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HomeMy WebLinkAboutFY Ended September 30, 1999TROPI-IY CLUB hl[JNIClPAL UTILITY DiSTRICT 1\10, 1 GENEML PURPOSE FML\JCIAL STATEMENTS FCR TEE YEAR ENDED SEPTEMBER 30,1999 TROPRY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 TABLE OF CONTENTS FINANCIAL SECTION Independent Auditors' Report General Purpose Financial Statements: Combined Balance Sheet - All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (GAAP Basis) - General Fund Notes to General Purpose Financial Statements Required Supplementary Information (GASB Technical Bulletin 99-1) Year 2000 Issues Supplementary Information - Information Required by Texas Natural Resources Conservation Commission (TNRCC) (C) Auditors' Report on Supplemental Schedules is incorporated in "Independent Auditors" Report on page 1. (D) Notes required by the TNRCC in the Annual Audit Report Requirements for Texas Water Districts and Authorities are incorporated into the notes presented as part of the General Purpose Financial Statements. (E) Schedule of services and rates (F) Schedule of General Fund Expenditures (G) Schedule of Temporary investments - all funds (H) Analysis of taxes levied and receivable (I) Analysis of changes in general fixed assets and organizational costs (0 General long-term debt service requirements - by year (K) Analysis of changes in general long-term debt (L) Comparative schedule of revenues and expenditures - five years (M) Insurance coverage TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 GENERAL PURPOSE FINANCIAL STATEMXNTS September 30,1999 TABLE OF CONTENTS (N) Board members, key administrative personnel and consultants 37 Annual Filing Affidavit 39 Information Requested by Board of Directors Departmental Balance Sheet - General Fund Departmental Stntement of Revenues, Expenditures and Changes in Fund Balance - General Fund A-2 42 Departmental Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (GAAP Basis)- General Fund THIS PAGE INTENTIONALLY LEFT BLANK. RUTLEDGE CRAlN & COMPANY, PC CERTIFIED PUBLIC ACCOUNTANTS 2401 Garden Park Court. Suile 0 Arllnglon, Texas 76013 INDEPENDENT AUDITORS' REPORT To the Board of Directors Trophy Club Municipal Utility District No. I Trophy Club, Texas We have audited the accompanying general purpose financial statements of Trophy Club Municipal Utility District No. I. as of September 30, 1999 and for the year then ended. lliese general purpose financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on the general purpose financial statements bascd on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditin: standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial sratements are free of material missiatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the general purpose financial statements referred to above present fairly, in all material respects, the finnncial position of Trophy Club Municipal Utility District No. 1, as of September 30, 1999, and the results of its operations for the year rhen ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The accompany in^ supplemental information listed in the table of contents is presented for purposes of additional analysis and are not a required part of the general purpose finmicial statements of Trophy Club Municipal Utility District No. I. Such infomatinn has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion. is fairly stated in all material respecti in relation to the general purpose iinancial statements taken as a whole. The Year ZOO0 supplementary information presented on page 16 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certair~ limited procedures, which consisted principally of inquiries of managemeni regardin: the methods of measurement and presentation of the supplementary information. Ho\\fever, we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Trophy Club Municiptl Utility Eistrict No. 1 is or will become Year 2000 compliant, thar MUDl's Year 2000 remediation efforts will be successhi in \!'hole or in part, or thar parties ~vidi which MUD1 does business are or will become Year 2000 compliant. I December 10, 1999 - -. .~ Metro (e:i) 265-9989 American inslilule a1 Cerl~fied Publtc P~counlunls Fax (817) 861-9623 iexas Society at Ceiiilied Public Accountants ASSETS EXHIBIT I T'OPHY cLua MUNICIPAL UTILITI DISTRICT NO. 1 COi~IKILIED BALANCE SHEET - ALL FOND TYPES AND ACCOUNT GZOUPS September 30, 1999 (With Comparative Totals for September 30, 19991 ------Governmental ?und Types- ACCOU~C GTOU~S Generai General Gdneral Fund Debt Service Fined Assets Lang-tern Debt Cash and cash equivalents $ 1,871,472 $ 128.105 $ - $ :.eceivables Pmperty taxes 3.347 10, 840 Accounts receivable trade 340.376 other governments 1,947 Miscellaneous 1,565 ?repaid items 3.652 Rsstrictrd cash - customer deposits 122.527 Loan receivable from government 40.662 Contracc receivable 77,856 Fissd assets 18.608.3L7 . ' .:mount available in debt seriice 129,074 ?.maunc to be provided 6,552,086 TOT>& ASSETS $ 2,453,414 $ 138,945 $ 18,508,347 $ 5,781,160 LI.>dILITIES i2lD FUND EQUITY LI23ILITIES Accounts payable T 268,572 5 - $ - $ Accrued liabilities 13.691 Liabilities payable from restricted assecs - customer deposLts 122.527 Accrued compensated absencss 2e:erred revenue 80.913 9,870 Due to other governmenrs 16.147 - LICL1 payable 33,630 aonds payable 6,747,530 TOT.*L LiAEILITIES 501.850 9.870 6,781,160 FOliO EQUITY Investment In general frx-d isscts 18.608.347 Psnd baiance - resened 44,314 Fund balance - unreserved 1.917.250 129.075 TO?;& FUND EQUITY 1,961,564 129.075 18,608,347 TOT.=& LIABILITIES MUD FlJMD EQliITI $ 2,453,414 $ 138.945 $ 18,508,347 $ 6,781,160 The accompanying nates to financial statements are an integral part of this statement. Totals hiamorandurn Only Memerandurn Only Currenc Year Prior Year -.. L.,.HIE~T I1 'TROPHY CLUB 1~1UI.IICIPAL UTILITY DISTRICT NO. 1 COI.IEiIllED STATEI.IEIiT OF REVELiUES, EXPENDITURES AtiD CilQiGES IN FUND B2LUUCES ALL GOVEXNt.IENTili. FUND TSPES Year Ended September 30. 1994 IWich Comparative Totals for Year Ended September 30, 19981 Tacals t.lemarandum Only l~lemarandum Only General Fund Debt Ss~ice Curreni Year Prior Year REVENUES -. !ister, sewer, rire dcpar~ment $ 2.137.246 $ - $ 2,133,246 $ 2,096,183 Standby fees 3.343 3,343 5.414 Inspection and cap cannect5ons 94.455 94.455 83.981 Ad valorem tan~s 368,892 -, .=>, . 017 1,111,909 1.011.889 t~liacellaneaus revenues 82,648 82,618 85.822 Interest income 84.208 20.326 104,534 92.591 TOTfL P.EVENUES 2.770.792 763.343 3,531,135 3,376,280 ESPEMDITURES Current Espenditures ILdministrativs 590.132 590.132 463,398 Vlater and sewer 1,418,652 1,412,652 1,446,220 Fire department 278.296 278.296 195.339 Total Current Expenditures 2.2~7.080 2.287.080 2,104,357 Capital Outlay Adininistrati\ie 24.127 24.127 55.285 Water and sewer 133.561 133.961 354,343 Fire department 131,171 131.171 1.725 Total Capital Outlay 289.259 289.259 411.359 Debt Service Principal payments 2.245 P00.000 402.245 353.600 Interest payments 78,159 315.260 393.419 366,793 Paying agent fees 1,000 1.000 2,000 Tacal Debc Senrice 20,404 716.250 796.664 722,393 TOT.- EZTE1IDITUP.SS 2,656.743 716,260 3.373.003 3,238,703 Excess ldeficiencyi oE revenues over expenditures 11'1. 