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HomeMy WebLinkAboutFY Ended September 30, 1998TROPHY CLUB MUNICIP.4L UTILITY DISTRICT NO. 1 GENERV. PURPOSE FIN-WCI& STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1998 TZOPHY CLUB MUNICIPAL UIILITS DISTRICT 110. 1 GENERAL PDRPOSE FIMANCIiJI STATEMENTS September 30, 1998 FINANCIAL SECTION Independent Auditore' Report General Purpose Finacial Statements: Combined Balance Sheet - A11 Fund Types and Account Groups Combined Statement of Revenues. Expenditures and Changes in hind Balances - A11 Governmental hlnd Tmee statement of Revenues. Expenditures, and Changes in Fund Balances - Budget and Actual lGAAP Basis) - General Fund Nrces to General Purpose Financial Statements Supplementary Information - Information Required by Texas Natural Resources Conservation Commiesion ITNRCC) ICI Auditors' Report on Supplemental Schedules is incorporated in " Independent Auditors" Report on page 1. (D) llotes required by the TNRCC in the Annual Audit Report Requirements for Texas Water Districts and Authoritien are incol-poratad into the notes presented as part of the General Purpose Financial Statements. [El Schedule of services and ritee IF) Schedule of General Rrnd Expenditures (GI Schedule of Temporary investments - all funds 25 IiI) Analysis of twee levied and receivable (i) Analysis of changes in general fixed assets and organizational costs (JI Gener-l long-term debt service requirements - by year (3 Analysis of changes in general long-term debt ILI Comparative schedule of revenues and expenditures - five years (MI Insurance coverage IN1 Board membera, key administrative personnel and coneultants 3 8 Information Requested by Board of Directors Departmental Balance Sheet - General Fund Departmental Statement of Revenues, Expenditures and Changes in Fund Balance - General FundA-2 4 2 Departmental Statement of Revenues, Ex~enditurea and Changee in Rrnd Balance - Budget and Actual (GAAP Baai.1- General Fund THIS PAGE INTENTiONALLY LE!T BLANIi HU I LtUGE CRAlN & COMPANY, PC CEfiTlFlED ?U@L C F.CXIC)_I,TAI~TS 2401 Garden Park Cour!. Suite B Arlinglon. Texas 76013 To the Board of Directors Trophy Club Municipal Utility Diatrict 80. 1 Trophy Club. Texas We have audited the accompanying general purpose financial stztements of Trophy Club Municipal Utility District No. 1, as of September 30. 1998 and for the year then ended. These general purpoee financial statements are the responsibility of the District'. management. Our responsibility is to emrees an opinion on the general purpose financial statements based an our audit. Elccept as diecussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable aesurance about whether the general purpoee financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and dlecloaures in the general purpoee financial statements. An audit also includes aesessing the accounting principles used and significant eetimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Governmental Accounting Standards Board Technical Bulletin 98-1. Disclosures about Year 2000 Iasues, requires discloeure of certain matters regarding the year 2000 io~ue. The Dietrict has included such disclosures in Note IV H. Because of the unprecedented nature of the year 2000 issue, its effects and the success of related remediation efforts will not he fully determinable until the year 2000 and thereafter. Accordingly, insufficient audit evidence exists to support the Districtre disclosures with respect to the year 2000 issue made in Note IV Y. Further, we do not provide assurance that the District is or will be successful in whole or in part, or that parties with which the District does business will be year 2000 ready. In our opinion, except for the effecta of such adjuetmente. if any, as might have been determined to be necessary had we been able to examine evidence regarding year 2000 diecloeuree, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of Trophy Club Municipal Utility District No. 1, as of September 30, 1998, and the results of ite operations for the year then ended in confomity wich generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statement. taken as a whole. The accompanying supplemental information listed in the table of contenta is presented for purpooes of additional analysis and are not a required part of the general purpose financial statements of Trophy Club Municipal Utility District No. 1. Such information has be=n subjected to the auditing procedures applied in the audit of the general purpose finacial starements and, in our opinion, is fairly stated in all material respecta in relation to the general purpose financial statements taken as a whole. 1 Members: Metro (817) 265-9989 Arnerlcan lnslilute ol Cenilied Public Accounlaols Fax (817) 861-9623 Texas Sociely oi Cerlii~ed Public Accaunlants EXHIBIT I TROPHY CLUB MLW1CIP.G UTILITY DISTP.ICT NO. 1 COIMBINED BAlPNCE SHEET - ALL F'? TYPES AND ACCOLnlT GROUPS September 30, 1996 (With Compariitive Totals for September 30. 19971 ---6ove-mmental Fund T~es Account ~roups Dnht General General General Fund 5ervics Fund APO A55et.3 Lono-Term Deht pi.. . Cash and investments 5 1,609,946 $ 81,485 $ - 5 Receivables Property taxes 3.681 12,703 Accounts receivable trade 413,110 Other governments 36,065 Miscellaneous 2,339 Due from other funds Prepaid items 1,577 Restricted cash - customer deposits 114,852 Loan receivable from government 55,755 C~ntract receivable 86.445 Fixed assets - 18,253,306 Amount available in debt service fund 61,991 Amount to be provided 1,031,965 TOT% ASSETS $ 2.323.770 5 94,188 $ 18,255,306 $ 7,113,956 LIABILITIES AND FU3lD EQUITY LIABILITIES Accounts payable $ 316.374 $ - $ - $ Accrued liabilities 20.962 Liabilities ~ayabie from restricted assets - customer deposits 115,152 Accrued compensated absences 3.302 Deferred revenue 89.967 12.197 Due to other funds Due to other governments 36.803 . Bands payable 7,110,654 TOTAL LIASILITIES 581,258 12,197 7,113,956 FUND EQUITY Investment in general fixed assets 16,259,306 Fund balance - reserved 143,777 Fund balance - unreserved 1,598,735 81,991 TOTAL FUND EQUITY 1,742,512 81.991 18,253,306 TOTAL LIABILITIES AND FUND EQUITY $ 3,323,770 $ 94,188 5 18,259,306 $ 7,113,956 Tocais Memorandum Only Memorandum Only Current Year Prior Year EXHIBIT I1 TROPHY CLUB MUNICIPAL U'riLTTY OISTP.ICT No. 1 COMBINED STATEhlZNT OF P.EXENUES. EXPENDITURES PiW CKWGES IN FDND B.WXCES- >LL GOVEWNZNTAL FDND TYPES Year Ended September 30. 1556 (With Comparative Totals for Year Ended September 30, 19971 -.---- i~lemorandum Only Memorandum Only General Fund Debt Sarvice Current Year Prior Year REVENUES Water, sewer, fire department service and penalties 5 2,096,183 $ - 5 2,096,183 $ 1,683,709 Standby fees 5.414 5,414 7,747 Inspection and tap connections 83,981 83.981 63,805 hd valorem taxes, penalties & interest 303.944 707.945 1,011,889 911.7E3 Sale of wastewater connec~ians 227.915 Miscelianeous revenues 85,822 85,822 71.536 interest income 14,393 18,600 52.553 104.581 TOTAL REVEKUES 2,649,737 726,545 3,376,282 3,071,416 EXPENDITURES Current Expenditures Administrative Water and sewer Fire department Tocal Current Expenditures Capital Ouclay Debt Service Principal payinents Interest pa)rmmte Paying agent fees Total Debt Service TOTAL EXPENDITURES Excess fdeficiencyl of revenues over expenditures 53,024 84,547 137,571 131,7071 OTHER FINANCING SOURCES IUSES) Proceeds of Long-term Debt 3,862,033 Other Financing Uses 159.663) Payments to Escrow Agent 13,887,0871 TOTAL OTHER FINANCING SOURCES (USES1 184,717) Excess (deficiency) of revenues over cxpendicures and other sources 1uiesl 53.024 84.547 137,571 (116,424) Fund Balances at beginning oE year 1,689,488 (2,5561 1,686,532 1,803.356 Fund Balances at end of year 5 1.742.512 5 81.551 $ 1,824,503 $ 1,686,932 The accompanying nates to financial statements are an integral part of this statement. 4 EXHIBIT 111 TROPW: CLUB I~!UNICIP.AL UTILITY DISTRICT NO. i ST.%TEI.IEIIT OF REilE:KlES. EXPENDITORES XND CKWGES IN fUEiD B>LriNCES- BIDGET XND ACTUAL 1GP.X 5.4SISI GENE?