19,770,000
Less Unamortized Discount (180,667) - 12,988 (167,679)
Contract Revenue Bonds,
Series 2012
Original Issue $25,425,000
2.00% to 4.00%23,660,000 - (620,000) 23,040,000
Plus Unamortized Premium 187,613 - (7,817) 179,796
Revenue Refunding Bonds,
Series 2014 Original Issue
$6,275,000 2.00% to 3.5%4,680,000 - (530,000) 4,150,000
Plus Unamortized Premium 166,804 - (20,851) 145,953
Revenue Refunding Bonds,
Series 2015 Original Issue
$41,720,000 2.00% to 5.00%40,325,000 - (730,000) 39,595,000
Plus Unamortized Premium 1,821,107 - (67,448) 1,753,659
Contract Revenue Bonds,
Series 2016, TWDB SWIRFT
Original Issue $43,670,000
0.66% to 3.11%43,670,000 - (25,000) 43,645,000
Board Participation Program
Series 2016 Original Issue
$22,830,000 3.19% to 3.88%22,830,000 - - 22,830,000
167,393,651$ -$ (2,493,128)$ 164,900,523
Less Current Maturities (3,685,000)
Net Long-Term Bonds Payable 161,215,523$
20
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE D --BONDS PAYABLE (Continued)
The Corporation has issued bonds to provide funds to build, improve, extend, enlarge, and repair the
Corporation’s utility system, fund a reserve, and pay the costs of bond issuance. The bond resolution
pledges intergovernmental contract revenues from the cities of Schertz and Seguin to bondholders. Under
the intergovernmental water supply contract, the participating governments are unconditionally obligated
to pay their respective shares of annual contract revenue bond debt service as operating expenses from
their respective utility systems. The reserve fund requirement, which is average annual debt service, has
been met with the purchase of a surety bond. As additional security for the bonds, the Corporation has
established a reserve fund. The cash balance held in the reserve fund as of September 30, 2018 was
$1,316,646.
The total unamortized deferred loss on debt refunding is $2,277,401 as of September 30, 2018 and is
shown on the Statement of Net Position as a deferred outflow of resources.
The Corporation issued revenue bonds through the Board Participation Program with Texas Water
Development Board in the amount of $22,830,000 on November 1, 2016. The Corporation also issued
revenue bonds through the Texas Water Development Board SWIRFT Project Financing in the amount of
$43,670,000 on November 1, 2016. The bonds were issued to fund development of a well field and water
treatment plant known as the “Guadalupe Project” as well as develop a parallel pipeline. As of
September 30, 2018, the Corporation has drawn $350,000 of the total available. The remaining funds
after issuance costs are held in escrow by the Texas Water Development Board in the Corporation’s name
(see Note B).
Annual Requirements to amortize all long-term debt outstanding as of September 30, 2018, including
interest payments, are as follows:
Year Ending
September 30 Principal Interest Total
2019 3,685,000$ 5,071,164$ 8,756,164$
2020 3,780,000 5,145,783 8,925,783
2021 3,865,000 5,042,869 8,907,869
2022 3,985,000 5,013,058 8,998,058
2023 4,105,000 4,976,295 9,081,295
2024 - 2028 23,030,000 24,451,704 47,481,704
2029 - 2033 28,055,000 23,870,231 51,925,231
2034 - 2038 37,635,000 15,925,020 53,560,020
2039 - 2043 35,155,000 6,355,651 41,510,651
2044 - 2048 14,410,000 2,232,578 16,642,578
2049 - 2051 5,325,000 385,566 5,710,566
163,030,000$98,469,919$ 261,499,919$
Average Annual Requirements 7,924,240$
21
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE D --BONDS PAYABLE (Continued)
The Corporation also entered into a Cost Allocation Agreement, along with the Cities of Schertz and
Seguin, whereby the City of Schertz has agreed to fund 100% of the debt service for the bonds issued to
fund the Guadalupe Project in exchange for delivery of sufficient water to Schertz. The agreement
contains provisions for an annual review (with modifications as necessary), the possibility of other third-
party users, and separate rates established for water produced by the project.
NOTE E --COMMITMENTS
Leases –Water Rights
The Corporation has entered into lease agreements with various land owners for rights of development,
production, transportation, and use of ground water on the properties. In addition to incentive and
acquisition costs (see Note A-10), the leases call for annual royalty payments based upon, at a minimum,
the surface acres of the property times a royalty rate base amount ($105 -$125) adjusted for increases in
the consumer price index. The minimum term of the leases is ten years, but if the Corporation continues
the royalty payments, the leases remain in effect. Changes in maximum allowable production by the
Gonzales County Underground Conservation District may decrease the future commitment for some
leases.