049 47,083 161.132 137,571 OTHER FIIV4NCING SOURCES (USES) Proceeds of Long-tsrm Debc 105,000 105,000 TOT= OMSR FINPSCING SOURCES (USES) 105,000 105,000 Excess ldeflciencyl of revenues aver espmdrtures and other sources lusesl 219.049 47,083 266.132 137.571 Fund Balances ac beglnnrng of year 1,742.515 81,992 1,924,507 \OI~[~,~~~.~~~ Fund Balances at end of year 5 1.961.564 5 129.075 $ 2,090,535 $ 1.824.507 The accompanying notes to financial statements are an integral part of this statement. + EXHIBIT 111 TROPh-< CLUB f.IUNICIPKL UTILITY DISTRICT NO. 1 STATEI.IEEIT OF REVENUES. EXPEN0ITUP.ES APNC CHANGES IPI FtlPiD BXWCE BUDGET DND ACTUAL (GXiP 2ASISl Mi'NUALLY BUDGETED GOVE~.IE?IT;IL Fii7.10 T'LPES Year Ended September 30. 1999 General Fund REVENUIS -. I'later, sewer, ilrs department Siandb? fess Inspecticn and tap connec~ians Ad valorem taxes Miscellaneous revenues Interest iceome EXPENDITLR.fS Current Expenditures Adminisirative Water rqd sewer Fire departmenc Total CJrrenc Espendicuras Capital Outlay Administrative Waeer and sewer Fire department Total Capital Outlay Principal payments Interest payments Total Debt Seriics TOT.= EXPENDITURES E:<cess ldeLicienr,i of revenues over expenditures OTYER FINDIICI2.IG SOim.CES IUSESI Proce-zds of Lon:-term neb: TOT= OTYER FIEIANCIEIG SOURCES (USES1 EI:cess fdeficiencyi of revenues over expenditures and ocher sources (uses1 Zund Balances at b+:inning of year Fund Bzlances at end of year Fa-iorable (Unfavorable) The accompanying notes to financial s:aLaaenLs are an ini-egral art cf this stiLsment 5 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE PTNANCWL STATEMENTS September 30,1999 I. SUWIMARY OF SIGNIFICANT ACCOUNTlNG POLICIES A. Reporting Entity Trophy Club Municipal Utility District No. I (tlie District) was created by an order of the Texas Natural Resources Conservation Commission (TNRCC) (farmerly the Texas Water Commission) on March 4. 1975 and confirmed by the electorate of the District at a confirmation election held on October 7, 1975. The Board OF Director's held its first meeting on April 24, 1975. The bonds were first sold on June 8, 1976. Tlle District operates pursuant to Article XVI, Chapter 59 of the Texas Constitution and Chapter 54 of the Texas Water Code, as amended. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for rhe District. The financial statements of the District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. As required by generally accepted accounting principles, these financial statements present the District only. There are no component units which satisfy requirements for blending within the District's financial statements or discrete presentation. Master District The District holds legal title to and operates the central water supply system and the central waste disposal system as ";vlaster District" for the benefit of tlie District and Trophy Club Municipal Utility District No. 2 (MUD 2) customers. The proportionate allocation ofcosts and related beneficial usage rights in the major assets is estimated as follows: Water plant and wells Twenty-one inch water line Elevated tank Original treatment plant and land First expanded treatment plant Second expanded treatment plant Administration building (A) MUD 2 27.14% 40.00% 56.01% 32.86% 32.86% 22.70?6 (C) 0.00% (B) Future Development 31.95% 0.00% 0.00% 0.00% 0.00% 0.00% 76.62% (A) MUD 2 has not paid for its full shares. (B) The developer's original intent was for five districts. (C) MUD 7 does not acknowledge any portion orthe cost of tlie adminisrration building as being their responsibility. Pursuant to the provisions of the Master District Contract dated December 1, 1982, as amended, certain items have changed from prior years. Tlie District serves as the managing district. Under a contract dated December 1. 1982, the managing district has financial responsibilities which include preparing and administering the budgets. ivlUD 2, has tlie option to review their budget. The agreement as amended provides that any net revenue from operations flows to the Master District. Agreements exist behveen the District and MUD 2 that compensate the District for water and sewer plant capacity and out of dishict sales as approved and required by the TNRCC. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 Based upon this arrangement, all financial transactions relating to water and sewer operations are included in the financial statements of the District in the Master District Account, which is part of the General Fund. A summary of the Master District's financial statements for the year ended September 30, 1999 follows: Total assets $ 1,322,279 Total liabilities (439,089) Total equity $ 883,190 Total revenue 9; 2,244,413 Total expenditures (2,107,715) Excess of revenues over expenditure 136,698 Plus capital expenditures 158,088 Net revenue before capital expenditu 9; 294,786 B. Measurement Focus, Basis of Accounting and Basis of Presentation The accounts of the District are organized and operated on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The District utilizes governmental fund types to account for the District's aclivities and to prepare its financial statements. Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The District considers all revenues available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Those revenues susceptible to accrual are ad valorem taxes, interest revenue and charges for services. Penalties and interest on property taxes and miscellaneous revenue are recorded when received, as they are generally not measurable until received. The District reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Governmental funds include the following fund types: The general fund is the District's primary operating fund. It accounts for all financial resources of the general government, except those required to he accounted for in another fund. Debt service funds account for the servicing of general long-term debt not being financed by proprietary or nonexpendable trust funds. TROPHY CLUB MUNICWAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FILNANCIAL STATEMENTS September 30,1999 Account Groups include the following: The general fixed assets account group is used to account for all fixed assets of the District. The general long-term debt account group is used to account for general long-term debt and certain other liabilities of the District. C. Assets, Liabilities and Equity 1. Deposits and Investments The District's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. State statutes authorize tlie District to invest in (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) 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 by a nationally recognized investment rating firm and having received a rating of not less than A or its equivalent; (5) certificates of deposit by state and national banks domiciled in this state that are (A) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor; or, (B) secured by obligations that are described by (1) - (4); or, (6) fully collateralized direct repurchase agreements having a defined termination date, secured by obligations described by (I), pledged with third party selected or approved by the District, and placed through a primaly government securities dealer. Investments are stated at fair value. 2. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivablesipayables" (is., tlie current portion of interfund loans) or "advances tolfrom other funds." All other outstanding balances behveen funds are reported as "due to/€rom other funds." Advances behveen 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 of ninety days comprise most of tlie allowance for uncollectibles. Property taxes are levied as of October I, on the assessed value listed as of the prior January I, for all real and certain personal property located in the District. The appraisal of property withii the District is the responsibility of Denton 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 on the basis of 100% of its appraised value and is prohibited from applying any assessment ratios. The value of property within tlie Appraisal District must be reviewed every five years; however, the District may, at its own expense, require annual reviews of appraised values. The District may challenge appraised values established by the Appraisal District through various appeals and, if necessary, legal action. Property taxes for the District are not limited as to rate or amount. In an election held October 7, 1975, the electorate of the District authorized the levy of up to $0.25 per $100 valuation for the operations and maintenance of the District. Property taxes attach as an enforceable lien on property as of January 1, following the levy date. Taxes are due by January, 31, following the levy date. Property taxes are recorded as receivables when levied. Following is information regarding the 1998 tax levy: TROPHY CLUB MUNICIPAL UTILITY DISTRlCT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 Adjusted taxable values $ 359,434,668 O&bl tax levy %0.07501$100 $ 269,576 l&S tax levy $0.2050/$100 736,841 Total tax levy $0.2800/$100 $ 1,006,417 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 the District 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 of 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 ("infrastructure") general fixed assets consisting primarily of drainage systems have been capitalized. 5. Organizational Costs The District, in conformance with requirements of the TNRCC, capitalized costs incurred in the creation of the District. The TNRCC requires capitalization as organizational costs for the construction period all costs incurred in the issue and sale of bonds, bond interest and amortized bond 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 The District 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, 1999. 7. Compensated Absences Effective October 1, 1998, the District transfel~ed its employees to the Town of Tropl~y Club under an agreement whereby the Town provides the employees necessary to continue the District operations. Accordingly, no provision for compensated absences is provided for at September 30, 1999. 8. Long-term Obligations The District 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. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 For governmental fund types, bond premiums and discounts, as well as issuance costs, 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 are not appropriable or are legally segregated for a specific purpose. Reserved fund balance represents the amount of prepaid items. 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 aggregation of this data. 11. Comparative Data/Reclassifications Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the District's fmancial 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. 11. STEWARDSHIP, 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. The Board of Directors budgets revenue but does not budget expenditures for the Debt Service Fund. 2. The Board of Directors approves all budget appropriations. Any 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. B. BudgetlGAAP Reconciliation The budget is adopted on the modified accrual basis of accounting, thus there are no reconciling items between the Budget basis and the GAAP basis of accounting. C. Excess of Expenditures Over Appropriations For the year expenditures exceeded appropriations for the following funds: General Fund TROPHY CLUB MUh'ICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 111. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Cash, Cash Equivalents, and lnvestments At year end, the District's carrying amount of deposits was $479,071 ($122,527 restricted) and the bank balance was $533,549. All of the bank balance was covered by federal depository insurance or by collateral held by the District's agent in the District's name. Investments lnvestments are categorized into these three categories of credit risk: 1. Insured or registered, or securities held by the District or its agent in the District's name. 2. Uninsured and unregistered, with securities held by the counter party's trust department or agent in the District's name. 3. Uninsured and unregistered, with securities held by the counter party's, or by its trust department or agent but not in the District's name. At year end, the District's investments were as follows: Market lnvestments not subject to categorization: Texas Local Government Pool System IF_l ,643.033 1,643.033 Investments categorized as cash equivalents $1.643.033 B. Receivables Receivables as of year end, including the applicable allowances for uncollectible accounts, are as follows: General Debt Service Total Property taxes receivable $ 3,347 $ 10,840 $ 14,187 Trade accounts receivable $ 449.536 $ $ 449.536 Less: allowance for uncollectible (109;160) (109;160) $ 340,376 $ $ 340,376 Receivable from other governme $ 1,947 $ $ 1,947 Miscellaneaus receivables $ 1,565 $ $ 1,565 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 C. Fixed Assets Activity in the general futed assets account group for the District was as follows for the year ended September 30, 1999: Balance Balance Land Buildings Furniture and fixtures Machinery and equipment Autos and trucks Water system Sanitary wastewater syste Drainage system Engineering fees District Organization - Total Additions Disposals $ - $ D. Interfund Receivables and Payables There were no interfund receivable balances as of September 30, 1999 E. LONG-TERM DEBT 1. Combination Tax and Revenue Bonds The Dish-ict 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 6om a combination of property tax revenue and revenues of the water and waste water utility system). Combination bonds are as follows: Water works and sewer system combination unlimited tax and revenue bonds, Series 1993, with interest rates ranging from 3.25% to 5.9%, due through 2007. $2,895,000 Water works and sewer system combination unlimited tax and revenue refunding bonds, Series 1997, with interest rates ranging from 4.0% to 5.0% , due through 2011, including related capital appreciation bonds. 3,570,000 Total combination tax and revenue bonds Less unaccreted discount Total general long-term debt net 2. Other general long-term debt The District periodically issues other forms of long-term debt including contractual obligations, and public property finance contractual obligations, which are unsecured. The debt for the bonds is recorded in the general long-term debt account group (to be repaid from revenues of the water and waste water utility system). Such other debt is as follows: Public property finance contractual obligations, Series 1996, with interest rate of 5.5076, due through 2006. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FJiYANCIAL STATEMENTS September 30,1999 Public properly finance contractual obligations, Series 1999, with interest rates ranging from 5.50%, due through 1999. Total other general long-term debt 3. Changes in General Long-Term Debt During the year, the following changes in general long-term debt occurred: Balance Balance 9130198 Additions Payments 9130199 Combination tax 61 revenue bon $ 6.865.000 $ $ 1400.0001 % 6.465.000 \. , ~. Discount on bonds (1931346) 21,876 (171,470) Net combination bonds 6,671,654 (378.124) 6.293.530 ~. .., . . Other general long-term debt 439,000 70,000 (55,000) 454,000 7,110,654 70,000 (433,124) 6,747,530 Note payable 35,000 (1,370j 33,630 Compensated absences j,302 (3,302) 4. Debt Service Requirements The requirements to amortize all hoods and contractual obligations outstanding as of September 30 summarized below: Year Ending eptember 30, Principal Interest Total 2000 $ 495,000 $ 317,372 $ 812,372 Thereafter 3,763;000 587;400 4,350,400 Total 6,919,000 $ 1,914,556 $ 8,748,156 Discount (171,470) 5. Defeased Debt In prior years, the District has advance refunded previously issued debt. As a result, the refunded bonds were considered to be defeased and the liability was removed from the general long-term debt account group. At year end $3,260,000 defeased debt remained outstanding. 6. Additional Long-term Debt Disclosure Tax and revenue bonds authorized and unissued as of September 30, 1999 amounted to $1,229,217. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 The bonds are payable from the proceeds of ad valorem taxes levied upon all property subject to taxation within the District, without limitation as to rate or amount, and are further payable from, and secured by a lien on and pledge of the net revenue to be received from the operation of the District's waterworks and sanitary sewer system. The outstanding bonds are callable for redemption prior to maturity at the option of the District as follows: Series 1993 -All maturities from 2003 to 2007 are callable in principal increments of $5,000 on 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 2008 to 2011 are callable in principal increments of $5,000 on or after September 1, 2007 at par plus unpaid accrued interest to 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, 1999. IV. OTHER INFORMATION A. Risk Management The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; business intemption; 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 the Dish-ict is exposed. Any losses reported but unsettled or incurred and not reported, are believed to be insignificant to the District's general purpose financial statements. B. Commitments The District follows the guidelines of the TNRCC in its dealings with developers. The District leases certain equipment and a modular building under the provisions of operating leases. One half of the monthly rent ($450 per month) on the modular buildings lease is repaid to the District by the Town of Trophy Club. Future minimum rental payments are $3,600 for 2000: C. Related Party Transactions The Dishict's employees assist in maintaining the books and records of MUD 2 and the Town of Trophy Club, including payment of invoices and payables. The District does not assess a management fee for services performed. Certain costs, i.e.; copies, phone, postage, and supplies are charged to the respective entity as incurred. Related party receivables and payables by fund at September 30, 1999 are as follows: Fund Related Party Due From (To) General Fund MUD 2 $ (3,137) General Fund Town of Trophy Club $ 1,947 General Fund Town of Trophy Club $ (13,010) TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS September 30,1999 D. Contingent Liabilities The District is currently not subject to any pending litigation. However, the District is an interested party to several administrative hearings at year end. Although the outcome of these matters is not presently determinable, it is the opinion of the District's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the District. E. Employee Retirement Plan Effective October 1, 1998, the District discontinued provision of retirement benefits for all of its full time employees through a defined contribution, single employer Simplified Employee Pension - Individual Retirement Contribution agreement. On that date, employees of the District became employees of the Town of Trophy Club which concurrently adopted a pension plan providing pension benefits for all full-time employees through a nontraditional, joint contributory, defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS). F. CONCENTRATION OF CREDIT RISK Properly taxes and accounts receivable for utilities are due from citizens and businesses within the District's boundaries. Risk of loss 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 I purchased 3,382 unused water taps from a bankrupt developer. MUD1 had agreed to hold and sell to MUD 2 not less than 1,082 taps for the purchase price paid by MUD 1 plus interest from the date of purchase at a rate of 6.7989%. MUD 2 had an exclusive right to purchase these taps until September 19, 1998, after which time MUD 2 has the right of first refusal on future purchase of unused taps. Through September 30, 1999, MUD 2 has purchased 540 waste water connections. $28,754 of revenue for the year ended September 30, 1999 resulted from a contract between the District and Maguire Thomas Partners (MTP) whereby the District has set aside 900 wastewater taps for use by MTP for the future development of the Solana complex. At the point tax revenue from new construction in lhe Solana complex exceeds the carrying cost of these 900 connections, this revenue 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 payments to the Master District account of $23,663 including interest through 2006. At September 30, 1999, the District's share (60%) of the receivable was $77,866. H. Subsequent Event Effective October 1, 1999, the District entered into a joint venture in participation with MUD 2, the Town of Trophy Club, and the City of Westlake, Texas. Each entity made contributions of assets and related long-term liabilities to the Trophy ClublWestlake Public Safety Joint Venture (the "Venture"). Each entity is obligated to contribute a prorata share of the venture's operating budget. Due to the agreement determining the appoinhnent of the venture's board of directors, no entity can individually impose its will on the operations of the venture. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 REQUIRED SUPPLEMENTARY INFORMATION Year 2000 Issues September 30,1999 (Unaudited) The Year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that may adversely affect the District's operations. The District has completed an inventory of computer systems and other electronic equipment that may be affected by the Year 2000 issue and that are necessary to conduct District operations and has completed remediation, testing and validation as follows: Firlairciul Reportii~g/W'ater Billing - The District lias completed all testing and validation on the financial reportinglwater billing system. The vendor has reported that system is Year 2000 compliant. Payroll m7d Eritployee Benejis Systents - The Town of Trophy Club is responsible for remediating payroll and employee benefit systems. The vendor has reported that system is Year 2000 compliant. htergover~trne~rta/ Eirtities IIrof Have Material Troirsactio?is or Make Material Paynents to the Cicv. The Denton County Appraisal District is responsible for assessing property values for real and business property located within the District's limits. The Denton County Tax Assessor/Collector is responsible using the property tax assessments for property tax billing and collection computer systems. Both ofices are responsible for remediating their computer systems. Pltblic Worh (Utilities) Systenrs. The District has upgraded systems as necessary. Individual vendors are responsible for remediating these systems, and are solely responsible for any costs associated with these projects. Telephone System - The District has completed all testing and validation on the telephone systems. The vendor has reported the system is Year 2000 compliant. Departiilent of Public Safetj, Systems - The District has completed all testing and validation of department of public safety systems including rolling stock and communications equipment. Vendors have reported that their respective systems are Year 2000 compliant. The District believes its remediation efforts are substantially complete and has not budgeted any significant resources for Year 2000 issues in subsequent fiscal years. Because of the unprecedented nature of the Year 2000 issue, its effect and the success of related remediation efforts will not be fully determined until the year and thereafter. Management cannot assure that Trophy Club Municipal Utility District No. 1 is or will be Year 2000 ready, that the District remediation efforts will be successful in whole or in part, or that parties with whom the District does business will be Year 2000 ready. SUPPLEMENTARY INFORMATION TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 SUPPLEMENTARY SCHEDULES INCLUDED WITHIN THIS REPORT September 30,1999 (D) Notes required by the TNRCC in the Annual Audit Report Requirements for Texas Water Districts and Authorities are incorporated into the notes presented as part of the General Purpose Financial Statements. (E) Schedule of services and rates. (F) Schedule of General Fund expenditures. (G) Schedule of temporary investments -all funds (13) Analysis of taxes levied and receivable (I) Analysis of changes in general fixed assets and organizational costs. (J) General long-telm debt service requirements - by year (K) Analysis of changes in general long-term debt. (L) Comparative schedule ofrevenues and expenditures - five years (M) Insurance coverage (N) Board members, key administrative personnel and consultants (0) Management letter to Board of Directors. The following supplemental information is provided for the Board of Directors' additional analysis and is not part of the information required by the TNRCC. (P) Combining schedules (Q) Individual General Fund account financial statements TROPHY CLUB MLlNlCIPAL UTILITY DISTRICT NO. 1 (E) SERVICES AND RATES September 30,1999 I. Services provided by the District: rn Retail Water Wholesale Water Drainage rn Retail Wastewater Wholesale Wastewater Irrigation ParksJRecreation Fire Protection Security Solid WasteIGarbage Flood Control Roads @ Participates in joint venture, regional system andlor wastewater service (other than emergency interconnect) Other 2. Retail Rates Based on 518" Meter: Retail Rates Not Applicable Most prevalent type of meter (if not a 518") NIA Flat Rates per 1,000 Minimum Minimum Rate Gallons Over Charge Usage Y/N Minimum Usage Levels WATER: $ 9.00 0 No 0.47 0 to 3,000 0 No 1.92 3,001 to 20,000 0 No 2.18 20,001 to i Note: Out of district rates are determined by contract. WASTEWATER: 9.00 0 No 0.47 0 to 3,000 No 1.79 3,001 to 12,000 GOLF COURSE: SURCHARGE: 0 Yes I $1,00 NIA 0 to 300,000 2.18 300,001 to + District employs winter averaging for wastewater usage? Yes Total water and wastewater charges per 10,000 gallons usage (including surcharges). First 10,000 gallons used Next 10,000 gallons used Next 10,000 gallons used and subsequent Maximum residential wastewater charge is for 12,000 gallons or $26.52. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I (E) SERVICES AND RATES (Continued) September 30,1999 3. Retail Service Providers: Number of retail water and/or wastewater* connections within the District as of the fiscal year end. Provide actual numbers and single family equivalents (ESFC) Inactive Active Active Connections Connections (ESFC) (ESFC) ** Single Family 1,075 1,075 0 Multi-Family I I 136 0 Commercial 105 927 0 Other - recreational centers, government 81 20 100 0 TOTAL 1,211 2,238 0 * Number of connections relates to water service, if provided. Othenvise, the nunmber of wastewater connections sl~ould be provided. ** "Inactive" means that water and wastewater connections were made, but service is not being provided. 4. Total water consumption (in thousands) during the fiscal year: Gallons pumped into system: Gallons billed to customers: 5. Standby Fees: Does the District Assess standby fees? Yes No For the most recent full fiscal year, FY 1999: Debt Service Operations and maintenance Total levy Total Collected Percentage Collected Total levy Total Collected Percentage Collected Have shndby fees been levied in accordance with Water Code Section 49.231, thereby constituting a lien on property? Yes No M*** *** Standby fees are levied by the District and constitute a lien under recorded deed restrictions or covenants pursuant to Section 293.150 of Title 30 of Texas Administrative Code. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (E) SERVICES AND RATES (Continued) September 30,1999 6. Anticipated sources of funds to be used for debt service payments in the District's following fiscal year: a. Debt Service Tax Receipts $ 584,699 b. Surplus Construction Funds 0 c. Water andlor Wastewater Revenue 0 d. Standby fees 0 e. Debt Service Fund Balance To Be Used 109,885 f. Interest Revenues 0 g. Other (Describe) Out of District Funds 15,000 Proceeds from lnstalment Sale of System Assets 14,197 Annual Contractual Payment from Developer 28,574 TOTAL ANTICIPATED FUNDS TO BE USED $157.;s5 7. Location of District: Counties in which district is located: Denton, Tarrant. Is the District located entirely within one county? Yes • No Is the District located within a city? Entirely Partially Not at all City in which district is located. Town of Trophy Club, Town of Westlake. Is the District located within a city's extra territorial jurisdiction (ETJ)? Entirely Partially Not at all Unknown El ETJ's in which district is located. Is the General Membership of the Board appointed by an office outside the District? Yes No Kl If yes, by whom? CURRENT Personnel Professional fees: Auditing Legal Engineering TROPI-IY CLUB MUNICLPAL UTILITY DISTRICT NO. 1 (F) SCHEDULE OF GENERAL FUND EXPENDITURES September 30,1999 Master District Fire Operating Department Department Department Current Year Prior Year Purchased services for resale: Bulk water purchases 610,959 - - 610,959 611,062 Contract services: Tax administration fee - 2,950 10,068 13,010 10,456 Utilities and telephone 213,402 11,396 - 224,798 207,546 Repairs and maintenance 169,737 40,179 - 209,916 233,490 Other operating costs 71,240 18,669 29,782 119,691 144,177 Administrative expenditures: Directors fees - - 2,861 2.861 