& FUND Year Ended Sep~ember 30, 1998 General Fund variance Zavorable Budget I.ctual (Unfavorable) P.DrENUES Water, sewsr, and fire department service h psnalties Standby fees Inspection and tap connections Ad valorem taxes, penalties h interest Miscellaneous revenues Interest income TOT& REVENUES EXPENDITURES Current Expenditures Administrative Water and sewer Fire department Tacal Current Expenditures Capital Outlay Debt Service Principal payments Interest payments Paying agent fees Total Debt Service TOTPI. EXPENDITURES Escess (deficiency) of revenues ov2r expenditures and other sources (uses1 Fund Balances at beginning of yeir Fund Balances at end of year Ths accompanying notes to financial statements aze an integral part of this sLatement. 5 TROPHY CLW MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENEUAL - PURPOSE FINAVCIAL STATEMENTS September 30, 1998 I. SUKHARY OF SIGNIFICAKT ACCOUNTING POLICIES A. Reporting Entity Trophy Club 1.lunicipal Utility District No. 1 IInJn 11 was created by an order 05 the Te:ias Natural P.esources Conservation Commission ITNRCCI (formerly the Texas Water Commission1 an March 4, 1975 and confirmed by the eleccarate of MUD 1 at a confirmation election held an October 7, 1975. The Board of Directors held its first meeting on April 24, L75. The bands were first sold on June B, 1976. MUD 1 op~rat~s pursuanr to Article XVI. Chapter 59 of the Texas Constitution and Chapter 54 of the Texas Water Code, as amended. The Governmental Accounting Standards Board (GASBI is the accepted standard setting body for lm 1. The financial statements of MUD 1 have been prepared in conformity with generally accepted accounting principles (GkA?I as applied to government units. For financizl reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in Gm?. The criteria used are as fallows: Financial Accountability - The primary government is deemed to be financially accountable if it appoints a voting majority of the organization's governing body and (11 it is able to impose its will on that organization or I21 there is a potential for the organization to provide specific financial benefits or impose specific financial burdens an the primary government. Additionally. the primary government may be financially accountable if an organization is fiscally dependent on the primary givernment regardless of whather the organization has a separately elected governing board, a governing board appointed by a higher level of Savernment or a jointly appointed board. Accordingly, MUD 1 has no potential component units which meet this definition. Master District MUD 1 holds legal title to and operates the central water supply system and the centrzl waste disposal system as "Master District" for the benefit of MUD 1 and Trophy Club Municioal Utility District No. 2 (MUD 21 customers. Thc proportionzte alLocatian of costs and related beneficial usage rights in the major assets is estimated as fallows: (31 Future MUil 1 (A1 MUD 2 Development Water plant and wells 40.91% 27.14% 31.951. Twenty-one inch water line 60.00% 40.00% 0.001 Elevated tank 43.99% 56.01% 0.00% Original treatment plant and land 67.14% 32.86% 0.00% First expanded treatment plant 67.14% 32.86% 0.00% second expanded treatment plant 77.30% 22.70'1 0.009 Administration building 23.38% ICI 0.00% 76.62\ IAI MUD 2 has not paid for its full shares. (81 The developers original intent was for five districts. ICI MUD 2 does not acknowledge any portion of the Cost of the administration building as being their responsibility. TROPHY CLUB EILTNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENEFLAL - PURPOSE FINANCIAL STATEMENTS September 30, 1998 Governmental funds include the folloving fund types: The general fund is MUD 1's primary Operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Debt service funds account far the ssrvicing of general long-term debt not being financed by proprietary or nonexpendable trust funds. Account Groups include the following: The general fixed assets account group is used to account for all fixed assets of MUD 1. The general long-term debt account group is used to account far general long- term debt and csrtain other liabilities of MUD 1. C. Assets, Liabilities and Equity 1. Deposits and Investments MUD 1's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three ~nonths or less from the date of acquisition. State statutes authorize MUD 1 to invest in I11 obligations of the United States or its agencies and instrumentalities; (21 direct obligations of the State of Texas or its agencies; I31 other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States; (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as to investment quality hy a nationally recognized investment rating firm and having received a rating of nat less than A or its equivalent; (5) certificates of deposit by state and national banks domiciled in this state that are (A1 guaranteed or insured by the Federal Deposit Insurance corporation, or its successor; or, 1.91 secured by obligations that are described by I11 - 141; or, I61 fully collateralized direct repurchase agreements having a defined termination date, secured by obligations deecribed by Ill, pledged with third party selected or approved by MUD 1, and placed through a primary government securities dealer. Investments are stated at fair value. 2. Receivables and Payables Transactions between funds that are representative of lendinglborrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" (i.e.. the current portion of interfund loans1 or "advances to/from other funds:' All other outstanding balances between funds are reported as "due ta/from other funds." Advances between funds are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Trade accounts receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess af ninety days comprise most of the allowance for uncollectibles. Property taxes are levied as of October 1, on the assessed value listed as of the prior January I, for all real and cert-in personal property located in MUD 1. The appraisal of property within MUD 1 is the responsibility of Denton Central Appraisal District (Appraisal District) as required by legislation passed by the Texas legislature. The Appraisal District is required under such legislation to assess all property within the Appraisal District an the basis of 1DDb of its appraised value and is prohibited from applying any assessment ratios. The value of property within the Appraisal TROPHY CLtia MJNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINANCIAL STATmNTS September 30, 1958 District must be reviewed every five years; however. MUD 1 may, at its own expense, require annual reviews of appraised values. MUD 1 may challenge apprzis~d values established by the Appraisal District through various appeals and, if necessary, legal action. Property taxes for MUD 1 are not limited as to rate or amount. In an election held October 7, 1975. the eleccorace of MUD 1 authorized the levy of up to $0.25 per $100 valuation for the operations and maintenance of MUD 1. Property tares attach as an enforceable lien on propercy as of January 1, fallowing ;he levy date. Taxzs are due by January. 31, following the levy date. Property tcxes are recorded as receivables when levied. Following is information regarding the 1997 tax levy : Adjusted tasable values $319,497,001 Om tax levy $0.0697/$100 $222,689 I&S Car levy $0.2203/$100 703,852 Total tax levy $0.2900/$100 $926.541 3 Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are therefore recorded as prepaid items. 4. Fixed Assets Fixed assets used in governmental fund types of MUD 1 are recorded in the general fixed assets account group at cost or estimated historical cost if purchased or constructed. Dedicated fixed assets are recorded at their estimated fair value at the date oE dedication. Assets in the general fixed assets account group are not depreciated. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the general fixed assets account group. Public domain lwinfrastructure"l general fixed assets consisting primarily of drainage systems have been capitalized. 