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5.03. INELIGIBLE EXPENSES. The City must use Principal Forgiveness Funds for Eligible <br /> Expenses. The City must return any Principal Forgiveness Funds that are used for expenses <br /> that cannot be verified as eligible or that are ineligible. The amount of Principal <br /> Forgiveness Funds used for any ineligible or unverified expenses shall be credited against <br /> verified Eligible Expenses. If the total amount of Eligible Expenses is insufficient to fully <br /> offset the amount of improperly expended Principal Forgiveness Funds, the City must use <br /> other funds to fully repay the TWDB. <br /> 5.04. MAINTENANCE OF PROJECT ACCOUNTS The City must maintain all project <br /> accounts containing funds disbursed for the planning, acquisition, design, or construction <br /> of a project, as applicable, in compliance with generally accepted accounting principles <br /> (GAAP), including the reporting of underlying infrastructure assets. <br /> 5.05. FINAL ACCOUNTING. The City shall provide a final accounting of funds expended <br /> on the Project pursuant to 31 TAC § 375.106 and return any remaining Principal <br /> Forgiveness Funds in a manner determined by the Executive Administrator. <br /> 5.06. LEGAL STATUS. The City must notify the Executive Administrator prior to taking <br /> any actions to alter its legal status in any manner, such as by conversion to a conservation <br /> and reclamation district or a sale-transfer-merger with another retail public utility. <br /> 5.07. WATER CONSERVATION AND DROUGHT CONTINGENCY PLAN. If applicable, the <br /> City shall adopt and implement a water conservation and drought contingency plan that <br /> complies with Texas Water Code §§ 11.1271 and 11.1272 and 31 TAC §§ 363.15 and <br /> 375.43. <br /> 5.08. WATER AUDIT. If the City is a retail public utility as defined in Texas Water Code <br /> § 13.002 and the City provides potable water, then the City annually shall perform and file <br /> a water audit computing the City's most recent annual system water loss with the TWDB. <br /> The first water audit shall be submitted by May 1St following the passage of one year after <br /> the effective date of this Agreement and then by May 1st every year thereafter during the <br /> term of this Agreement. The City agrees to comply with 31 TAC § 358.6 relating to water <br /> audits. <br /> 5.09. REGISTRATION REQUIREMENT. Pursuant to the Federal Funding Accountability <br /> and Transparency Act of 2006, Pub. L. 109-282, as amended by Pub. L. 110-252, the City <br /> shall obtain a Data Universal Numbering System (DUNS) Number and shall maintain <br /> registration in the System for Award Management (SAM). <br /> 5.10. ANNUAL FINANCIAL AUDIT. During the Term of this Agreement, the City shall <br /> submit an annual audit of the general purpose financial statements prepared in accordance <br /> with Generally Accepted Accounting Principles (GAAP) by a certified public accountant or <br /> licensed public accountant. Audits shall be submitted to the TWDB no later than 180 days <br /> after the close of the City's fiscal year. <br /> TWDB Commitment No.L1000601 <br /> Page 8 of 14 <br />