2,611 office supplies 6,373 003 504 7,760 11,736 Insurance and bonds 33,627 6,284 225 40,136 43,993 Other admin.expenditures 53,702 13,758 370 67,830 67,072 Capital outlay 158,088 131,171 - 283,253 411,359 Debt service - 80,404 - 80,404 80,395 TOTAL EXPENDITURES Number of employees emplayeed by the District: ~ull time None * Part time None * * The District contracts with the Town of Trophy Club which provides all necessary employee positions. TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (G) SCHEDULE OF TEMPORARY INVESTMENTS September 30,1999 Funds General Fund TexPool TexPoOl TexPoOl TexPool Total Debt Service Fund Tex Pool Total - All Funds Identification Interest Maturity Balance Accrued Interest Number Rate Date End of Year End of Year 06133-9296 6.10% Demand 5 518,677 Paid daily 06133-1200 6.10% Demand 25, 047 Paid daily 06133-2489 6.10% Demand 941,212 Paid daily 06133-3821 G.lO% Demand 45,522 Paid daily 1,530,458 06133-3333 6.10% Demand 112,575 Paid Daily $1,643,033 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (H) ANALYSIS OF TAXES LEVIED AND RECEIVABLE September 30,1999 General Fund Debt Operations Fire Total Service Total Taxes receivable, beginning ofyear 1998 tax levy Total to be accounted for Less collections, write offs & adjustments: Current year Prior years Total Taxes receivable, end of year Taxes receivable by year 1987 and prior 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Taxes receivable, end of year Property valuations (in 000's): Land Improvements Personal property Exemptions 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: TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (H) ANALYSIS OF TAXES LEVIED AND RECEIVABLE (Continued) September 30,1999 Tax rate for any other special district which (a) encompass less than a county, (b) provides water, wastewater collection, drainage or roads to property in the district and (c) taxes property in the district. Name of Special Districts Service Provided Tax Rate Total rate (s) of special dishicts $ Tax rates for all overlapping jurisdictions. Include any taxing entities which overlap 10% or more of the District Denton Tarrant County County County City DentonITarrant 0.23504 0.26484 Town of Trophy Club 0.46051 ~chool Dishict Northwest ISDiCarroll ISD 1.70472 1.74472 2.40027 2.00956 Snecial Districts not included above -r Hosoital District 0.23407 Tarrant County Junior College 0.10641 Total Special Dishicts - 029179 Total Dishict Tax Rate 0.28000 0.28000 Total Overlapping Tax District Physical Facilities: Land Buildings Water system sanitary wastewater system Drainage system Machinery and equipment Autos and trucks Furniture and fixtures TROPHY CLUB MUNICIPAL UTILlTY DISTRICT NO. 1 (I) ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS September 30,1999 Balance 9/30/98 Additions Disposals Balance 9/30/99 $ 305.103 249,686 5,622,701 7, GOO, 060 1,996,730 552,589 929,074 66.392 -~~~~~ ~ Engineering fees 763,324 . - 763,324 Total Physical Facilities 17,666,617 419,042 . 18,085,659 District Organizational Costs - Creation Period: Ensineerins and surveys 10,991 - - 10.391 Filing fees, licenses, legal notice & permits Legal fees Director fees and per diem Other costs uistrict organizational Costs - Construction Period: Legal fees Financial consulting fees operating Bond interest Amortized bond discount Total District Organizational Costs Total Physical Facilities 6 organization costs 5 18,189,305 5 419,042 $ - $ 18, 608,347 Amounts Provided By: General Fund: Dedicated by developers Revenue Debt Service Fund - Revenue Capital Projects Fund: Bond proceeds Revenue Total Amounts Provided Balance Balance 9/30/98 Disposals Additions 9/30/99 5 (6,850,7411 $ - 5 . $ 16,850,7411 l2.605.9581 - (419.0421 (3,025,0001 (242.3431 - . (242.3431 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (J) GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS September 30,1999 Series 1993 Combination Tax Bonds Due During Fiscal Principal Due Interest Due Years Ending I-Sep Mar IISep I Total ~i~~~~~ contractual Obligations series 1996 Public Propem Due During Fiscal principal Due Interest Due ~otal I -Sep Mar llSep 1 ------- Years Ending p; 40,000 $ 20,017 $ 60,017 2000 17,768 59,768 2001 42,000 15,358 59,358 2002 44,000 12,890 58,890 2003 46,000 10,309 59,309 2004 49,000 7,539 59,539 2005 52,000 4,607 58,607 2006 54,000 1,563 58,563 2007 57,000 $ 474,051 $ 384,000 $ 90305' ------ y TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (J) GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS -BY YEARS (Continued) September 30, I999 Series 1997 Combination Tax Bonds Due During Fiscal Principal Due Interest Due Years Ending 1-Sep Mar lISep 1 Total Discount TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (J) GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS (Continued) September 30,1999 Series 1999 Public Property Finance Contractual Obligations Due During Fiscal Principal Due Interest Due Years Ending I-Sep Mar llSep I Total 2000 $ 10,000 $ 3,850 $ 13,850 2001 10,000 3,300 13,300 2002 10,000 2,750 12,750 2003 10,000 2,200 12,200 2004 10,000 1,650 11,650 2005 10,000 1,100 11,100 2006 10,000 550 10,550 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (3) GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS (Continued) September 30,1999 Annual Requirements for All Series Due During Fiscal Total Total Total Principal Years Ending Principal Due Interest Due & Interest Due Discount TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (K) ANALYSIS OF CHANGES IN GENERAL LONG-TERM September 30,1999 Series Series Series Series Series 1989 1993 1996 CO's 1997 Tax 1999 CO's Total Interest rate 7.6-9.0% 3255.9% 5.50% 3.25-5.9% 5.50% Date interest payable Ill & 711 311 & 911 1211 & 611 311 & 911 411 9/1/00 to 12/1/99 to 9/1/98 to Maturity date 1/1/99 91111 1 12/1/06 911111 4/1/06 Bonds outstanding at beginning of year $ 18,000 $3,185,000 $ 421,000 $3,486,654 $ $7,110,654 Accretion of capital appreciation bonds 94,346 94,346 Bonds sold during current year 70,000 70,000 > is i . ., . i-j.!.' - Retirements of ,, , )-.J FLL. principal (18,000) (290,000) (384;OOO) (11,000) (703,000) - Bonds outstanding at end of year $ $2,895,000 % 37,000 $3,570,000 $ 70,000 $6,572,000 Retirements of interest $ 711 $ 173,905 $ 22,077 % 141,355 $ $ 338,048 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (K) ANALYSIS OF CHANGES IN GENERAL LONG-TERM (Continued) September 30,1999 Paying agents Name & City: Series 1989, Series 1993, and Series 1997 Series 1996 and 1999 Chase Bank of Texas, N.A P.O. Box 219053 Dallas, Texas 75221-9053 Texas National Bank 3205 E. Hwy 114 Southlake, Texas 76052 Tn* Other Refunding Bond Authority Bonds Bonds Bouds Amount oulllorizcd by votcn S 12,344,217 % - .% Amount issued (11,115.000) Remnining to be issued S 1,229,217 $ - S The general obligation bonds were authorized on October 7, 1975. Debt Service Fund cash and cash equivalents balance as of September 30,1999: $= Average annual debt service payment (principal & interest) for remaining term of debt:$- . .. . . .