5. Organizational Casts I4UD 1, in conformance with requirements of the TNRCC, capitalized costs incurred in the creation of MUD 1. The TNRCC requires capitalization as organizational costs for the construction Period all casts incurred in the issue and sale of bonds, bond interest and amortized band premium and discount, losses on sales of investments, accrued interest on investments purchased, attorney fees and some administrative expenses until construction and acceptance or use of the first revenue producing facility has occurred. 6. Capitalized Interest MUD 1 capitalizes net interest costs as part of the cost of constructing various water and sewer projects. There was no interest capitalized for the year ended September 30, 1998. 7. Compensated Absences It is MUD 1'5 policy to permir employees to accumulate earned but unused vacation pay benefits. No liability is reported for unpaid accumulated sick leave. Vacation pay that is eqected to be liquidated with expendable available financial resources is reported as an expenditure and a fund . . ~iability of the governmental fund that will pay rt. mounts not expected to TROPHY CLW HUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINANCIAL STATEMEWS September 30, 1998 be liguidated with expendable available financial resources are reported in the general long-term debt account group. No e-upenditure is reported for these amounts. 8. Long-term Obligations MUD 1 reports long-term debt of governmental funds at face value in the general long-term debt account group. Certain other governmental fund obligations not expected to be financed with current available financial resources are also reported in the general long-term debt account group. For governmental fund types, bond premiums and discounts, as well as issuance costa, are recognized during the current period. Bond proceeds are reported as an other financing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. 9. Fund Equity Reservations of fund balance represent amounts that either are not appropriable or are legally segregated for a specific purpose. Reserved fund balance represents the amount cf prepaid items and long-term loans or contacts receivable from other governments. 10. Memorandum Only-Total Columns Total columns on the general purpose financial statements are captioned as "memorandum only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position, results of operations or cash flows in accordance with generally accepted accounting principles. Interfund eliminations have not been made in the 8ggregation of this datz. 11. Comparative Data/Reclassificat'ions Comparative total data for the prior year have been presented in selected sec~ions of the accompanying financial sratements in order to provide an understanding of the changes in MUD 1's financial position and operations. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. I STEWARDSRIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles as follows: 1. The Board of Directors adopts an annual budget for the General Fund on the modified accrual basis. 2. The Board of Directors approves all budget eppropriations. my revisions which alter the total appropriations of the General Fund must be approved by the Board of Directors. The level of budgetary responsibility is by total appropriations of the General Fund. 3. All annual appropriations lapse at fiscal year end. 4. no significant amendments to the budget occurred during the year. 5. BudgetlGAAP Reconciliation The budget is adopted on the modified accrual basis of accounting, thus there are no reconciling items between the Budget basis znd the GAAP basis of accounting. TROPHY CLUB MDNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINANCIAL STATEMENTS September 30, 1998 C. Excess of Expenditures Over Appropriecions For the year expendizures exceeded appropriations for the following fund; Gener~l Fund $339,249 This amount is due to greater demznd for water and additional capital outlay expenditures. This variance was offset by a positive variance in charges for water and sewer. D. Deficit Fund Equity There were no fund deficits at September 30. 1998 111. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Cash. Cash Equivalents, and Investments At year end, ldUD 1's carrying amounc of deposits was $338,294 and the bank balance was $275.844. a11 of the bank balance was covered by federal depository insurance or by collateral held by 14LD 1's agent in MUD 1's name. Investments Investmsnts are categorized into chese three categories of credit risk: 111 Insured or registered, or secr?rities held by MUD 1 or its agent in MUD 1's name. 12) Uninsured and unregistered, with securities held by the counter party's trusr department or agent in hIrm 1's name. 13) Uninsured and unregistered, with securities held by the counter party's, or by its trust department or agent but not in HUO 1's name. At year end, MIX 1's investments were 2s £allows: Carplinq Fair Val"$ Investments not subject to categorization: Texas Local Governmen; Pool System $1.467.999 S1.467.989 Investments categosized as cash equivalents $1.467.989 8. Receivables Receivables as of year end, including the appliczble allowances for uncollectible accounts, are as follows: Debt General Service Total Property taxes receivable $3,681 $12.703 $16,384 Trade acco~nts receivable $525,650 $ 0 $525,550 Less: allowance for uncall~ctibles 1112,540) 0 ~112,5401 $413.110 $0 9413,110 Receivable from other gov+rnments $36,065 $0 $36,065 Miscellaneous receivables $2,339 $0 42,339 TP.OPIN CLW WJNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINRllCIAL STATEMENTS September 30, 1338 C. Fixed Assets Activity in the general fixed assets account group for MUD 1 was as follows for the year ended September 30, 1398: Balance Balance Land 9/30/97 Additions Disposals 9/30/38 $248.033 $0 $0 $248.033 Buildings 243.686 0 0 243,686 Furniture and fixtures 63,576 0 0 63,576 Machinery and equipment 404.075 57.010 0 461,085 Autos and trucks 824.124 0 0 824,124 Water system 5,453,203 39.716 0 5,492,319 Sanitary wastewater 7,322,443 314,631 (70.0001 7,567,080 system Drainsge system 1,336,730 0 0 1,936,730 Engineering tees 763.324 0 0 763.321 District Organization 522,688 0 0 522.688 Total $17.847.948 $411,357 ($70.0001 $10,183,305 D. incerfund Receivables and Payables There were no interfund receivable balances as of September 30, 1998 E. LONG-TERM DEBT 1. Combination Tax and Revenue Bonds MUD 1 periodically issues combination tax and revenue bonds for general uses and expansions of the system. This debt for the bonds is recorded in the general long-term debt account group (to be repaid from a combination of property tku revenue and revenues af ths water and waste water utility system). Combination bonds are as follows: Water works and sewer system combination unlimited tax and revenue bonds, series 1333, with interest rates ranging from 3.25% to 5.3%, due through 2007 $3,185,000 Water works and sewer system ccmbination unlimited tax and revenue refunding bonds, Series 1337, with interest rates ranging from 4.0% to 5.0%, due through 2012, including related capital appreciation bonds 3.680.000 Total combination tax and revenue bonds Less unaccreted discount Total general long-term debt net 2. Other General Long-term Debt MUD 1 periodically issues other forms of long-term debt including certificates of obligation, and public property finance contractual obligations, which are unsecured. The debt for che bands is recorded in the general long-term debt account group (to bc repaid from revenues of the water and waste water utility system). Such other debt is as follows: TROPKY CLW XONICIPRL WTILTTY DTSTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINANCIAL STATECNTS September 30, 1998 Public property finznce contractual obligations, Series 1956, with interest rate of 5.501. due through 2006 $411,000 Public property finance contractual obligations, Series 1989, with interest rates ranging from 7.6% to 9.05 . due through 1999 le;OI)O Total ocher general long-term debt '439 000 "_i_ 3. Changes in General Long-Term Debt During the year, the fallowing changes in general long-term debt occurred: Balance Balance 9/30/91 Additions Payments 9/30/98 Combination tax k revenue $7,165,000 $0 1$300,0001 $6,865,000 Discount on bonds (214,1781 0 20,832 1193,3461 Net combination bands 6,950,822 0 1219.1681 6,671,654 Other general long-term 492.600 0 (53,6001 439.000 Compensated absences 13,246 0 (9,9441 3,302 57,456,668 $0 15342,712) $7,113,956 4. Debt Sertice Requirements The requirements to amortize all bonded deht outstanding as of September 30 is summarized below: Year Endin3 September 30, Principal Interest Total 1999 $455,000 $338,048 $793,048 2000 495.000 317.372 812.312 Thereafter 4,482,000 781,233 5,265,233 Total 57,304,000 $2.237.204 $9,541,204 Discount 1193.346) 5. Defeased Debt During 1997. MUD 1 issued Waterworks and Sewer System Combination Unlimited Tax and Revenue Refunding Bonds, Series 1997 to drfeasr the Waterworks and Sewer System Combination Unlimited Tax and Revenue Bonds, Series 1991. Of the 53,140,000 of bonds originally defeased, $3,430,000 remain outstanding ac Segtember 30, 1998. 