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2026 02 25 BAWA Minutes, Special MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY February 25, 2026 The Board of Directors of the Baytown Area Water Authority(BAWA)met in a Special Meeting on February 25, 2026, at 5:00 P.M., in the Council Chamber of the Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance: Brenda Bradley Smith President Alyssa Linares Director David Start, Jr. Director Sharon Valiante Acting Assistant General Manager Kristen Holmes Assistant General Counsel Miriam Hernandez Acting Assistant Secretary President Brenda Bradley Smith convened the February 25, 2026, BAWA Board Special Meeting with a quorum present at 5:00 P.M., all members were with the exception of Vice President Frank McKay III. 1. CITIZEN COMMENTS President Brenda Bradley Smith announced no one signed up to speak. 2. MINUTES a. Consider approving the minutes of the Baytown Area Water Authority Special Meeting held on December 10, 2025. A motion was made by Director David Start, Jr., and seconded by Director Alyssa Linares to approve minutes of the December 10, 2025. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Alyssa Linares, Director David Start, Jr. Nays: None Other: Vice President Frank McKay III (Absent) Approved b. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on January 21, 2026. BAWA Board Special Meeting Minutes February 25,2026 Page 2 of 3 A motion was made by Director Alyssa Linares, and seconded by Director David Start, Jr., to approve minutes of the January 21, 2026. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Alyssa Linares, Director David Start, Jr. Nays: None Other: Vice President Frank McKay III (Absent) Approved 3. PROPOSED RESOLUTIONS a. Consider a resolution authorizing a professional services agreement for construction materials testing services for the Baytown Area Water Authority East Surface Water Treatment Plant Phase 2 Expansion Project. Assistant Director of Utilities in Public Works and Engineering, Sterling Beaver, presented Agenda Item 3.a. and provided the Board Members with an overview of the agenda items. Mr. Beaver stated this proposed resolution authorizes for the material testing required in the development of the project. Board Members requested clarification of the costs not included with the current design build contract and services provided by this third party. Assistant Director of Capital Improvement Plan (CIP) in Public Works and Engineering Rafael Errisuriz clarified regarding the Request for Quote (RFQ)process and state law requirements for necessary testing. A motion was made by Director David Start, Jr., and seconded by Director Alyssa Linares to approve Resolution No. 2026-2,related to Item 3.a. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Alyssa Linares, Director David Start, Jr. Nays: None Other: Vice President Frank McKay III (Absent) Approved RESOLUTION NO. 2026-2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY AUTHORIZING AN AGREEMENT FOR MATERIAL TESTING SERVICES WITH TERRACON CONSULTANTS, BAWA Board Special Meeting Minutes February 25,2026 Page 3 of 3 INC., FOR THE EAST SURFACE WATER TREATMENT PLANT PHASE 2 EXPANSION PROJECT; AUTHORIZING PAYMENT IN AN AMOUNT NOT TO EXCEED THREE-HUNDRED, NINETEEN-THOUSAND, SIX-HUNDRED FORTY-FIVE AND NO/100 DOLLARS ($319,645.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. b. Consider a resolution awarding the Annual Liquid Sodium Hypochlorite Contract to Brenntag Southwest,Inc. Assistant Director of Utilities in Public Works and Engineering, Sterling Beaver, provided an overview regarding the renewal of the current contract with no increase. A motion was made by Director Alyssa Linares, and seconded by Director David Start, Jr. to approve Resolution No. 2026-3,related to Item 3.b. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Alyssa Linares, Director David Start, Jr. Nays: None Other: Vice President Frank McKay III (Absent) Approved RESOLUTION NO. 2026-3 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY AUTHORIZING PAYMENT BY THE BAYTOWN AREA WATER AUTHORITY, IN THE AMOUNT OF ONE- HUNDRED, FORTY-SIX THOUSAND, FIVE-HUNDRED, FORTY-SEVEN AND 77/100 DOLLARS ($146,547.77) TO BRENNTAG SOUTHWEST, INC., FOR THE ANNUAL SODIUM HYPOCHLORITE CONTRACT; MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 4. REPORTS a. Receive a report on the status of the Baytown Area Water Authority East Expansion Project. Senior Project Manager Ms. Lindsay Kovar, with BGE, Inc. provided a presentation regarding the status of the expansion project and the ongoing review of the environmental state, pending approval to continue with scheduling. (Exhibit A) BAWA Board Special Meeting Minutes February 25,2026 Page 4 of 3 President Brenda Smith clarified that its potential ground-breaking date may change due to the pending environmental review. b. Receive the Baytown Area Water Authority Quarterly Financial and Investment Reports for the Quarter Ending December 31, 2025. Director of Finance Teresa McKenzie presented the Quarterly Financial and Investment Report to the Board for quarter ending December 31, 2025, and the Board considered the report as received. (Exhibit B) Director David Start Jr, clarified the break-down of the investment percentage is also reflecting a true market decline. c. Receive the Baytown Area Water Authority Investment Policy. Director of Finance Teresa McKenzie provided a summary regarding the investment policy as required to be incompliance and introduced Hilltop Securities as consultant representatives. Consultant Scott Maclntyre provided an overview regarding the investment policy, and presented the Board with options for fees associated with the certification process. d. Receive the Baytown Area Water Authority's Annual Financial Report for the fiscal year ended September 30, 2025. Director of Finance Teresa McKenzie introduced representative Stephen Smith from Weaver and Tidwell. Mr. Smith presented the annual financial report for fiscal year ending on September 30, 2025 regarding the annual audit report highlighting the phases. (Exhibit C) 5. MANAGER'S REPORT The next Baytown Area Water Authority meeting is scheduled for Wednesday, March 11, 2026, at 5:00 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. Acting Assistant General Manager Sharon Valiante reminded the Board Members of their next Baytown Area Water Authority meeting, which is scheduled for Wednesday, March 11, 2026, at 5:00 P.M. 5. ADJOURN BAWA Board Special Meeting Minutes February 25,2026 Page 5 of 3 A motion was made by Director David Start, Jr., and seconded by Director Alyssa Linares to adjourn the February 25, 2026 Baytown Area Water Authority Board Special Meeting at 5:28 P.M. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Alyssa Linares, Director David Start, Jr. Nays: None Other: Vice President Frank McKay III (Absent) Approved (e + fi4.a r O ' Angela t ckson, Assistat d•c '`t,b 2.0 City of Baytown %cA S �r� EXHIBIT "A" PROGRESS REPORT 10WM�q j‘ *j '+D Project: BAWA East Surface Water Treatment Plant Phase 2 Expansion Owner's Advisor Date: February 25, 2026 Progress Report 1. Previous Months Activities A. 90% Plan Review B. Army Corp Confirmation of No Permit 2. Project Highlights A. Funds Available ($79,000,000) B. Project Budget with GMP Price Proposal BWP - GMP $69,782,861 Material Testing $600,000 Pulsed Bed Clarifier $2,092,798 Recommended Owner Contingency $2,434,091 Fiscal Services $382,000 OA with CMI $3,473,578 Project Budget $78,765,328 C. Schedule 1) Limited Notice to Proceed - January 7, 2026 2) TWDB Environmental and Design Package Approval - February 20, 2026 3) Pulsed Bed Clarifier Proposal - February 25, 2026 4) Full Notice to Proceed -- February 27, 2026 5) Phase 2 Substantial Completion - May 22, 2028 6) Phase 2 Acceptance & Final Completion - July 19, 2028 7) BAWA is anticipated to need additional water by 2028 D. Outstanding Agency Reviews 1) TWDB Environmental Review/Design Package Firs+ 0.i!.. rrer Financial Report Q1 2026 BAYTOWN AREA WATER AUTHORITY(BAWA) Pe,,.dErtthdg Decembe•31,2025 Operating Fund CY to PY Revised Budget CY Actual Balance % PY Actual Change$ Rev r w enues Water Sales•60102.o 5 20,344,606 Si 5,428,491 5 14,916,115 27%S 5,150,032 S 278,459 © BAWA Budget Received -'" .. Water Sales Others 1,729,730 465,264 1,264,466 27% 465,264 MAN rx6l•$5 vsl axe ♦,' Interest Income 372,915 57.670 315.245 15% 117,449 (59,779) Vir 27% Miscellaneous - 0% Intergovernmental 0% 4,974 (4,974) Total Revenues 22,447 251 5,951 425 16,495,826 27% 5,272,455 678,970 �-,..,.. ,�. ...`- ExpendituresPerso m,nel Seces 2,349,762 435,997 1.913,765 19% 497.530 (61,533) Suppl es 10,041291 8,393,31] 1,647,913 84% 2,141,206 6,152,1]1 :'S-C Mantenance 384,656 122,222 262,434 32% 71.382 50,840 BAWA Budget Spent 32 ,-, p ,I: -- 5ervces 1,266,894 630.465 636,429 50% 141,377 489,088 SxJ xxl,exvrslp9ex,79e evS �-, Tep41 OA*rsOut 19,020 18,290 0% 47% y aaee * Ca Hams Out 9,160,000 1,;W.737 7.860,000 1 2,544,393 (1,243,657) ''" BAYTOWN r Com ngency7Lew InnAtve - 0% A MINI' . le', Tool Expenditures 23.22T629 10,882,799 12.338831 47% 5,495.888 5,366.971 AREA WATER AUTHORITY ,■' EAST PLAN '.' ClNChang ,976,319) (4931,374) (223,433) -^' Beg.WEndin Cap.41 9,201,002 5,044.628 Q 5' Entling Working Capiul$ 9,201,613 $ 5,044,6T8 w -''4 ^"^^^^• •• ,,• .: \ Capital Improvement Program CO to PY Woe \, - Revised Budget CY Actual Balance % PY Actual Change$ BAYTOWN AREA Revenues ...,,.,. ., i ----.- "„ Interest Income 5 80,000 5 18,390 $ 61,610 23%$ 24,913 $ (6,523) Securrt TypeBalance A' WATER AUTHORITYl earnings \s '�� Revenue 4om BAWAOperatir•g 2,044,000 511,000 1,533,000 25% 1,092.073 (581,0]3) ie.pool S2],10)63a S. 290,210 (BAWA) Total Revenues 2.124000 529 390 1.594610 25% 1,116.986 (587,596) ..._ .41 I Espendeuree 0,410,639 5 7,572.154 410048 7,'62,106 5% 72,823 33727S Net Working Aga (5,448.154) 119.342 1,044,163 atilks.-411 1111141°1*&k ..1,�g •.,.N Beg Ceptal 6,280,270 6,280,270 QUARTERLY Ending Working C.f.'s!5 832,116 5 6,399,612 FRJANCIAL RTERLY kI Ending December 31.2025 Unaudited Financials HilltopSecurities HilltopSecurities INVESTMENT REPORT Contents Marker Recap , City of Baytown Investment OfficersCertrecatton Prr(icfie OvermeW Pomfollo Overview r• i ttrbel t to December Ti,202s Asset Allocation r Credit Rating hummtr, ri us: Benchmark Comparison Detail of Security niold,nu- .. .. I Earned Income i 4 6 'a Irk. - Investment Transactions, Investment innsactionS To's). y Amomoation and ACactlun f9.AT r -. Projected Cash Flows ;iI Projected Cash lows-totals 21 Dlsdostire R_Disclaimers ..Hiltop Seaurmes Asset Manager enl,UN.AN righn reserved. r(Hilltop Securities Asset Management,(IC.All rights reserved. 1)J;e Hillt Securities City of Baytown City of Baytown As of December 31,2025 HilltopSecurities*, Os of December 31,2025 Market Recap Investment Officers'Certification December saw the return ofoffcial goverment data following the43 day shutdown.After deceleration,posting their smalest two month increase since theearty months ofthe This report isprepsed for the Gty of BaytownftheErrsrtyl inactordarce with Chapter2256 ofth Tess Public Funds Investment Iniesbient Moms two months of relying on private sources,financial markets Only received delayed oclober pandemic.Economists warned that shutdown relateddistorrdns may unwind in the ActCPHA').San.tkn 2256.023(a)of the PHA states 11iat•Nut less tlwi quarterly,N le itivesmnerrt officerslrall prepare and submit and Nrnenrherleadrngs on inflation,the labor markeLeconnmicgrnslnh,and consumer coming months,but the oven Ochre reinforced the(lea that the Fed's restrictive stance is to the go.enurg body of the entity a Antler,report of the investment transactions for al funds covered by this chapter for the sentiment. continuing to exert downward pressure on inftatan preceding nppNg period."This report is sgned by the Entity's Investment officers and includes the disclosures required in the PHA. iAlxx marker data remained ovenvhelmingly rive throughout DnremMr Private The Federal Reserve delivered its third consecutive 25 basis rut at the December In the investment portfolioTeresa McKenzie nqb negative g parr p complied with the PhIA and the EINrt's approved Investment Policy and Strategy throughout he period sector employment showed more weakness ahead of FOAM-meeting,with the meeting,lower) the target taMrrc c'craxr pkryrrw g, n0 ye reutn 3.?fY!6-775ab The vote Ga('rtrad.with three All investment nansactxns made In the porddro during this period were made on behalf Entity were made in November ADP upon nv4'alrrg a 32k deslirr mµaynsls,doe largest monthly drop rinse dissents,the most sink'2019,as Chw.agok Goody e and Kansas City's Schmid argued for compliancevvirh the PFlA and the approved Investment Policy early2023.Snap businesses shed 120kjubs,the biggestpltlbaek once May 2020,while n change while Governor Miran pushed tor a larger 50 bp MOW Chair Powell descried li larger firms managed naxdestgairn.Challengers layoff data showed more than ll/Aron the deeiston asaUose sat-trolly that neither intlanurl rxxenrpknrnent data mode a Uanette Leon • jeb cuts year to date,akeady the lowest once 2020 By the time the 8LS finally released Ai compelling case for cantos but the eornmlttee felt-well cgs/boned towalt and see'leadaiy .1r,na14t-•0..si(a mwm.. • combined(kmber--November report,die uneniploylnent late had jumped to46%,,arid i1to202o.the updated Summary Of Feorrxnie Progcctiorlsoflirsd mixed tgicds.nr 2026 the underemployment rate rose sharply to 8/96,reflectiol a combination of lower survey GDP forecast was revised sharply higher to 2.3r6,svhkcore PCF was nudged down to 25?4, pamcipation,discouraged workers re entenng the labor force,and softening in economic supporting the slew that tariff related inflation pressures might be fading conditions Payrolls increased a modest 64k in