~ ~ ~ %0'0 %0'0 %0'1 %OE %8'Z 1 19'8Z 56EL08 POP'O8 a>!NDs 1qaa %L'S %L'9 %E'61 %5'51 %1'01 616'LOl LE8'6E1 PSB'OSS 65E'l lP 652'682 Lollno lqkdc3 %FOE %TOE %8'ZZ %T'LZ %6'EZ S9E'PUS EUE'IE9 86Z'ES9 180'IZL 010'989 s~lni!puadxa 5u!iruado Bu!nn~ax %8'E %E'Z %9'1 %P'1 %9'1 ESS'ZL Z10'6P S0L49P ES5'LE 9ZP'SP SJJJ pUO!SS9JOJJ %L'9Z U/UE'LZ %?EZ %L'LZ %8'ZE 151'905 9SZ'OLS 998'EL9 Z9Z'SEL 589'PP6 q1~3~aq adoldma puc SJ~UA\ 'sa[lolos %1'61 %9'ZZ %$'PI %I'EZ %Z'lZ LOIrZ9E OIZ'ZLP LLO'PIP Z90'119 656'019 saa!uas ~JAUS ~UC laiu~ p~mq3lnd S311flLIaN3dX3 ~- - ~- ~ ~~ ~ %EZ %Z' I %KO1 %WE %WE 089'ZP 8E9'5Z LZI'E6Z 9EZ'16 166'58 %SZ %OE %TE %8'Z %6Z 6PL'LP 8 1 P'E9 101'26 E6E'PL SOZ'P8 %FZ %O'O %OO %0'0 %0'0 106'PS %L'I %9' 1 %I'l %€'I %E'I LP8'1E LSO'EE P8E'IE E58'EE 08ZC9E %L'OI %9'8 %1'6 %5'1I %8'il Z9Z'ZOZ 61L'8LI 99PG65Z PP6'EOE Z68'89E %6'E %6'1 %S'Z %Z'E %E'E 698'EL E85'6E 508'E9 186'EU SSP'P6 %1'9L %L'E8 %WE5 %8'LL %I'EL Z9Z'OPP'I $ 91Z'LPL'I $ EL6'099'1 $ OEE'Z90'Z B 996'001'Z % ----- 5661 9661 L661 8661 6661 5661 9661 L661 8661 6661 anuanal[o~o~ ja iua~lnd qunowv anuana 1cio.l iqapwog spaa3old mqio ~UE S~OJUBIIJJS!W pawca is~~atu, lU3UIJliIJS isalalu! puo sa!ilouaj sami badold wa~olon pv saaj uo!pauuo3 dcl ;g uo!l3adsul aquas Jakus pun IJIEM 3flN3A3U 6661 'OK JJ~~JI~~S aNnd 'lWZNZ3 - SZXnLIaNZdXZ (INV ZflNllAZX 30 SZTnCiXH3S ZAILVXVdMI03 (7) I 'ON L3MLSIa AL17ILIl7VdI3INWJ an13 AHdOXL TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I (L) COMPARATIVE SCHEDULES OF REVENUE AND EXPENDITURES - DEBT SERVICE FUND (Continued) September 30,1999 REVENUE Ad valorcm properly twcs Penalties and interest AmountS Percent oftotnl revenue - 1999 1998 1997 1996 1995 1999 1998 1997 1996 1995 S 738,181 S 700,912 $ 649,257 5 625,730 $ 656.834 96.7% 96.5% 15.9% 95.6% 93.9% 4.836 7,033 2,158 1,537 3.795 0.6% 1.0% 0.1% 0.2% 0.5% Intcrest enmcd 20,326 18,601 17,174 26,984 38,525 2.7% 2.6% 0.4% 4.1% 5.5% Miscclloneous nnd olhcr 0.0% 0.0% 0.0% 0.0% 0.0% Proceeds from debt issue 3,403,433 0.0% 0.0% 83.6% 0.0% 0.0% Total revcnuc 763,343 726,546 4,072,022 654,251 699,154 100.0% 100.0% 100.0% 100.0% 100.0% EXPENDITIIRES Principal retirement 400,000 300.000 405.000 380,000 355,000 52.4% 41.3% 9.9% 58.1% 50.8% Interest and fiscal charges 316,260 341.998 330,772 480,414 505,130 41.4% 47.1"h 8.1% 73.4% 72.2% Pavment to rdundinr bond aecnt 3.337.767 0.0% 0.0% 82.0% 0.0% 0.0% " Debt issuc cosls Total Expcndilurcs E~cess (dcficicncy) of revenues over (undcr) expenditures $ 47,083 $ 84,548 $ (61,180) $ (206,163) S (160,976) 6.2% 11.6% -1.5% -31.5% -23.0% TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (M) INSURANCE COVERAGE September 30,1999 Type of Policy Amount oi Corporation Clause Type ofcovcrngc Covcragr Name Stocl;/Mutunl Co-insurance DISTNCT Employee I-foncsty, Etc.: Tax asscssorlcollcclor Public official (each director) Bookkeeper bond Hnnford Casually Co. Slock None s10,000 50,000 50,000 Dircctor and Oficers Liability 5,000.000 Mid-Continent Casualty Co. Stock None Building & Contents and Wnter System 5,724,000 Mid-Continent Casualty Co. Stock 100% Comprehensive Gcncral and Contractual Liability: Mid-Continent Casualty Co. Stock Nonc Gencrnl Aggregalc 300000 Producls & Complctcd Opcntions Aggrcgatc 1.000.000 Personal & Advertising lnjuly 1,000,000 Firc Damage 50,000 Medical Expcnrc 5,000 Contractor's equipment 41,375 Mid-Conlincnt Casualty Co. Stock 90% Umbrella Liability Mid-Continent Casualty Co. Stock Nonc General Aggregate 4000000 Products Br Complctcd Operations Aggrcgatc 4,000,000 Pollution liability 300,000 Mid-Continent Casualty Co. Stock None Commercial Aulomobilc Liability 1,000,000 Mid-Continent Casualty Co. Stock Nonc Workers' Compci~sation Baed on Salary Tcxas Municipal League Mutual None Management Liability Policy 2,000,000 American Altcrnativc Ins. Co. Stock None General Liability 1000000/ 2,000,000 American Allcmativc Ins. Co. Stock None Commercinl Umbrella 3,000,000 American Alternative Ins. Co. Stock None Commercial Automobile Liability: American Allemotive Ins. Co. Stock None Bodily Injury 1.000,OOO Propcny Damage 1,000,000 Uninsured Motorist 1,000,000 Physical Dmnge Agrecd Value TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (N) BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL AND CONSULTANTS September 30,1999 Complete District Mailing Address: 100 Municipal Drive, Trophy Club, Texas 76262 District Business Telephone Number: Metro (817) 430-191 1 Fees and Term of Office Expense Title Resident ElectedExpires Reimbursement at of Name and address or Date Hired 9130199 Year End District? Board Members Constance S. White 119 Trophy Club Drive Asst. Trophy Club, TX 76262 5/98 - 5/02 $721 Secretary Yes T.A. Neidenberger 1033 Sunset Drive Trophy Club, TX 76262 5/96 - 5/00 545 President Yes Dean Henry 308 Oakmont Drive Secretary1 Trophy Club, TX 76262 5/96 -5100 495 Treasurer Yes Dave Robison 2 Crickett Court Trophy Club, TX 76262 5/98 - 5/02 700 Director Yes Wesley W. Obermeier 207 Oakmont Trophy Club, TX 76262 5/98 - 5/02 400 Vice President Yes Note: No director is disqualified from serving on this board under the Texas Water Code (Continued) TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 (N) BOARD MEMBERS, ICEY ADMINISTRATIVE PERSONNEL AND CONSULTANTS (Continued) September 30,1999 Fees and Term of Office Expense Title Resident ElectedExpires Reimbursement at of Name and address or Date Hired 9130199 Year End District? Key Administrative Personnel Roger Unger 102 Caroustie District Trophy Club, TX 76262 4/15/86" $79.43 1 Manager Yes * Assumed responsibility of District Manager on 10/15189. Cathy Morgas 2158 Wedgewood Drive Grapevine, TX 7605 1 Denton County Appraisal District P.O. Box 2816 Denton, TX 76202 Rutledge Crain & Company, PC 2401 Garden Park Court, Suite B Arlington, TX 7601 3 Carter & Burgess P.O. Box 985006 Fort Worth, TX 76185-5006 Micllener, Larimore, et al, L.L.P. 3500 City Center, Tower 11 ~ort Worth. TX 76102 Assistant District 2/1/91 56,455 Manager No 411181 11,774 Appraiser No 915197 6,750 Auditors No Consulling 1983 23,832 Engineer No Legal 2/1/93 24,328 Counsel No ANNUAL FILING AFFIDAVIT THE STATE OF TEXAS ) COUNTY OF DENTON i 1, (Name oFDuly Authorized District Representative) of the Trophv Club blunicipal Utility DistrictNo. I (Name of District) hereby swear, or affirm, that the district named above has rev~ewed and approved at a meeting of the Board of Directors of the District on the - day of , 19- its annual audit repon of the fiscal year or period ended September 30. 1999 and that copies of the annual audit report have been filed in the district office, located at 100 Municipal Drive. Trophv Club. Texas. 76262. This annual filing afiidavit and the attached copy of the annual audit report are being submitted to tlie Texas Natural Resource Conservation Commission in satisfaction of all annual filing requirements within Section 49.194 of the Texas Warer Code. Date: , 19- (Signarure of District Representative) (Typed Nanie and Title of Districr Official) Sworn to and subscribed to before me this day of I 19- (Seal) (Signature ofNotary) lvly Commission Espires On: , 19-, Notary Public in and for the State of Texas. ESliIGIT A-1 TROPHY CLUB MUNICIPAL UTILITY DISTRICT 10. 1 DEPARTi~1EEIT.U. BALLNCS SHEET GENEPAL FWD September 30. 1999 (with Comparative Total5 For September 30. 19991 I.lascer District Fire Operating Department Department Department ASSETS Cash and cash equivalents Recei-rabies: Property taxes Accaunis receivable trade Other governments Miscellaneous Due From other Funds Prepaid items Restricted cash - customer deposits Loan receivable from government Contracc receivable TOT.