6. Additional Long-term Debr Disclosure Tar and revenua bonds authorized and unissued as of Csptember 30, 1958 amounted t~ $1,229,217, TROPW CLUB MUNICIPRL UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINANCIAL STATEMENTS September 30, 1998 The bonds are payable fram the proceeds of ad valorem taxes levied upon all property subject to taxation within MUD 1, withour limitation as to rate or amount, and are further payable from, and secured by a lien on and pledge of the net revenue fo be received from the operation of MUD 1's waterworks and sanitaqr sewer system. The outstanding bonds are callable for redemption prior to maturity at the option of Mim 1 as follows: Series 1993 - A11 maturities fram 2003 to 2007 are callable in principal increments of $5.000 an or after September 1, 2002 at par plus unpaid accrued interest to the fixed date for redemptions. Series 1996 - All maturities are callable at anytime in principal increments of $1.000 plus unpaid accrued interest to the fixed date for redemptions. Series 1997 - All maturities from 2OOB to 2011 are callable in principal increments of $5.000 on or after September 1. 2007 at par plus unpaid accrued interest ta the fixed date for redemptions. The provisions of the bond resolutions relating to debt service requirements have been met, and the cash allocated for these purposes is sufficient to meet debt service requirements for the year ended September 30, 1998. IV. OTHER INFORMATION A. Risk Management MUD 1 is exposed to various risks of lcss related to torts; theft of, damage to, and destruction of assets; business interruption; errors and omissions; injuries to employees; employee health benefits; and other claims of various nature. Commercial insurance is purchased for the risks of loss to which MUD 1 is exposed. MUD 1 has not had any significant reductions in insurance coverage, nor have insurance settlements for the last three fiscal years exceeded insurance coverage. Any losses reported but unsettled or incurred and not reported, are believed to be insignif~cant to MUD 1's general purpose financial statements. B. Commitments MUD 1 Eollows the guidelines of the TNP.CC in its dealings with developers. MUD 1 leases certain equipment and a modular building under the provisions of operaring leases. One half of the monthly rent ($450 per month1 on the modular buildings lease is repaid to MUD 1 by the Tam of Trophy Club. Future minimum rental payments are $3,600 for 1999. C. Related Party Transactions MUD 1's employees assist in maintaining the books and records of MUD 2 and the Town of Trophy Club, including payment of invoices and payables. MUD 1 does not assess a management fee for services performed. Certain costs, ie; copies, phone, postage. and supplies are charged to the respective encity as incurred. Related party receivables and payables by fund at September 30. 1998 are as follows: Fund General Fund Related Party Due From (To1 MUD 2 ($13.607) General Fund MUD 2 6.201 General Fund Town of Trophy Club 29,864 General Fund Tom of Trophy Club (24,840) TROPW CLW XUNICIPAG UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FINANCIAG STATEKZNTS September 30, 1998 D. Contingent Liabilities MUD 1 is currently not subject to any pending litigation. However, MUD 1 is an interested party to ser.eral administrative hearinos at year end. Alchough the outcome of these matcers is not pr~sently determinable, it is the opinion of MUD 1's counsel that resolution of these matters will not have a material adverse effect an the financial condition of MUD 1. E. Employee Retirement Systems and Plans I4UD 1 provides retirement benefits for all of its full time employees through a defined contribution single employer: Simplified Employee Pension - Individual Retirement Contribution agreement plan administered by the First National Bank of Grapevine. Texas and Fidelity investments. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Employees are eligible to participate after completion of six months of service. MUD 1 contribution rate was adopted by the governing board of MUD 1 at five and one-half percent of participating employees' base compensation. By Board approval and Internal Revenue Serrice regulations, the contribution rates are established annually. There is no vesting period. Employees do not have the option ro contribute to the plan. The plan, as established, does not recognize prior senice costs, as it is based exclusively an current compensation earned by participants. MUD 1's total payroll, covered payroll and contributions for the year ended September 30, 1998 were as follows: District's total payroll $587,430 oistrict's covered payroll $478,727 District's contribution paid $26.330 F. CDIYCENTRATIDN OF CREDIT RISK Property taxes and accounts receivable for utilities are due from citizens and businesses within MUD 1's boundaries. Risk of lass is immaterial due to wide dispersion of receivables and policies which address procedures for filing property tax liens or utility service cut-off. G. CONTRACTS Under the terms of a contract dated September 19, 1991. MUD 1 purchased 3,382 unused wastewater taps from a bankrupt developer. MUD 1 had agreed to hold and sell to MUD 2 not 185s than 1,082 taps for the purchase price paid by MUD 1 plus inrerest from date of purchase at a rate of 6.7989%. MUD 2 had an exclusive right to purchase these taps until September 19, 1998, afcer which time MUD 2 has the right of first relusal on future purchases of the unused taps. Through September 30, 199B. MUD 2 has purchased 540 waste water connections. $28,754 of revenue for the year ended September 30, 1998 resulted from a contract between MUD 1 and Maguire Thomas Partners IMTPI whereby MUD 1 has set aside 900 wastewater taps for use by MTP for the future development of the Solana romplex. >.t the point tax revenue from new construction in th* Solana complex exceeds the carrying cost of these 900 connections, this rei.enue stream will cease. Under the terms of a contract whereby MUD 1 and MUD 2 sold an unused portion of the water supply system to the City of Roanoke. Texas, the City of Roanoke will make annual paymenu to the Master District account of $23.663 including interest through 2006. At September 30. 1998, MUD 1's share 16011 of the receivable was $86.445. TROPHY CLW MVNICIPRL UTILITY DISTRICT NO. 1 NOTES TO GENERAL - PURPOSE FTNANCIRL STATEMENTS September 30, 1998 H. DISCLOSURES hBOW >TAR 2000 ISSUZS The Year ZOO0 issue is the result of shortcomings in miny electronic data processing systems and other electranic equipment that may adversely affect MUD 1's operations as early as fiscal year 1999. MuD 1 has completed an inventory of computer systems and ocher electronic equipment that may be affected by the year ZOO0 issue and that are necessary to conducting MUD 1 operations. MUD 1 has identified the Fallowing systems requiring year 2000 remediation: Financial Reporting Water Billing - A vendor is currently remediating the financial reporting system and water billing systems. The year 2000 compliant upgrades will be available for distribution in early March 1999, at na additional cost. Permit and Code Enforcement - MUD 1 has completed an inventory oi the systems and will purchase software prior to September 30, 1999 at an additional cost of $2,000. Payroll and Employee Benefits Systems - h vendor handles the payroll and employee benefits. The vendor is responsible for remediating this system, and is solely responsible for any costs associated with this project. T&Y