November attera steep 105k decline in latermdle month the economy,dl9svered another a October,and the three month average pace of gob growth slowed to tars[22k,down from .urpnsewhen Q_COP was revised up 62k,prior TO the shutdown. to4.3%,the strongest quarterly growth intwo years and wellabove every major forecast Personal consumption remained the engine ofexpansion,while net exports provided an The weak pb market has fed directly into collapsing consumer confidence Both the unusually large boost as imports leg sharply But ihestronger groAh also pushed the 4UP Univeistr of Michigan and Conference Board measures sir]toward multi decade lows, price Index up to i.B14,and the core PCE indes rose to 299v,complicating the fed's inflation with Michigan's current conditions Index hitting its lowest reading in nearly fifty yea¢ narrative and reinforcing the idea that rale cuts or early 2026 are assured Sarong GDP Confidence ersded further as households continued to snuggle with higher prices,laver with rising unempoynrent rv0 be a challenge for pdicymakers next year,especially in an swage gains,and a cooling job market Retail categories tied to discretionary spending economy increasirnjy shaped by rapid technll,yo,ll changes and investment showed weakening rnnnrenwm,while hiring free5es broadened across rydicully sensitive As the year wraps,the economic landscape remains uncertain marked by strong topine sectors such as manidaeruring,tansportarion,information services,and finance. growth but weakenm labor momcn 9• tun,easeg inflator but distorted data,and a Fed that With October CP1 data never collected.the November CPI release only provided year cud while signaling caution ahevd The path art monetary polcyearly in 2026 soil hinge NI over year'lungls.Even with the data disruptions,the rlumbrs were striking headline wfrether the erunorny apparent stnvyth prowsduratlr or w5redrertfw growing signs of CH unexpactcdN fell hum3016 to 2 K6,uvhpe cum CH softened from 3046to 26%.. labor market sdrenrg begin todunrewte dierlanann• both rearrdny rhea kaeest levels sine early 2021.Shelter costs showed a questini uole a'eslirue Securities Asset Management,LLC.All tights reserved. Page 3 .r rvItop Serursrie.Asset Management,sic.All rights reserved Page 4 ty HilltopSecurities tktone t,2025_CD'l-December HilltopSecurities 441111' City of Baytown As of December 31,2025 Portfolio Overview Portfolio Overview Portfolio Summary Income Sunim.5ry Portfolio Characteristics Maturity Distribution by Security Type Top Ten Holdings Pr. Carew sassyw llor[35 ,"u,Pnroa ion.3stent.as ySeP' stirvnt 35 noon ■AGCt 3A1M ♦AG. c s-i 1.91s •Sri,8833% is 115,3,(31141, 1-sloe ialgll(on s-itun,licti d lair 5rrp. IMMmra'n:;.'eerel 1.1 Ni./ rtia,W:eal is'Sr. r,;. ,.r 982 troy V1 M)Ma Meassrx s'pae3)1E31 431,1:/A7948 ushren,re 4G3730.28 3ey;;c eneiiz5Arsa.:y ss -_ 3V',A55 now A.'-nto-va 82.nei ir:.51:: inses ls.-,rd,-.a'xr vrr n)ri•,,t':i' sear. iludoral,eftskoveo 4/015897/3 40045553C rede•a1I4 eid5'iR nu 241M t 4.1a54:ra'' 1.ti3,:3411i ',Ite'a te Ytcs,nu ie+uG_y1 159,631tn inasis3 7.3 l.) vseR 'g,S U d'c „sf''~ '� i i A oei Asset Allocation Transaction Summary Transaction Type Narittity P mrt. .en m mamt r.. •. Maturity Distribution by Security Type a 0 351,135,983.13 i 6ra-arss r-rMmdn 9-13M,Mhs Balers P3twi larva' 4-3 own p,,sf sr9d 14,86(318.82 A(.Cr'3.67% Kecsa - - orsoa/83 - .AUJO'IOali - 1.9(116113 sCcv CALL 1.65% aa•ti n•.'k''' "'r .or .,.r'•i:3.' _ _ _ .- - -. •rule N.23% rots' - - - 5,r-ssm'W 4981,4i549 - ... - -- N1/1A3111 ▪J5 c,00i 0.t3% TOYI 351.13515,ts - ;96;6615 39,W31(A5 14,98),)134, - - - - 40A116a8811 'Aaron Securities Asset Management,LLC.All rigors reserved bay.") t Hilltop Securities Asset Manegement,LLC.All rbhrc reserved. :,'h f Hilk Securities Ciceobr3ytown Ciceobr I,2025 oP As of December31,2025 Hilltop5eeurities p,,ofD^iemb?rst202S Asset Allocation Credit Rating Summary Asset Allocation by Security Type as of Asset Allocation by Security Type as of Rating Distribution Allocation by Rating 30-Sep-2025 31-Dec-2025 , %AA Gown.A investment Pools 6 Man%Mad.rm. TN Lain Gw.mnw3 RrnstmentPeo66MMIryMMel funds 397.135113.13 0623% Totall2997 Rati,Oeebram 47p103411• 1133% Porg99oTaW 011/610011 1tl00% •AMp.2ri ■AA.11.77% Book Value Basis Security Distribution n %runty Nee ,n BJ.,nte P1Inr 65.rFxs Change el AlNnetmor �K2S Y.la Malunty ' I,ileetIAM 'M0.1,003 ),, L.,N, 2.962897 3 13,V _341% 114'1. 4l:..:V'.l wsse ,_.'2% 5(1% 1049►s 24311413.01 613% 3949% 41233331013 10100% 10076T1111 100110% UM% Ce311I.o1ssecomles Asset Management Ur-Aft,roMsreserved. Pagel AntonSs.4,5a,Asset Management,1IC All nynnreserved Page8 City of Baytown City of Baytown HllltopSecurities4111' As of December 31,2025 HilltopSecurities Olober1,2025-December 31,2025 Benchmark Comparison Fund Overview vFr,x v ..,ti� NN Me M4M1.t Awe ei aloe (urr•+e&+•,N Unlue (.,t,n•M.M1eI VaN,e Net home Days to Final M(y VIM ee tatty of Raylnnn -6Month CAM ee Tots., UC,ll.,. :,,- .. i-I4+, 3134% I,cl',-e., ,1 7.: ....:Isw 1.1-r.t.4 1,16.6 i 111111111.1111111111110 .9043.13441 79a041,35693 (1.13.1)21,49 27,,10)01313 1510277403 73021006 I 3902% 390796 4/149'.N9s fre'. 1 .. , r M,s ?.�I,I+•, ..?.n.r !1,'9':. I 310'% 791sn. 51400 lmlmeter%Proven, 12,0%91%31 '0255,90131 '243:A60 10A54 3499 I5453,9313 9 '54,tari'. 1 3d2151 1821% . F-,,.:.Ms 1,.er.rT I.,e .n.,. 1 .. c x?Ri','., I:::w 3, „ .,G I 3915.:A i8Jw_ /3.2 Ands/,netMSen,o22(41 1 ,,,N]E 13,,11,01,OR CAW!i' 12PS6,71403 :,6343Cae 1-31!73.14 267 39400.6 394(P[ RAvn 536e.• ,Xr, .e„ ......4 55,:6,6, ;3.6I 6666i:3: 5 3R6', 321300. Ttdd 4933331733 4316 24411 (1363123611 01T76 0131 e691796710 6037.1030 32 3.106% 3.306% Yield Overview 1,47343109 n. 5.17 5.1, 5.16 5.15 lu su 532 326 310 436 671 ass 4.39 4.34 431 431 489 427 433 427 611 409 339 LI 59197161 5.41 170 5.30 533 5.1 514 534 529 ,11 513) 46 414, 3;,0 439 4.3= 6,, 420, 42' 42, 424 4 3 411 402 131 ,.H4ltop Securltles Asset Management,LLC All ngMs reserved Page0 ,Hilltop Securities Assn Management,LLC.All rights re5erye6. Page 10 Hillt Securities City ofb Baytown City of Baytown � As of December 31,2025 HilltopSecurities r:of O'i.embtr it 2025 Detail of Security Holdings Detail of Security Holdings - Se4V4490e,0,-4. 415 '.:"u'91 Nett Ca3 0414, P.9V.3lue Pwch 41 3't 0ry,ro U..le Gale Pp::: Clgnal CnM Bm4,V.Jw PiAe M9AM Value to Mty CaX YTM YiSY RMg , 579a t.,,n(5'peu'3,h„n MI MDNem pN¢d Cz1Type PMV,31ue Pr.,,,'A an91nJ(nrt 8694Valw �. 1.4e01416e to MR Giro YTS Y11Y AAA, 'Wb31G.I�� :CI ,+a. 'n ,r. .i 9:14.r, I_..V. , x > o�£fi 1t '4..:A l _..c.> 1 a- f_. 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LL4P '''T"'Rf' ''"0 fa ,1 ':5303(1 J000) 1ili 1,L315, 4043 ':OU;: 36): 33;1 Ma. n,1..401 3 .. .. •1/8.9'4) YA'.6)5 21.341 L5're44.v4'90 'en 05/:346 IC0300000) 91539 9358406.5 9,90743343 a„n 9.v19s3':4) Ial .r' I'll AA,. l riumikuhy' usix86 7251031Z 1)3Ip118 7931m115 1 3II)UV 31304,9, Y93025 3640' 1..111 675 04331/.6 300_0)000,2 93311 98)8100(0 9911149.03 58r1 463114030 .54 373)321 M- Ike, 31i339-411 '13321 4474(41:.14(3 11 1'/33/26 44)/26 Can91o9.3 11.0W.)I:OA 504.S0(J 503)x31) 19.a1 <6 .42 XI 32, 1 lax):330 M. LOOM! TPA 1t+a11t11 loposa119914M113 II9knd .121MM 119JTM143 1111M,0 23 3T I S3 I 3YN A.M. � 2.3041441er10 I.-P 946 IC. F',01•x:,I2 .>, ':.31 11 'v150911Y,4''x;'xa <s39a3'R 'v1!<''6w'xX;) <sa931.,S AT'±an MA Ytl G nrr9.'wa•J:9 +�L'v4l LY9t4M11 ,9LCIc: tF u , ,re'.441a. A-1 3133/2, I1P53415.Y 19110e 113w. ,96 1:1594:199 ICO'OC 101,9.44,16 1 14:' 142' Mu, 1 p0000 l I413•ANM 1944310393 3464.$M33 1113690110 1 3m 3 O yr4 144.31C'= .tl' "n':AJAIn.W I.'? 1:/±'I..S 3$61:.:3 3„V. „MA1)34 9fid1)t5 1010C ,a')54 1 ?4''(till MA1kv44ol„•v31'!: f loollO4dl `4'1144104:, 3iF ... -1r:1.1 3X21 ''''''(-5 N<,'9L(914011C 41,.'..1)92 41a.'.31(9 ILJ',00 M4.I9.169 1 13:1 162/ A:,A I" ICIP F'r"4/4Y r 11,, ..:I:, 'ty.i(A131"JCpN '•'I,Ik.Y., ivl'891'..fa1.1 '..q`Yy'i 'I:i AA.'- '3 C.vn3, Fs,M,' 1. 9l1 -56.1009 3'120'% 9l AIL 0311 ,,5G54 :82 '35 AAa. 7431-3RaY 13i R1.e vr6:MS1:. 11,•: It/:'/,s :.'14M..' XIC ).,abW9' .,145.40)9' 14�+',(e: 3:,e5.",.:" I 1 la.l MA 1 T.•--I Ilk Tn:M-T 1n'r, ,,.. .' .p1.1.' .U'W ±IO:)0:. I.L>.1. xUk NF1:Z 1921 '15 NM '�4Fa1..-n. UY.3ICM1I W' R4944,1t ie. 114,-/'i :611114:11 I1n300 )4381345,0 2l13:49 11 If.:'0 14)1 3, AM i.�:'. LfIP Te.:iN9-4'31.149tta tn„ ,'1 d:!ltJbl'X'p\r 42,-!Final 322706011'30001 822'12S41 )X1r :•4r`. 5.54 I1/ T4W bSpeoY _-- ----- -"_ 1 P I.vt1 .4)f A .Bm3 45 3 3 I 6(14,07'SI /(W M110,5 16 a 4 6.151 46.6)151 'M , 51150 M)I51 3X11 10,5 A Trap MOW 14962,61821 16,96267021 1496267824 It.9(.b3834 M 1 3 3103 4 6,Ac.,1 1, f,fin,. l s8' w«t41,M 96,5 '401,34'56 30LL0 :1010.34156 10930156 0003 1,3093219C 3815 33:5 AM 01011/op SeSuns,Asset Managemont.UC 14119m1 resolved Page 11 .141113np 5e,xr'11e4 Asset 54n49e,Int,I LC All n1h11 reserved Page 12 f Bayt HilkopSecurities :11) As et City cemberr Baytown, 211P Citye of r 31,2wn HiltopSecuritiesOnobe3l,2025-December 31,2025 Detail of Security Holdings Earned Income GULP SetW pate$e4M4y 5[aw4y De14npom CAN Ma1w4Y tie.l(dl GI9I4 Par 415. 3•'. �, Md 101193 V91w 0':.,il.•y,1 3TM 13W 44mq (:.. r'" Det44ed5r,o,.ryDe431'p66A 1e:1i1r1vq Accrued Interest IMa43P4c'G 4nere'4 h43343, mne Type Da1c Gale Rur Prle to Mry CaOo i;pe Eared Sd6MaWed Purchased A44rWd A Amon Goo/toss , .4,....c 1"A 46' 3M 4/5,,, r:' 4 r' ,.- 1::,'v ' ' _ 1. n..n 1{r�dl4a4f r.'r,1 : S3.9 ,,. 1,1.C-J.3 U' 4.4J.ut4'.,91a,. (x .1..159 513.3'S4 0M1 10 Ca 5': (P e456F:RNi(1w4N1. (a: ,,,, t,+ tat' Wcn65. - I 08. I,V. 1a69',*,19/ 101(1,..5,10)110 141.Y,,3619/ I 18,5 (3,1< MA 14.x'u4, a A.n.a.r'aMau4"r� cx I/C-3 :'M )30 CC) 0x 0a 3443.Y.5 .CI. ,1 :.111:L.4..n: a i039 30 '3561;4 J00 r003 Ox 6M 3:•.'J . .14± lT '9451911,1A 00 boo, 5339 I1/: 3913,V I30000 1I39I4119 4439./A"9 100500 4335/4,Pi 1 !8)S 3125 MA IV 1,41). C. e-1441.5140641 04x44: CAC 91343 5')9113' OM CO, OIC Ca '136,+, Cp 1+F-9011if,14 3, 3K5 IL:/.' 1?1.,),3N1!(/100 I>W..119:9 '3•s„i.ti'I((:4E IlM::3<9i) 1 t&5 ((4' MA (4,4361 .4.1 1,30 kf.;_.Mw.3rxo f;1L 4,�3PJ 14^ltp` 010 LU] OJf Ca u. ,ewsdF;no 1'Y.$Y2 CO .Cf 4w1,401•.NSMn5f14.1 f:TC 'I4M '4M 101 OC) Ox OM ur 1J4.WSTgT,m- 3925 12/3:1,5 6)).2NJ15M 139300 (G:2001501 6)10315M 1y,1:44; C(.::50'.(1 1 38)5 1,15 MA S,F:F0' .fl 7-,9-,a.411 el(3 3pv 413) OM 30M4M 12YAM )30 Cf' '.'9' CM 3: TatYf9nd Few 14.nx+nvw (441'' J'F { I'0 1 COO ,40.54�:3 140041.,1 300 (("� I COC CA a4914d1 1N,f/{)Mlf IaAT4D11f Ia,a 0376 lam4331M 1 3335]� ,:21,0 408144 95314.04 1.)3 I r 4M. twldrrr 2 x�34 M'„ .11,A i,4., 4g3'SCo CIO9 - we 30,4 • a.44MN.los I 9/22C0 T4121123nrJ 23,223.40 1,045s7747 1,063444333 ow 6535.4 9155116 GOO LW.IZR ,I.311„ pr,'-.: 1'r( !'S( 0031406 (: V"5�+n». '3 ':0A.V4.' i. )�: ,.. , 1 6 '4 3e !.1'1 34' M. Fold 3 25C O'Y3'M, .y5 3"45 A.- 1428111.1.1 411 123154, v 1.11-,R "aW 1 4410 M- MAN J)Bwd Eurld3 i44.11'J1.`2 OF 4:,.}ym+Mv.1' n;�i3F�',• ':i -.+'. '1,..:'1: a ,:(: OM 0a ':I.30i'' 3me'1e4115ews n3A0000102 12.939,210M 1295465493 1299243045 361 23 1.940 3110 (.3'P 315 -:4i 4,,,,9A49939,11?-441,93'9.9 41(' 4.4141- I34i(:1 .,:G 40) OX Oa 12,>'4 2022 C0 T,1:-0T14/ Ji' 'roR}'IraCr 149.11,444041's: C'J" '.'.HY' ;t]•;:6 310 00 04 .(al 1919814465 . , 0 X. I I4 LN U''3m c1' a:.}4�Iel r•494 P+!o94+r13rnr.lxa .)nr•93 )MI (:(:., ,. 230:'11s -e..n4Ta.1,,ine0Wv.en,1" .,,.,t 3X CC) OM C14 x'/)91P AI 'n,\m1 � - ... 1'liv Alf 1.. I':::33C'13 IfJ IF 11t>•;,. 1 1 5, X,' AM (F T,3-0T.T' .,.. n'f,;1 ,44P '94334 I::i.i 'N:45 M 133100 413416 44 40313.54 I4393. 444C,94341 1 -ri'34." MA Jtl3dyd4 - .. -4L01 :tin 'aP,q 36:7 1th/,5 1523.443'IN*, IWO1545 15.099„,4.' ICJSC 15859,)145 1 04'3o, MA L4dn�H 000 1M,539.30 116.519.T8 003 0.00 000 0.00 1965M)3 V"9 Cf' .91 2Y:7 13/3'/.:5 e11320k.5 1)000C 31' X))5 e I'3214.5 IC0AC 4'3.4C131 1 30::'3421 AM . z,:'.• 1 se.I „a1-.c J156 Mf3'/26 11.X.4.03 9123+ <e6 ,: n ttr-r4: 1d'6t 493619345 ,13 322 1n2 AA., ..-'.+:. cl. 4:5C 12If/': ,(:0ua(2 5951Y ..44, 4, 1.:al,. ,0' �u3 1:55 35, 4.x3 4163 M3 T.f .f 01 ea4'L SS.J::L 34n - ....l,.I l" r 4 .1 Told OW..A T43..11-3 tF p.M-96,14(394 rnJ 5ev5x 55,0462133 5535423851 5539862).51 55.M0,1%p3 S5 31M 31M .3 11,)1401 I:J.{4"'•' 34 'e1W30 hMry. ,33 ' 1ere F:r., C a 19 ..'00: 0 , , Wald T9tl 1M,135,913.13 1Mb15$1581 4M/>430081 W4Y)L6A,M A 2331111M ..FHZ:u.4 f,A�.rv. (1� AYN(E 1A3`"�Lti JMn r„ t :,MIII49p Secu,Itl,S Asset Man 9ement,IL(.All nohts,...sped Page 13 446I1op Securi31e5 Asset Manogomen0I LC.All rights reserve. Page 14 .,, - . - '- - i ''''..:2,',g _ 3- ,...g I .... , 1t, t., -- I ..- . .., 7 c, a-, 0 i 1 - ,`'-' , i ggg . 51 4--.. i ..., r . 4, `•-, •?,c g 11 :-- 11 8RRR8 ?, I If' '•-• 2 1 - - - - - t it 11.2 . a a ). :1.,z : sz, 0 '0- 8L a R '. '.4 `14, 1 .; , '-', R '' ,. X ! 3 i ,t, g 7 - °,., 6' § gi §. 13 - - .3 1 -, ... .-i.f — .`--. 3 6" t. i 4 e• C.` g H ir g i , '-. § , -0 I ... . ,-o t g •c E 3 0 f V v j in g E II f Q. E t 7 =7" , 1 I I - II ... > 5 ... .; LI E . '51-2 ' '' ^18 7. /1 ii 7 E - E L23 s' IR A i . - :. .. , 1 , . 's ' ' .... t t 4 7 7 Z.- FO' t:•--1. • 22 „ .. - - 'f 5 _ t . , . , .4-- c.-D-c-t• 7 t t § t § t t 1 t t t 1 t t t .7. f ;-=-, 5, § .-- , , 5 ' ' ' R i § •'-', 8 ,t ,13$ i' ' # I 7 I t '‘'' 7.' f, - 7 ''. ' t 3 7 I 3 ; t g. .. ,. - I 4 i4 .13 g t t a 1. : 3. :7 § q ...1 F.• I o,., '..1 ., ; ; = 13 .7 a , 3 - il 5 , R I; , . * a ,- i .--,. .?; 2 i 1 I , ,"-- 3 i I .1 R ;--' 4' R7 7 r; •--; -_--,, 3 I ..1 i - , t i 3 1 13 ,5371177 -01, -_,- , ....! ' ' ..i. '•-• 4 4 ,".- 4 , , .'iR ' ./f. g _ c t i € ..= L., a, a a :•-•` `g 0 ‘i` S = -• 7 Z (IJ ...7; a) F .a 1_ v. E 0 n 1 3 1: A (i) •'./ 1 I ' I 1 t $ 7, . t. s _ 7 I / ' '' ' t2 !,' 4 x- 2 - i 3 t,. :2, 1 I IP. 1 :11 ifi."41 / , ', 113:741 id c 2it 4 .`4 2 = ._ - City of Baytown City of Baytown HilltopSecurities Jr* !,..