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03-31-1995 district #2 ............u. ,l,. b,..... ('.Jv........s> Ie,. K.S. ANNUAL FINANCIAL REPORT AND SUPPLEMENTAL INFORMATION GUADCO MUNICIPAL UTILITY DISTRICT NO.2 GUADALUPE AND COMAL COUNTIES, TEXAS YEAR ENDED MARCH 31, 1995 / HARRY A. WERLAND Cru{id <Abf1, dT-=ounl=t . HARRY A. WERlAND C",tifid PuG!io dtaaoun/ant June 6, 1995 737 ISOM ROAD SAN ANTONIO,TX 76216 (210) 306-0303 FAX: (210) 525-0340 The Board of Directors Guadco Municipal Utility District No. 2 Guadalupe and Comal Counties, Texas As part of my examination of your financial statements at March 3l, 1995, I reviewed and tested the District's system of internal accounting control to the extent I considered necessary to evaluate the systems as required by generally accepted auditing standards. Under these standards the purpose of such evaluations is to establish a basis for reliance thereon in determining the nature, timing, and extent of other auditing procedures that are necessary for expressing an opinion on the general purpose financial statements. The objective of internal accounting control is to provide reasonable, but not absolute, assurance as to the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a system of internal accounting control should no exceed the benefits derived and also recognizes that the evaluation of these factors necessarily requires estimates and judgements by management. There are inherent limitations in that should be recognized in considering the potential effectiveness of any system of internal accounting control. In the performance of most control procedures, errors an result form misunderstanding of instructions, mistakes of judgement, carelessness, or other personal factors. Control can be circumvented by collision. Similarly, control procedures can be circumvented intentionally by management either with respect to the estimates and judgements required in the preparation of financial statements. Further, projection of any evaluation of internal accounting control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions, and that the degree of compliance with the procedures may deteriorate. My study and evaluation disclosed no condition that I believe to be a material weakness, but did disclose the following condition on which I believe some corrective action should be considered. Oriqinal Documents in Files In our review of the District's prior contracts and bond agreement as part of our audit procedure, some of the original documents were not available for review. The originals are important to management and to the Board of Directors if a question arises in the future regarding these documents and the user knows he is looking at the actual document. These documents have probably been placed in other files throughout the years. Management should take steps to locate the placement of the original documents for future reference. . Guadco Municipal Utility District No. 2 Page Two This report is intended solely for the use of the management, Board of Directors, and the Texas Natural Resource Conservation Commission and should not be used for any other purpose. The foregoing conditions were considered in determining the nature, timing, and extent of the audit tests to be applied in my examination of the financial statements, and this report of such conditions does not modify my report dated June 6, 1995, on such financial statements. June 6, 1995 -lj J' "e::.':'---. , ,'1 {'J ~ I.~ (. '..,<._1..."..,_---.. \~},,-___j r - "'-- ACf I I I I I I I I President I Vice President Secretary I Treasurer Assistant Secretary I I I I I I I I I ANNUAL FINANCIAL REPORT OF THE GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 YEAR ENDED MARCH 31, 1995 George E. Griffiths George H. Gentry, Jr. Bill F. Hackney Dick Reavis Henry L. Ward I I I I I I TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED BALANCE SHEET - ALL GOVERNMENTAL FUND TYPES AND ACCOUNT GROUPS COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND NOTES TO FINANCIAL STATEMENTS SUPPLEMENTAL INFORMATION I I I I I I I I I I I I I SUPPLEMENTAL SCHEDULES INCLUDED WITHIN THIS REPORT D. E. F. G. (1) G. (2) H. I. I. (1) J. K. L. M. OTHER INFORMATION AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULES NOTES REQUIRED BY THE WATER DISTRICT ACCOUNTING MANUAL SCHEDULE OF SERVICES AND RATES SCHEDULE OF GENERAL FUND EXPENDITURES SCHEDULE OF TEMPORARY INVESTMENTS ANALYSIS OF CHANGES IN CASH AND TEMPORARY INVESTMENTS - ALL FUNDS ANALYSIS OF TAXES RECEIVABLE ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS ANALYSIS OF ORGANIZATIONAL COSTS GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS BY YEARS ANALYSIS OF CHANGES IN GENERAL LONG-TERM DEBT COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES, GENERAL FUND, AND DEBT SERVICE FUND - FIVE YEARS ENDED MARCH 31, 1995 INSURANCE COVERAGE INDEPENDENT AUDITOR'S REPORT ON OTHER INFORMATION N. BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL, AND CONSULTANTS O. AUDITOR'S QUESTIONNAIRE P. CERTIFICATE OF THE BOARD OF DIRECTORS PAGE NUMBER 1 2 3 4 5 1 5 13 15 16 17 18 19 20 21 22 23 25 26 27 29 33 I I HARRY A. WERlAND C",ufid ~&[;" c4caounWnt I 737 ISOM ROAD SAN ANTONIO,TX 78216 (210) 308-0303 FAX: (210) 525-0340 I Board of Directors Guadco Municipal Utility District NO.2 Guadalupe and Comal Counties, Texas Independent Auditor's Report I I have audited the accompanying general purpose financial statements of Guadco Municipal Utility District No. 2 as of March 31, 1995, and for the year then ended as listed in the table of contents. These general purpose financial statements are the responsibility of the Guadco Municipal Utility District No. 2 management. My responsibility is to express an opinion on these financial statements based on my audit. The financial statements of the GUADCO Municipal Utility District NO.2 were audited by other auditors whose report dated May 19, 1994 expressed an unqualified opinion. on those statements. I I I conducted my audit in accordance with generally accepted auditing standards and generally accepted government auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examiningr on a test basis! evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. I I I In my opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of Guadco Municipal Utility District No.2 as of March 31, 1995, and the results of its operations and changes in fund balances for the year then ended in conformity with generally accepted accounting principles. I My audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The accompanying financial information listed as supplemental information is presented for purposes of additional analysis and is not a required part of the general purpose financial statements of Guadco Municipal Utility District NO.2. The information in these schedules has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in my opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole for the year ending March 31, 1995. The supplemental information contained for the fiscal years prior to April 1, 1994 were audited by other auditors whose reports at various dates expressed an unqualified opinion on those statements. I