HomeMy WebLinkAboutFY Ended September 30, 2004TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED
SEPTEMBER 30,2004
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
September 30,2004
TABLE OF CONTENTS
Annual Filing Affidavit
FINANCIAL SECTION
iii
Independent Auditors' Report on Financial Statements ........................................................................ .. ....................... 1
Management's Discussion and Analysis (Required Supplementary Information) 2
Basic Financial Statements:
Government-wide Financial Statements
Statement of Net Assets ... ............................................................ ...................................................... 8
Statement of Activities 9
Fund Financial Statements:
Balance Sheet - Governmental Fund 0
Reconciliation of the Governmental F 1
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Governmental Funds 2
Reconciliation of the Statement of
of Governmental Funds to the 3
Notes to Basic Financial Statemen 4
Required Supplementary Information:
Budgetary Comparison Schedules:
General Fund 26
Individual Statement and Other Supplementary information Required
by Texas Commission on Environmental Quality (TCEQ)
Budgetary Comparison Schedules:
Debt Service Fund 32
TSI-1 Services and rates ..... .. .................... 33
TSI-2 General Fund Expenditures 36
TSI-3 Temporary investments ....................... .. 37
TSI-4 Taxes levied and receivable 38
TSI-5 Long-term debt service requirements -by years ................... .. .......... ........................................... 40
TSI-6 Changes in long-term bonded debt 2
TSI-7 Comparative schedule of revenues and expenditures -five years 43
TSi-8 Board members, key personnel, and consultants ................... .. 45
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RUTLEDGE CRAlN & COMPANY, PC
CERTIFIED PUBLIC ACCOUNTANTS
2401 Gafden Park Couri. Suite B
ArilnQion. Texas 76013
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Trophy Club Municipal Utility District No. 1
Trophy Club, Texas
We have audited the accompanying financial statements of the governmental activities and each major fund of Trophy Club
Municipal Utility District No. 1 (the "District"), as of and for the year ended September 30, 2004, which collectively comprise
the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of
the District's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the 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 opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities and each major fund of Trophy Club Municipal Utility District No. 1 as of September 30,
2004, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
As described in Note I E.. the District has implemented a new financial reporting model, as required by the provisions of
GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local
Governments, and Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis - for State
and Local Governments - Omnibus.
The management's discussion and analysis and budgetary comparison information on pages 2 through 7. 26, and 27, are not
a required part of the basic financial statements but are supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally
of inquiries of management regarding the methods of measurement and presentation of the supplementary information.
However, we did not audit the information and express no opinion on it.
Our audit was cor~ducted for the purpose of forming opinions on the financial statements that collectively comprise Trophy
Club Municipal Utility District No. 1's basic financial statements. The accompanying supplemental information listed in the
table of contents are presented for purposes of additional analysis and are not a required part of the basic financial
statements. The accompanying supplemental information have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
V I
November 5, 2004
Members:
Melio (817) 265-9989 Amencan lnsl~tule 01 Certified Public Acco~ntanls
Texas Soclely of Ceilltied Public Accounlants
Fax (817) 861-9623
TROPHY CLUB MUNICIPAL UTlLiTY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30. 2004
Troohv Club Municiuai Utiiitv District No. 1. Texas (the "District") Management's Discussion and Analysis (MD&A), is a
nariaive overview and analy& designed to provide the reader a means toidentify and understand the financial activity of the
District and changes in the District's financial position during the fiscal year ended September 30, 2004.
The Management's Discussion and Analysis is supplemental to, and should be considered along with the District's financiai
statements.
Financial Highlights
At the close of the fiscal year, the assets of the District exceeded its liabilities by $4,783,495, Of this amount. $255.042 is
unrestricted net assets and may be used to meet the District's ongoing commitments to its citizens and creditors.
The District's net assets increased by $229,696 as a result of operations
At the end of the fiscal year, the District's governmentai funds reported a combined fund balance of $286,055.
For the year ended September 30, 2004, the unreserved fund balance for the General Fund was $259.022, 45% of the
total expenditures for the General Fund for 2004.
The governmental long-term debt obligations of the District decreased by $551,332
Overview of the Financial Statements
The MD&A is intended to introduce the reader to the District's basic financiai statements, which are comprised of three
components: 1. Government Wide Financial Statements, 2. Fund Financiai Statements, and 3. Notes to those Financial
Statements. The report also contains other required supplementary information in addition to the basic financial statements.