Collection - Dentan County handles tax collection for MUD 1. The County is responsible for remediating this system and, is solely responsible for any costs associated with this project. Water supply System - MUD 1 has completed an inventory of the water system. A new software system has b~en sent out for bids. The new system will be installed prior io Septeinbsr 30, 1999 at an estimated cost of $8,000. Telephone System - MUD 1 has completed an invsntory of the telephone system. New software fur the system has been ordered at an estimated cost of $6.000. Waste Water System - MUD 1 has completed an inventory of the waste water system and has determined that the current system is year 2000 compliant. Department of Public Safety - MUD 1 has completed an inventory of the department of public safery systems including rolling stock and communication gear. All are year 2000 compliant. Because oE the unprecedented nature of the Year ZOO0 issue, its effects and the success of related remediation efforts will not be fully determinable until the year 2000 and thereafter. Management cannot assure that MUD 1 is or will be Year 2000 ready, that MUD i's remediation efforts will be successful in whale or in part, or that parties with whom MUD 1 does business will be Year ZOO0 ready. (This Page Intentionally Left Blank) (El IF1 (GI (HI (11 I Jl 1x1 iLI i 1.1 I IN) TROPHY CLUE MUNICIPAL UTILITY DISTRICT NO. 1 SUPPLEKENTARY SCHEDULES INCLUDED WTTHIN THIS REPORT September 30, 1998 Notes required by the TNRCC in the .Lmu+l Audit Reporc Requirements for Texas Water Drstricts and Aurhorities are incorporated into the notes presenied as part of the General Purpose Financial Statements. Schedule of services and races Schedule of General Fund expenditures. Schedule of temporary investments - all funds. Analpis of taxes levied and receivable Analysis of changes in general fixed assets and organizational costs General long-term debc service requirements - by year Analysis of chz.ngea in general long-term debt Comparative schedule of revenues and expenditures - five years Insurance coverage aoard members, key administrative personnel and consultants The following supplemental information is provided for the Board of Directors' additional analysis and is not part of the information required by the TNRCC. Combining schedules iThis Page Intentionally Left Blank1 TROPHY CLW BUNICIPAI. WPILITY DISTRICT NO. 1 (El SERVICES AND RATES Segtember 30, 1998 1. Services provided by I4UD 1: 8 Retail lYater €3 Wholesale Water iE] Drainage 5 Retail Wzstewater 5 Wholesale Wastewater 5 Irrigation I3 Parks/Recreation E Fire Protection Security Solid Waste/Garbage Flood Control Roads 5 Participates in joint venture, regional system and/or wastewater service (other than emergency interconnect) Other 2. Retail Rates Based on sh" Meter: Retail Rates Not Applicable Most prevzlent type of meLer (if not a 5,b") KIA Flat Rates per 1000 Minimum lninimum Rate Gallons Over Charge Usage Y/M Minimum Usage Levels WATER : $9.00 0 No $0.47 0 to 3,000 GOLF COURSE IRRIGATION SW.CHARGE : Certain contracts allow for a demand charge during peak usage periods. District employs winter averaging for wastewater usage? yes a NO 5 Total water and wastewater charges per 10.000 gallons uszge (including surcharges) First l0,OOO gallons used 546.79 Next 10.000 gallons used 22.78 Next 10.000 gallons used and subsequent 21.80 inaximum residential wastewater charge is for 12,000 gallons or $26.52 TROPKY CLUB WmrrC1P.U UTILITY DISTRICT NO. 1 (El SERVICES AND RATES (Continued) September 30, 1998 3. iletail Service Providers: Number of retail water and/or wastewater* connections within MUD 1 as of the fiscal year end. Provide actual numbers and single family equivalents (ESFC) as notpd: Single Family Multi-Family Inactive Iictivs Active Connections Connections IESFCI IESFCI ** 1.029 1,029 0 Commercial 125 611 0 Other - recreational centers. government h VFD 14 30 0 TOTAL 1.179 1,806 0 Number of connections relates to water service, if provided. Otherwise, the number of wastewater connections should be provided. ". ,'Inactive" means that water and wastewater connections were made, but service is not being provided. 4. Total water consumption (in thousands) during ihe fiscal year for the Master District: Gallons pumped into system: 623,100 Gallons billed to cuseomers: 615,080 MUD 1 operates a Master District for hlM 1 and MUD 82. Amounts shown are for the Master District. 5. Standby Pees: Does MUD 1 Assess standby fees? Yes 'Zl No 0 Far the most recent full fiscal year. FY 1998: Debt Service Total Levy $0 Total Collected $0 Percentage Collected 0% Operations and maintenance Total Levy $3,714 Total Collected $3.114 Percentage Collected 100% The Master District collected $5,1114 of which $1.700 is attributable to MUD 2 Heve standby fees besn levied in accordance with Water Code Section 49.231, thereby constituting a lien an property? yes No B*., -** Standby fees -re levied by 14UD 1 and conskitute a lien under recorded deed restrictions or covenants pursuant to Section 293.150 of Title 30 of Texas Administrative Code. TROPXY CLUB KUNICIPAL UTILITY DISTRICT NO. 1 (El SERVICES RND PATES (Continued1 September 30, 1990 6. mticipated sources oi funds to be used for debt sen-ice psyments in I.IUD 1's following fiscal year: a. Debt Service Tar Xeceipts $110,Ell ~i. Surplus Constr~ction Funds C. water andior Wastewater Revenue d. Standby fees e. Debt Servic~ Fund Balance To Be Used f. Interest Revenues 9. Other (Describe) TOT& PNTICIBATED FUNDS TO BE USED 7. Location of District: Counties in which district is located: Denton, Tarrant Is MUD 1 lccated entirely wiehin one county? Yes Is MUD 1 located within a city? Entirely Partially El Not at all City in which district is located. Town a£ Troohv Club. Town of wsstlake. IS MUD 1 located within 5 city's e:itra territcrial jurisdietian (ETJ)? E n t i r e 1 y Partially 0 NO: at all Unknown ETJ's in which district is locaced. 15 the General Membership aE the Board appointed by an office outside MUD l? yes O NG El if yes, by whom? CURRENT Personnel Professional fees: Suditing Legal Engineering TROPHY CLUE HVNICIPAL [PPXLITY DISTRICT NO. 1 IF) SCHEDULE OF GENERAL FUND EXPENDITLElES Year Ended September 30, 1998 (With Comparative Totals for Year Ended Sapternher 30, 1991) Master District Fire Operating Totals Department Depsrcment Department Current Year Prior Year Purchased services for resale: Bulk water purchases 611.062 611.062 414.077 Contract services: Tax administration Eee 10.456 10.456 9,944 Utilities and telephone 196.488 11.058 207,546 198,347 Repairs and maintenance 212.020 21,470 233,490 194.053 other operating costs 128.836 15.341 144.177 162,179 Administrative expenditures: Directors fees 2.611 2.611 2,600 Office suppiies 8.380 1,336 2,020 11,736 13,246 Insurance and bonds 31.742 9.151 3,100 43.993 46.393 other admin. expenditures 58.338 8.419 315 67,072 36,480 Capital outlay 409.634 1.725 411.359 550,854 Debt Service 80,395 80,395 27,366 TOT& EXPE13DITURES $ 2,282,694 $ 286,560 $ 27.459 5 2,596,713 $ 2,361,411 lqumher of employees employed by !.IUD 1: Full time Part time TROPKY CLUB KUNICIPAL UTILITY DISTRICT NO. I (GI SCHEDULE OF TEMPORARY INVESTMENTS September 30, 1998 Identification Inrerest Maturity Bslance Accrued Interest Funds Number Rate Date End of Year End of Year General Fun5 TexPaal 06133-9296 5.5492% Demand $442,985 Paid daily Te:.:Pool 06133-1200 5.5492% Demand 23.830 Paid daily TexPoal 06133-2499 5.5492% Demand 860.957 Paid daily TerPocl 06133-3831 5.5192% Demand 90,578 Paid daily Total 1,418,350 Debt Ser:ice Fund TexPoo1 06133-3333 5.5192% Demand 49.639 Paid Daily Total - All Funds $1,467,999 TROPKI CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (HI ANALYSIS OF TAXES LEVIED Ahll RECEIVABLE Year Ended September 30, 1998 Gsneral Fund Debt Clpsration Fire Total Service Total Taxes receivable, beginning of year $863 $2,553 $3,416 $13.248 $16.664 1997 tar. lev, 31,950 190.739 222,689 703. 852 926,541 Total to be accounted for 32.813 193.292 226.105 717.100 943,205 Less collections, write ofis & adj. 0 Current year 131. 