I I I June 6, 1995 l~ uJ~ I I I -1- I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 COMBINED BALANCE SHEET - ALL GOVERNMENTAL FUND TYPES AND ACCOUNT GROUPS MARCH 31, 1995 I ASSETS ASSETS Cash Temporary Cash Investments, at Cost Receivables Taxes Accounts Other Accrued Interest Prepaid Insurance Due from Other Funds - Note 4 Restricted Assets Cash and Temporary Cash Investments, at Cost Property, Plant, and Equipment, Amount Available in Debt Service Fund Amount to be Provided for Retirement of General Long- Term Debt TOTAL ASSETS LIABILITIES AND FUND EOUITY LIABILITIES Accounts Payable Regulatory Assessment Payable Advances from Developer - Note 9 Due to GUADCO #1 Payable from Restricted Assets - Deposits Due to Other Funds Deferred Revenues General Obligations Bonds Payable - Note 5 Total Liabilities FUND EOUITY Investment in General Fixed Assets Fund Balances (Deficit) Reserved Unreserved Undesignated Total Fund Equity (Deficit) TOTAL LIABILITIES AND FUND EQUITY GOVERNMENTAL FUND TYPES I GENERAL 16,034 1,306 97 31 451 1,137 6,085 25.141 3,108 76 145,000 2,848 5,295 156,327 (131. 186) (131. 186) 25 . 141 DEBT SERVICE 15,854 122,047 1,014 608 139.523 1,137 1,014 2,151 137,372 137.372 139.523 CAPITAL PROJECTS 5,563 213,690 I I 1,063 I I I 220,316 I I I I I 220,316 I 220,316 220,316 I I I The accompanying notes are an integral part of these financial statements. -2- I I I I I ACCOUNT GROUPS GENERAL GENERAL TOTALS I FIXED LONG-TERM I MEMORANDUM ONLY) ASSETS DEBT 1995 1994 37,451 56,404 I 341,822 333,125 1,014 2,953 1,306 1,499 I 97 1,702 1,008 451 1,137 2,182 I 5,826 910,718 910,718 910,568 I 138,268 138,268 161,314 I 766,732 766.732 793.686 910.718 905.000 2,200.698 2.268.565 I 5,257 3,108 76 I 145,000 145,000 2,848 5,295 5,335 I 1,137 2,182 1,014 2,953 905.000 905.000 955.000 I 905,000 1,063,478 1,115,727 910,718 910,718 910,568 I 357,688 372,496 1131.186) 1130.226) 910.718 1.137.220 1.152.838 I 910.718 905.000 2.200,698 2.268.565 I I I I Ii -2 - I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES YEAR ENDED MARCH 31, 1995 I I I REVENUES Property Taxes Water Service Sewer Service Penalty and Interest Tap Connection Fees Interest on Time Deposits Total Revenues I I EXPENDITURES Debt Service: Principal Retirement Interest and Fiscal Charges Purchased Water and Sewer Services Professional Fees Director Fees Contracted Services Utilities Materials and Supplies Repairs and Maintenance Tax Collection Services Other Expenditures Capital Expenditures Total Expenditures I I I I I Excess of Revenues Over (Under) Expenditures GOVERNMENTAL FUND TYPES DEBT CAPITAL GENERAL SERVICE PROJECTS 10,596 50,365 21,935 200 2,400 456 85,952 37,814 7,747 3,100 18,170 1,193 13,601 5,137 150 86,912 960) I FUND BALANCES (DEFICIT) AT BEGINNING OF YEAR (130,226) I FUND BALANCES (DEFICIT) AT END OF YEAR I I I (131, 186) 133,694 6 ,118 139,812 9,134 9,134 TOTALS (MEMORANDUM 1995 144,290 50,365 21,935 200 2,400 15,708 234,898 50,000 106,335 37,814 7,747 3,100 18,170 1,193 13,601 7,055 5,503 150 250,668 (15,770) 242 , 272 226,502 I The accompanying notes are an integral part of these financial statements. I 50,000 106,335 7,055 366 163,756 ( 23,944) 9,134 161,316 211, 182 137 ,372 220,316 -3- ONLY) 1994 144,878 49,316 21,729 175 1,200 13 , 179 230,477 45,000 107,358 37,473 7,653 2,800 16,833 1,245 827 7,739 6,989 4,577 890 239,384 8,907) 251, 179 242,272 I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED MARCH 31, 1995 I GENERAL FUND I REVENUES Property Taxes Water Service Sewer Service Penalty and Interest Tap Connection Fees Interest on Time Deposits Total Revenues 11,100 53,251 21,745 178 12,010 396 98,680 10,596 50,365 21,935 200 2,400 456 85,952 VARIANeE- FAVORABLE (UNFAVORABLE) 504) 2,886) 190 22 9,610) 60 12,728) I BUDGET ACTUAL I I EXPENDITURES Purchased Water Water Maintenance and Repair Water Pump Repair Electric Utilities Sewer Treatment Sewer Maintenance and Repair Sewer Inspection Sewer Permit Connection Fees Director Fees Legal Fees Audit Fees Election Expense Data Processing Management Fees Legal Notices Telephone Insurance and Bonds Printing and Office Supplies Postage Miscellaneous Capital Expenditures Major Repairs Total Expenditures 26,878 7,735 360 1,355 16,780 1,264 360 20,611 6,225 1,022 1,193 16,726 3,695 6,267 1,510 662) 162 54 2,431) 360 377) 75 100) 9,753 I I 675 377 100 3,100 2,247 5,500 1,234 2,362 15,807 109 219 1,613 1,142 814 8 150 2,658 86 , 912 766 142) 1,182) 49) 81 1,027 542) 26 8) 525 2,658) 12 ,455 I I 175 3,000 12,000 5,500 2,000 2,220 14,625 60 300 2,640 600 840 I I 99,367 Excess of Revenues Over (Under) Expenditures 687) 960) 273 I FUND BALANCE (DEFICIT) AT BEGINNING OF YEAR (130,226) (130,226) I FUND BALANCE (DEFICIT) AT END OF YEAR (130 , 913) (131 , 186) 273 I I I The accompanying notes are an integral part of these financial statements. -4- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 II NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Renortina Entitv I All significant activities and groups on which the District exercises oversight responsibility have been included in the general purpose financial statements, for the fiscal year ended. The following criteria regarding manifestation of oversight were considered by the District in its evaluation of District organizations and activities: II Financial Interdenendency - The District is responsible for it debts and entitled to surpluses. No separate agency receives a financial benefit nor imposes a financial burden on the District. I Election of the GoverninG Authority - The locally elected Board of Directors is exclusively responsible for all decisions and accountable for the decisions it makes. II Desianation of Manaaement - The Board of Directors hires the management company. The activities under the purview of management are within the scope of the reporting entity and management is accountable to the Board of Directors for the activities being managed. I Ability to SiGnificantlv Influence Onerations - The Board of Directors has the statutory authority under provision of state law, and specifically the Texas Water Code, to significantly influence operations. This authority includes, but is not limited to, adoption of the budget, control over assets, including facilities and properties, short-term borrowings, signing contracts, and developing programs to be provided by the District. I I Accountabilitv of Fiscal Matters - The responsibility and accountability over all funds is vested in the District's management. I Purchases and sales of water are provided through an interconnect shared by Guadco Municipal Utility District No. 2 and another district, Guadco Municipal Utility District NO.1. Both districts are managed by Cortes Contracting, Inc. and administrative costs are allocated to each district. There is no oversight relationship among any of the previously described entities, as each is controlled and directed by its own independently elected governing body. I B_ DescriDtion of Funds I The District has established several funds, in conformance with generally accepted accounting principles, for the purpose of accounting for transactions in compliance with legal requirements. Funds and account groups in