Government Wide Financial Statements - the government wide financial statements are designed to provide the reader with a
general overview of the District's finances in a way that is comparable with financial statements from the private sector. The
government wide financial statements consist of two statements:
1. The Statement of Net Assets - (Exhibit A-I) this statement presents information on all of the District's assets and
liabilities; the difference between the two is reported as net assets. Over an extended period, the increase or
decrease In net assets will serve as a good indicator of whether the financial position of the District is improving or
deteriorating.
2. The Statement of Activities - (Exhibit A-2) gives information showing how the District's net assets have changed
during the fiscal year. All revenues and expenses are reported on the full accrual basis so certain revenue and
expense items will result in cash flows in future fiscal periods (such as uncollected taxes or unused vacation leave).
in the above statements, the District's operations are presented as Governmental Type Activities -where the District's basic
activities are reported as administration. Normally, these operations are financed by property taxes.
Note: the government wide financial statements are found on pages 9 and 10 of this report.
Fund Financiai Statements -A fund is a grouping of related accounts that is used to maintain control over resources that have
been set aside for specific activities or objectives. Fund financial statements provide detailed information about the most
important funds and not about the city as a whole as in the government-wide financial statements.
The District uses fund accounting to demonstrate compliance with finance related legal requirements which can be
categorized as government fund activities.
Governmental Funds -All of the District's activities are reported in governmental funds. They are used to account for those
functions known as governmental activities. But unlike government - wide financial statements, governmentai fund financial
statements focus on how monies flow into and out of those funds and their resulting balances at the end of the fiscai year.
Statements of governmental funds provide a detailed short-term view of the District's general government operations and the
basic services it provides. Such information can be useful in evaluating a government's short-term financing requirements.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30. zoo4
The District maintains two governmental funds. information is presented separately in the Governmental Fund Balance Sheet
and in the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund
and the Debt Service Funds, both of which are considered to be major funds.
The District adopts annual appropriated budgets for the general fund, and debt service iunds. A budgetary comparison
statement is provided for each annually budgeted fund to demonstrate compliance with its budget.
Notes to the Financial Statements -The notes provide additional information that is essential to a full understanding of the
data presented in the gOVernment.wide and fund financial statements. The notes to the financial statements can be found on
pages 14-23.
Government-wide Financial Analysis
The maWWement discussion and analysis highlights the information provided in both the Statement of Net Assets and
Statement Of Activities in the government-wide financial statements. It may serve over an extended period of time, as a
useful indicator of the District's financial position. ~t the end of the fiscal year, the District's assets exceeded liabilities by
$4.775.087. Of this amount $4,463,671 (93%) reflects the District's investment in capital assets (e.g., land, buildings,
machinery and equipment, and equity in joint venture, net of accumulated depreciation), less any related outstanding debt
used to acquire those assets. The District uses these capital assets to provide service to the community, therefore these
assets are not available for future spending.
Fiscal Year 2004 is the District's first year to implement the requirements of GAS6 34: comparative data for the previous Year
IS not available.
Table 1
Condensed Statement of Net Assets
Governmental
Activities
Current and other 5 344,243
Capital assets 8,585,768
Total Assets 8,930,011
Long-term Liabilities 4,122,097
Other Liabilities 24,419
Total Liabilities 4,146,516
Net Assets:
Invested in capital
Net of related debt 4,463,671
Restricted 64,782
unrestricted 255,042
Total net assets $ 4,783,495
Note: The District did not restate its 2003 financial statements in this first year of implementation of GASB-34. Comparative
Information will be provided in future years.
District operational analysis -The following table provides a summary analysis of the Districi's operations for the fiscal year
ended September 30, 2004. Governmental activities have increased the District's net assets by 5229,696 which amounts to
a 5% increase in total net assets for the year. AS noted above, comparative data will not be presented.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEhlENT
September30, 2004
The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long
term debt of governmental funds.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges
Provided. 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments.
Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general
revenues include all taxes, miscellaneous revenue, and interest income.
D. Assets, liabilities, and net assets or equity
1. Cash and Cash Equivalents
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.
2. investments
State statutes authorize the 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
h~urance C~rp~ration, or its successor; or, (B) secured by obligations that are described by (1) - (4); or, (6)
collateralized direct repurchase agreements having a deiined termination date, secured by obligations described by
pledged with third Party selected or approved by the District, and placed through a primary government securities dealer.