6021 1189.859 i221.6611 1700.602) 1922,2631 Prior years 14801 12931 (7631 13,7951 14,5581 Total 132,2821 1190,142 1222.4241 1704,397) 1926.8211 Taxes receivable, end of year $531 $3.150 $3,681 $12,703 $16.384 Taxes receivable by year 1997 and prior 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Taxes receivable. 23 13$ 157 551 708 282 1,681 1,963 6.488 8.451 14 8 881 1,029 3.250 4,279 end of year $531 $3,150 53,691 $12,703 $16.384 Property valuations (in 000'sl 1997 1996 1995 1994 1993 Land $56.878 $51,596 $50.312 $48.530 $51,057 Improvements 202.602 184,309 174.006 166,321 179,834 Personal property 63,509 24,887 45,506 60,901 110.876 Exemptions 13.4921 12,095) 12.9231 12,6901 12.3191 $31,497 $257.897 $266,901 $273.062 $339,448 Tax rate per $100 valuation: Operations Fire Department Debt Service Total tax rate per $100 valuation Tax Levy: Percent of taxes collected to taxes levied TRDPEY CLU6 MUNICIPAL UTILITY DISTRICT NO. 1 (HI ANALYSIS OF TAXES LEVIED AND RECEIVABLE (Continued) September 30, 1998 Tax rate for any other special district which la1 encompass less than a county, lbl provides water, wastewater collection, drainage or roads to property in r.liio 1 and lcl tbx:ea property in MUD 1. liame of Special Districts Service Pxovided Tax Rate Total rate Is1 of special districts $ Tax rates for all overlapping jurisdictions. Include any taxino entities which overlap 10% or more of MUD 1. a. County b. City c. School District Denton Tarrant County County 0.25590 0.26484 Town of Trophy Club 0.46580 Carroll LSD 1.74000 d. Special Districts not included above Hospital District 0.23407 e. Total Special Districts f. Total District Tbu Rate g. Total Overlapping Tax District Tarrant County Junior college 0.10646 0.00000 0,34053 0.29000 0.29000 2.68751 2.63531 TROPHY CLUB KUNICIPAL UTILITY DISTRICT NO. 1 11) ANALYSIS OF CHANGES IN GENE% FIXED ASSETS Year Ended September 30, 1998 Physical Facilities: Land Buildings Water system sanitary wastewater systPm Drainage system I4achinery and equipment Autos and trucks Furniture and fixtures Engineering fees Total Physical Facilities District Drganizational Casts - Engineering and surveys Filing fees, licenses, legal notice & Legal fees Director tees and per diem Other costs District Organizitional Costs - Legal fees Financial consulting fees Operating Bond interest Amortized bond discount Total District Organi=ational Costs Total Physical Facilities & Amounts Provided By: General Fund: Dedicated by developers Revenue Debt Service Fund - Revenue Capital Projects Fund: Bond proceeds Revenue Total Amounts Provided Balance Balance 3/30/97 Addition Disposals 9/30/9S 4.088 4.088 522.608 0 0 522.668 $17. 847.348 5411,357 ~$70.0001 $18,189,305 Balance Balance 9/30l91 Disposal Additions 9/30/98 TROPHY CLW MUNICIPAL UTILITY DISTRICT NO. 1 IJ) GENERAL LONG-TERN DEBT SERVICE REQUIREMENTS - BY YEARS September 30. 1998 Series 1989 Finance Contractual Obligations Due During Fiscal Principal interest Due Due Years Ending January 1 Jan l/Jul 1 Tcial 1999 $18,000 $711 $16.711 $16,000 $711 $18,711 Series 1993 Cambinacion Tur Bonds Due During Fiscal Years Ending 1999 2000 2001 2002 2003 2004 2005 2006 2007 Principal Interest Due Due September 1 Mar 1/Sep 1 Total $290,000 $173.905 $463,905 300.000 160,565 460.565 TROEHY CLUE MUNICIPAL DTILITY DISTRICT NO. 1 IS) GENEXRL LONG-TERM DEBT SERVICE P.EQDXREMENTS - BY YEARS (Continued) Septerrber 30, 1598 Series 1996 Public Property Finance Contractual Obligation Due During Fiscal Years Ending Principal Inttrest Due Due September 1 Dec l/.iun 1 Total $37.000 $22.077 $59,077 TROPHY cLua ~ICIPAL ~ILITY DISTRICT NO. 1 IS1 GENERAL LCNG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS September 30, 1998 Series 1997 Combination T~Y Bonds Due During Fiscal Principal Intereet Due Due Years Ending September 1 Mar 1!Sep 1 Tot21 1999 5110,000 $141,355 $251,355 TROPW CLW MUNICIPAL UTILITY DISTRICT NO. 1 (J) GENERAL LONG-TERM DEBT SERVICE REQUIREMEmS - BY TEARS IContinuedI September 30, l??e Annual Rermirem=ncs for >~ll Series Due During Fiscal Years Ending 1933 2000 2001 2002 2003 2004 2005 2D06 2007 2008 2009 2010 2011 Discount Total Total Total Principal Principal Due Interest Due G Interest Due $455,000 $338.048 $7s3.0.18 365, OCO 36,505 401.505 TROPIN CLUE mICIPhL UTILITY DISTRICT NO. 1 lK1 ANALYSIS OF CIiRNGES IN GENERhL LONG-TERM September 30, 1938 Interest rate Series Ssries Series Series 1389 1993 1996 CO's 1391 Tax Total 7.6-3.0% 3.25-5.9% 5.5% 3.25-5.9% Date interest payable 1:l k 711 3/1 & 9/1 12 6 3/1 & 3/1 Maturity date Bonds outstanding ac beginning of year 534.000 $3,460,000 $458.600 $0 $3,352,600 Bonds sold during current year 0 0 0 3,490,142 3,490,142 Retirements of principal Bonds outstanding at end of year Xstirements of interest Paying agents Name & City: Series 1389. Series 1933, and Series 1997 Chase Ban!? of Texas. 1q.a. P.O. BOX 213053 Dallas. Texas 75221-9053 Series 1936 Texas Nationil Bank 3205 E. Hwy 114 Southlake, Texas 76052 Tax Other Refunding Bond Authority Bonds Bonds Bonds Amcunt authorized by vocers 512,344,217 $0 53,7135,000 Amount issued 11.115.000 0 3.105.000 Remaining io be issued 51,229,217 $0 $0 The general obligation bonds were authorized on October 7. 1375 Debt Service Fund cash and cash equivalents balance as of September 30.1998: Average annual debt service payment [principal k interest1 for remaining term of debt: REVENUE Water and sewer service Inspection h tap connection fees Ad valorel" property taxes Penalties and interest Settlement Interest earned Miscellaneous and other Proceeds from debt Total revenue EXPENDITEXES Purchased water and sewer services Salaries, wages and employee benefits ProEessional fees Recurring operating expenditures Capital outlay Debt service Miscellaneous expenditures Payment to escrow agent Total Expenditures Excess ideficicncylof revenues over (under1 expenditures Total Active Retail Water and/or Wastewater Connections TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (L) COMPARATIVE SCHEDULES OF REYENUE AND EXPENDITURES - GENERAL FUND Five Years Ended September 30, 1398 Amounts Perrent of total xrevenue 1938 1937 1996 1995 1994 1398 1997 1396 1995 1994 $2,062,330 $1.660.973 $1.747.516 $1,440,262 $1.384.990 77.8% 58.0% 83.7% 76.1% 78.3% 83. 981 63.805 39,583 73,869 36,351 32 2.2% 1.3% 3.3% 2.1% 303,944 253.466 178.719 202.262 185.588 11.5% 3.1% 8.6% 10.7% 10.6% 33.853 31,384 33.057 31.847 26,852 1.3% 1.1% 1.6% 1.7% 1.5% 0 0 0 54.301 0 0.0% 0.0% 0.0% 2.9% 0.0% 74.393 92.101 63,418 47.743 25,772 2.8% 3.2% 3.0% 2.5% 1.5% 91.236 295.157 25.638 42.680 95.316 3.4% 10.3% 1.2% 2.3% 5.4% 0 458,600 0 0 0 0.0% 16.0% 0.0% 0.0% 0.0% 2,649,737 2,861.486 2,087,331 1,893,570 1.754.869 100.0% 100.0% 100.0% 100.0% 100.01 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (I.) COMPARATIVE SCHEDULES OF REVENUE RND EXPENDITURES - DEBT SERVICE FUND (Continued] Five Years Ended September 30, 1998 Amounts Percent oE total revenue REVENUE 1998 1997 1996 1995 1994 1998 1997 1996 1995 1994 Ad valorem property taxes $700,912 $649,257 $625,730 $656,834 $808,365 96.5% 15.9% 95.6% 93.9% R7.3P Penalties and interest 7,033 2,158 1.537 3.795 2.652 1.01 0.1% 0.2% 0.5% 0.3% Interest earned 18,601 17.174 26,984 38.525 26.984 2.5% 0.4% 4.11 5.5% 2.9% Miscellaneous and other 0 0 0 0 87.801 0.0% 0.0% 0.0% 0.0% 9.51 Proceeds from debt issue 0 3,403,433 0 0 0 .01 0.na 0 0.0% 83.6% -- 0.09: Total revenue 726.546 4.072.022 654.251 699,154 925,802 100.0% 100.09 100.0% 100.01. lno.a% EXPENDITURES P~incipal reiirentent 300,000 405,000 380.000 355.000 330.000 41.3% 9.9% 58.11 50.0% 35.6% Interest and fiscal charges 341,998 330,772 480,414 505,130 527,655 47.1% 8.1% 73.4% 72.2% 57.0% PaymenL to refunding bond agent 0 3,337,767 11 0 0 0.0% 82.01 0.0% 0 0% n n% . . .. . Debt. issue costs 0 59,663 0 0 0 0.0% 1.5% 0.0% 0.0% 0.0% Total Expenditures 641,998 4,133,202 860.414 860.130 857,655 88.4% 101.5% 131.5% 123.0% 92.6% Excess IdeEiciency) of revenues over (under) expenditures $84.548 ($61,1801 l$206.163) l$160,9761 $68,147 11.6% -1.5% -31.5% -23.0% 7.4% TROPRY CLW MUNICIPAL UTILITY DISTRICT NO. 1 (MI INSURANCE COVERAGE September 30, 1998 Type of Policy iunount of corporation clause co- nipe oE coverage Coverage Name rtoct/mutual insurance Employee honesty, etc. Hartford Casualty Co. Stock None Tar assessor/collector $10,000 Public official leach 10,000 director) Bookkeeper band 50.000 Director and officers 5,000,000 Mid-Continent Stock None liability Casualty Co. Building & contents and 5,824,000 Mid-Continent Stock 100 .OOP water system Casualty Co. Comprehensive General and Contractual Liability: Mid-Continent Stack None Casualty Co. Products h Completed operations Aggregate: 3,000,000 Personal h Advertising 1,000,000 Injury Medical Expense 5,000 Automobile 1,000,000 Mid-Continent Stock None Casualty Ca. Contractor's equipment 41,375 Mid-Continent Stock None Casualty Ca. Umbrella 4,000,000 Mid-Continent Stock None Casualty Co. Pollution liability 300,000 Mid-Continent Stock None Casualty Co. This statement, prepared from insurance policies and records, is intended only as a descriptive summary; no expression of opinion as to the adequacy of the coverage is intended. (Cantinuedl TROPhY CLW MUNICIPAI UTILITY DISTRICT NO. 1 1M) INSURANCE CDVXIULGE (Continued) September 30, 1598 Type of Policy Amount of co~qoration clause co- Type of coverage Coverage Name stock/mutual insurance W~rkm+n's Based on salazy TbIL I.lutual None comper.sation Fire Department: Management liability policy General liability policy 2,000,000 American Aliernaeive Ins. Stock CO . 1,000,000 American AlternatCve Ins. Stock /2,ooo,ooo co. Commercial umbrella 3,000,000 AmericanAlternativeIns. Stock CO. Cammercial Auto: Bodily injury 1,000,000 Nid Continent Casualty Co. Stock Property damage 1,000,000 Mid Continent Casualty Co. Stock Combined single 1,000,000 Mid Coniinent Casualty Co. Stock limic Uninsured motorist 1,000,000 Mid Continent Casualty Co. Stock Auto physical Agreed value Mid Continent Casualty Co. Stock damage None Nlne None None This statement, prepared from insurance policies and records, is intended only as a descriptive summary; no expression of opinion as La the adequacy of the coverage is intended. TROPKY CLUE MUNICIPAL UTILITY DISTRICT NO. 1 (Nl BOARD KXKBERS, KEY ADNINISTRATIVE PERSONNEL AND CONSULTRNTS September 30, 1998 Camglete District. Mailing Address: 100 i~lunicipal Drive, Trophy Club. Texas 76262 District Business Telephone Number: Mecro (8171 430-1911 Term of office Fees and expense Resident elected and expires reimbursement Title at of Name and address or date hired 09/30/98 Year End District? Board Members Constance S. White 119 Trophy Club Drive Trophy Club. Ti 76262 T.A. Neidenberger 1033 Sunset Drive Trophy Club. TX 76262 Dave Robison 2 Cricket Court Trophy Club, TX 76262 Dean Henw 308 Oakmont Drive Trophy Club. TX 76262 Wesley W. Obermeier 207 Oakmont Trophy Club, TX 76262 R. Peter Reincke. Jr 1111 Wilshire Trophy Club TX 76262 $500 Asst secretary Yes Treasurer 594 President Yea 300 Director Yes Secretary/ 297 Treasurer Yea 550 Director 5/94 - 5/98 370 Director yes Note: No director is disqualified from serving on this board under the Texas Ylate: Code TROPW CLUE MUNICIPAL UTILITY DISTRICT NO. 1 IN1 BOARD XEMSERS, KEY ROMINISTRATIYE PERSONNEL AND CONSmTANTS (Continued) September 30, 1998 Ten of office Fees C elected and sspense Resident e.xpires or date reimbursement Title at of Name and address hired 09/30/98 Year End District? iiev Administrative Personnel Roger Unger District 102 Caroustie Trophy Club. TX 76262 4/15/06. Manager and $66.816 Investment Yes * Assumed responsibility of District Manager on 10/15/85. Officer Cathy Morgas 2158 Wedgewood Drive Grapevine. TX 76051 02/01/51 Denton Central Appraisal Discrict P.O. Eaa 2816 Denton. TX 75202 04/01/81 Rutledge Crain r Company, PC 1601 E. Lamar, Suite 109 >.=lington, TX 76011 09/05/97 Carter h Burgess P.O. Box 985006 Fort Worth. TX 75185-5006 15a3 Michener, Larimore, et al. L.L.P. 3500 City Center, Towzr I1 Fort Worth. TX 76102 02/01/33 Assistant District 43.761 Manager 9, ,515 Appraiser No Certified Public 6.550 Accountants No Consulting 7,061 Engineer 22.394 Legal EXHIBIT A-1 TROPHY CLLm MUNICIPAL UTILITY DISTRICT NO. 1 D!?PARTl.IENTAL BALPNCE SHEET GENERaL FUND September 30, 1998 (With Comparative Totals :or September 10. 1997) Master District Fire Operating Department Department Department ASSETS Cash and investments Receivables: Property taxes Accounts receivable trade Other governments Miscellaneous Due from other funds Prepaid items Restricted cash - CusKomer deposits Loan receivable from governments Contract receivable TOTAL ASSETS LIABILITIES AND FUh'D BALFNCE LIABILITIES Accounts payable Accrued liabilities Liabilities payable from restricted assets - customer deposits Deferred revenue Due to other funds Due to other governments TOTAL LIABILITIES FUND BALANCE Fund balance - reserved Fund balance - unreserved TOTAL FUND BALANCE TOTAL LIABILITIES PND FUND BALPNCE Interdepartment TOL-~S Eliminations Current Year Prior Year EYHIBIT A-2 TROPHY CLUE I.IUN1CiPI.L 'miLITY DlSTRiCT NO. 1 DEFAP.TI.lENT%L STATEI4ENI OF REVENUES. EXPENDITURES PND CHIUI'GES IN FOND BPJANCE- GENE?-% FUIJD Year Ended September 30. 1998 (With Comparative Totals far Year Ended September 30. 19971 Master District Fire Operating Department Department Department REVENUES Water, sewer, and fire department service and penalties standby fees Inspection and tap connections fees Ad valorem taxes, penalties and interest Sale of wastewater connections 14iscellaneous revenues Interest inzome TOTFL RNENUES EXPENUITURES Current Expenditures Adminiscrative Water and sewer Fire department Total Current Expenditures Capital Outlay Adminiscrative Water and sewer Flre department Total Capital Outlay Debt Service Principal payments Interest payments Paying agent fees Total Debt Service TOTAL CXPENDITUP.ES Excess Ideficiencyl of revenues over expenditures OTHER FINANCING SOURCES [USES) Proceeds of Long-term Debt Payments to Escrow Agent TOTAL OTHER FINANCiNG SOURCES IUSESI Excess (deficiency1 of revenues over expenditures and other sources lusesl Fund Balances at beginning of year ~und Balances at end of year .-.-.- Current ~ear Drior Year EXHIBIT A-3 TROPW' CLUB I~ImJICIPFi UTILITY DrSTRICT Pi3. 1 DZELPTMENTPL STATEMENT OF P.EVENUES. EXPENDITURES PND CHIUJGES IN FUND BmCE- BUDGET MID ACTUPL (GL<? BASIS1 GENERRI FWD Year Ended September 30, 1398 Master District Fire Departmene Department Variance Variance Favorable Favorable Budget Actu+.l iUnEavorable) Budgec Actual (Unfav~rablel RWENUES Water, sewer, h fire department sen'ice and penalties $ 1,588,406 $ 2,038,399 $ 449,913 $ 8,500 $ 7,050 $ (1.4501 Standby fees 8,130 5.414 (2.7161 Inspection and tap connections 60,135 83.961 23. 846 Ad valorem taxes, penalties & interest 261.471 271,130 9,659 Miscellaneous revenues 21, 864 24,337 2.473 16.500 18,533 2,033 Interest income 17.500 24,238 6,738 1,000 4.332 3.332 TOTAL REVENUES 1. 636.115 2.176.369 480,254 287.471 301,105 13.634 EXPENDITURES Current Expenditures Administrative 456.559 426.840 29.713 (9,0991 9.099 (18,1981 Water and sewer 1,243,908 1,446,220 i2C2.3121 Fire department :11.375 195,341 16.634 Total Current Expenditures 1,700.li7 1. 873, 060 1172,5531 202.876 204.440 (1.564) Capital Outlay Administrative 3.700 55,285 (51.5851 Water and sewer 240,875 354.343 1113.4741 Fire department 1.725 (1,725) Total Capital Outlay 244.575 409.634 1165.0591 1.725 11,725) Debt Service Principal payments 53.600 53,600 Interest payments 25.146 26,295 I1.1491 Paying agenc fees 500 500 Total Debt Servics 79,246 80.395 il.1491 TOTAL EXPENDITURES 1,345,042 2,282,694 1337,6521 282,122 286.560 (4,438) Excess (deficiency) of revenues over expenditures $ (248.3271 (106.3251 $ 142,602 $ 5,349 14,545 $ 9.196 -- Fund Balances at beginning of year 852.816 33,177 Fund Balances at end of year $ 746.491 $ 47,722 Operaclng Total5 Department Current Year Variance Variance Favorable Favorable Budget kctusl Itinfavorable) Budgec kczual I" n-~iarable) z.. (This Page Intentionally Left alankl ANNUAL FILING AFFlDAVl THE STATE OF TEXAS . 1 COUNTY OF Denton I I 8014000 TROPHY CLUB MUD 1 1, Roqer A. Unaer of the (Namc of Duly Authorized District Rcpresenlativc) Tro?hv Clnh M n n $1 hereby (Namc of District) swear, or affirm, that tie district iiiimeti abcve has reviewec? 