use by the District in accounting for its financial activities are as follows: II Governmental Funds I General Fund - To account for all of the general water and sewer revenue of the District and other revenues not specifically levied or collected for other District funds, and for expenditures related to the maintenance of operations. I I I -5- II I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 II NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I B. DescriDtion of Funds (Continued) Governmental Funds I Debt Service Funds - To account for the source and disposition of funds for paying interest and principal on general long-term debt and fiscal agents' expenses. I Canital Prolect Funds - To account for the acquisition of capital facilities being financed from bond proceeds. Account Grauns I General Fixed Assets Accounts - To account for property, plant, and equipment of the District. I General Lonq-Term Debt Accounts - To account for the unmatured principal of outstanding bonds. C. Basis of Accountinq I The District maintains its accounting records on the modified accrual basis. The modified accrual basis recognized revenues that are suspectable to accrual when measurable and available, and recognizes expenditures when incurred including expenses that normally qualify as prepaid expenses. lIMeasurablel' means the amount of the transaction can be determined, and "availablell means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Property taxes remaining uncollected at year end are reported as deferred revenues, since they are not considered to be available. I I D. Cash I Cash includes amounts in demand deposits, and interest-bearing deposits held by the District. Cash in excess of current requirements is invested in various interest- bearing instruments and is disclosed as part of investments, primarily in U. s. obligations. These deposits and U. S. obligations were authorized by legal provisions. E. Investments I All investments during the fiscal year consisted of short-term U.S. Treasury Bills held in the District's name and carried at cost. (See Page 16.) I F. Receivables and Revenue I All receivables are reported at gross values. There is no estimate for uncollectible amounts in the customer water and sewer accounts as the deposits have proven to be adequate to cover liabilities except in non~material amounts. Revenues are reported based on the utilities used monthly. G. Interest Receivable I Interest on investments is recorded as revenue in the year the interest is earned and is available to pay liabilities of the current period. I I -6- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MAReH 31, 1995 I NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I H~ Pronertv, Plant, and Eauioment I Property, plant, and equipment, including infrastructure assets, are recorded at cost when acquired. General fixed assets are recorded as expenditures in the general fund and capital projects fund at the time of purchase and are capitalized in the General Fixed Asset Account Group. No depreciation is provided for on the general fixed assets of the District. I Costs related to repairs and maintenance are recorded as expenditures. Significant renovations and improvements are capitalized when incurred. Interest costs are not capitalized on projects financed by government grants, third-party donations! or on assets that will be reported in the General Fixed Assets Account Group. I I. Emolovee Salaries. Taxes. and Pension Plans I The District has engaged a management firm to oversee the monthly operations in a manner dictated by the Board of Directors. Thus, the District has no employees and is not required to pay salaries, payroll taxes, or amounts to pension plans. I J. Budqets I Budgeted amounts are as adopted and amended by budget is prepared on a modified accrual basis. end of each fiscal year. the District's Board of DinKtors. ~ All budget appropriations lapse at the K. Comoarative Data I Comparative totals for the prior year have been presented in the a c com pan y i n 9 financial statements in order to provide an understanding of changes in the District's financial position and operations. However, comparative data by fund type has not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. I L. Total Columns on Combined Statements I Total columns on the combined statements are captioned Memorandum Only to indicate that they are presented only to facilitate financial analysis. Data in these columns does not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. I NOTE 2: STEWARDSHIP. COMPLIANCE. AND ACCOUNTABILITY I A. COffioliance with Bond Covenants ~ The annual debt service requirements at March 31, 1995, of all bonds is $152,166, and the balance of the interest and sinking fund at March 31, 1995, is $137,901. The District met or exceeded the funding requirements of all bond issues on a timely basis. Expenditures and resources of the interest and sinking fund were all of an authorized nature. I I I -7- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 I NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED) I B. Deoosits with Financial Institutions - All investments, demand deposits, and savings of the District were sufficiently covered through either FDIC insurance amounts I collateralized deposits in the District's name, held by other banks, or by nature of the investment (purchase of U.S. Treasury Bills). Throughout the fiscal year, the District's only investments were in the form of u.s. Treasury Notes and Bills~ I NOTE 3: CREATION OF DISTRICT I Guadco Municipal Utility District No. 2 was created by an order of the Texas Water Rights Commission on October 28, 1975, and confirmed by the electorate of Guadco Municipal Utility District NO.2 at a confirmation election held on April 4, 1981. The District is operating pursuant to the provisions of Chapter 54, Texas Water Code, as amended. The Board of Directors, consisting of five elected property owners, held its first meeting on April 2, 1979, and the first bonds were sold on February 1, 1984. I NOTE 4: INTERFUND RECEIVABLES AND PAYABLES I The following is a summary of amounts due from and due to other funds at year end: DUE FROM DUE TO I General Fund Debt Service Fund Debt Service Fund General Fund 1.137 I TOTAL ALL FUNDS 1.137 1.137 1.137 NOTE 5: GENERAL LONG-TERM DEBT I The following is a summary of changes in general long-term debt: I BONDS PAYABLE AT APRIL 1, 1994 ADD BONDS ISSUED LESS BONDS RETIRED BONDS PAYABLE AT MARCH 31, 1995 I Water Works and Sewer System Combination Unlimited Tax and Revenue Bonds Series 1984 955,000 50,000 905,000 I At March 31, 1995, the District's long-term debt consisted of: I RANGE OF GENERAL INTEREST LONG-TERM CURRENT LONG-TERM MATURITY RATES DEBT MATURITIES MATURITIES Water Works and Sewer System Combination Unlimited Tax and Serially Revenue Bonds through 9.00%; Series 1984 2005 10.75%- 905,000 55,000 850,000 I I I -8- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 I NOTE 5: GENERAL LONG-TERM DEBT (CONTINUED) I A schedule of bond maturities for the next five (5) years is as follows: I YEAR ENDING MARCH 31. TAX AND REVENUE BONDS SERIES 1984 I 1996 1997 1998 1999 2000 Thereafter 151,577 150,858 149,558 152,700 149,750 767.219 I TOTAL 1.521.662 905,000 616.662 I Principal Interest I TOTAL 1. 