Investments are stated at fair value
3. Receivables and Payables
Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end the
fiscal Year are referred to as either "interfund receivables/payables" (i.e., the current portion of intefiund loans) qr
"advances to/from other funds." All other outstanding balances between funds are reported as "due to/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.
Property taxes are levied as of October 1, on the assessed value listed as of the prior January I, for ali real and certain
Personal Property located in the District. The appraisal of property within the District is the responsibility of ,DentO,n
Appraisal Distri? (Appraisal District) as required by legislation passed by the Texas legislature. The Appraisal Dlstrlct 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 the Appraisal District must be
reviewed every five years; however, the District may, at its own expense, require annual reviews of appraised
The District may challenge appraised values established by the Appraisal District through various appeals and, lf
necessary, legal action. Property taxes for the District are not limited as to rate or amount. In an election held 0,ctober ',
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, foilowing the levy
date. Taxes are due by January, 31, following the levy date. Property taxes are recorded as receivables when levied.
Foilowing is information regarding the 2003 tax levy:
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
September 30.2004
Adjusted taxable values
O&M tax levy
I&S tax levy
Total tax levy
4. Capital Assets
Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks and similar
items), and equity in the Trophy Club Master District Joint Venture are reported in the government-wide financial
statements. Capital assets are defined by the District as assets with an initial, individual cost or more than $5,000
(amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the
date of donation.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives
are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the
straight line method over the following estimated useful lives:
Buildings 50 years
Improvements other than buildings 20 - 30 years
Machinery and equipment 5 - 15 years
Vehicles 6 - 12 years
Water and wastewater systems 30 years
5. Organizational Costs
The District, in conformance with requirements of the TCEQ, capitalized costs incurred in the creation of the District. The
TCEQ 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. Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in
the statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over
the life of the bonds using the straight line method which approximates the effective interest method. Bonds payable are
reported net of applicable bond premium or discount. Bond issuance costs are reported as deferred charges and
amortized over the term of the related debt.
in the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance
costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums
received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as
other financing uses. issuance costs, even if withheld from the actual net proceeds received, are reported as debt
selvice expenditures.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENT
September 30.2004
7. Fund Equity
In the fund financial statements, governmental funds report resewations of fund balance represent amounts that are not
available for appropriation or are legally segregated by outside parties for a specific purpose. Designations of fund
balance represent tentative management plans that are subject to change.
E. Implementation of Governmental Accounting Standards Board Statement 34 and 37
in June 1999 and June 2001, respectively, the GASB issued Statement No. 34. Basic Financial Statements - and
Management's Discussion and Analysis for State and Local Governments, and Statement No. 37, Basic Financial Statements
- and Management's Discussion and Analysis - for State and Local Governments - Omnibus. These statements provide for
the most significant change in financial reporting in over twenty years. As a part of these statements, there is a new reporting
requirement regarding the District's infrastructure.
II. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS
A. Cash, Cash Equivalents, and investments
At year end, the District's carrying amount of deposits was $24.152 and the bank balance was $13,113. 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
investments 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:
Carrying Fair
Amount Value
investments not subject to categorization:
Texas Local Government Pool System (TexPool) $.26&1?Z L26LlZZ
TexPool is an external investment pool operated by the Texas Comptroller of Public Accounts and is not SEC registered. The
Texas Interlocal Cooperation Act and the Texas Public Investments Act provide for creation of public funds investment pools
and permit eligible governmental entities to jointly invest their funds in authorized investments. The fair value of investments
in the pool is independently reviewed monthly. At September 30, 2004, the fair value of the position in TexPool approximates
fair value of the shares.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STA JEiWENTS
September 30.2004
8. Capital Assets
District capital asset activity for the year ended September 30, 2004 was as follows:
Balance Completed Balance
913012003 Addtions Retirements Construction 913012004
GOVERNMENTAL ACTIVITIES:
Capital assets, not being depreciated
Land
Equity in joint venture
Construction in progress
Organization costs
Total capital assets not being depreciated
Capital assets, being depreciated
Buildings
Improvements other than buildings
Machinery and equipment
Vehicles
Water system
Wastewater treatment system
Wastewater collection system -
Total capital assets being depreciated
Less accumulated depreciation ior:
Buildings
Improvements other than buildings
Machinery and equipment
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Total accumulated depreciation
Total capital assets being depreciated, net
Total capital net of accumulated depreciation
Depreciation expense charged to general government activities of the primary government &2QQ533
TROPHY CLUB MUNICIPAL UTlLlW DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENT
September 30. 2004
C. Investment in Joint Venture
Pursuant to the provisions of the New Master District Contract dated October 4. 2000, the Trophy Club Master District Joint
Venture is managed as a joint venture of the District and MUD2 whereby representatives of the boards of directors of the
District and MUD2 serve on the Master District board of directors. Accordingly the financial statements of the Master District
have been removed from those of the District effective October 1. 2000 and are presented separately.