2nd ap~rovec? at a meeting of the Board of Directors of the District on the 1Ot.h day of January , 19%, its annual audit report for the fiscal year or period ended September 30, 1995 and that copies of the annual audit report have been filed in the district office, located at 100 Municipal Dr. , Trophy Club, TX 76262 (Addms of District) The annual filing affidavit and the attached copy of the annual audit report are being submitted to the Texas Natural Resource Conservation Commission in satisfaction of all annual filing requirements within Section 49.194 of the Texas Water Code. Date: January 18 , 1996 Roqer A. Unqer/~istrict Manaqer (Typed Name & Tille of above District Rcprescnlativc) Sworn to and subscribed to before me this Commission Expires On: September 30 (Annual Filing Affidavit Rcviscd 8/95, effective on 9/1/95) day of January , ,1996. MEMBERS: ~meocon Imfifule of Cerillied RiDilc ACCOUOIOOII Tsrorsalelyor cemfied PubIlC ACCDY~IO~~~ SANFORD & BAUMEISTER, EC. CERTIFIED PUBLIC ACCOUhT.AhTS 6300 RIKLL~ PLACE, SUITE 1111 FORT WORM, TEX.G 76116 TELEPHOSE (817) 377-1111 FACSIIIILE (817) 737-6973 Board of Directors Trophy Club Municipal Utility District No. I Trophy Club, Texas We have audited the general-purpose financial statements of Trophy Club Municipal Utility District No. I (MUD I) as of and for the year ended September 30, 1995, and have issued our report thereon dated November 17, 1995 except Note 11, which is dated December 14, 1995. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general-purpose financial statements are free of material misstatement. The management of MUD I is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general-purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the general-purpose financial statements of MUD I for the year ended September 30, 1995, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies Board of Directors Trophy Club Municipal Utility District No. I Page 2 and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general-purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general-purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operations that we consider to be material weaknesses as defined above. This report is intended for the information of the Board of Directors, management, and The Texas Natural Resources Conservation Commission. However, this report is a matter of public record and its distribution is not limited. January 16, 1996 PLEASE SEND THE AUDIT REPORT TO THE TNRCC BEFORE: Feburary 12, 1996 MAILING ADDRESS: Reports and Supervision Team, MC-152 District Administration Section Water Utilities Division Texas Natural Resource Conservation Commission P.O. Box 'i3G37 Austin. Texas 7871 1-3087 PHYSICAL ADDRESS: Texas Natural Resource Conservation Commission Water Utilities Division Reports and Supervision Team 1201 5 Park 35 Circle Colonnade Bldg. F, Room 3101 Austin, Texas 78753 CHECKLIST FOR SUBMITTING THE AUDIT REPORT TO THE TNRCC I. Have copies of the audit report been filed with the office of the district in accordance with V.T.C.A. Water Code, Section 49.1 94(c)? 2. Is the filing affidavit completed and notarized? (Revised Blank form enclosed) THIS IS THE LAST NOTICE YOU WILL RECEIVE OF THE DUE DATE OF THE ANNUAL REPORT PLEASE TAKE STEPS NOW TO ENSURE A TIMELY FILING OF THE REPORT Filing instructions For Texas Water Districts Effective September 1, 1995 These instructions are summaries. For further details, refer to theTexas Water Code, 549.191-. 198 and the Annual Audit Report Requirements (AARR). File the document below: DCCLMEWT: IF - Your district does not collect taxes; - - and your district had no bonds or other long-term (more than one year) liabilities outstanding during the fiscal period; - and gross receipts from loans, operations or conbibutiors did not exceed $lW,MM during the fiscal period; - - and the district's cash and temporary investments were not in excess of $100.000 at any time during the fiscal period. 1 Etnnncid Dormancy Affidavit * - Your district had $500 or less of receipts from operations, tax asswments, contributions, loans or any other sources during the calendar year. - - and the district had $500 or less of disbursements of funds dc&g the ~r.!en<ar ye?r: - - and the district had no bonds or other long-term (more than one year) liabilities outstanding during the-calendar year; -and - no cash or investments that exceeded $5,000 at any time during the calendar year. DUE WHEN Annually, within 45 days aftel the close of the district's fiscal year. Annuall& on or before Jan. 31. The Financial Dormancy Affidavit form refers to the calendar year (January 1 through December 31). - Your district does not qualify to file a Financial Dormancy Affidavit or an Annual Financial Report, then the district must engage a Texas CPA or PA (with a current license) to perform an audit. Annual Finnncial Report * Annually, within 135 days after the close of the district's fiscal year. Audit Report FILE OUR MAILING ADDRESS - one copy in the district's office. - one copy with the Reports & Supervision Team, Water Utilities Division - TNRCC. ALSO Reports and Supervision Team Water Utilities Division - MC 152 Texas Nalural Resource Conservation Commission P. 0. Box 13087 Austin. Texas 7871 1-3087 - one copy of the Annual Films Affidavit* with the Reports & Supervision Team of the TNRCC, at the same time the Audit Report is filed. The affidavit certifies that all required documents I have been filed with the district. While the Annual Filing Affidavit is a separate form that must be submitted with an Audit Report, it has been incorporated within the Financial Dormancy Affidavit and the Annual Financial Report forms for user convenience. * Copier of ritese fom can be obrained by cortmcting rhe Ri,porrs orid Sul>enfision Tcarn ar 5121239-6170, Filing Deadlines In accordance with Texas Water Code 549.1 94(a), districts shall submit a copy of the audit report to the Commission for filing within 135 days after the District's fiscal year ; .a. dr, in accordance with Texas Water Code §49.198(c), qualified districts can submit their annual financial reports within 45 days after the fiscal year end. FISCAL AUDIT YEAR REPORTS END ARE DUE 1995 August 31 September 30 October 31 Nobember 3u December 31 1996 January 31 February 29 March 31 April 30 May 31 June 30 July 31 August 31 September 30 October 31 November 30 December 31 FINANCIAL REPORTS ARE DUE Due Date Increased By One Day Because of the Weekend. Due Date Increased By Two Days Because of the Weekend. Pam Reed, Commissioner R. B. "Ralph" hlarquez. Corni?~issioilcr Dan Pearson, E.YCCII~~I'LI Dircclor Prolecling Taus by Reducing and Preuenling Pollulion 0ctob.er 2, 1995 Dear Board Members: RE: Annual Audit Report for the Fiscal Year Ending September 30, 1995 Our records show your district's fiscal year ends on September 30, 1995. Please begin ~lanning for the annual zudit required by Section 49.191 of the Texas Water Code. The audit report requirements are outlined in the Commission's "Annual Audit Report Requirements for Texas Water Districts and Authorities" (AARR). The governing board is urged to select an auditor familiar with generally accepted accounting principles for governmental units. The auditor must be a Certified Public Accountant or a Public Accountant, with a current license from the Texas State Board of Public Accountancy [Water Code Section 49.191(c)]. You should require the auditor's engagement letter to state that (1 ) the audit will be performed in accordance with generally accepted auditing standards, and (2) will be completed in final form within 120 days after the fiscal year has ended. [Water Code Section 49.191 (dl1 A copy of the audit report must be received by the TNRCC by February 12. 1996. TO ensure public disclosure, the report must be accompanied by an Annual Filing Affidavit stating that copies of the report have been filed locally [Water Code Section 49.1 941. Note that the enclosed filing affidavit has been revised. If you have any questions about your district's reporting requirements, please contact the Reports and Supervision Team at (51 2) 239-61 70. Sin erei d&k Team ~eadr Reports and Supervision Team Water Utilities Division Enclosures: Filing Affidavit Revised and Yellow Notice P.O. Box 13087 - Auslin, Tcsas 7871 1-3087 . 512/239-I000 v,,,,, t,,;,, ?<)% ,.> q,,,,r,,x.,., :,.:!.:w~' .*