-'...2025-December 31,2025 HilltopSecurities 441/? December 31,2025 to December 31,2026 Amortization and Accretion Projected Cash Flows CUSP Detailed Semrlty Oevemnon ,,,,,,,,,,,,, ong,, ,,,,,,,,,,,, Amort/kin Mt total AmoL.430,...72manzzl:s3) Ending,8736, CUSP Detaded Smoinmkknottmn 1 General Ftem • I,PM 'TP 1.I 2':,...., a 24 IV`,C, '1'5510 3101 is, li,A25 A4C7 '4.8$151131,31237 111.1301111 91313k 9,82.81... 433,54 ft 434343.1 (351)1 JO) 41174.43331 MM..%) .,.Tmemtr Mk 1 IMS k....4 .433.3310 13901 311114.30 '1 21121 3)4)43.4.1 -.3 331 kl.IliS I.10)1.3. 13055.1 3(}30.31.1 C X 21.4 i Oa 342,34*3/ M.10141811 ,,1 TramtreNele 1 en.xvic.seas 3.V:.13, 1400.111100 ..2414410 Tot411-6matai 25445341120 24,113701123 91351.16 9M51.15 017.747411 24,110.251.40 3.113.3.4.04 3113.e I 417P4/11/2.6 937100 4/313131 Fund 3,361.3.4114 4981317,09/11/1024 IT)I 142E 1.0.10.31t3) IC,X3043)0 7.1Iend fouls 3133F1EMe tfilf I 41 1.23?Lk I ki3.1* 3%75100 3.100C Ilrnmsted)Senes 202301 3333;,FMe 4(1,4311 2,10)6 124 1.010 NY:0 ',01.0.4 IC •,, ,,, • , Co_. tiedrandi 11•••••1150“H I co- 2MICO ',kik.. .7 Ck 33/342e9, 433, e44113: ,,,'s.7) .,14 2.641333 ,.,..`1,<ii, .S Iternmitise 3 iS SSP/IA n t4100 94 31C 3C 1,47104410e 113 333 ,417J,14.344 Ott OM 'Si MI 1"lb 1,0.713638 •.14..3. 133)93k 15/X1R 35 3 m V'/r. 14,,,34 OS I 0.74:11 IS 413 1 41,It,41, 1.34,43, 113 395 13'S'llik 3,3414*0.1 344/113S Total Mond Rods 3.3-77<) 4341.35 IdlekiX I J3,':5 C. *031351 431,3001 Soils 11,003.020.00 12939X/11.44 225291 15,77533 (43,94537) 12.956,05418 2022 CO P 2,,C-.. ...s Treasix,Nole 3,5 41/3,/.... 3e A 2( 11,5J14 ,,C X r thItCki ,S Peasum Note 3 35 Ce(31/,...6 k.31. 103433/JS. 13300°JO. 144Nr&S•mor 3 33,4,4. .k.13 4 313 lii Iffilte 1 53. .3 ia CO .03 kJ X .4123.,X,V: k.o./1 3C4331 3 334.42 I I,:134 133 li/141,113, 3 e. 113110411 i...1.1133C X .41,710. )1011, ,SCOR ...Ire,•Iteme:.34 li.PI/i kt, i,,...,. ,intit 4,774419344 'k 41 lAWshellSom Ta44144.114611 10010.00020 5157617.15 05544 4311101 01.993.151 9,01CO. 34 3.,21 P•1M 33117. Semer 13 Mkt ,I.m413.3,113 10,7326 .21 if. MI t SC GandTotel 411.000.5400 CIA19A101.118 151,064.53 tannsie 359A112.121 0,610311Y S 237433449 ,3 Iremmtem./31111/31/kiS 113/31.234 13 nk.)C SI3421)3333 .5..I77.1,r34t4e34k09/3.1415 340,14 3730.30201 .,,,,,,,,,, ,Le AYES 23..Te9114m44334.21 I ZI 4 4.4'3 .12",P) 2012.11 .'2,1,3311 ....,.lreeemlenteer I)'.it, 1,31 k 443410IC.) 4 4234 AJC GrendTmal IATIOAle 4a45en50 414010.731155 4141179p Securities Asset Management IIC All nghts reserved Page 10 4131414op Setuntre,Asset Management I.LC All nghts reseeved Page 20 City of Baytown City of Baytown HilkopSecurities 4:1111111 December 31,2025 to December 31 202f., HilltopSecuri ties 1:111.6P At of December 31,2025 Projected Cash Flows Totals Disclosures&Disclaimers . ,. 7t.434113 1,3..4355-e.,.0.1,,r ni 3.,3,1,i55151554,1 a...1.1 yo4 dant t,3419,34.p,..1v INA owev-rm 1,....u.,/rig InIt 54 km pdemtirril a ti.t. 11,/in k • ,tni-3 t-tr ter.,41 1.m.411 m e terkn,m,..tratlettb,reciu,t met,.3/kkemr We 3.34.4 mee.sommmao m Ms3 k mtemnd,met.311 511,1}1551 rrpro I,41.443 m.1 41,Se,.4,15,51<51,ll...n.p.1.134.444t rl 3 14314,0/S30 r rt,r I-i ,ren....nr 33 Or r r n m 3 net,M..3 foomma pram..Ite Me owl./steirm,Mk ntemel Foes 41,d,Ik,cluryes,vel rma not be M11011(13,me Okra.1, t kalklt. InIIiI kg 3-3e n'en,RI ml dem 4,el 314114,11 i nb.a ned,/,s e ace.bebe,ed,DP rel,kle Du."Is er<ncv m.....A....... is net tuwarit.ed 0,111101,1y iNe ot,imanen 70131313 r/kV,leld xm/v13444 IfP.meter..ries:3330 7443 4,4 le, 3.011 1.33 .4..7)5101 <1131,31,4,m 4,..n.am,mIkesent.M344 MAIM.Mt,we rbsttemmrs or,s.ei.,o.frerere 91.0 row,rne,,,r heldavav tese,477 at,H,A1 do,mt g 3,33.4 Me test,-.v or toemv el 143 mn m rt:t kr.,or 4 olkkne tes1'3,`,r''J ,'"", -.,X, ,(X,Mt. 3.35.73310 4277othe144,.mekm33.mom..mews AI nit,313,3 4 tke.to tumme mvitimm,41.4m.Kink fill/3,13., S•mnrn,-. 711313301.6) I.srm rock*lc e reek mtrestm-.I.ket 31.3,4,13,treves.441es,tlekt,n313311...m,m,..ekte IIS5r'lf,,,,P.,be tsed as vv.rout'It ker.:,.44 Met stm 311 lot Iv 443,334Mten 4 gm.mn.e.k.ium r.,^,n,p,9794,31,.e c' Total 1,014710.00 MIROACOOS 4g.010291/11 ,Nev.ig,,,,Al fry,.Ayermes Pak t.e,...mmte.3 tot a gt.mmee-r 3 0-343 1144e1 kn.e reek t et 3 Ter Me r E,:e1 c..e-f31,...5LI4iettme1.UP...sex-../.Iwo.,,ms.IndImad m.31143em AA.433333.1 a D lame ,..„,,,,,,,4,303,277,44,3,,,„,,,„,,,,,,,,,,,,,„..,,,,„,,,,,,,,,,,,,..„„,,,,,,,,,,,,,im,em,m Li tt Mr c..t 313..3,71116,e44.t4,ro•of A rorev,,,to,J,.1.v.Mei 1.,,777:J4,1 r.:72.33 43 kd 43.4 vikes dM134:3 Income se..,Im.1 Mtvek'Mem,.rite,.111.La J v.e.15..19e velue,IA hied 3,e,le si.,..a Ai.CteJt mA.Mc.34 1.1.4.1 51,.5.5,WII F.ue Ale.4.pm 3 etbts.m.lkung me klete.t m 43 tand,1111,1 Jr etik ti Me 03346.1 It PM Mt I emes1 rk.on,3 r,,1110 II,5 51C.W11.1....,r.t.Me Irani.ra.cet tea..k.Ittior 1,5 DOW C051 di.,,,.,5 551,1 alio,i.1347 r mat,•,363151,577.15.1,.S ae....er trik 1.41,,r,11,1,451 kern A.1,tn,Ave-,la')..,',.1.1.440 LA,v,e,ir er i.4 no ey la,.so.u,tme Item 4.3:13e OMR r 030 J J"I X dr',Vol km Se.nme meley 4.met ft:,5It5 lee negneF1,1551-1,..ar met.3 i II.1.31031.13,..,,It s.ktrt3e1./....3it me..7173 gtotemet or JIMMY.Mete:r i p.r.lee Om 31,43.4 mal them,.41 be•55,,55,5 a.,JO,sl.e el d 34:01,ifes yekt sok,owe Se wad.,int.3 kss nen,41......,ge A pn J.,Mem.3 i kens.,bilk.2,e 13.k,e3T t,torte;mkt'suk pm...num ty Marke,rml...,Me t mskdo,Met Mt mkte.m3,3 1.143,ln•be Iv»iv-ov ot.,,a.,p ce It m.343,1,mitt mt Nee:3 mem.3,31 r,,,,.the t 31 3 tunes,ruk a k VII kly ksk le pot,n'4,0 s,s31,1...1,te Vol.,i I ly,.,tt 4,1.1.4 t^3,nes shn et awct,I1,41 i.e..,,,•Ile o kt,,LA MI'nt t ,‘e„a Al,i,,,,,w If I if one,..,n.m...3 nlmt e t..-'Mr:3km m 3 13.34e.0 r`I,,-3.Matter,a mot v4-4,mt.es 4.,,d1,4 1.e4...tie.mum Ie...m.,it homey t.ts the 4mn.e-at.ktt Ikon,.11,44.1,3(ersMisttylke.,3 veil ametmly aI.3 I 433.3 put.w It nere r.it.t, eculi e•,,re41 try- ..',,,.r,III:1,m,,11).04.f4•,,lorprelf,C.,,,,,,,,,,,52'45 r,b.,1..,07,.(3)2e,4,,...4,t55,1r,mt k.3-'Im.t A t'tklm A 4,3.411,11 41k.Y...Po'3.1.44I.'"tk1S.^.3,•41433,''''". 34 v i I...CO III I III I .13.44 Ai,,t.,,,,esoU.MV40.1,0.1 1-6.04),,-.5E,,-,..,1 1.,1114.1,M1VI,1455<5J,j,1,1555Ir,I,41 s•mu 41.4m t tmeel-.33,31m.mokeml 4imme me amme and mg m.031 1.1.4.mn,tl..tes not 3.33,,3e cer cr leo,.15.05 ''......""''''..11,HIS,r.f.-AMA`.4,411r...^4.,,,r'.444 4 WII.,[134,r,I,.(N,i.111H,le,4t3 3 i• 13111,,a,,..Me:40,1.,e.',,,,,,,,,.rl 114),..1,40,6.4111.,1,11. t,ttoilol t 202,,,,l'(4 ctl MyrIon Imoturro 4,+evunoct A,,riv T+mkt,naM A et,Mettel Illu5,1 J.4,,5 J,5,p,51,,,,,,55 J,55‘5,551.5.5.,,45 fno 55.5,,,5,,,,J,M(5'.n A to telkert pry.11 r arty,,,ATI,Ve,rid ,,,,I,..r ,,,,cr t fr,yd.,.1,.r"r,r,,a,,,,,,,,,,,..,.,,,.., j,,,,,„„,,,,,,rk,n,,,,Ariel•Ans r 4.413,1r.A...11,,r A,n,ii are rot i ro,p,Nvbk fi.ir re,.r,-.m.o.. gl,i•,rht,s1 41,44,A0`.i,....,A f",4,,,esi,ts ,Il III..1i,171,,rf,xt,r te,In I,eue,o•WI,-,.,tem 11,moor t,Ialle f r,e,1.,,,,...,,,5,,per•e•,It olfemmk m,IP Lk311,31 m r 1,13,3 4 Ito wok arra topt.'43MM 44/5,1 it4MI.1....1414.3I-14 011k C.13m. '1.'4'1'1'131.1 3k.34,133141311134,11.1.3',NI'tr 4'km...4.3.111M3 44 memo,.Met ts nem 1.33 turn,.,r,,,'Kam.,qatn,Wyo.,'of,01J,AI it regmert m...us:,Ole rie 3311,3 Me mtaktlet.1 m hest^,,,,-.SP,J11,10,4,A i get be mlied;31 es,nvestremi mote k•e31..mrem am smatmetts.313.,..Al i si.,r.,stkemert4 or', Aug..3 ..14111too Secutmes Atiet Management,Ilk All',hes resomed Page 2: ,Hilltop Securilin Asset Management,Lk All rights reselved Page 22 EXHIBIT "B" Project Budget Cost Category Cost • Direct Purchase of Pulse Bed Clarifier gives a BAWA East Water Plant GMP $69,782,861 savings of-$200,000 Progressive Design Build Material Testing $600,000 Material Testingestimated ati%of construction value Pulsed Bed Clarifier $2,092,798 •Owner's Contingency used unforeseen BAWA Board Meeting Recommended Owner $2,434,091 conditions,force majeure,etc.(included in February 25, 2026 Conyngenty TWDB loans) Fiscal Services $382,000 •Owner's Advisor fee includes construction OA with CMI $3 473,578 management and inspection. _ ill4401411:e Project Budget $78,765,328 . ,.. . Schedule • Limited Notice to Proceed-January 7,2026 • Phase 2 Kick-Off-February 2,2026 • TWDB Environmental and Design Package Approval-February 20,2026 •Full Notice to Proceed`February 27,2026 •Groundbreaking-April,2026 •Phase 2 Substantial Completion"'May 22,2028 •Phase 2 Acceptance&Final Completion July 19,2028 • BAWA is anticipated to need additional water by 2028 Remaining Approvals: •TWDB Environmental Review,US Corp response received •TWDB Design Builder Agreement •TWDB Design Package EXHIBIT "C" weaver 1800 Hughes Landing Blvd, Suite 500 The Woodlands,Texas 77380 Assurance•Tax.Advisory 713-800-1060 February 11, 2026 To the City Council of Baytown, Texas and the Board of Directors of Baytown Area Water Authority Baytown, Texas 77522 We have audited the financial statements of Baytown Area Water Authority (the Authority), a discretely presented component unit of the City of Baytown, Texas, as of and for the year ended September 30, 2025, and have issued our report thereon dated February 11, 2026. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated June 18, 2025, our responsibility, as described by professional standards, is 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 accordance 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 the Authority 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 Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence. With respect to any nonaudit/nonattest services we perform as previously communicated to you in the engagement letter, the Authority acknowledges and understands that the Authority has the responsibility for (a) making all management decisions and performing all management functions; (b) assigning an individual with suitable skills, knowledge, and experience to oversee the services; (c) evaluating the adequacy of the services performed; (d) evaluating and accepting responsibility for the results of the services performed; and (e) establishing and maintaining internal controls, including monitoring ongoing activities. Such nonaudit/nonattest services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. Weaver and Tidwell, L.LP. CPAs AND ADVISORS I WEAVER.COM The City Council of Baytown,Texas and the Board of Directors of Baytown Area Water Authority February 11,2026 Page 2 Significant Risks Identified Our audit process uses a risk-based approach in which we identified potential areas of risk that could lead to a material misstatement of the financial statements. We tailored our audit procedures to specifically address the following areas of risk: • Management override of internal controls • Improper revenue recognition • Misappropriation of cash through improper or unauthorized expenditures These risks were addressed by walking through controls in each respective area and performing substantive detail testing and/or analytical testing of transactions. Based on test work performed in these areas, no material misstatements were identified. 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 the Authority is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during 2025. 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. No sensitive accounting estimates affecting the financial statements of the Authority were identified. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards also 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. 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. No misstatements were identified as a result of our audit procedures. The City Council of Baytown,Texas and the Board of Directors of Baytown Area Water Authority February 11,2026 Page 3 Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the Authority's financial statements or the auditor's report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in a separate letter dated February 11, 2026. 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. Other Significant Matters, Findings, or Issues In the norrrial course of our professional association with the Authority, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the Authority's auditors. Other Information Included in Annual Reports Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the Authority's annual report, does not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have made certain inquiries of management and evaluated the form, content, and methods of preparing the other 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 other information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. Such other information has not been subjected to the auditing procedures applied in the audit of the financial statements and we do not provide any assurance on them. Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. This report is intended solely for the information and use of the City Council of Baytown, Texas and the Board of Directors of Baytown Area Water Authority and management of the Authority and is not intended to be and should not be used by anyone other than these specified parties. ()Java aid _34'4„ 2eaP.e.P. WEAVER AND TIDWELL, L.L.P. The Woodlands, Texas February 11, 2026 • • • • • • • • • • • • • • • • weaver nce•Tax•Advisory ■ • U • 11 • • • • S U U a U • a I I . ■ ✓ Baytown Area Water Authority • Annual Financial Report (A Component Unit of the City of Baytown, Texas) For the Fiscal Year Ended September 30, 2025 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Baytown Area Water Authority Annual Financial Report For the Fiscal Year Ended September 30, 2025 Table of Contents Page . Introductory Section Transmittal Letter ii Financial Section ■ Independent Auditor's Report 3 ■ Management's Discussion and Analysis 7 Basic Financial Statements Statement of Net Position 12 ■ Statement of Revenues, Expenses, and Changes in Net Position 13 ■ Statement of Cash Flows 14 Notes to the Financial Statements 15 Required Supplementary Information Schedule of Revenues, Expenses and Changes in Net Position- IIBudget and Actual- Budgetary Basis 26 Supplementary Information ■ Texas Supplementary Information Schedules 29 Other Information Analysis of Changes in Property, Plant, and Equipment 42 . Revenue Bond Coverage 43 Compliance Section ■ Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an . Audit of Financial Statements Performed in Accordance with Government Auditing Standards 47 111 ■ ■ BAYTOWN AREA WATER AUTHORITY 7425 Thompson Rd µ.n" Baytown,TX 77521L. ■ L. (281) 420-5310 ■ Transmittal Letter ■ February 11,2026 ■ ■ To the President and Members of ■ the Baytown Area Water Authority Board and Baytown Area Water Authority: ■ The financial statements of the Baytown Area Water Authority (the "Authority") for the year ended ■ September 30, 2025 are hereby submitted. The Authority is presented as a discrete component unit of the ■ City of Baytown (the "City") in the City's Annual Comprehensive Financial Report. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including ■ all disclosures,rests with management.We believe the information,as presented,is accurate in all material respects. It is presented in a manner designed to set forth fairly, in all material respects, the financial ■ position and results of operations of the Authority as measured and reported by its financial activity. All disclosures necessary to enable the reader to gain an adequate understanding of the Authority's fmancial ■ affairs have been included. ■ Weaver & Tidwell, LLP, has audited the financial records of the Authority for the fiscal year ended ■ September 30, 2025, and their opinion is included in this report. The financial statements are the responsibility of the Authority. The responsibility of the independent public accountant is to express an ■ opinion on the Authority's financial statements based on their audit.An audit is conducted in accordance with generally accepted auditing standards. Those standards require that the audit be planned and ■ performed in a manner to obtain reasonable assurance as to whether the financial statements are free from material misstatement. ■ The timely preparation of this report could not have been accomplished without the efforts and dedication ■ of the staff. We would like to express our appreciation to our staff and other personnel who assisted in its ■ preparation. In addition,we would like to thank the Board of Directors for their interest and support in its planning and conducting the financial operations of the Authority in a responsible and progressive manner. ■ ■ Respectfully submitted, ■ ■ ■ Ja n Reyn ds Teresa McKenzie ■ G neral Manager Director of Finance ■ ■ ii ■ ■ • • • • • • • • • • • • • • Financial Section ■ ■ ■ ' ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ • 1111 • • • • • • • • • • • This Page Intentionally Left Blank • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2 ■ ■ 1800 Hughes Landing Blvd,Suite 500 weaverThe Woodlands,Texas 77380 Assurance•Tax•Advisory 713-800-1060 ■ Independent Auditor's Report . The Board of Directors of the IIIBaytown Area Water Authority of the City of Baytown, Texas Report on the Audit of the Financial Statements UOpinion • We have audited the financial statements of the Baytown Area Water Authority(the "Authority"), a component unit ■ of the City of Baytown,Texas, as of and for the years ended September 30, 2025 and 2024, and the related notes to the financial statements,which collectively comprise the Authority's basic financial statements as listed in the table ■ of contents. ■ In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the Authority as of September 30, 2025 and 2024, and the respective changes in • financial position and,where applicable,cash flows thereof for the years then ended,in accordance with accounting ■ principles generally accepted in the United States of America. ■ Basis for Opinion ■ We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS)and the standards applicable to financial audits contained in Government Auditing Standards, issued by the ■ Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be . independent of the Authority, and to meet our other ethical responsibilities,in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and ■ appropriate to provide a basis for our audit opinion. Responsibility of Management for the Financial Statements UManagement is responsible for the preparation and fair presentation of the financial statements in accordance with ■ accounting principles generally accepted in the United States of America and for 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. ■ In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate,that raise substantial doubt about the Authority's ability to continue as a going concern ■ for twelve months beyond the financial statement date, including any currently known information that may raise ■ substantial doubt shortly thereafter. • ■ Weaver and Tidwell, L.L.P. 3 CPAs AND ADVISORS I WEAVER.COM The Board of Directors of the ■ Baytown Area Water Authority of the City of Baytown,Texas Auditors'Responsibilities for the Audit of the Financial Statements ■ Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from ■ material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government AuditingStandardswill always detect a material ■ misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or ■ the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the ■ financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards,we: ■ • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or U error, and design and perform audit procedures responsive to those risks. Such procedures include ■ examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 Authority's internal control. Accordingly, no such opinion is expressed. ■ • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. ■ • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,that raise substantial doubt about the Authority's ability to continue as a going concern for a reasonable period of ■ time. We are required to communicate with those charged with governance regarding,among other matters,the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. ■ Required Supplementary Information ■ Accounting principles generally accepted in the United States of America require that the Management's Discussion ■ and Analysis and the Schedule of Revenues, Expenses and Changes in Net Position —Budget to Actual—Budgetary Basis be presented to supplement the basic financial statements. Such information is the responsibility of ■ management and,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 GAAS, which consisted of inquiries of 1111 management about the methods of preparing the information and comparing the information for consistency with ■ management's responses 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. ■ 111 111 4 ■ ■ ■ The Board of Directors of the Baytown Area Water Authority of the ■ City of Baytown,Texas ■ Supplementary Information ■ Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority's basic financial statements. The Texas Supplementary Information Schedules,as listed in the table of ■ contents, are presented for purposes of additional analysis and are not required part of the basic financial ■ statements. ■ The Texas Supplementary Information Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such ■ information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying ■ accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the Texas Supplementary ■ Information Schedules are fairly stated, in all material respects, in relation to the basic financial statements as a ■ whole. ■ Other Information Included in the Annual Financial Report ■ Management is responsible for the other information included in the annual financial report. The other information comprises the transmittal letter and other supplementary information, as listed in the table of contents, but does ■ not include the financial statements and our auditors' report thereon. Our opinion on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.In connection ■ with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements,or the other information ■ otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. ■ ■ Other Reporting Required by Government Auditing Standards ■ In accordance with Government Auditing Standards,we have also issued our report dated February 11,2026 on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with ■ certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and ■ the results of that testing,and not to provide an opinion on the effectiveness of the Authority's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with ■ Government Auditing Standards in considering the Authority's internal control over financial reporting and compliance. ■ I ■ C). a Q ■ WEAVER AND TIDWELL, L.L.P. ■ The Woodlands,Texas ■ February 11, 2026 ■ ■ ■ 5 ■ II • • • • • • • • • • • • • • • This Page Intentionally Left Blank • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 6 • • Management's Discussion and Analysis As management of Baytown Area Water Authority (the "Authority"), we offer readers of the Authority's financial statements this narrative overview and analysis of the financial activities of the Authority for the fiscal years ended September 30, 2025 and 2024. Please read the discussion and analysis in conjunction ■ with the Authority's financial statements,which follow this section. ■ Financial Highlights • The assets exceeded liabilities at the close of the most recent fiscal year by $80,243,680 (net position).The unrestricted net position of$15,784,152 may be used to meet the Authority's ongoing obligations to citizens and creditors. • The Authority's total net position increased by $4,020,525. The increase is due primarily to an increase in sales of treated water. • Operating revenues increased by$917 thousand. • Operating expenses increased by$1.1 million. • Construction in progress increased by$8.2 million. • Long-term liabilities (net of current portion) decreased by $2.8 million (4.6%) during the current ■ fiscal year due to the payment of bonds. Overview of the Financial Statements ■ This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements. The Authority's basic financial statements include the financial statements and notes to the ■ financial statements. This report also contains required supplementary information, supplementary information, and other information in addition to the basic financial statements themselves. ■ The financial statements provide both long-term and short-term information about the Authority's . financial status. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. ■ The Authority's financial statements are prepared in conformity with accounting principles generally ■ accepted in the United States of America (U.S. GAAP) as applied to governmental units on an accrual basis. Under this, revenues are recognized in the period in which they are earned, and expenses are ■ recognized in the period in which they are incurred. ■ The Statement of Net Position includes all of the Authority's assets, liabilities, and deferred outflows/inflows of resources, with the difference reported as net position. The Statement of Revenues, Expenses, and ■ Changes in Net Position reports the Authority's net position and how it has changed. Net position is the difference between the sum of the Authority's assets and any deferred outflows of resources and the sum ■ of liabilities and any deferred inflows of resources. ■ The Statement of Cash Flows presents the Authority's cash receipts, cash disbursements and net changes in cash resulting from operating, investing, and financing activities. This statement provides answers to . such questions as where cash came from, what cash was used for, and what the changes in cash balances were during the reporting period. 1111 U 111 7 1111 The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the financial statements. The notes to the financial statements can be found as noted in the table of contents of this report. II In addition to the basic financial statements and accompanying notes, this report also presents certain IIII required supplementary information that further explains and supports the information in the financial statements. The required supplementary information relates to the comparison of the original adopted II budget, the amended budget, and the actual amounts for the fiscal year. The required supplementary information can be found as noted in the table of contents of this report. Financial Analysis of the Authority Net position may serve over time as a useful indicator of the Authority's financial position. In the fiscal year El 2025, the Authority's total net position increased from $76,223,155 to $80,243,680. (5.3 percent). In fiscal year 2024, the Authority's total net position increased from $72,125,733 to$76,223,155. (5.7 percent). ■ Unrestricted net position increased$2,490,035 from a balance of$13,294,117 to$15,784,152 (18.7 percent) ■ at the end of the fiscal year. Unrestricted net position can be used to finance day-to-day operations without constraints established by debt covenants and enabling legislation. ■ Baytown Area Water Authority's Net Position . 