521. 662 I Tax and revenue bonds authorized and unissued as of March 31, 1995 f amounted to $9,025.000. I The bonds are payable from the proceeds of an ad valorem tax levied upon all property subject to taxation within the District. without limitation as to rate or amount, and are further payable from and secured by a lien on the pledge of the net revenues to be received from the operation of the District's waterworks and sanitary sewer system~ I Outstanding bonds which mature in the years 1999 through 2005, are callable for redemption on September 1, 1998, or any interest payment due thereafter at the option of the District. The bonds may be called in whole or in part for the purpose of retirement or refunding, or bothj at par in addition to unpaid accrued interest. I I I I I I -9- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MAReH 31, 1995 I NOTE 6: WATER AND SEWER SERVICE RATES I The Guadco Municipal Utility District No. 2 has established the following water and sewer service rates for residential or multi-family customers. I FOR FISCAL YEAR 1994-1995 I Water Service Only First 3,000 Gallons of Water Used - Minimum Bill Each 1,000 Gallons of Water Used from 3,001 to 6,000 Increasing the Base of $1.37 by $.24 for Each 3,000 Gallons Thereafter 18.00 1.37 I Sewer Service Only First 5,000 Gallons of Water Used - Minimum Bill Each 1,000 Gallons of Water Used Thereafter 13.85 .55 I Deposits Refundable Deposit - Owner Refundable Deposit - Renter 40.00 75.00 I Tap Fees Standard Home 1,315.00 I There were 128 metered water and sewer customers at March 31, 1995. I The rates above have not been sufficient to fund operating costs. During 1987, a maintenance tax of $0.06 per $100 valuation was levied to help defray part of the cost of operations. This levy was $.088 per $100 in the current year and provided the District approximately $10,596 in spendable general fund revenues. I NOTE 7: CI~GES IN GENERAL FIXED ASSETS A summary of changes in general fixed assets follows: I TOTAL BALANCE APRIL 1, 1994 412,152 121,464 129,207 80,824 166,921 910.568 NET ADDITIONS (DELETIONS) 150 150 BALANCE MARCH 31, 1995 412,302 121,464 129,207 80,824 166.921 910.718 I I Water System Sewage System Drainage System Engineering Fees Organizational Costs (See Page 21) NOTE 8: PROPERTY TAXES I Property taxes attach as an enforceable lien on property as of January 1, are due October 1 and become delinquent on February 1. Property taxes for the District are not limited as to rate or amount. The District's current tax rate is $1.193 per $100 of assessed valuation and assessed valuation is approximately 100* of actual values. Of the $1.193 per $100 of assess valuation, $1.105 is designated for debt service and $.088 is designated for maintenance. I I -10- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 I NOTE 9: ADVANCES FROM DEVELOPER I The District has entered into several reimbursement agreements for advances from a developer to use for payment of general administrative, operations, and maintenance expenditures. It also entered into a construction agreement for advances for construction. These advances, plus interest, are to be repaid from the proceeds of a subsequent bond issue pursuant to the approval by the Texas Water Commission. An agreement was entered into July of 1994 which could allow cancellation of $100,000 plus all associated accrued interest upon issuance of a subsequent bond issue by the District. I I NOTE 10: FUND EOUITY RESERVES I The District records one (1) general type of reserve. The one (1) type is used to indicate that a portion of the fund equity is legally restricted for a specific future use. Following is a list of all reserves used by the District and a description of each: I Reserved for Debt Service - An account used to indicate that certain assets are legally restricted by the bond indenture to be used for specific purposes. I Reserved for Canital PrOl8cts - An account used to indicate that certain assets are legally restricted to be used for specific purposes. NOTE 11: EXCESS OF EXPENDITURES OVER REVENUES I During the current fiscal year the general fund and the debt service fund incurred expenditures in excess of revenues earned. This excess is expected to continue for the next few years until either property values increase, a tax rate increase is approved, or an increase in water and sewer rates are approved. I NOTE 12: COMMITMENTS lP . ~}r,j I The District entered into an agreement during 1985, to construct a 1,145,850~gallon water storage facility. The water tank was completed during 1986 and was approved by the City of Schertz and the Texas Water Commission in May, 1986. The DistrictJs share of the construction and engineering costs is approximately $130,700 plus interest. I During 1985/ the District entered into an agreement authorizing the Guadalupe-Blanco River Authority to apply on the behalf of the District for a wastewater discharge permit from the Texas Water Commission. The permit, which was granted in 1987, authorized the District, by itself or in combination with others, to discharge 700,000 gallons per day of treated effluent. The District's estimated cost of the permit is $74,300 plus interest. I I During 1986, the District entered into an agreement with a developer to construct the underground water lines, sewer lines, and related facilities to serve a 240-acre development project, of which 87~ of the project lies within the service area of the District. The preliminary design phase work was completed in 1987. The District's total estimated cost of the facilities that lie within its service area is approximately $120,100. /--~----.. I All three of the preceding paragraphs are subject tot he terms and conditions set forth in the separate contracts, which describe the conditions for reimbursements. The conditions of payment, in summary, include the approval by the Water Commission of any new bonds that might be sold for the above stated purposes, the issuance and saTe~()f I I j'l [) (i ~O r l.-i'~ , 7'JU ~J,) , ~/ / ~;\ ~11~ " ",i,', 'v:.y.j',c' I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 I NOTE 12: COMMITMENTS (CONTINUED) I the bonds and most notably, the issuance of the bonds will not occur until such time as the development of the 240 acres will support the retirement of principal and interest on the new bonds. Growth in the District in recent years does not indicate that this requirement will be achieved in the near future. I The developer in claiming certain additional costs associated with the above mentioned proj ects, plus other costs claimed to be reimbursable from work allocated to this District. All of these costs are subject to review and audit at some future date prior to payment. Therefore,. costs wil~ be considered by the Board after reviewing documentation presented by the developer ( should a future bond issue be approved to pay these claimed costs. I I The District purchases its water supply from the City of Schertz under a contract date May 25, 1975. The contract is for a term of 30 years, at which time it is renewable for a maximum of 