Future minimum payments under the initial lease terms of the leases are as follows:
Year Ending
September 30
2019 270,679$
2020 23,519
294,198$
As of September 30, 2018, the Corporation has leased a total of 18,414 acre feet. Total estimated annual
costs of $2,318,550 are expected for the year ended September 30, 2019, assuming the leases remain in
effect beyond the initial minimum term.
Contract Commitments
The Corporation had the following outstanding contract commitments as of September 30, 2018:
Original Incurred Outstanding
Commitment to Date Commitment
Consulting 528,400$ 238,644$ 289,756$
Engineering 1,477,000 664,325 812,675
Improvements & Repairs 2,843,174 56,849 2,786,325
Totals 4,848,574$ 959,818$ 3,888,756$
22
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE E --COMMITMENTS (Continued)
Gonzales County Underground Water Conservation District Mitigation Fund
The Corporation has entered into an agreement with Gonzales County Underground Water Conservation
District (GCUWCD) effective March 16, 2010 to fund a Mitigation Fund (the “Fund”) for the purpose of
investigating and evaluating mitigation claims and implementing mitigation measures for qualifying wells
in Western Gonzales County. Contributions to the Fund are in lieu of the Corporation’s obligation to
perform its own mitigation under GCUWCD’s rules.
The Corporation’s initial fund principal is $30 per acre foot of water authorized to be produced and
transported. The initial contribution was $530,860 and was recognized in prior financial statements as
operating expenses of the system. In addition, the Corporation will pay a negotiated export fee surcharge
of $0.0175 per 1,000 gallons of water exported each calendar year, except the export fee surcharge shall
not be imposed during the initial 3-year period of the agreement while the Fund balance remains at or
above $250,000 as of each July 1st. As of July 1, 2017, the Fund balance fell below $250,000 and the
Corporation was responsible for making an additional payment in the amount of $52,098.
Monitoring Well System Construction, Operations, and Maintenance Agreement
The Corporation has entered into an agreement with Gonzales County Underground Water Conservation
District (GCUWCD) effective December 30, 2016 to fund the Corporation’s percentage of a project (the
“Project”) for the construction of new monitoring wells in Gonzales County. Contributions to the Project
are based on the number of monitoring wells that each contributing party is responsible for as determined
in the agreement.
The Corporation’s required contribution represents 21.05% of the total cost of the project and is equal to
$192,608. The total contribution will be paid in three installments related to the completion of each phase
of the Project. The second contribution related to Phase II was $60,823 and was recognized during the
year ended September 30, 2018.
San Antonio Water System Contract
The Corporation has entered into a Mutual Regional Water Supply Contract with San Antonio Water
System (SAWS) whereby SAWS intends to deliver untreated groundwater to the Corporation, and the
Corporation will deliver treated water to SAWS. The Corporation and SAWS have determined that
significant efficiencies can be achieved through the agreement.
Pursuant to the agreement, SAWS has unconditionally agreed, on a take-or-pay basis, to pay the
Corporation an amount equal to the debt service payments on the Contract Revenue Bonds, Series 2012.
The water supply contract specifies that the agreement does not create any legal or equitable interest in
the land or equipment to be purchased by the Corporation with the proceeds of the bonds. Under the
take-or-pay agreement, SAWS will make monthly payments toward the debt service regardless of
whether SAWS takes any water from the Corporation. For the year ended September 30, 2018, total
payments received from SAWS for water treatment, water purchases and debt service were $6,458,524.
23
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE F –CONTINGENCIES
Contractual Contingencies
The Corporation has entered into contracts with the cities of Selma and Universal City (referred to as
“Customers”) to provide supplemental water to those cities’ existing systems. The contracts call for
connection fees in the amount of $2,270,171 from each customer. The Corporation has agreed to provide
a conditional right to each customer of 400 acres of land with water rights in the Carrizo aquifer well field
in Gonzales County, owned by the Corporation. At the election of the Corporation, or in the event the
Corporation dissolves, the title to 400 acres will be transferred to the customer. The Corporation’s
contingent commitment does not restrict the Corporation’s right to buy and sell real estate as long as the
Corporation’s holdings in Gonzales County do not fall below the amount necessary to fulfill this
obligation.
Litigation
The Corporation filed a lawsuit against the Post Oak Clean Green, Inc. (POCG) to prevent them from
getting a permit and building a landfill in the aquifer recharge zone. As of the date of this report, the
litigation is still ongoing as the Corporation is appealing the permit approved by Texas Commission on
Environmental Quality. Management is of the opinion that any proceedings known to exist as of
September 30, 2018 are not likely to have a material adverse effect on the Corporation’s financial
position.
NOTE G --RISK MANAGEMENT
The Corporation is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; business interruption; errors and omissions; and other claims of various natures. The Corporation
contracts with the Texas Municipal League (TML), through the City of Seguin, to provide insurance
coverage for property and casualty. The provider is a multi-employer group that provides a combination
of risk sharing among pool participants and stop loss coverage. Contributions are set annually by TML.