2025 2024 2023 ■ Current and other assets $ 19,380,513 $ 16,657,497 $ 9,949,496 ■ Restricted assets 22,123,417 28,828,142 4,231,861 II.Capital assets,net 103,565,232 98,487,316 100,797,875 Total assets 145,069,162 143,972,955 114,979,232 II Current liabilities 7,955,040 8,015,825 3,720,945 ■ Noncurrent liabilities 56,870,442 59,733,975 39,132,554 ■ Total liabilities 64,825,482 67,749,800 42,853,499 ■ Net position: ■ Net investment in capital assets 60,351,802 58,955,612 59,660,321 Restricted 4,107,726 3,973,426 3,594,780 . Unrestricted 15,784,152 13,294,117 8,870,632 ■ Total net position $ 80,243,680 $ 76,223,155 $ 72,125,733 ■ ■ ■ IIII ■ U 8 I. 111 III • Baytown Area Water Authority's Change in Net Position III 2025 2024 2023 ■ Operating revenues $ 21,083,649 $ 20,165,789 $ 18,161,488 . Operating expenses (16,215,850) (15,070,575) (11,168,223) Nonoperating revenues (expenses) (847,274) (997,792) (1,082,083) ■ Change in net position 4,020,525 4,097,422 5,91 1,182 ■ Beginning net position 76,223,155 72,125,733 66,214,551 ■ Ending net position $ 80,243,680 $ 76,223,155 $ 72,125,733 II IllKey elements of the change in net position for fiscal year 2025 are as follows: • Operating revenues increased $917,860 or 4.6 percent primarily due to a 6%increase in rates. III • Operating expense increased $1,145,275 or 7.6 percent primarily due to increases in raw water and chemical costs. II • Nonoperating revenues (expenses) remained comparable to the prior year. ■ Key elements of the change in net position for fiscal year 2024 are as follows: ■ • Operating revenues increased $2,004,301 or 11.0 percent primarily due to a 6% increase in rates and an increase in consumption. ■ • Operating expense increased$3,902,352 or 34.9 percent primarily due to an increase in raw water purchases from the City of Houston. ■ • Nonoperating revenues (expenses) remained comparable to the prior year. ■ Budgetary Highlights ■ • Operating revenues were$68,181 under budget due primarily to lower than expected water sales of treated water to municipal utility district customers. ■ • Operating expenses were $1,706,473 under budget due primarily to lower than anticipated raw water purchases and other supplies. ■ Capital Assets ■ The Authority's plants operate at an average demand flow of 15.99 million gallons per day (MGD). The ■ peak capacity of the plant is 32.0 MGD.The Authority is in compliance with all rules and regulations of the Environmental Protection Agency,Texas Commission on Environmental Quality, and Texas Department of ■ State Health Services applicable to surface water treatment, analysis, and operations. . At year end, the Authority had invested$103,565,232 in capital assets, net of accumulated depreciation. Major capital asset events during the year included the following: ■ • Approximately $5.9 million increase in construction on East Surface Water Treatment Plant Phase ■ 2 Expansion. • Approximately$2.2 million increase in construction on raw water rehabilitation. IIMore detailed information about the Authority's capital assets is presented in Note 5 to the financial . statements. 1111 1111 U Long-term Debt 111 The Authority has sufficient reserves established for debt service requirements. The Authority's revenue bonds carry the rating of "Aa3"with Moody's Investors Service and "AA-"with Standard & Poor's. At year end, the Authority had $55,055,000 in revenue bonds outstanding versus $58,100,000 last year. The decrease is due to the retirement of $3.045 million of Water Supply Contract Revenue Bonds. More ■ detailed information about the Authority's long-term liabilities is presented in Note 6 to the financial statements. ■ On November 1, 2025, the Authority privately placed with the Texas Water Development Board $69,000,000 of Water Supply Contract Revenue Bonds, Series 2025 under its State Water Implementation ■ Fund for Texas (SWIFT) program to fund the expansion of the Authority's East Surface Water Treatment Plant and related infrastructure. The interest rate on the bonds is 1.94% to 4.12% and the maturity date is ■ May 1, 2055. Economic Factors and Next Year's Budget The demand for water delivery by the Authority has remained steady during the past few years and is ■ expected to continue at the current rate for the next year. The Authority is managing regional inflation ■ factors on parts and materials through its capital projects budget for its existing and anticipated projects. The 2025-2026 proposed budget estimates sales of$22,074,336 for an average of 15.47 million gallons per day.The rates will consist of a 6%increase to$3.87 per 1,000 gallons for the City of Baytown and$4.14 per 1,000 gallons for customers outside the City. Total operating expenditures for the proposed 2025-2026 ■ budget are$13,964,249 which is an increase from the 2024-2025 budget. The increase is largely driven by estimated costs of raw water and chemical purchases. Contacting the Authority's Financial Management ■ This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of the Authority's finances and to show the Authority's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City of Baytown Finance Department, 2401 Market Street, Baytown, Texas 77522. A copy of the budget is available to the public at the Sterling Municipal Library and at the City of Baytown's City Clerk office. ■ 1.1 U 10 ■ • • • • • • • • • • • • • Basic Financial Statements ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ • 11 1111 NI Baytown Area Water Authority Statement of Net Position II September 30, 2025 and 2024 ■ 2025 2024 Ill Current assets: Cash and cash equivalents $ 19,163,920 $ 16,452,691 ■ Receivables 216,593 204,806 ■ Total current assets-unrestricted 19,380,513 16,657,497 ■ Current assets-restricted: ■ Cash and cash equivalents 22,123,417 28,828,142 Total current assets-restricted 22,123,417 28,828,142 III Noncurrent assets: Nondepreciable capital assets: ■ Land 2,877,960 2,877,960 Construction in progress 9,178,071 969,838 ■ Depreciable capital assets: Plant and equipment 131,619,116 131,382,661 Less accumulated depreciation (40,109,915) (36,743,143) ■ Total noncurrent assets 103,565,232 98,487,316 ■ TOTAL ASSETS $ 145,069,162 $ 143,972,955 ■ LIABILITIES ■ Current liabilities: ■ Accounts payable $ 3,827,333 $ 4,028,329 Retainage payable 108,105 - ■ Accrued interest payable 989,602 942,496 Bonds payable due within one year 3,030,000 3,045,000 . Total current liabilities 7,955,040 8,015,825 ■ Noncurrent liabilities: ■ Bonds payable due in more than one year 56,420,994 59,733,975 Arbitrage liability due in more than one year 449,448 - . Total noncurrent liabilities 56,870,442 59,733,975 5 Total liabilities 64,825,482 67,749,800 ■ NET POSITION ■ Net investment in capital assets 60,351,802 58,955,612 Restricted for: ■ Debt service 4,107,726 3,973,426 Unrestricted 15,784,152 13,294,1 17 . TOTAL NET POSITION $ 80,243,680 $ 76,223,155 5 ■ The Notes to the Financial Statements are an integral part of this statement. ■ 12 III III Baytown Area Water Authority III Statement of Revenues, Expenses, and Changes in Net Position IIFor the Fiscal Years Ended September 30, 2025 and 2024 2025 2024 III OPERATING REVENUES Sales of treated water:■ City of Baytown $ 19,472,129 $ 18,401,642 ■ Municipal utility districts 1,611,520 1,764,147 ■ Total operating revenues 21,083,649 20,165,789 ■ OPERATING EXPENSES Raw water purchases and other supplies 8,566,316 7,844,514 ■ Contracted personnel costs 2,030,741 2,021,979 Maintenance 565,278 330,049 ■ Services 1,686,743 1,492,968 Depreciation 3,366,772 3,381,065 1111 Total operating expenses 16,215,850 15,070,575 II Operating income 4,867,799 5,095,214 II I ■ NONOPERATING REVENUES (EXPENSES) Interest income 1,207,215 883,121 . Intergovermental 126,106 100,000 Interest expense and fiscal agent fees (2,181,008) (1,980,913) ■ Miscellaneous 413 - ■ Total nonoperating revenues (expenses) (847,274) (997,792) ■ Change in net position 4,020,525 4,097,422 ■ Net position-beginning 76,223,155 72,125,733 ■ NET POSITION - ENDING $ 80,243,680 $ 76,223,155 II ■ ■ ■ ■ ■ ■ 1111 . The Notes to the Financial Statements are an integral part of this statement. 13 II Baytown Area Water Authority Statement of Cash Flows III For the Fiscal Years Ended September 30, 2025 and 2024 III 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES . Cash received from customers for sale of treated water $ 21,071,862 $ 20,1 17,449 Cash payments to suppliers for goods and services (10,91 1,228) (6,718,066) . Cash payments to contract personnel for services (2,030,741) (2,021,979) Net cash provided by (used for)operating activities 8,129,893 11,377,404 El CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES • Intergovernmental revenues received 126,106 100,000 ■ Net cash provided by (used for) ■ noncapital financing activities 126,106 100,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES ■ Construction of capital assets (8,444,688) (1,070,506) ■ Proceeds from issuance of bonds - 23,929,401 Principal paid on capital debt (3,045,000) (2,005,000) II issuance costs - (429,401) Interest and bank fees (2,416,883) (1,529,077) ■ Net cash provided by (used for) by capital and related financing activities (13,906,571) 18,895,417 . CASH FLOWS FROM INVESTING ACTIVITIES ■ Interest received 1,657,076 883,121 Net cash provided by(used for) investing activities 1,657,076 883,121 In Net increase (decrease) in cash and cash equivalents (3,993,496) 31,255,942 ■ Cash and cash equivalents at beginning of year 45,280,833 14,024,891 CASH AND CASH EQUIVALENTS,END OF YEAR $ 41,287,337 $ 45,280,833 ■ RECONCILIATION TO STATEMENT OF NET POSITION Unrestricted cash and cash equivalents $ 19,163,920 $ 16,452,691 MI cash and cash equivalents 22,123,417 28,828,142 CASH AND CASH EQUIVALENTS, END OF YEAR $ 41,287,337 $ 45,280,833 ■ RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH . PROVIDED BY(USED FOR)OPERATING ACTIVITIES Operating income $ 4,867,799 $ 5,095,214 ■ Depreciation 3,366,772 3,381,065 Changes in assets and liabilities: ■ (Increase) decrease in current assets: Receivables,net (11,787) (48,340) ■ Increase (decrease) in current liabilities: Accounts payable (200,996) 3,234,782 . Retainage payable 108,105 (285,317) NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES $ 8,129,893 $ 11,377,404 ■ ■ In The Notes to the Financial Statements are an integral part of this statement. ■ 14 U II Baytown Area Water Authority Notes to the Financial Statements Note 1. Creation of Authority U The Baytown Area Water Authority (the "Authority") was created by House Bill No. 967 of the Texas ■ Legislature on June 15, 1973. The Authority was created to purchase and distribute surface and/or underground water supplies to persons, corporations, municipal corporations, political subdivisions, and others. The boundaries of the Authority include all of the City of Baytown, Texas (the "City") and most of the City's extraterritorial jurisdiction in East Harris County, Texas. Presently, the Authority provides water to eight municipal entities which in turn service a total population area of 106,801 people. Administration of the Authority is vested in the Board of Directors (the "Board"), which held its first meeting on September ■ 20, 1973.The Board is appointed by the City Council. The first Authority bonds were sold in May 1977. The water treatment plant and a portion of the water transmission lines were completed in 1981 and actual ■ operations and sale of treated water began in April 1981. Note 2. Summary of Significant Accounting Policies ■ The accompanying financial statements and accounting policies of the Authority are prepared in conformity with generally accepted accounting principles for local governmental units as prescribed by the Governmental Accounting Standards Board (GASB), which is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Authority's significant ■ accounting policies are described below. ■ A. Reporting Entity The City exercises significant influence over the operations of the Authority and, as a result, the Authority 111 is a discretely presented component unit of the City.The Authority's financial statements are included as ■ a discrete component unit in the government-wide financial statements of the City.The Authority has no component units and is presented on a stand-alone basis. . The Authority has no employees. Personnel employed by the City are responsible for the physical operation and maintenance of the water treatment plant. The City's personnel perform the purchasing ■ and accounting functions of the Authority.The Authority reimburses the City for payroll costs and related fringe benefits of personnel assigned to the water treatment plant operations and for goods and services ■ purchased on its behalf. . B. Basis of Accounting ■ Under GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — For State and Local Governments, the Authority qualifies as a special-purpose government ■ engaged only in business-type activities, and accordingly, only the financial statements required for an enterprise fund are presented as basic financial statements. ■ The Authority's activities are accounted for on the flow of economic resources measurement focus with ■ the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable. Expenses are recognized in the accounting period ■ in which they are incurred and become measurable. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the Statement of Net Position. The ■ net position is segregated into net investment in capital assets, restricted net position, and unrestricted net position. 