The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the federal award activity of the City of Harlingen Waterworks System (the “System”) for the year ended September 30, 2025. The reporting entity is defined in Note 1 to the System’s financial statements. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the SEFA presents only a select portion of the operations of the System, it is not intended to and does not present the financial position, changes in net position or cash flows of the System.
The accompanying SEFA is presented using the full accrual basis of accounting, which is described in Note 1 to the System’s financial statements. Such expenses are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenses are not allowable or are limited to reimbursement. Federal grants are generally considered earned to the extent expenses are made under the provisions of the grant.
The System did not elect to use the de minimis cost rate of 15% as described in 2 CFR §200.414(f) – Indirect (F&A) costs.
No amounts were passed through to subrecipients for the year ended September 30, 2025.
The System received funding from three federal loan programs administered through the Texas Water Development Board: - L1001698 Clean Water State Revolving Fund (ALN 66.458) – originated in August 2024 in the principal amount of $10,000,000; the loan was funded in full and is held in escrow. Principal payments are scheduled to be repaid annually, beginning in fiscal year 2026. - L1001932 Drinking Water State Revolving Fund (ALN 66.468) – originated in July 2025 in the principal amount of $800,000; the loan was funded in full and is held in escrow. Principal payments are scheduled to be repaid annually, beginning in fiscal year 2026. - LF1001933 Drinking Water State Revolving Fund (ALN 66.468) – originated in July 2025 in the principal amount of $874,286; the loan was funded in full and is held in escrow. The loan is under a Principal Forgiveness Agreement whereby the principal may be forgiven, subject to meeting certain requirements. Consequently, no schedule of principal repayments was applicable as of September 30, 2025.
Changes in balances of federal loans with ongoing compliance requirements were as follows: ALN | Program Name | Balance as of 9/30/24 | Principal Issued | Principal Paid | Balance as of 9/30/25 66.458 | Clean Water State Revolving Fund | $ 10,000,000 | $ -| $ - | $ 10,000,000 66.468 | Drinking Water State Revolving Fund | -| 840,000 | - | 840,000 66.468 | Drinking Water State Revolving Fund |-| 874,286 | - | 874,286