Liability for the Corporation is generally limited to the contributed amounts.
NOTE H --MANAGEMENT SERVICES AGREEMENT
The Corporation operates under a Management Services Agreement with the City of Seguin whereby the
City provides all financial administrative duties (including bookkeeping and record retention, purchasing,
and monitoring contracts approved by the Board or General Manager) on a cost reimbursement basis. In
addition, all personnel of the Corporation are employees of the City of Seguin and participate in and are
subject to City policies and benefits, with the exception of the General Manager, who is an employee of
the City of Schertz.
The Corporation also provides financial and administrative duties (including bookkeeping and record
retention,purchasing, and monitoring contracts approved by the Board or General Manager) on a cost
reimbursement basis under a Management Services Agreement with the Cibolo Valley Local Government
Corporation. Funds received from the Cibolo Valley Local Government Corporation for Management
Services have been shown as operating revenue on the Statement of Revenues, Expenses, and Changes in
Net Position.
24
SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2018 AND 2017
NOTE I --SUBSEQUENT EVENTS
The Corporation issued Contract Revenue and Refunding Bonds, Series 2018, in the amount of
$19,045,000 on December 7, 2018. The bonds are payable over 23 years at initial rates of 3.0 –5.0%.
The refunding bonds were issued to refund a portion of the 2010 revenue bonds for a savings of
$1,424,506 (net present value benefit of $913,545).
Bid / Proposal Summary
Date: 3/8/19
Entþ Name:
Entity ID:
Proposed
Effective Date
Proposed
Anniversary DateSchertz-Seguin Local
Government Corporation
7868 4nn9 t0nng
Tvne ofCoveraqe Limit Deductible
Annual
Contribution
General Liability
Cyber Liability (see Sample
Declarations of Coverage for LimÍls)
Enors & Omissions Liabilþ'
(Public OfÍ¡cløls)
Automobile Liability
(Includes Híred & Non-Ûwned)
Automobile Medical Payments 3
Automobile Physical Damage
Real & Personal Properly'
Wind and Hail Occurrence
Deductible Reinstatement
Flood u
Earthquake'
Mobile Equipment
Boiler & Machinery'
$
$
$
$
$
s
2,000,000
4,0oo,oo0
1,0oo,oo0
1,000,000
2,00o,ooo
1,000,000
25,000
56,318,125
5,ooo,ooo
10,000,000
106,547
52,798,r25
Each occurrencet
Aggregate
Aggregate
Each wrongful act
Aggregate
Each occurrence
Each person
Actual Cash Value
Actual Cash Value
Replacement Cost
Actual Cash Value
Replacement Cost
Actual Cash Value
Replacement Cost
Actual Cash Value
Replacement Cost
Per accident
r$
$
$
$
s
$
s
nN
TxTXnX
5,000
0
10,000
5,000
5,000
1,000/10,000
1,000
t%
25,000
1,000
$
$
$
$
$
s
$
$
$
$
$I
$
$
3,409.00
Included
5,674.00
1242.00
Included
1,479.00
34,666.00
Included
12,074.00
Included
21s.00
Included
$
$
$
$
$
$
$
$
$
s
TOTAL ANNUAL: $ 58,756
SEE PROPOSAL FOR OPTIONAL COVERAGES, LIMITS, DEDUCTIBLES, EtC.
I Sudden events involving pollution provided at the occurrence limit shown or $2,000,000, whichever is less.
2 E&O retroactive date available for 5 years prior to the effective date of coverage at no additional contribution'
3 Automobile Medical Payments Coverage is included automatically for all automobiles with a design capacþ of eight passengers or less. For
larger capacity vehiclei, coverage is ávailable subject to an additional contribution. The deductible for Automobile Medical Payments
Coverage is the same as the deductible elected for Automobile Liabilþ'
a Deductible applies per vehicle, subject to a $10,000 maximum deductible for any occlurence involving two or more vehicles. The occurrence
deductible does not apply to loss caused by hail.
5 Real & personal fropìrty deductible is on a per occurïence basis except for Wind and Hail that carries a 1% per building deductible and there
is no coinsurance penaþ.6 Flood & Earthquaie coverage is provided as an option under Real & Personal Property Coverage and may not be purchased separately. Flood
& Earthquake íimit is the aggregate limit for all losses occurring during the fund year. Limitations apply to properties in Flood Zones A and
V located in the first tier of counties and in Harris, Orange and Jackson counties.
7 Flood & Earthquake coverage is provided as an option under Real & Personal Property Coverage and may not be purchased separately' Flood
Texas Municipal League Intergovernmental Risk Pool
Page I of2
xl04
05ll4l18
7
Bid / Proposal Summary
& Earthquake limit is the aggregate limit for all losses occurring during the fund year. Limitations apply to properties in Flood Zones A and
V located in the first tier of counties and in Harris, Orange and Jackson counties.