1.1 ■ 15 1111 111 Baytown Area Water Authority Notes to the Financial Statements C. Budget The general manager for the Authority formulates a budget for the Authority's fiscal year beginning on October 1 and ending on September 30. Both the Authority's Board and the City Council approve the annual budget. D. Comparative Data ■ Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of the changes in the Authority's financial position and operations. E. Deposits and Investments ■ The Authority's cash and cash equivalents are considered to be cash on hand, equity in the City's pooled ■ cash account, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. For the purpose of the statement of cash flows, the Authority considers ■ temporary investments with maturity of three months or less when purchased to be cash equivalents. Investments, except for certain investment pools and commercial paper, are reported at fair value. The investment pools operate in accordance with appropriate state laws and regulations and are reported ■ at amortized cost. The Authority has adopted a written investment policy regarding the investment of its funds as defined in ■ the Public Funds Investment Act, Chapter 2256, Texas Government Code. In summary, the Authority is . authorized to invest in the following: • Direct obligations of the U.S. government ■ • Fully collateralized certificates of deposit ■ • Fully collateralized repurchase agreements • Bankers' acceptances that meet certain criteria ■ • Commercial paper that meets certain criteria • Mutual funds of specific type ■ • Collateralized guaranteed investment contract • Statewide investment pools ■ F. Receivables and Payables ■ All receivables are shown at full value and are expected to be 100 percent collected. The Authority ■ reports payables as obligations that are expected to be financed with current, available financial resources. G. Capital Assets ■ Capital assets,which include property, plant,equipment,and infrastructure assets (e.g.,water lines), have been recorded at cost. Capital assets are defined by the Authority as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at ■ historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. ■ 16 ■ U U III Baytown Area Water Authority III Notes to the Financial Statements IIProperty, plant, and equipment of the Authority are depreciated using the straight-line method over the ■ following estimated useful years: Estimated ■ Asset Description Useful Life ■ Buildings 25 to 50 years Improvements other than buildings 10 to 50 years ■ Machinery and equipment 5 to 30 years H. Deferred Outflows/Inflows of Resources ElIn addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, 111 represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. In addition to liabilities, the statement of net position will IIsometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future IIperiod(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Authority IIdid not recognize deferred outflows or inflows for the years ended 2025 and 2024. I. Long-term Obligations The Authority reports long-term debt as a liability on the Statement of Net Position. Bond premiums and ■ discounts are amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed in the period incurred. II J. Net Position Flow Assumption IN Sometimes the Authority will fund outlays for a particular purpose from both restricted (e.g., restricted ■ bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position a flow assumption must be made about the order in . which the resources are considered to be applied. It is the Authority's policy to consider restricted net position to have been depleted before unrestricted net position is applied. ■ K. 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, 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. ■ L. Operating and Nonoperating Revenues ■ Operating revenues and expenses generally result from providing services and producing and delivering I. goods in connection with the Authority's principal ongoing operations. The principal operating revenues of the Authority are charges to customers for sales and services. Operating expenses for the Authority . include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non operating revenues and expenses. II II • 17 U 111 Baytown Area Water Authority Notes to the Financial Statements M. Implementation of New Accounting Standards GASB Statement No. 101, Compensated Absences (GASB 101), improves the information needs of U financial statements users by updating the recognition and measurement guidance for compensated absences under a unified model and amending certain previously required disclosures.The requirements 1111 of this statement are effective for reporting periods beginning after December 15, 2023, with earlier application encouraged. These requirements for GASB 101 were implemented in the Authority's fiscal year 2025 financial statements with no impact to amounts previously reported. GASB Statement No. 102, Certain Risk Disclosures (GASB 102), improves financial reporting by providing users of financial statements with essential information regarding certain concentrations of constraints ■ and related events that have occurred or have begun to occur that make a government vulnerable to a substantial impact.The requirements of this statement are effective for reporting periods beginning after ■ June 15, 2024,with earlier application encouraged.These requirements for GASB 102 were implemented in the Authority's fiscal year 2025 financial statements with no impact to amounts previously reported. ■ N. Recent Accounting Pronouncements ■ GASB Statement No. 103, Financial Reporting Model Improvements (GASB 103), improves key ■ components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government's accountability.This statement also addresses ■ certain application issues.The requirements of this statement are effective for reporting periods beginning after June 15, 2025,with earlier application encouraged. GASB 103 will be implemented in the Authority's ■ fiscal year 2026 financial statements and the impact has not yet been determined. GASB Statement No. 104, Disclosure of Certain Capital Assets (GASB 104), establishes requirements for ■ certain types of capital assets to be disclosed separately in the capital assets note disclosures. It also . establishes requirements for capital assets held for sale, including additional disclosures for those capital assets.The requirements of this statement are effective for reporting periods beginning after June 15, 2025, ■ with earlier application encouraged. GASB 104 will be implemented in the Authority's fiscal year 2026 financial statements and the impact has not yet been determined. GASB Statement No. 105, Subsequent Events (GASB 105), improves financial reporting related to ■ subsequent events by 1) clarifying the subsequent events time frame and the subsequent events that constitute recognized and non-recognized events and 2) specifies the information items that are required ■ to be disclosed about subsequent events. The requirements of this statement are effective for reporting periods beginning after June 15, 2026, with earlier application encouraged. GASB 105 will be implemented in the Authority's fiscal year 2027 financial statements and the impact has not yet been determined. ■ Note 3. Deposits and Investments ■ Deposits - State statutes require that all deposits in financial institutions be fully collateralized by U.S. ■ government obligations or its agencies and instrumentalities or direct obligations of the state of Texas (the "State") or its agencies and instrumentalities that have a market value of not less than the principal ■ amount of the deposits.The Authority's deposits, including those held in the City's depository in the City's name as agent for the Authority, were fully insured or collateralized as required by the state statutes at ■ year end. 18 ■ 1111 1111 Baytown Area Water Authority Notes to the Financial Statements The Authority held the following deposits and investments as of September 30, 2025: ■ Weighted ■ Average Credit Type Value Maturity (Days) Rating ■ Investments measured at amortized cost: Investment pool: ■ TexPool $ 11,412,522 44 AAAm ■ Investments measured at net asset value: ■ Investment pool: Texas Class 17,630,833 84 AAAm ■ Total investments 29,043,355 ■ Equity in the City's pooled cash and investments 11,686,498 ■ Other cash deposits 557,484 ■ Total cash and cash equivalents $ 41,287,337 ■ Portfolio weighted average maturity 68 Interest Rate Risk - In compliance with the Authority's investment policy, the Authority minimized the interest rate risk related to the decline in market value of securities due to rising interest rates in the portfolio by limiting the weighted average maturity not to exceed five years; structuring the investment portfolio so that securities matured to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the secondary market prior to maturity; monitoring credit ratings of portfolio positions to ensure compliance with rating requirements imposed by the Public Funds Investment Act;and investing ■ operating funds primarily in shorter term securities or similar government investment pools. Credit Risk-In compliance with the Authority's investment policy, the Authority minimized credit risk losses due to default of a security issuer or backer by limiting investments to the safest types of securities; prequalifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the Authority will do business; and diversifying the investment portfolio so that potential losses on individual ■ securities were minimized. The credit rating for each investment is noted in the preceding table. TexPool U The TexPool investment pool is an external investment pool measured at amortized cost. In order to meet ■ the criteria to be recorded at amortized cost, investment pools must transact at a stable net asset value per share and maintain certain maturity, quality, liquidity and diversification requirements within the ■ investment pool. TexPool is duly chartered and overseen by the State Comptroller's Office, administered and managed by Federated Investors, Inc. State Street Bank serves as the custodial bank. The portfolio consists of U.S. ■ Government securities; collateralized repurchase and reverse repurchase agreements; and AAA rated money market mutual funds. U 111 19 II II Baytown Area Water Authority Notes to the Financial Statements ■ TexPool transacts at a net asset value of$1.00 per share, has a weighted average maturity of 60 days or III less and weighted average life of 120 days or less, investments held are highly rated by a nationally recognized statistical rating organization, have no more than 5%of portfolio with one issuer (excluding US IIII government securities), and can meet reasonably foreseeable redemptions. The investment pool has a redemption notice period of one day and no maximum transaction amounts. The investment pools' ■ authorities may only impose restrictions on redemptions in the event of a general suspension of trading on major securities market, general banking moratorium or national or state emergency that affects the ■ pools' liquidity. Texas CLASS III Texas CLASS is an external investment pool measured at fair value, i.e. net asset value. The investment III pool's strategy is to seek preservation of principal, liquidity and current income through investment in a ■ diversified portfolio of short term marketable securities. There are no unfunded commitments related to the investment pool. Texas CLASS has a redemption notice period of one day and may redeem daily. ■ The investment pool's authorities may only impose restrictions on redemptions in the event of a general suspension of trading on major securities market, general banking moratorium or national or state ■ emergency that affects the pool's liquidity. The Texas CLASS portfolio consists of U.S. Government securities; collateralized repurchase and reverse repurchase agreements; AAA rated money market ■ mutual funds; and commercial paper. Note 4. Restricted Cash and Cash Equivalents II Restricted cash and cash equivalents include reserves held to satisfy the debt service requirements of the II Authority's bond ordinances and proceeds from the sale of bonds issued for construction. I. The restricted cash and cash equivalents at year end are as follows: . Bond reserve funds $ 5,097,328 ■ Construction funds 17,026,089 Total $ 22,123,417 ■ 1. Note 5. Capital Assets Beginning Ending ■ Balance Additions Reductions Balance Capital assets,not being depreciated: ■ Land $ 2,877,960 $ - $ - $ 2,877,960 Construction in progress 969,838 8,208,233 - 9,178,071 ■ Total capital assets,not being depreciated 3,847,798 8,208,233 - 12,056,031 Capital assets,being depreciated: ■ Buildings 59,216,042 - - 59,216,042 Improvements other than buildings 64,925,462 - - 64,925,462 III Machinery and equipment 7,241,157 236,455 - 7,477,612 Total capital assets,being depreciated 131,382,661 236,455 - 131,619,116 ■ Less accumulated depreciation for: II and improvements (30,954,705) (2,937,774) - (33,892,479) Machinery and equipment (5,788,438) (428,998) - (6,217,436) Total accumulated depreciation (36,743,143) (3,366,772) - (40,109,915) ■ Total capital assets,being depreciated,net 94,639,518 (3,130,317) - 91,509,201 ■ Total capital assets,net $ 98,487,316 $ 5,077,916 $ - $ 103,565,232 ■ 20 II ■ 1111 Baytown Area Water Authority Notes to the Financial Statements Construction Commitments 111 The Authority has active construction projects as of September 30, 2025. At year-end, the Authority's significant commitments with contractors include the construction of the East Surface Water Treatment I on Plant Phase 2 Expansion and raw water rehabilitation, with a remaining commitment balance of $12,502,780.The remaining construction commitments will be provided by the proceeds of revenue bonds and operating revenues. Note 6. Long-term Liabilities Outstanding bonds are payable using revenues generated from the sale of treated water to the City and other entities. The City also guarantees payment of bonds and such bonds may be redeemed prior to 111 their scheduled maturity. The Authority is in compliance with all bond resolutions. The resolutions provide ■ that reserves are sufficient to pay the current portion of the principal and interest payments. . Redemption Provisions 2012 Series Baytown Area Water Authority Water Supply Contract Revenue and Refunding Bonds issued for$8,315,000. The Authority reserves the right, at its option, to redeem bonds having stated maturities on or after May 1, 2023, in whole or in part, in principal amounts of$5,000 or any integral multiple thereof; on May 1, 2022, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. 