=& ASSETS .LIA!diLITIES P>ID FUND BAL>NCT LI9BILITi95 Accounts oavable . . Accrued liabilities Liabilities payabie from rescric~ed assets - customer deposits Deferred revenue Due to ocher funds Due to other governments FUNj BPGNCE Fund balance - reser-ed Fund balance - unreserved Xnterdeparznencal Totals Sliminiiions Cuxrsnt Year Prior Year FXHI3IT A-2 TROPliY CLUB MUNICIPAL UTILIT'i DISTRICT EIO. 1 DEPW.TIIENT.LI. STATEMENT OF REVEIIUES. BSPEIIDITUEES AND CH>>lGES IN FUND B?lL?>ICE- GEEIELqL ?UND Year Ended September 30. 1999 1VI;th Comparative Totals for Year Ended September 30, 19901 Master Dlstricc Fire Opersting Deparcnent Depzrtment Daparrmenr REVEENES Water, sewer. Lire department Standby fees Inspection and tap connecticns Ad -ialorem taxes Pliscellaneaus rs.ienues Interest income TOTAL RZVENUES EXPENDITDRES Currenc E:,~enditurcs Administrative Water and sewer Fire department Total Current Enpendicures Capital Outlay Administrative nacer and sewer Fire department Total Capital Outlay Debt Semice Principal paymencs interssc paymenrs Paying agent fees Excess idaficienc:,i of rs'lenuas over expanditures OTHER FINI>ICIMG SObiCES (USES1 Proceeds of Long-term Debt TOTAL OTHEP. FINP>?CCIIIG SOLV.CES (USES) Excess (deficiency) of revenues over expenditures and ocher sources (uses) Fund Balances at beginning of year Fund Ealances at end of year ~ocals Currsni Year Prior Year EXHIBIT 1-3 TROPHY CLUB r.lmIcI?.x, UTILITY DISTRICT 110. 1 BUDGET %ID ACTUU (GAXP BASIS) GENERAL FUND Year Ended Seatember 30, 1393 MasC~r Distz:~: Fire Department Depacrment Variance Variance Favarzbie Favorable Budget Actual 1Unfavorablei Budgec Accual IUnfavarablel REVENUES !<a:+r, sewer. Eire depactment $1,734,900 5 2,094,156 $ 233,256 $ 7,500 $ 21,025 $ 13.525 standby Lees 1.200 3.343 2.143 Inspection and tap connections 86.100 34,455 6.355 Ad valorem taxes 323,490 332, 705 9.215 :~liscellaneous r2venue5 31.650 24.152 17.6381 2.000 21.163 19,163 Interest income 16,125 28,307 12,152 3.000 4,344 1,344 TOT.= ZEVENUES 1,330,135 2,241,413 314,218 335.930 379,237 43,247 i?:eE!<EIT~.ES Current Expenditures Adminis~rative 524.413 530.975 16.5621 9,033 9.102 131 tla~er and sewer 1,303,894 1,418,652 1114,7581 Fire departmen: 245,1~19 278,296 133,1471 Tcral Currenr. Exprqrndiiuras 1,928,307 1,549,527 1121,3201 254,248 287.338 133.1501 Crpital Ouclay Rdminiscraci..-e 4.878 2.1.127 119,2431 :,iatir and sewer 136,141 133,361 2,180 Fire department 968 131.171 (130.2031 Total Capiial Outlay 141,019 158,089 117,0691 96a 131,171 1130,2031 Deb? Ser~icr ?rincipal payments 2.245 12,2451 Ixterest paynnents 80. 811 78.153 2,652 Total Debt Ssmice 60,311 80.40.1 407 TOT>& EXPE:IUITUREI 1,969,326 2,107,715 1138.3891 336.027 498,973 (162,3461 Excess (deficiency] of revenues over e:.:p:pendi Lures 133,131) 135.633 175.829 1371 1113.7361 1113.693l OTHZP. FiPlF24CIMG SOURCES (USES1 Proceeds of Long-tarm Debt 105,000 105.000 T0T.tL CTH??. FIPI?l.lCING SOURCES (USES) . 105.000 105,000 E:<cess ldeficiencyl of revenues over expenditures acd other sources (uses1 $ (39.1311 136.638 5 175,823 $ 1371 114,7361 $ 114.6331 - Fund Balances at beginning of year 746.432 47,723 Fund Balances at end of year 5 883.190 $ 32.987 RUTLEDGE CRAlN & COMPANY, PC CERTIFIED PUBLIC ACCOUNTANTS 2401 Garden Park Court. Suile B Arlinglon. Texas 76013 December 10.1999 To the Audit Committee Trophy Club Municipal Utility District No. 1 Trophy Club, Texas We have audited the September 30, 1999 financial statements of Trophy Club Municipal Utility District No. 1 (the "District") and have issued our report thereon dated December 10, 1999. Under generally accepted auditing standards, we are providing you with the attached information related to the conduct of our audit. Auditor's Responsibility Under Generally Accepted Auditing Standards Our responsibility under generally accepted auditing standards is to express an opinion on the financial statements of the District based on our audit. In carrying out this responsibility, we assessed the risk that the financial statements may contain a material misstatement, either intentional or unintentional, and designed and conducted an audit to provide reasonable, not absolute, assurance of detecting misstatements that are material to the financial statements. In addition, we considered the internal control structure of the District to gain a basic understanding of the internal control policies and procedures in order to design an effective and efficient audit approach, not for the purpose of providing assurance on the internal control structure. Significant Accounting Policies The significant accounting policies used by Trophy Club Municipal Utility District No. 1 are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 1999. We noted no transactions entered into by the District during the year that were both significant and unusual, and of which, under professional standards, we are required to info* you, or transactions for which there is a lack of authoritative guidance or consensus. Management Judgments and Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based upon management's current judgments. 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. 0 Management estimates a reserve for uncollectible property taxes. We evaluated the allowance for uncollectible property taxes. Our evaluations indicated that the allowance for uncollectible taxes is reasonable in relation to the financial statements of Trophy Club Municipal Utility District No. 1 taken as a whole. Members: Metro (817) 265-9989 American Institute of Certitied Public Accounlanls Texas Society of Certified Public Accountants Fax (817) 881-9623 Board of Directors, Trophy Club Municipal Utility District NO. 1 December 10,1999 0 Management estimates a reserve for uncollectable accounts receivable. We evaluated the allowance for uncollectable accounts receivable. Our evaluations indicated that the allowance for accounts receivable is reasonable in relation to the financial statements of Trophy Club Municipal Utility District No. 1 taken as a whole. Significant Audit Adjustments The following represent significant adjustments to the September 30, 1999 financial statements of the District: e Record acquisition of fire department equipment financed by the Texas Commission on Fire Protection. Record fixed assets acquired or disposed of in General Fixed Assets Account Group. Disagreements with Management There were no disagreements with management in financial accounting and reporting matters that, if not satisfactorily resolved, would have caused a modification of our report on the District's 1999 financial statements. Consultations with Other Accountants To the best of our knowledge management has not consulted with or obtained opinions, written or oral, fiom other independent accountants during the past year that were subject to the requirements of Statement of Auditing Standards No. 50, Reports oil the Applicatiotz ofAccozinting Principles. Maior Issues Discussed with Mana~ement Prior to Retention We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no significant or unexpected difficulties in dealing with management in performing our audit. This information is intended solely for the use of Trophy Club Municipal Utility District No. 1 and should not be used for any other purpose. Sincerely, YDc