The District records its investment in the Master District in Note II 8. above. Contributions to and amounts received from the
Master District are re~orted as revenues and ex~enditures in the funds. In the aovernment-wide statement of chanoes in net
assets, contributions'and refunds of equity are ieflected in the asset. changes in equity due to operations are reported as
program costs or revenues. During the year, the District contributed $95,000 to the Master District which had received less
operating revenue that budgeted. The District's share of loss from operations was $(127.562). A summary table of net
assets and changes in net assets is presented in the MD&A and at Note A.
D. Long-Term Debt
1. The District uses various types of debt to finance long-term capital asset acquisitions:
Average
Original Year of Final Annual Interest Balance
Purpose Amount Issue Maturity Payment Rate 9/30/2004
Combination TaxiRevenue Bonds
Improvements 5 3,490,142 1997 201 1 $ 398,800 3.25 - 5.90% 5 2,320.489
Refunding 1,949,288 2003 2011 253,100 4.00 - 5.00% 1,565,000
3,905,489
Public Property Finance Contractual Obligation Bonds
Equipment 458,600 1996 2006 58,900 5.50% 163,000
Equipment
Notes Payahle
Capital Lease Obligations
Equipment 66.090 2000 2005 1,309 7.00% 7,360
Total
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO 8.4SIC FINANCIAL STATEMENTS
September 30. 2004
2. During the year, the following changes in long-term debt occurred:
September 30. Seplember 30, Due Within
Description 2003 Additions Retirements 2004 One Year
Governmental activities:
Taxirevenue bonds S 4,460,000 5 - 5 (510,000) S 3,950.000 S 525,297
Unaccreled discount (79,436) 34,925 (44,511) (15.183)
4,380.564 (475,075) 3.905.489 510,114
Conlractuai obligations 242,000 (59,000) 183,000 62,000
4,622,564 (534,075) 4,088,489 572,114
Notes payable 27,798 (1,550) 26.248 1,589
Capital lease obligations 21,988 (1 4,628) 7.360 7.360
Accrued cornpensaled absences 4,204 (4.204)
5 4,676,554 $ - 5 (554,457) $ 4,122.097 5 581,063
3. The requirement to amortize all bonds and contractual obligations outstanding as of September 30 is summarized below:
Year Ending
September 30, Principal Interest Total
2005 5 587.000 $ 131,997 $ 718.997
2006 594.000 128.514 722.51 4
Total 4,130,000 5 629,102 5 4,759.102
Discount (44,511)
4. The requirements to amortize the note payable and capital lease obligations as of September 30 are summarized below:
Year Endina Notes Ca~ital
September 30. Payable ease 0blig.
2005 5 2,245 $ 10.469
2015 - 2018 8,980
Total 31,430 10,469
Less interest (5.1 82) (3,109)
5. Additional Long-term Debt Disclosure
Tax and revenue bonds authorized and unissued as of September 30.2004 amounted to 51,229,217.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NO JES TO BASIC FINANCIAL S JA JEMENT
September 30. 2004
The bonds are payable from the proceeds of ad valorem taxes levied upon ail property subject to taxation within the
District, without limitation as to rate or amount, and are iurther payable from, and secured by a lien on and pledge ot 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 1997 - Ail maturities from 2008 to 201 1 are cailable in principal increments of $5,000 on or afler September 1,
2007 at par plus unpaid accrued interest to the fixed date for redemptions.
Series 2003 - No bonds are subject to redemption prior to maturity.
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, 2004.
Ill. 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
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 the District 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 TCEQ in its dealings with developers. The District leases certain equipment and a
modular building under the provisions of operating leases. Future minimum rental payments are $3,600 for 2004.
C. 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
management's opinion that resolution of these matters will not have a material adverse effect on the financial condition of the
District.
D. Concentration of Credit Risk
Property taxes and accounts receivable for utilities are due iron citizens and businesses within the District's boundaries.