2018 Series Baytown Area Water Authority Water Supply Contract Revenue Bonds issued for$22,040,000. ■ The Authority reserves the right, at its option, to redeem bonds having stated maturities on or after May 1, 2028, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof; on ■ May 1, 2027, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. ■ 2019 Series Baytown Area Water Authority Water Supply Contract Revenue Bonds issued for $17,315,000. The Authority reserves the right, at its option, to redeem bonds having stated maturities on or after May 1, 2029, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof; on ■ May 1, 2028, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. ■ 2024 Series Baytown Area Water Authority Water Supply Contract Revenue Bonds issued for $21,525,000. ■ The Authority reserves the right, at its option, to redeem bonds having stated maturities on or after May 1, 2035, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof; on . May 1, 2034, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. U U U ■ 21 U III II Baytown Area Water Authority Notes to the Financial Statements ■ The following is a summary of changes in long-term liabilities for the year ended September 30, 2025: 1. Amounts ■ Interest Beginning Ending Due Within Series Rate Balance Additions Reductions Balance One Year ■ 2012 2.00-3.50% $ 2,830,000 $ - $ (315,000) $ 2,515,000 $ 325,000 II 4.00-5.00% 19,700,000 - (1,000,000) 18,700,000 1,000,000 2019 3.00-4.00% 14,045,000 - (725,000) 13,320,000 755,000 2024 5.00% 21,525,000 - (1,005,000) 20,520,000 950,000 ■ Total bonds 58,100,000 - (3,045,000) 55,055,000 3,030,000 ■ Plus net(discount)and premium 4,678,975 - (282,981) 4,395,994 - Total bonds payable 62,778,975 - (3,327,981) 59,450,994 3,030,000 III Plus arbitrage liability - 449,448 - 449,448 - ■ Total long-term liabilities $ 62,778,975 $ 449,448 $ (3,327,981) $ 59,900,442 $ 3,030,000 ■ As of year end, the debt service requirements on bonds outstanding for the next five years and thereafter ■ are as follows: Fiscal ■ Year Principal Interest TotalII 2026 $ 3,030,000 $ 2,380,220 $ 5,410,220 ■ 2027 3,120,000 2,242,770 5,362,770 2028 3,210,000 2,100,900 5,310,900 . 2029 3,350,000 1,954,588 5,304,588 2030 3,500,000 1,801,888 5,301,888 ■ 2031 -2035 19,940,000 6,589,126 26,529,126 2036-2040 18,905,000 2,141,650 21,046,650 ■ Totals ,$ 55,055,000 $ 19,21 1,142 $ 74,266,142 III Federal Arbitrage ■ The Tax Reform Act of 1986 instituted certain arbitrage legislation consisting of complex regulations with respect to issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the ■ investment of tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if ■ applicable rebates are not reported and paid to the Internal Revenue Service (IRS) at least every five years for applicable bond issues. Accordingly, there is the risk that if such calculations are not performed ■ or are not performed correctly,a substantial liability to the Authority could result.The Authority periodically engages an arbitrage consultant to perform the calculations in accordance with the IRS rules and ■ regulations. As of September 30, 2025, the Authority reported an arbitrage liability of$449,448. III II II ill El 22 Ill 1 III Baytown Area Water Authority U Notes to the Financial Statements I 111 Note 7. Net Position iiThe Authority's net position has been reported net of related outstanding debt.The three components of 1.1 net position (net investment in capital assets, restricted net position for debt service, and unrestricted net position) are detailed below: ■ 2025 2024 ■ Net investment in capital assets: Capital assets, net of accumulated depreciation $ 103,565,232 $ 98,487,316 In Outstanding debt that applies to capital assets (59,450,994) (62,778,975) Unspent bond proceeds 17,026,089 23,912,220 III Capital asset related payables (788,525) (664,949) ■ Net investment in capital assets 60,351,802 58,955,612 INRestricted debt service: Debt service restricted assets 5,097,328 4,915,922 ■ Accrued interest (989,602) (942,496) . Restricted net position for debt service 4,107,726 3,973,426 Unrestricted net position: 15,784,152 13,294,1 17 II Total net position $ 80,243,680 $ 76,223,155 • Note 8. Risk Management ■ The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of ■ assets; errors and omissions; and natural disasters for which the Authority cooperatively purchases commercial insurance and participates in a public entity risk pool with the City.The Authority and the City IIII participate along with 2,617 other entities in the Texas Municipal League's Intergovernmental Risk Pool (the "Pool"). The Pool purchases commercial insurance at group rates for participants in the Pool. The ■ Authority has no additional risk or responsibility to the Pool, outside of the payment of insurance premiums. The Authority has not significantly reduced insurance coverage or had settlements that exceeded ■ coverage amounts for the past three fiscal years. ■ Note 9. Commitments and Contingencies ■ On October 24, 1994, the Authority entered into a 26-year agreement with the City of Houston (the "Agreement") to purchase raw water for treatment. The Agreement was amended in January 2005 to . increase the maximum obligation of the City of Houston to provide water from 11.9 MGD to 15.8 MGD and to extend the termination date to December 31, 2040. A second amendment was approved in 111 February 2007 to increase the maximum obligation of the City of Houston to provide water from 15.8 MGD to 20.0 MGD. A third amendment was approved in December 2015 to increase the maximum obligation of the City of Houston to provide water from 20.0 MGD to 26.0 MGD. A fourth amendment was approved 1111 in September 2023 to increase the maximum obligation of the City of Houston to provide water from 26.0MGD to 32.0 MGD. The Authority may reserve additional monthly quantities of untreated water by giving 30 days' notice to the City of Houston. Should the consumption exceed the contract quantity by ten percent, a five percent surcharge shall be charged against that portion of the consumption that 1111 exceeds the contract quantity. A fifth amendment was approved in May 2025 to extend the termination IIIdate of the agreement to December 31, 2055. ■ 23 111 Baytown Area Water Authority Notes to the Financial Statements The Authority is contractually obligated to provide treated water to the City. As with the City of Houston Agreement, the Authority increased the maximum obligation to provide treated water to the City from 10.71 MGD to 14.22 MGD and extended the term of the contract through calendar year 2040. On May 9, 2024, the sixth amendment was brought into effect,increasing contract quantity to 28.6 MGD. The Authority is also obligated to provide 2.55 MGD to other municipal entities, making the total obligation ■ 31.15 MGD. 111 Note 10. Related Parties, Concentrations, and Economic Dependency ■ The Authority is a discretely presented component unit of the City. In addition, approximately 92.36 percent of the Authority's operating revenues are attributable to the sale of treated water to the City. Note 11. Subsequent Event On November 1, 2025, the Authority privately placed with the Texas Water Development Board $69,000,000 of Water Supply Contract Revenue Bonds, Series 2025 under its State Water Implementation Fund for Texas (SWIFT) program. The interest rate on the bonds is 1.94% to 4.12% and the maturity date is May 1, 2055. ■ I U U U U U U U U 24 • U • • • • • • • • U • • • • • • • Required Supplementary Information ■ ■ ■ ■ ■ II ■ ■ ■ ■ ■ ■ ■ ■ ■ 25 II 111 Baytown Area Water Authority Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Budgetary Basis For the Fiscal Year Ended September 30, 2025 111 Variance ■ 2025 Positive Original Final (Budget Basis) (Negative) ■ OPERATING REVENUES III of treated water: City of Baytown $ 19,197,497 $ 19,197,497 $ 19,472,129 $ 274,632 Municipal utility districts 1,954,333 1,954,333 1,611,520 (342,813) ■ Total operating revenues 21,151,830 21,151,830 21,083,649 (68,181) ■ OPERATING EXPENSES ■ Raw water purchases and other supplies 5,854,530 9,924,381 8,566,316 1,358,065 Contracted personnel costs 2,292,451 2,292,451 2,030,741 261,710II Maintenance 429,350 637,831 565,278 72,553 Services 1,639,046 1,769,069 1,686,743 82,326 ■ Total operating expenses 10,215,377 14,623,732 12,849,078 1,774,654 ■ Operating income 10,936,453 6,528,098 8,234,571 1,706,473 ■ NONOPERATING REVENUE(EXPENSES) ■ Interest income* 90,000 90,000 635,266 545,266 Intergovermental - - 126,106 126,106 Other expenses (9,827,573) (9,827,773) (9,827,773) - ■ Total nonoperating revenues(expenses) (9,737,573) (9,737,773) (9,066,401) 671,372 ■ CHANGE IN NET POSITION -BUDGETARY BASIS $ 1,198,880 $ (3,209,675) $ (831,830) $ 2,377,845 ■ RECONCILIATION OF BUDGET BASIS TO GAAP ■ Depreciation (3,366,772) Interest expense and fiscal agent fees (2,181,008) ■ Interest income from restricted bonds 572,362 Adjustment to remove net effect of combined funds 9,827,773 ■ CHANGE IN NET POSITION $ 4,020,525 ■ *Interest income does not include restricted interest income on bond funds. ■ Notes to Required Supplementary Information ■ 1. The annual budget is adopted on a basis consistent with generally accepted accounting principles(GAAP),with the exception of the reconciling items noted above. ■ ■ III 1111 26 El . . . . . . . . . • . • . . • Supplementary Information ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 27 . • • • • • • • • • • • • • • This Page Intentionally Left Blank • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 28 • • IIII II Baytown Area Water Authority I Texas Supplementary Information Schedules September 30, 2025 III Page III (Schedules included are checked or explanatory notes provided for omitted schedules.) ® TSI-1 Schedule of Services and Rates 30 II ® TSI-2 Schedule of Operating Expenses 31 ElTSI-3 Schedule of Temporary Investments 32 . ❑ TSI-4 Taxes Levied and Receivable (Omitted-no tax levy) ® TSI-5 Long-Term Debt Service Requirements by Years ■ (All Bonded Debt Services) 33 ® TSI-6 Changes in Long-Term Bonded Debt 36 ■ ® TSI-7 Comparative Schedule of Revenues and Expenses 38 0TSI-8 Board Members and Administrative Personnel 40 III II 1111 Ill II II 111 111 111 II 111 II II 1111 II II II • 29 Baytown Area Water Authority TSI-1 Services and Rates ■ For the Fiscal Year Ended September 30, 2025 ■ 1. Service Provided by the Authority Wholesale Water 2. a. Retail Rates Based on 5/8"Meter: Retail Rates Not Applicable ■ Rate per 1000 Gallons over ■ Minimum Charge Minimum Usage Flat Rate Y/N Minimum Usage Levels WATER: City of Baytown $3.65 per 1000 gallons N/A N N/A N/A ■ Other districts $3.88 per 1000 gallons N/A N N/A N/A SURCHARGE: ■ City of Baytown 5%on that portion that exceeds contract quantity Other districts Surcharge varies per municipal entity ■ b. Retail Service Providers: Number of wholesale water connections within BAWA as of the fiscal year end. ■ Provide actual numbers and single family equivalents(ESFC)as noted: ■ Inactive Connections Active Connections Active ESFC (ESFC) Wholesale ■ Cities and MUD's 8 - - Total 8 - - ■ 3. Total Water Consumption During the Fiscal Year: ■ Gallons pumped into system: 5,766,077,740 Water Accountability Ratio: ■ Gallons billed to customers: 5,766,077,740 1.000 4. Standby Fees:Does the Authority assess standby fees? No ■ 5. Location of the Authority: ■ Counties in which the Authority is located: Harris and Chambers Counties Is the Authority located entirely within one county? No Is the Authority located within a city? Partially City in which the Authority is located: Baytown Is the Authority located within a city's extraterritorial jurisdiction(ETJ)? Partially ■ ETJs in which the Authority is located: Baytown Is the general membership of the Board appointed by an office outside the Authority? Yes ■ If Yes,by whom? City of Baytown City Council ■ ■ ■ ■ ■ 30 ■ 1111 Baytown Area Water Authority TSI-2 Schedule of Operating Expenses ■ For the Fiscal Year Ended September 30, 2025 ■ Professional Fees $ 20,037 Other Services 1,144,909 Purchases of Raw Water 6,363,870 . Contracted Personnel Services 2,030,741 Utilities 519,671 Repairs and Maintenance 565,278 ■ Chemicals 2,085,202 ■ Administrative Expenses 119,370 Depreciation 3,366,772 111 Total Expenses $ 16,215,850 The Authority has no employees;however,25 full-time City of Baytown employees are ■ contracted to the Authority. 111 111 U • 31 Baytown Area Water Authority TSI-3 Schedule of Temporary Investments For the Fiscal Year Ended September 30, 2025 . Identification or Accrued Interest Certificate Interest Maturity Balance at Receivable at ■ Number Rate Date End of Year End of Year ■ JPMorgan Chase Checking Acct Various N/A $ 557,484 $ - Texas Class Investment Various N/A 17,630,833 - TexPool Investment Various N/A 23,099,020 - ■ Total Cash and Investments $ 41,287,337 ■ ■ ■ 111 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ S 32 ■ U III 1111 Baytown Area Water Authority III TSI-5 Long-Term Debt Service Requirements by Years (All Bonded Debt Services) 111 For the Fiscal Year Ended September 30, 2025 IIAnnual Requirements for All Series ■ Due During Fiscal Principal Interest Interest Year Ending Due 5/01 Due 5/01 Due 11/01 Total ■ 2026 $ 3,030,000 $ 1,190,1 10 $ 1,190,1 10 $ 5,410,220 ■ 2027 3,120,000 1,121,385 1,121,385 5,362,770 2028 3,210,000 1,050,450 1,050,450 5,310,900 III 2029 3,350,000 977,294 977,294 5,304,588 2030 3,500,000 900,944 900,944 5,301,888 III 2031 3,655,000 825,250 825,250 5,305,500 . 2032 3,815,000 745,863 745,863 5,306,726 2033 3,980,000 662,800 662,800 5,305,600 ■ 2034 4,160,000 572,950 572,950 5,305,900 2035 4,330,000 487,700 487,700 5,305,400 ■ 2036 4,510,000 398,850 398,850 5,307,700 2037 4,690,000 306,175 306,175 5,302,350 ■ 2038 4,880,000 209,675 209,675 5,299,350 2039 2,945,000 109,125 109,125 3,163,250 ■ 2040 1,880,000 47,000 47,000 1,974,000 ■ $ 55,055,000 $ 9,605,571 $ 9,605,571 $ 74,266,142 . Series 2012 III . Due During Fiscal Principal Interest Interest IllYear Ending Due 5/01 Due 5/01 Due 11/01 Total 2026 $ 325,000 $ 41,460 $ 41,460 $ 407,920 . 