15 years. NOTE 13: FUND DEFICIT I The District is attempting to recover the general fund deficit through revenues generated by the increase in metered water and sewer customers and income from the maintenance tax. To the extent that the increase in customers is not sufficient, water and sewer rate increases will be considered to help defray the cost of operations. I I I I I I I I I I -12- I I I I I I I I I I I I I I I I I I I I SUPPLEMENTAL INFORMATION I I I I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 SUPPLEMENTAL SCHEDULES INCLUDED WITHIN THIS REPORT YEAR ENDED MARCH 31, 1995 YES NO -z- C. AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULES -z- D. NOTES REQUIRED BY THE WATER DISTRICT ACCOUNTING MANUAL - ALL NOTES REQUIRED BY THE WATER DISTRICT ACCOUNTING MANUAL HAVE BEEN FULLY DISCLOSED IN THE GENERAL PURPOSE FINANCIAL STATEMENTS -z- E. SCHEDULE OF SERVICES AND RATES -z- F. SCHEDULE OF GENERAL FUND EXPENDITURES I I I I I I -z- G. (1) SCHEDULE OF TEMPORARY INVESTMENTS -z- G. (2) ANALYSIS OF CHANGES IN CASH AND TEMPORARY INVESTMENTS - ALL FUNDS -z- H. ANALYSIS OF TAXES RECEIVABLE -z- I. ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS -z- I. (1) ANALYSIS OF ORGANIZATIONAL COSTS -z- J. GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS BY YEARS -z- K. ANALYSIS OF CHANGES IN GENERAL LONG-TERM DEBT -z- L. COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES, GENERAL FUND, AND DEBT SERVICE FUND - FIVE YEARS ENDED MARCH 31, 1995 -z- M. INSURANCE COVERAGE -z- N. BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL, AND CONSULTANTS I I I I I I I -z- O. AUDITOR'S QUESTIONNAIRE CERTIFICATE OF THE BOARD OF DIRECTORS -z- P. -z- Q. SCHEDULE OF NOTES PAYABLE - THERE ARE NO NOTES PAYABLE OUTSTANDING AT MARCH 31, 1995 OR DURING THE CURRENT YEAR AUDITED PAGE NUMBER 1 5 13 15 16 17 18 19 20 21 22 23 25 27 29 33 I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 E. SCHEDULE OF SERVICES AND RATES YEAR ENDED MARCH 31, 1995 I 1. Services Provided by the District: I ~ Retail Water Wholesale Water ~ Retail Wastewater Wholesale Wastewater Parks/Recreation Fire Protection Solid Waste/Garbage _____ Flood Control Participates in joint venture, regional system, (other than emergency interconnect) Other (specify): Drainage Irrigation Security Roads and/or wastewater service I I 2. Retail Rates Based on 5/8" Meter ~ Retail Rates Not Applicable I Most prevalent type of meter (if not a 5/8"): N/A FLAT RATE PER 1,000 MINIMUM MINIMUM RATE GALLONS OVER CHARGE USAGE Jill MINIMUM USAGE LEVELS WATER $18.00 3,000 N $1. 37 3,001 to 6,000 WASTEWATER $13.85 5,000 N $ .55 5,001 to Thereafter SURCHARGE: $ -0- 0 I I District employs winter averaging for wastewater usage? Yes No~ I Total water and wastewater charges per 10,000 gallons usage (including surcharges) 48.68 I 3. Standby Fees: Does the District assess standby fees? Yes If yes, specify amount and basis of the assessment. No .2L- $_._ Per Lot $_._ Per Acre Other or Non-Uniform Rates I (check one) Per Year Per Quarter Per Month Percent allocated to: General Fund % Debt Service Fund %" I Have the standby fees been approved by the Texas Water Commission? Yes No I Have standby fees been levied in accordance with Water Code Section 50.056, thereby constituting a lien on property? Yes No I I I I The accompanying notes are an integral part of these financial statements. -13- I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 E. SCHEDULE OF SERVICES AND RATES (CONTINUED) YEAR ENDED MARCH 31, 1995 I 4. Total water consumption (rounded to the nearest 1,000) during the fiscal year: I Gallons pumped into system: Gallons billed to customers: 16,627,000 14,829,000 I 5. Number of retail water and/or wastewater* connections within the District as of fiscal year end~ CONNECTIONS ACTIVE CONNECTIONS INACTIVE CONNECTIONS" I Single Family Multi-Family Commercial Other - Recreational Centers, Government, and VFD 128 17 I --1. TOTALS 146 I * Number of connections relates to water service, if provided. wastewater connections should be provided. Otherwise, number of I ** IIInactivell means that water and wastewater connections were made, but service is not being provided. I 6. Anticipated sources of funds to be used for debt service payments in the District's following fiscal year: a. Debt Service Tax Receipts Amount 144,290 I b. Surplus Construction Funds c. Water and/or Wastewater Revenue I d. Standby Fees 8. Beginning Debt Service Fund Balances 1,168 I f. Interest Revenues 6,119 g. Other (Describe) I TOTAL ANTICIPATED FUNDS TO BE USED 151,577 I I I I The accompanying notes are an integral part of these financial statements. -14- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 F. SCHEDULE OF GENERAL FUND EXPENDITURES YEAR ENDED MARCH 31, 1995 I CURRENT Personnel (Including Benefits) I PROFESSIONAL FEES Auditing Legal I PURCHASED SERVICES FOR RESALE Bulk Water and Sewer Service Purchases Tap Connection Expenses I CONTRACTED SERVICES Bookkeeping General Manager Appraisal District Tax Collector I UTILITIES I REPAIRS AND MAINTENANCE I ADMINISTRATIVE EXPENDITURES Directorsr Fees Office Supplies Insurance Other Administrative Expense (Data Processing) Election Expenses Legal Notices I I CAPITAL OUTLAY Acquisition of Fixed Assets SOLID WASTE DISPOSAL (Sewer Only Not Garbage) I FIRE FIGHTING PARKS AND RECREATION I OTHER EXPENDITURES TOTAL EXPENDITURES I Number of persons employed by the District: (Do not include independent contractors or consultants) 5,500 2,247 48,655 100 15,807 1,412 2,658 3,100 1,956 1,614 2,363 1,234 109 86,912 All Services in District Provided by Contractors or Management Company. I I I I -15- The accompanying notes are an integral part of these financial statements. I 150 8 Full-ti.me Part-time I I GUADCO G. (1) MUNICIPAL UTILITY DISTRICT NO. 2 SCHEDULE OF TEMPORARY INVESTMENTS YEAR ENDED MARCH 31, 1995 I IDENTIFIeATION INTEREST MATURITY NUMBER RATE DATE I FUNDS GENERAL FUNDS I U.S. Treasury Bill #912794T20 6.112 8-24-95 DEBT SERVICE FUNDS I U.S. Treasury Bill #912794T20 6.112 8-24-95 CAPITAL PROJECTS FUND I U.S. Treasury Bill #912794T20 6.112 8-24-95 TOTAL - ALL FUNDS I I I I I I I I I I BALANCES AT END OF YEAR COST MARKET 6,085 122,047 213.690 341. 