Risk of loss is immaterial due to wide dispersion of receivabies and policies which address procedures for filing property tax
liens or utility setvice cut-off.
E. Change in Operations
During 2004, Trophy Club Master District Joint Venture ("the District" - which is a joint venture of Trophy Club Municipal Utility
Districts ill and #2, known as MUDl and MUD2) and the Town of Trophy Club, Texas entered into an agreement for the
administration of fire protection services within the boundaries of the Town. MUDl and MUD2 and other defined areas. The
Town amended its 2003-2004 annual budget to provide for fire services. During the year, MUDl and MUD2 contributed
$274,622 and $280,693, respectively, for the cost to operate the fire department. MUDl has retained ownership of fire
department building and equipment along with liability for related debt.
F. Contracts
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 of $1 1,832, including interest, each to the districts'
respective debt service funds through 2006. At September 30, 2004, the District's share (50%) of the receivable was
$21,540.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES 70 BASIC FINANCIAL STATEblENTS
September 30, ZOO?
G. Prior Period Adjustment
In preparing the financial statements for presentation in compliance with GASB-34, the District has restated the cost basis of
its capital assets as of September 30, 2003 as follows:
913012003 Reclassifications GASB-34 9130/2003
Asset Within the External Additions Restated for
Description Cost Entity Transfers Deletions GASB-34
Land 5 248,093 5 5 5 $ 248.093
Equity in joint venture 3,064,423 3,084,423
Buildings 249.686 (35,992) 213,694
Improvements other than buildings 54.749 54.749
Machinery and equipment 686.565 (157,651) (42.562) (193,681) 292,671
Vehcles 713,603 103.1 69 816,772
Water system 5,643,753 (3,028,003) (761,788) 1,653,962
Wastewater treatment system 7,618,616 (1,188,952) (768,859) (4,502.597) 1,158,208
Wastewater collection system 1,224,677 1,224.677
Drainage system 1,996,730 (1,996,730)
Construction in progress 1,520,734 1,520,734
Organization costs 1,359,815 1,359,815
5 20,037,595 5 5 (5,836,1541 5 (2,373,643) $ 11 ,827,798
External transfers represent contributions of drainage system capital assets to the Town of Trophy, Club or reallocation
between Trophy Club Master District Joint Venture, MUD1 and MUD2.
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SUPPLEMENTARY INFORMATION -
BUDGETARY COMPARISON SCHEDULES
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Revenues:
Ad valorem taxes, penalties and interest
Misceilaneous revenues
interest
Total revenues
Expenditures:
Current:
Administrative
Total expenditures
Budgeted Amounts
Orlgtnal F~nal
Excess (defciency) of revenues over (under) expenditures --
Fund balances. October I 176.813 176.813 ..~. ~- .. .~ ~
Fund balances, September 30 $. ...?76,81? $ __176N3- ~.
Actual
Variance with
Final Budget
Positive
(Negative)
Budgetary Information
Annual budgets are adopted as follows:
1. The District Board ("Board) adopts an annual budget for the General Fund on the modified accrual basis excepting
recognition of noncash grant and capital lease proceeds and related expenditures for equipment. The District also does
not budget developer contribution of infrastructure.
2. The Board approves all budget appropriations. Any revisions which alter the total appropriations must be approved by
the Board. The level of budgetary responsibility is by total appropriations of the fund.
3. All annual appropriations lapse at fiscal year end
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INDIVIDUAL NONMAJOR FUND AND OTHER
SUPPLEMENTARY INFORMATION REQUIRED BY TCEQ
Debt Service Funds account for the accumulation of resources for, and payment of, general obligation principal and interest,
except for those certificates of obligation serviced by the Enterprise Fund. . Debt Setvice Fund - to account for accumulation of property tax revenue to pay principal and interest due on government fund
debt.