2027 335,000 36,585 36,585 408,170 . 2028 345,000 31,350 31,350 407,700 1. 2029 360,000 25,744 25,744 411,488 . 2030 370,000 19,894 19,894 409,788 2031 385,000 13,650 13,650 412,300 . 2032 395,000 6,913 6,913 408,826 ■ $ 2,515,000 $ 175,596 $ 175,596 $ 2,866,192 III NI III III • • 33 II Baytown Area Water Authority III TSI-5 Long-Term Debt Service Requirements by II Years (All Bonded Debt Services) - Continued For the Fiscal Year Ended September 30, 2025 III Series 2018 III Due During Fiscal Principal Interest Interest ■ Year Ending Due 5/01 Due 5/01 Due 11/01 Total ■ 2026 $ 1,000,000 $ 419,825 $ 419,825 $ 1,839,650 ■ 2027 1,000,000 394,825 394,825 1,789,650 2028 1,000,000 369,825 369,825 1,739,650 . 2029 1,040,000 344,825 344,825 1,729,650 2030 1,095,000 318,825 318,825 1,732,650 ■ 2031 1,145,000 291,450 291,450 1,727,900 2032 1,210,000 262,825 262,825 1,735,650 ■ 2033 1,675,000 232,575 232,575 2,140,150 2034 1,760,000 190,700 190,700 2,141,400 ■ 2035 1,830,000 155,500 155,500 2,141,000 2036 1,905,000 118,900 118,900 2,142,800 ■ 2037 1,980,000 80,800 80,800 2,141,600 II. 2,060,000 41,200 41,200 2,142,400 $ 18,700,000 $ 3,222,075 $ 3,222,075 $ 25,144,150 II Series 2019 II Due During Fiscal Principal Interest Interest ■ Year Ending Due 5/01 Due 5/01 Due 11/01 Total . 2026 $ 755,000 $ 215,825 $ 215,825 $ 1,186,650 ■ 2027 785,000 200,725 200,725 1,186,450 2028 815,000 185,025 185,025 1,185,050 ■ 2029 850,000 168,725 168,725 1,187,450 2030 880,000 151,725 151,725 1,183,450 ■ 2031 910,000 138,525 138,525 1,187,050 II 935,000 124,875 124,875 1,184,750 2033 965,000 110,850 110,850 1,186,700 II 995,000 96,375 96,375 1,187,750 2035 1,025,000 81,450 81,450 1,187,900 IN 1,055,000 66,075 66,075 1,187,150 2037 1,085,000 50,250 50,250 1,185,500 ■ 2038 1,1 15,000 33,975 33,975 1,182,950 2039 1,150,000 17,250 17,250 1,184,500 ■ $ 13,320,000 $ 1,641,650 $ 1,641,650 $ 16,603,300 ■ Ill ■ 34 III 111 Baytown Area Water Authority II TSI-5 Long-Term Debt Service Requirements by Years (All Bonded Debt Services) - Continued II For the Fiscal Year Ended September 30, 2025 ■ Series 2024 ■ Due During Fiscal Principal Interest Interest ■ Year Ending Due 5/01 Due 5/01 Due 11/01 Total ■ 2026 $ 950,000 $ 513,000 $ 513,000 $ 1,976,000 2027 1,000,000 489,250 489,250 1,978,500 ■ 2028 1,050,000 464,250 464,250 1,978,500 2029 1,100,000 438,000 438,000 1,976,000 ■ 2030 1,155,000 410,500 410,500 1,976,000 2031 1,215,000 381,625 381,625 1,978,250 ■ 2032 1,275,000 351,250 351,250 1,977,500 2033 1,340,000 319,375 319,375 1,978,750 ■ 2034 1,405,000 285,875 285,875 1,976,750 2035 1,475,000 250,750 250,750 1,976,500 ■ 2036 1,550,000 213,875 213,875 1,977,750 111 2037 1,625,000 175,125 175,125 1,975,250 2038 1,705,000 134,500 134,500 1,974,000 ■ 2039 1,795,000 91,875 91,875 1,978,750 2040 1,880,000 47,000 47,000 1,974,000 1111 $ 20,520,000 $ 4,566,250 $ 4,566,250 $ 29,652,500 1111 II II II II 111 III 111 III II II II ill • 35 U III 1111 Baytown Area Water Authority TSI-6 Changes in Long-Term Bonded Debt II For the Fiscal Year Ended September 30, 2025 ■ Bonds Bonds ■ Revenue Outstanding Bonds Sold During Bonds Retired During Outstanding Bonds Interest Rate Amount of Issue October 2024 the Fiscal Year the Fiscal Year September 2025 ■ Series 2012 2.00-3.50% $ 8,315,000 $ 2,830,000 $ - $ 315,000 $ 2,515,000 Series 2018 4.00-5.00% 22,040,000 19,700,000 - 1,000,000 18,700,000 5 Series 2019 3.00-4.00% 17,315,000 14,045,000 - 725,000 13,320,000 Series 2024 5.00% 21,525,000 21,525,000 - 1,005,000 20,520,000 ■ $ 58,100,000 $ - $ 3,045,000 $ 55,055,000 ■ Paying Agent's Name and City: Series 2012 Bank of New York Mellon Trust Company,Dallas,Texas III Series 2018 Bank of New York Mellon Trust Company,Dallas,Texas III 2019 Bank of New York Mellon Trust Company,Dallas,Texas Series 2024 BOK Financial,Dallas,Texas Debt service cash and investment balances as of September 30,2025 $ 5,097,328 III Average annual debt service payment(principal and interest)for remaining term of all debt $ 4,951,076 ■ ■ ■ ■ ■ III ■ ■ II ■ ■ ■ ■ U ■ ■ 36 ■ ■ ■ Total ■ Interest Interest Due Interest Due Paid During ■ 05/01 11/01 the Fiscal Year $ 46,184 $ 46,184 $ 92,368 ■ 444,825 444,825 889,650 230,325 230,325 460,650 ■ 485,807 485,807 971,614 . $ 1,207,141 $ 1,207,141 $ 2,414,282 ■ ■ ■ ■ U ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 37 • 111 Baytown Area Water Authority II TSI-7 Comparative Schedule of Revenues and Expenses 1111 For the Fiscal Year Ended September 30, 2025 . AMOUNTS 2025 2024 2023 2022 2021 11 OPERATING REVENUES Sale of treated water: ■ City of Baytown $ 19,472,129 $ 18,401,642 $ 16,466,818 $ 13,511,028 $ 12,472,111 Municipal utility districts 1,611,520 1,764,147 1,694,670 1,475,071 1,394,136 ■ Total operating revenues 21,083,649 20,165,789 18,161,488 14,986,099 13,866,247 I. OPERATING EXPENSES ■ Raw water purchases and other supplies 8,566,316 7,844,514 3,931,863 5,448,723 5,595,282 ■ Contracted personnel costs 2,030,741 2,021,979 1,950,242 1,720,147 1,603,278 Maintenance 565,278 330,049 480,397 506,836 410,984 Ill 1,686,743 1,492,968 1,592,531 1,228,335 1,320,303 Depreciation 3,366,772 3,381,065 3,213,190 3,209,926 2,242,403 ■ Total operating expenses 16,215,850 15,070,575 11,168,223 12,113,967 11,172,250 Operating income(loss) 4,867,799 5,095,214 6,993,265 2,872,132 2,693,997 ■ NONOPERA11NG REVENUES ■ (EXPENSES) Interest income 1,207,215 883,121 209,842 18,178 7,465 ■ Intergovermental 126,106 100,000 123,258 123,258 117,227 Interest expense and fiscal agent fees (2,181,008) (1,980,913) (1,415,183) (1,504,030) (1,548,535) ■ Miscellaneous 413 - - 20,000 - Total nonoperating ■ revenues(expenses) (847,274) (997,792) (1,082,083) (1,342,594) (1,423,843) ■ CHANGE IN NET POSITION $ 4,020,525 $ 4,097,422 $ 5,911,182 $ 1,529,538 $ 1,270,154 El Total active wholesale water connections 8 8 8 8 8 ■ ■ ■ ■ ■ . ■ Il ■ ■ 38 II II Ill II 111 PERCENTAGE OF TOTAL OPERATING REVENUES ■ 2025 2024 2023 2022 2021 % ,o o % 1111 92.4 91.3 90./ 90.2 89.9 111 7.6 8.7 9.3 9.8 10.1_ III100.0 100.0 100.0 100.0 100.0 ■ ■ 40.6 38.9 21.6 36.4 40.4 9.6 10.0 10.7 11.5 11.6 . 2.7 1.6 2.6 3.4 3.0 8.0 7.4 8.8 8.2 9.5 16.0 16.8 17.7 21.4 16.2 ■ 76.9 74.7 61.4 80.9 80.7 1111 23.1 25.3 38.5 19.2 19.4 ■ . 5.7 4.4 1.2 0.1 0.1 0.6 0.5 0.7 0.8 0.8 . (10.3) (9.8) (7.8) (10.0) (11.2) 0.0 - 0.1 ■ . (4.0) (4.9) (5.9) (9.0) (10.3) 19.1 20.4 32.5 10.2 9.1 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 39 . Baytown Area Water Authority ■ TSI-8 Board Members and Administrative Personnel For the Fiscal Year Ended September 30, 2025 ■ Complete Authority Mailing Addres 2401 Market Street,Baytown,Texas,77520 Authority Business Telephone Number. (281)420-5310 ■ Submission Date of the Most Recent Authority Registration form(1WC Sections36.054 and 49.054): Not Applicable . Limit on Fees of Office that a Director May Receive During Not Appbcable a year III Fees of Office Expenses Term of Office Elected/ Paid Reimbursed Rile at . or Date Hired Appointed 9/30/2025 9/30/2025 Year End Board Members: . Brenda Bradley-Smith 09/01/24-08/31/26 Appointed N/A N/A President IIIFrank McKay III 09/01/25-08/31/27 Appointed N/A N/A Vice President AyssaUnares 09/01/24-08/31/26 Appointed N/A N/A Director Vacant N/A N/A N/A N/A Secretary ■ David Start,Jr. 09/01/25-08/31/27 Appointed N/A N/A Director City Clerk,Angela Jackson 09/01/25-08/31/27 Appointed N/A N/A Non-member/City Staff Note:No Board member is disqualified from serving on this Board under the Texas Water Code.the Board members do not . receive any form of compensation for their services. Key Administration(contracted through the City of Baytown): ■ Jason Reynolds 08/01/22 N/A N/A $ - General Manager General Manager ■ Frank Simoneaux 11/09/15 N/A N/A $ - Plant Manager Plant Manager Scott Lemond 06/20/22 N/A N/A $ - City Attorney City Attorney Teresa McKenzie 11/22/21 N/A N/A $ - Director of Finance Director of Finance ■ Consultants: Weaver and Tidwell,LP 09/12/24 N/A N/A $ - Auditor . . . . . . . . Ill . . . . . 40 ■ . ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ Other Information ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 41 ■ Baytown Area Water Authority Analysis of Changes in Property, Plant, and Equipment II For the Fiscal Year Ended September 30, 2025 . Deletions II and Ending Balances Additions Reclassifications Balances PHYSICAL FACILITIES ■ Land $ 2,877,960 $ - $ - $ 2,877,960 Building 59,216,042 - - 59,216,042 ■ Basins 3,614,845 - - 3,614,845 Pump station 12,999,541 - - 12,999,541 II Mixing chamber 1,084,986 - - 1,084,986 Distribution system 44,635,773 - - 44,635,773 ■ Office furniture and office equipment 602,809 - - 602,809 Machinery and equipment 6,462,300 236,455 - 6,698,755 II Motor vehicles 174,118 - - 174,118 Radio and testing equipment 1,930 - - 1,930 Ill Other 966,172 - - 966,172 Total physical facilities 132,636,476 236,455 - 132,872,931 II Capitalized interest 1,624,145 - - 1,624,145 II Construction in progress 969,838 8,208,233 - 9,178,071 El TOTAL PROPERTY,PLANT, ■ AND EQUIPMENT $ 135,230,459 $ 8,444,688 $ - $ 143,675,147 II AMOUNTS PROVIDED BY II bond proceeds $ 91,517,972 $ 8,031,517 $ - $ 99,549,489 Revenues 43,682,087 413,171 - 44,095,258 ■ Grants 30,400 - - 30,400 TOTAL AMOUNTS PROVIDED $ 135,230,459 $ 8,444,688 $ - $ 143,675,147 ■ ■ ■ ■ ■ III In II II ■ 42 II al II Baytown Area Water Authority NI Revenue Bond Coverage IIFor the Last Ten Fiscal Years Fiscal Gross Operating Available for ■ Year Revenues Expenses(1) Debt Service Principal Interest Total Coverage ■ 2016 $ 13,192,165 $ 6,256,498 $ 6,935,667 $ 1,980,000 $ 453,572 $ 2,433,572 2.85 2017 13,411,387 7,033,852 6,377,535 2,030,000 393,392 2,423,392 2.63 ■ 2018 14,315,866 7,094,523 7,221,343 2,090,000 694,694 2,784,694 2.59 2019 14,503,886 6,801,326 7,702,560 2,165,000 1,131,356 3,296,356 2.34 ■ 2020 14,419,907 7,749,717 6,670,190 1,930,000 1,745,515 3,675,515 1.81 2021 13,990,939 8,929,847 5,061,092 1,780,000 1,735,370 3,515,370 1.44 2022 15,147,535 8,904,041 6,243,494 1,8.'45,000 1,676,706 3,511,706 1.78 II 2023 18,494,588 7,955,033 10,539,555 1,970,000 1,613,294 3,583,294 2.94 2024 21,148,910 11,689,510 9,459,400 2,005,000 1,528,994 3,533,994 2.68 ■ 2025 22,417,383 12,849,078 9,568,305 3,045,000 2,414,282 5,459,282 1.75 ■ (1)Total operating expenses do not include depreciation expense. II ■ ■ 111 II 1 ■ Il ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 43 • • • • • • • • • • • • • • • • This Page Intentionally Left Blank • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 44 • • • • • • • • • • • • • Compliance Section ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 45 II • II • • II III • • • • II • This Page Intentionally Left Blank • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 46 ■ • ■ * 1800 Hughes Landing Blvd,Suite 500 ■ weaver The Woodlands,Texas 77380 Assurance•Tax•Advisory 713-800-1060 ■ Independent Auditors' Report on Internal Control Over Financial ■ Reporting and On Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance ■ with Government Auditing Standards ■ The Board of Directors of the Baytown Area Water Authority of the ■ City of Baytown, Texas ■ We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States, the financial statements of the Baytown Area Water Authority (the "Authority"), a ■ component unit of the City of Baytown, Texas, as of and for the year ended September 30, 2025, and the related notes to the financial statements, which collectively comprise the Authority's basic financial statements, and have ■ issued our report thereon dated February 11, 2026. ■ Report on Internal Control Over Financial Reporting ■ In planning and performing our audit of the financial statements, we considered the Authority's internal control over financial reporting (internal control) as a basis for designing the audit procedures that are appropriate in the ■ circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control. Accordingly, we do not express an ■ opinion on the effectiveness of the Authority's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or ■ employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal ■ control, such that there is a reasonable possibility that a material misstatement of the Authority's financial statements will not be prevented,or detected and corrected,on a timely basis.A significant deficiencyis a deficiency, ■ or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. I Our consideration of internal control was for the limited purpose described in the first paragraph of this section and . was not designed to identify all deficiencies in internal control that might be material weaknesses or significant ■ deficiencies. Given these limitations,during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have ■ not been identified. ■ Report on Compliance and Other Matters . As part of obtaining reasonable assurance about whether the Authority's financial statements are free from material misstatement,we performed tests of its compliance with certain provisions of laws, regulations,contracts,and grant ■ agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, ■ accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 111 ■ Weaver and Tidwell, L.L.P. 47 CPAs AND ADVISORS I WEAVER.COM U U The Board of Directors of the ■ Baytown Area Water Authority of the City of Baytown,Texas ■ Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the ■ results of that testing, and not to provide an opinion on the effectiveness of the Authority's internal control or on compliance.This report is an integral part of an audit performed in accordance with Government Auditing Standards ■ in considering the Authority's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Lc/2.etAze l ant �k oP,�,d..d•1. ■ WEAVER AND TIDWELL, L.L.P. ■ The Woodlands,Texas ■ February 11, 2026 U U I U U U U 48 ■ U . ■ faosinp y•xvi•axnanss y • aneam . . . . . . . . . . . . . . . . . . . . . . . . ■