822 6,119 122,720 214,867 343.706 I -16- The accompanying notes are an integral part of these financial statements. I ACCRUED INTEREST AT END OF YEAR 31 608 1.063 1.702 I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 G. (2) ANALYSIS OF CHANGES IN CASH AND TEMPORARY INVESTMENTS - ALL FUNDS YEAR ENDED MARCH 31, 1995 I I SOURCES OF CASH AND TEMPORARY INVESTMENTS Cash from Revenues Refundable Deposits I Total Cash and Temporary Investments Provided I APPLICATIONS OF CASH AND TEMPORARY INVESTMENTS Cash Disbursements for Current Expenditures Debt Service Total Cash and Temporary Investments Applied I I Increase (Decrease) In Cash and Temporary Investments I CASH AND TEMPORARY INVESTMENT BALANCES AT BEGINNING OF YEAR I TOTAL CASH AND TEMPORARY INVESTMENT BALANCES AT END OF YEAR I I I I I I I GENERAL FUND DEBT SERVICE FUND CAPITAL PROJECTS FUND TOTALS (MEMORANDUM ONLY) 1995 1994 84,974 148,241 ( 40) 8,683 241,898 ( 40) 84,934 148,241 84,483 84,483 451 21,668 22 ,119 8,683 241,858 21,730 151 , 728 106,213 151,728 173,458 257,941 (25,217) 8,683 (16,083) 163,118 210,570 395,356 137,901 219,253 379,273 I The accompanying notes are an integral part of these financial statements. I -17- 228,443 85 228,528 84,821 151,318 236.139 (7,611) 402,967 395,356 I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 H. ANALYSIS OF TAXES RECEIVABLE YEAR ENDED MARCH 31, 1995 I MAINTENANCE TAXES DEBT SERVICE TAXES I Taxes Receivable at April 1, 1994 1994 Year Original Roll Adjustments to Roll Total to be Accounted for 208 10,495 2,745 131,339 10.000 134.084 I 10.703 Tax Collections Current Deliquent Total Collections 10,439 189 10.628 TAXES RECEIVABLE AT MARCH 31, 1995 75 130,639 2,506 133.145 939 I I 1995 1994 1993 1992 1991 PROPERTY VALUATIONS Land Improvements Personal Property 2,468,180 9,257,330 163.364 2,489,330 7,932,140 169.398 2,495,230 7,696,250 172.175 2,485,250 7,588,230 30,095 2,837,000 7,739,580 111.092 I TOTAL PROPERTY VALUATIONS 11.888.874 10,590.868 10.363.655 I TAX RATES PER S100 VALUATION Debt Service Tax Rates Maintenance Tax Rates 1995 10.103.575 1994 10.687.672 I 1.105 .088 1.199 .091 I TOTAL TAX RATE PER $100 VALUATION 1.193 1.290 I TAX ROLLS Adjustment to Roll TOTALS 141,834 136,622 10.000 146.622 ALL TAXES 141.834 I FOR THE YEAR ENDED MARCH 31. 1995 Percent of Current Taxes Collected to Current Taxes Levied 99.47%" I Percent of Current and Deliquent Taxes Collected to Current Taxes Levied and Deliquent Taxes Outstanding at the Beginning of the Year 99.30%" I I I I The accompanying notes are an integral part of these financial statements. -18- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 I. ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS YEAR ENDED MARCH 31, 1995 I I Water System Sewage System Drainage System Engineering Fees Capitalized Construction Period Costs I TOTALS I ADDITIONS PROVIDED BY OPERATIONS I I I I I I I I I I I BALANCES APRIL 1, 1994 412,152 121,464 129,207 80,824 166,921 910,568 910,568 ADDITIONS 150 150 150 DELETIONS BALANCES MARCH 31, 1995 412,302 121,464 129,207 80,824 166,921 910,718 910,718 I The accompanying notes are an integral part of these financial statements. I -19- I I GUADCO I. (1) MUNICIPAL UTILITY DISTRICT NO. 2 ANALYSIS OF ORGANIZATIONAL COSTS YEAR ENDED MARCH 31, 1995 I I ORGANIZATIONAL COSTS - CREATION PERIOD Filing Fees, Licenses, Legal Notices and Permits Engineering Studies Other Costs Total Organizational Costs - Creation Period I I ORGANIZATIONAL COSTS - CONSTRUCTION PERIOD Election Costs Legal Fees Director Fees Operating Costs Fiscal Agent Fee Bond Issue Expense Total Organization Costs - Construction Period I I TOTAL ORGANIZATIONAL COSTS I AMOUNTS PROVIDED For District Organizational Costs - Creation Period By Capital Projects Fund Por District Organizational Costs - Construction Period By Capital Projects Fund I I TOTAL PROVIDED I I I I I I BALANCE AT APRIL 1, 1994 1,051 21,357 115 22.523 2,470 59,408 900 3,980 3,943 73.697 144.398 166.921 22,523 144.398 166,921 ADDITIONS (DECREASES) BALANCE AT MARCH 31, 1995 1,051 21,357 115 22.523 2,470 59,408 900 3,980 3,943 73.697 144.398 166.921 22,523 144.398 166.921 I The accompanying notes are an integral part of these financial statements. I -20- I I J. GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS YEAR ENDED MARCH 31, 1995 I I DUE DURING FISCAL YEARS ENDING MARCH 31. 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 I TOTALS SERIES 1984 PRINCIPAL INTEREST DUE DUE 03-01 03-01. 09-01 TOTAL 55,000 96,577 151,577 60,000 90,858 150,858 65,000 84,558 149,558 75,000 77,700 152,700 80,000 69,750 149,750 90,000 61,230 151,230 100,000 51,600 151,600 115,000 40.850 155,850 125,000 28,488 153,488 140.000 15.051 155.051 905,000 616,662 1.521,662 I I I I Cash and Temporary Investment Balances at March 31, 1995 Debt Service Fund 138.509 I I I I I I I I I The accompanying notes are an integral part of these financial statements. -21- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 K. ANALYSIS OF CHANGES IN GENERAL LONG-TERM DEBT YEAR ENDED MARCH 31, 1995 I BOND ISSUE - SERIES 1984 I Interest Rate 9.50% to 10.75% Dates Interest Payable March 1; September 1 I Maturity Dates Bonds Outstanding at Beginning of Current Period March 1, 1988 to March 1, 2005 I 955,000 Bonds Sold During Current Period I Retirements - Principal 50,000 Bonds Outstanding at End of Current Period 905.000 I Retirements - Interest 101. 728 I PAYING AGENT'S NAME AND ADDRESS Series 1984 Texas Commerce Bank} Post Office Box 2558/ Houston, TX 77252 I BOND AUTHORITY TAX BONDS OTHER BONDS REFUNDING BONDS Amount Authorized by Voters 10,200,000 I Amount Issued 1,1751000 Remaining to be Issued 9,025,000 I I I I I I I The accompanying notes are an integral part of these financial statements. -22 - I L. GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES GENERAL FUND AND DEBT SERVICE FUND FIVE YEARS ENDED MARCH 31, 1995 GENERAL FUND REVENUES Property Taxes Water Services Sewer Services Penalty and Interest Tap Connections Fees Interest on Time Deposits Contribution from Developer Total Revenues EXPENDITURES Purchased Water and Sewer Services Professional and Director Fees Contracted Services Utilities Materials and Supplies Repairs and Maintenance Other Expenditures Capital Outlay Total Expenditures EXCESS REVENUES (EXPENDITURES) DEBT SERVICE FUND REVENUES Property Taxes Penalty and Interest Interest on Time Deposits Total Revenues EXPENDITURES Tax Collection Services Debt Service, Interest, and Fees Other Expenditures Total Expenditures EXCESS REVENUES (EXPENDITURES) 1995 10,596 50,365 21,935 200 2,400 456 85.952 37,814 10,847 18,170 1,193 13,601 5,137 150 86.912 960) 133,694 6.118 139.812 7,055 156,335 366 163.756 (23,944) AMOUNTS 1994 1993 9,503 49,316 21,729 175 1,200 737 82,660 37,473 10,453 16,833 1,245 827 7,739 3,088 890 78,548 4.112 135,375 5,568 140.943 6,989 152,358 1. 489 160,836 (19,893) 8,731 42,322 21,298 81 448 2,035 74,915 32,445 8,963 15,330 1,291 606 12,426 6,572 77,633 {2.7181 128,751 7,497 136 , 248 6,758 154,342 1,874 162.974 (26,7261 1992 8,600 43,960 21,393 139 1,200 649 75.941 34,792 8,700 15,595 1,308 435 9,984 4,278 75.092 849 136,993 802 11. 065 148,860 7,475 151,033 457 158 , 965 (10,105) The accompanying notes are an integral part of these financial statements. -23- I I I 1991 9,078 40,879 20,897 196 I 622 I 71,672 I 33,947 I 9,884 15,223 1,760 585 9,590 4,341 I 75,330 I (3.658) I 134,953 214 15,108 150,275 I 7,575 I 149,496 321 157 ,392 I (7 , 117) I I I I I I I I I PERCENT OF FUND TOTAL REVENUES I 1995 1994 1993 1992 1991 12.86%' 11.50%' 11.65%' 11.32 %' 12.67 %' 58.60 59.66 56.49 57.89 57.04 I 25.52 26.29 28.43 28.17 29.16 .23 .21 .11 .18 .27 2.79 1. 45 1.58 .89 .60 .86 .86 I 2.72 100.00%' 100.00 %' 100.00 %' 100.00 %' 100.00 %' I 44.00%" 45.33 %' 43.31 %' 45.81 %' 47.36 % 12.62 12.65 11. 96 11.46 13.79 21.14 20.36 20.46 20.54 21.24 I 1.39 1.51 1.72 1. 72 2.46 1. 00 .81 .57 .82 15.82 9.36 16.59 13 .15 13.38 5.98 3.74 8.77 5.63 6.05 I .17 1.08 101.12% 95.03 %' 103.62 %' 98.88 %' 105.10 % I (1.12) %' 4.97 % (3.62) % 1.12 % (5.10) % 95.62 % 96.05 % 94.50 % 92.03 % 89.80 % I .54 .14 4.38 3.95 5.50 7.43 10.06 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % I 5.05 %' 4.96 % 4.96 % 5.02 % 5.04 % 111.82 108.10 113.28 101. 