8 Boiler & Machinery Coverage is included at no additional charge (except for electric generating facilities) under Real & Personal Propefy
Coverage and may not be purchased separately.
Texas Municipal League Intergovernmental Risk Pool
Page2 ofZ
xt04
0s/141t8
l,iabi1ity Proposat Àcceptance Forn
Directioûs: This forn a:¡d Èhe Interlocal Agreement must be completed, sigaed ¿urd returned. If tine is of Èhe essence, you maywish to use ¿¡n express rnail service or a facsimile copier. In tbe eveût you submit these documenÈs by facsinile, tbe origiDals
nusÈ still be sent by reglrlar mai1. (lfote: Rural Fire Èeveûti@ Districts anô tneúgeûcy Seryice Districts ErEt provide otberdoclreDta before clyerage is effective-l Please iûdicate ïiÈh (x) Èhe coverages and meÈhod of pelment. Èhat you are accepting.
IBfMlS IrO: Texas Municipal ¡Jeague Iatergovemeatal Risk Pool, Itûdersritiûg Departroett
P.O. Box L49L94, Àustifr, Texas 78714-9194Phone: (512) 49l.-2300 or L-800-537-6655 FÀX: (512) 49L-24O4
Cæerage LiniÈs Iþårcti¡r1e C@Èribut'i@
r+rBffectir€
DaÈe
âEDiversa.rlrItate
ceneral Liability
Errors & onissions Liability
**5)rr Prio:¡ Àcts Coverage (B&O)
Cyber LiabiliÈy and Data Breach
Àutonobile litedical Payments
Àutomobile r,iâbility
Àutonobile Pbysical Damage
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ss
s
$
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Same as B&o Same as E&O Included
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üeÈbod of Payneût: ( ) O¡a¡Èer1y ( ) ànnuffy (2* Discou¡t)
I, the u:rdersigiaed, as aa authorized representatíve of: 786fô Scüertr-Se$rin Lcal Gsy Corfroraticú
do hereby accept on behalf of the above named political subdj.vj.sion, the portion Õf the proposal as indicated ãbove.
Sig¡îature of Authorized official :
Tirle:
Dete:
Itse
Ihe signed lDterloca]. Àgre@Ðt
n¡.sÈ accqlary thie forn.contributior¡:verified by:( )l¡er ( )Re-awarding ( )Addiag Coverage
* ÀCV=AcÈual Casb Value, ÀV=Àgreed Value** This form must be accompanied by the ¡tarna:lt of IncidenÈ Report. if Prior Acts coverage is elected.*r* Effective date caüot precede signaÈure date.
LgTÀl{KO 3-08-19 15:29:18 Texas Muicipal Ireague lfrtergover¡.mentaL Risk PooI
LI.AB / 2 4-OL-t9 ro 10-0r.-19
ty ID: 78Bnt
L23a4-20-L2
Property Proposal Acceptance Form
Member: Schertz-Seguin Local Gov Corporation
Member lD:7868
Directions: This form must be completed, signed and returned. The lnterlocal Agreement must also be completed and returned if you
are not a current Liability or Property Fund participant. lf time is of the essence, you may wish to use an express mail service or
facsimile copier. ln the event you submit these documents by facsimile, the originals must still be returned.
lndicate with I X ] the coverages and method of payment that you are accepting. Forward all documents to:
COVERAGE
[ ] Real and Personal Property
Limit
[ ] Actual Cash Value OR
[ ] Replacement Value
Flood and Earthquake
[ ] lncluded OR
[ ] Excluded
[ ] Mobile Equipment
TotalValue
[ ] Actual Cash Value OR
[ ] Replacement Value
t1
Texas MunicÍpol League lntergovernmental Rîsk pool
U n d e rw rití n g De pø rtm e nt
P.O. Box 749794
Austin, Texas 78774-9794
Phone: 7-800-537-6655 or FAX: 572-49I-2404
DEDUCTIBLE CONTRIBUTION
s
[ ] Special Form OR
[ ] Named Perils
s
EFFECTIVE
DATE
ANNIVERSARY
DATE
s
s
ss
ss
Method of Payment: I I Quarterly I I Annuaily (2% Discount)
l, the undersigned, as an authorized representative, do hereby accept
on behalf of the above named political subdivision the portions of the proposal as indicated above.
Signature of Authorized Official:
Title:
Date:
The Signed lnterlocal Agreement
Must Accompany Th¡s Form
(Exceptíon: Cunent Liobility/Property Fund port¡c¡ponts ore not required to
submit o new lnterlocal
OFFICE USE ONIY
Member lD #
( ) New( )Re-awarding( )AddingCoverage
Verified by:
Contribution
PP7868-2018-2
03/08/zOLs P307
Rev.06/01/08
Page I