46 99.48 I .26 1. 05 1.38 .31 .22 117.13 % 114.11 %' 119.62 %' 106.79 % 104.74 % I (17.13) %' (14.111% (19.62) %' (6.79) %' (4.74) % I I I I -23- I I I L. GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES GENERAL FUND AND DEBT SERVICE FUND (CONTINUED) FIVE YEARS ENDED MARCH 31, 1995 I I Average Annual Debt Service Requirements for Unpaid Principal and Interest I Excess Revenues from General Fund and Debt Service Fund Before Expenditures for Debt Service I Coverage (Excess Revenues as Adjusted Divided by Annual Debt Service Requirement) I Number of Water and Sewer Connections at End of Year I Total Amount of Water Billed To Customers (In Thousands of Gallons) I Total Amount of Water Pumped Into System (In Thousands of Gallons) I Percentage of Water Billed to Water Pumped I I I I I I I 1995 152,166 131,430 .86 128 14,829 16,627 89 1994 152,126 136,577 .90 127 17,705 19,309 91. 7 AMOUNTS 1993 152,059 124,898 .82 126 13,407 16,418 81. 7 1992 151,928 141,777 .93 123 14,495 17,932 80.8 I The accompanying notes are an integral part of these financial statements. I -24- 1991 151,708 138,721 1. 04 123 15,565 21,211 73.4 I GUADCO MUNICIPAL UTILITY NO. 2 M. INSURANCE COVERAGE YEAR ENDED MARCH 31, 1995 I TYPE OF COVERAGE AMOUNT OF COVERAGE FROM TO $10,000 Each 04-20-94 04-20-97 $50,000 Aggregate $10,000 Each $30,000 Aggregate 09-01-94 09-01-95 I Public Officials Faithful Performance (5 Directors) I Employee Dishonesty Bonds - (3 Employees) Management Company I Liability: Automotive - Property Damage and Bodily Injury Comprehensive: General Personal Injury Fire Medical $500,000 08-21-94 08-21-95 $500,000 08-21-94 08-21-95 $500,000 08-21-94 08-21-95 $ 50,000 08-21-94 08-21-95 $ 5,000 08 -21-94 08-21-95 $1,000,000 08-21-94 08-21-95 I I Umbrella I I I I I I I I I I The accompanying notes are an integral part of these financial statements. -25- I I I I I TYPE OF COVERAGE I Public Officials Faithful Performance (5 Directors) I Employee Dishonesty Bonds - (3 Employees) Management Company I Liability: Automotive - Property Damage and Bodily Injury I Comprehensive: General I Personal Injury I Fire Medical I Umbrella I I I I I I I I I TYPE OF INSURER POLICY CORPORATION STOCK/MUTUAL NAME CLAUSE CO-INSURANCE Ohio Casualty Insurance Company Stock No Ohio Casualty Insurance Company Stock No Ohio Casualty Insurance Company Stock NO Ohio Casualty Insurance Company Stock No Ohio Casualty Insurance Company Stock No Ohio Casualty Insurance Company Stock No Ohio Casualty Insurance Company Stock No Ohio Casualty Insurance Company Stock No -25- I I I I I I I I I I I I I I I I I I I OTHER INFORMATION I I HARRY A. WERlAND Ce<tiftd <PuCCw c4aaoun/ant I 737 ISOM ROAD SAN ANTONIO,TX 78216 (210) 308.0303 FAX: (210) 525.0340 I Board of Directors Guadco Municipal Utility District No. 2 Guadalupe and Coma 1 Counties, Texas IndeDendent Auditor's Reoort on Other Information I I have audited the general purpose financial statements of Guadco Municipal Utility District No. 2 as of and for the year ended March 31, 1995, and have issued my report theron dated June 6, 1995. My audit was made in accordance with generally accepted auditing standards and, accordingly t included such tests of the accounting records and such other audit procedures as I considered necessary in the circumstances. I In connection with my audit nothing came to my attention during the course of my examination to indicate that the questions listed herein were not answered correctly, and in addition, nothing came to my attention that indicated the District has departed from general or special legislation under which the District was created or from laws and regulations excerpted and included in the Water District Accountino Manual, as amended September 1, 1983, in Section 70-03-1 or from requirements of the Bond Resolutions. However, my examination was not directed primarily toward obtaining such knowledge. I I I The information contained in the schedule of Board Members, Key Administrative Personnel and Consultants was provided by the District, and therefore, I express no opinion thereon. I June 6, 1995 I I I I I I I I I )~W~ -26- I I GUADCO MUNICIPAL UTILITY DISTRICT NO.2 N. BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL, AND CONSULTANTS YEAR ENDED MARCH 31, 1995 I Complete District Mailing Address: Post Office Box 18348 San Antonio, Texas 78218 I District Business Telephone Number: (210) 656-1310 I TERM OF FEES OFFICE ELECTED AND EXPENSE RESIDENT AND EXPIRES REIMBURSEMENTS TITLE AT OF NAME AND ADDRESS OR DATE HIRED MARCH 31, 1995 YEAR END DISTRICT? BOARD MEMBERS George E. Griffiths 3913 Pecan Court 05-94 to 05-98 668.10 President Yes Cibolo, TX 78108 George H. Gentry, Jr. 3752 Hunters Glen 05-92 to 05 - 96 700.00 Vice Yes Cibolo, TX 78108 president Bill F. Hackney 3605 Chestnut Court 05-94 to 05-98 500.00 Secretary Yes Cibolo, TX 78108 Dick Reavis 3717 Scenic Drive 05-94 to 05-98 550.00 Treasurer Yes Cibolo, TX 78108 Henry L. Ward 3732 Hunters Glen 08-94 to 05-96 400.00 Assistant Yes Cibolo, TX 78108 Secretary Past Board Members James A. Knight, Jr. 3925 Pecan Court 05-92 to 08-94 250.00 president Yes Cibolo, TX 78108 Jack Overstreet 4013 Oak Court 05-90 to 05-94 100.00 Vice Yes CiboloJ TX 78108 President George McCollough, Jr. 3745 Hunters Glen 05-90 to 05-94 100.00 Treasurer Yes Cibolo, TX 78108 KEY ADMINISTRATIVE PERSONNEL Louis A. Cortes 4827 Whirlwind 02-81 None General No San Antonio, TX 78217 Manager I I I I I I I I I I I I (See Auditor's Report on Other Information) I -27 - I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 N. BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL, AND CONSULTANTS (CONTINUED) YEAR ENDED MARCH 31, 1995 I I NAME AND ADDRESS TERM OF OFFICE ELECTED AND EXPIRES OR DATE HIRED CONSULTANTS FEES AND EXPENSE REIMBURSEMENTS MARCH 31. 1995 TITLE AT YEAR END RESIDENT OF DISTRICT? I Glenn Opel Vinson & Elkins First City Centre 816 Congress Avenue Austin, TX 78701-2496 04-84 623 . 12 Attorney No I Civil Engineering Consultants 9901 Broadway San Antonio, TX 78217 02-94 933.00 Project Engineer No I John W. Green, CPA Thompson, Williams, Biediger, Kastor, & Young, L.C. 800 NW Loop 410 Suite 300 San Antonio, TX 78216 02-93 5,500.00 Bookkeeper No I I Cortes Contracting, Ine 4827 Whirlwind San Antonio, TX 78217 02-81 26,225.25 Operator No I Bob Leared Interests 11111 Katy Freeway, #725 Houston, TX 77079 06-86 5,041.38 Tax Assessor- Collector No I Comal County Appraisal District PO Box 1222 New Braunfels, TX 78130 11-80 2,013.29 Central Appraisal District No I I Ronald J. Freeman 301 Congress, Suite 1400 Austin, TX 78701 02 - 94 3,385.40 Attorney No I Harry Werland, CPA 737 180m Road San Antonio, TX 78216 04-95 Auditor No I I I (See Auditor's Report on Other Information) I -28- I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 O. AUDITOR'S QUESTIONNAIRE YEAR ENDED MARCH 31, 1995 I GUADCO MUNICIPAL UTILITY DISTRICT NO.2 Name of Municipal Utility District GUADALUPE AND COMAL Counties I 1. On the following chart, provide the appropriate check marks for each listed accounting record. Under the 11 USED? II block for each record, indicate either II NOli (it is not used) or nYES" (it is used). Under the I1HOW KEPT?'l block indicate if records are maintained manually, by hand, or if data are input to a computer. Under the "WHEN UPDATED?" block show how often entries are made to each record. If entries are made less often than monthly, write in the frequency under ltHOW OFTEN?lI. Indicate who provided the information for the table below: District Manager, Cortes Contracting, Inc. I I USED? HOW KEPT? BY BY NO ~ HAND COMPUTER Description of Accounts X Chart of Accounts X X General Journal X X Cash Receipts Journal X X Cash Disbursement Journal X X Check Register X X General Ledger X X Customer Subsidiary Ledger X X Fixed Assets Ledger X X Bank Reconciliation X X Trial Balance X X WHEN UPDATED? HOW DAILY WEEKLY MONTHLY OFTEN? I x As Needed As Needed Water Manual Used I x I x X X Three Times Monthly I Annually X X I 2. Does the District use double entry accounting? Yes 3. What is the usual location of the accounting records? 4827 Whirlwind San Antonio, Texas I (All questions with responses marked by an asterisk (*) should be explained at the end of this Questionnaire in Item 15.) I 4. Did you identify, during the course of your examination of the financial statements of the water district, any areas pertaining to the accounting matters in which action should be taken by the Board of Directors of the Water District? No I 4. If Yes is checked for question 4} have these topics been discussed in the management letter to the Water District's Board of Directors? N!A I I I I (See Auditor's Report on Other Information) -29- I I I I I I I I I I I I I I I I I I I I GUADCO MUNICIPAL UTILITY DISTRICT NO.2 O. AUDITOR'S QUESTIONNAIRE (CONTINUED) YEAR ENDED MARCH 31, 1995 5. Did you obtain representation from the Board of Directors of the Water District that all records of the Water District were made available to you for your examination? Yes 6. Did the Water District: a. Use the capital projects fund, and debt service fund only for purposes authorized by the Board of Directors of the Water District and/or within the provisions of applicable bond resolutions? Yes b. Properly escrow the required amount of cash as prescribed by the Texas Water Commission or disburse the escrowed cash according to the terms prescribed by the Texas Water Commission? Yes c. Do business only with firms or corporations in which members of the Board of Directors had not pecuniary interest? Yes d. Observe the conditions for obtaining grants, gifts, etc., or observe agreements with governmental agencies for the purpose of securing funds or services? Yes 8. Have a contract for Social Security coverage for its employees with the Texas Employees Retirement System. (See #15) NO f. Make remittances of Social Security taxes according to the terms of the contract for Social Security coverage with the Social Security Division of the Texas Employees Retirement System? (See #15) No g. Deposit receipts to the proper funds kept by the approved depository bank? Yes h. Draw checks only on funds approved by the Board of Directors and signed by authorized personnel? Yes 7. Note - A management letter is an audit scope requirement of the Water District Accounting Manual. a. The date of your most recent management letter was June 6, 1995. b. Were your recommendations explained to and discussed with administrative officials of the Water District? Yes c. IS there evidence indicating that your previous years' recommendations have been or are being implemented? Yes (See Auditor's Report on Other Information) -30- I I I I I I I I I I I I I I I I I I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 O. AUDITOR'S QUESTIONNAIRE (CONTINUED) YEAR ENDED MARCH 31, 1995 8. The Texas Water Code makes specific provisions relating to security provided by depository banks. After consideration of the applicable laws pertaining to the specific water district, did the depository bank provide adequate security of the correct type? Please indicate for each depository: Yes a. The name of the depository bank Victoria Bank & Trust b. Amount of FDIC coverage (if member bank) $100,000 c. Amount of bond or other security pledged as of the end of the fiscal year $100,000 d. Largest cash balance $122,074 e. Date of largest cash balance February 28, 1995 f. Amount of bond or security pledged at the time of the largest cash balance (excluding FDIC coverage) $100,000 9. The Water District's taxes were collected by: Bob Leared Interests. Inc., Houston, Texas 10. Was the tax assessor-collector bonded as required by law? Yes 11. What was: a. The tax assessor-collector bonded for? 25,000 b. The greatest amount of the District's taxes in the tax assessor-collector's possession at anyone time? $ 17,477 c. The frequency of tax receipts deposits with the bonded depository? (check one) (1) Daily (or as Amounts Accumulate) x (2) Weekly (3) Monthly (See Auditor's Report on Other Information) -31- I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 O. AUDITOR'S QUESTIONNAIRE (CONTINUED) YEAR ENDED MARCH 31, 1995 I 12. We (Check One): I a. Actually examined the records of the tax assessor-collector (work down after June 6, 1995) b. Received written confirmation for tax data from the tax assessor-collector. I c. Accepted tax data furnished by the District's administrative offices. I 13. As a result, were local tax revenues (including delinquent taxes and interest and penalties on taxes) properly separated for debt services? I 14. Was the Water District in compliance with applicable bond resolutions, with the general or special legislation under which the District was created and with the specific statutes excerpted and included in the Legal Compliance Guidelines in Section 70-03-1 of the Water District AccountinG Manual? (See explanation below.) I I :5. Full and complete explanations and/or references to notes, schedules (or comments in the Auditor's Report Letter) for responses marked (*). I Explanation for items 6e and 6f - The District has no employees. I Explanation for Item 14 - The District's bond order states that the funds required to pay the current payments, of principal, interest and fiscal and agents fees should be delivered to the paying agent banks five (5) days prior to the payment due date. The District usually remits these monies the day before the payment date by wire transfer, taking maximum advantage of the investment income earned on these funds. The paying agent banks have not objected to this procedure. I I I I I I (See Auditor's Report on Other Information) I ,32- I x Yes No I I GUADCO MUNICIPAL UTILITY DISTRICT NO. 2 GUADALUPE AND COMAL COUNTIES, TEXAS P. CERTIFICATE OF THE BOARD OF DIRECTORS I We, the undersigned, do hereby certify that the audit report of the above I named Water District for the fiscal y~ar end~9/Mirc~ 31, 1995, was received by the Board of Directors on the 14fI/day of~ lL/i~C~, 1995, and was 1/ .J reviewed and ,/ approved disapp~ved at a/'"feting of the Board /tt! 1 ;", /J - of ict on the "l--PJY Of'----Y;L~! /995. '_l.;- II .<Cc, i 11/ .," / /. . I i,_ (j _,-"" t,";",_ // I' ;_>_~/ /./:.CL..--:/i--;;:,,/-: ./:____: ;-<-i--~C,Ll~:_"/ L_-'t:';,,({f Signature of Board Signatur.$1of Board"PrefsVdent ~ fi ' I I I I I I I I I I I I I I -33- I