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TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
SUPPLEMENTARY SCHEDULES lNCLUDED WITHIN THIS REPORT
September 30, 2004
Services and rates
General Fund expenditures
Temporary investments
Taxes levied end receivable
Long-term debt service requirements - by years
Changes in long-term bonded debt
Comparative schedule of revenues and expenditures -five years
Board members, key personnel, and consultants.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Revenues:
Ad valorem taxes, penalties and interest
Miscellaneous revenues
Interest
Total revenues
Expenditures:
Debt service:
Principal
Interest
Paying agent fees
Total expenditures
Budgeted Amounts
Or~glnal F~nal
Excess (deficiency) of revenues over (under) expenditures (212,118) (212,118)
Fund balances, October 1 218,037 218,037
Fund balances, September 30 $ 5,919 $
-
5.919
EXHIBIT 8-2
Varlance wlth
F~nal Budget
Posltlve
Actual (Negative)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-I SERVICES AND RATES
September 30,2004
1. Services provided by the District:
H Retail Water C] Wholesale Water Drainage
Retail Wastewater Wholesale Wastewater H Irrigation
C] ParkslRecreation Fire Protection Security
C] Solid WasteIGarbage C] Flood Control rn Roads
Participates in joint venture, regional system andlor wastewater service (other than emergency interconnect)
13 Other
2. Retail Service Providers
a. Retail Rates Based on 518" Meter: rn Retail Rates Not Applicable
Most prevalent type of meter (if not a 510) NIA
Flat Rates per 1,000
Minimum Minimum Rate Gallons Over
Charge Usage YIN Minimum Usage Levels
WATER: $ 11.00 0 No $ 2.00 0 to 6,000
NO 2.30 6,000 to 12,000
No 2.50 12,000 to 25,000
No 2.60 More than 25,000
NOTE: Out of district water rates are determined by contract
WASTEWATER: 11 .OO 0 No $ 2.00 0 to 6,000
NO 2.30 6,000 to 12,000
No 2.30 More than 12,000
GOLF COURSE: 0 Yes 151,000 NIA 0 to 300,000
2.60 300,001 to +
NOTE: All rates above were amended effective September 1,2002
District employs winter averaging for wastewater usage? Yes C] No lxI
Total water and wastewater charges per 10,000 gallons usage (including surcharges) -effective September 30, 2002
First 10,000 gallons used $65.40
Next 10.000 gallons used 29.20
Next 10,000 gallons used and subsequent 25.50
Maximum residential wastewater charge is for 12,000 gallons or $36.20
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES (Continued)
September 30,2004
b. Retail Service Providers: Number of retail water andior wastewater* connections within the District as of the fiscal year
end. Provide actual numbers and single family equivalents (ESFC)
Connections ESFC Active
Meter Size Total Active Factor ESFC's
Unmetered
Less than 314" 1,331 .O 1,252.0
1" 7.0 7.0
1 112"
2" 2.0 2.0
3" 2.0 2.0
4" 3.0 2.0
6
R" -
10
Total Water 1,345.0 1,265.0
Total Wastewater 1,291.0 1.209.0
* 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
3. Total water consumption (in thousands) during the fiscal year:
Gallons pumped into system:
Gallons billed to customers:
Water accountability ratio:
4. Standby Fees: Does the District Assess standby fees?
Yes No
For the most recent full fiscal year. FY 2004:
Debt Service
Operations and maintenance
Total levy
Total Collected
Percentage Collected
Total levy
Total Collected
Percentage Collected
Have standby fees been levied in accordance with Water Code Section 49.231, thereby constituting a lien on properly?
Yes No OM
* Standby iees 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
TSi-1 SERVICES AND RATES (Continued)
September 30,2004
5. Location of District:
Counties in which district is located: Denton. Tarrant
Is the District located entirely within one county? Yes 0 No La
Is the District located within a city?
Not at all0
Entirely q Partially I2
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 q
Partially Not at all q Unknown
ETJ's in which district is located.
Is the General Membership of the Board appointed by an office outside the District?
Yes q No I2
If yes, by whom?
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-2 GENERAL FUND EXPENDITURES
September 30,2004
CURRENT
Personnel
Professional fees:
Auditing
Legal
Engineering
Current Year Prior Year
5 $ 545,212
Contract services:
Tax administration fee 10,744 11,616
Utilities and telephone 15.130
Repairs and maintenance 43,209
Fire department operations 274,622
Administrative expenditures:
Directors fees 8.700 9,800
Office supplies 1,141
insurance and bonds 5,554
Other admin. expenditures 144,741 189,267
Joint venture contribution 95,000
Capital outlay 26,678 991,374
TOTAL EXPENDITURES
Number of employees employeed by the District:
Full time None
Part time None
Note: During 2004, MUD1 and MUD2 transferred operations of the fire department to the Town of Trophy Club. The MUDS contribute
the cost of operations.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
TSI-3 TEMPORARY INVESTMENTS
September 30,2004
ldentiiicaiion Interest Maturity Balance Accrued Interest
Number Rate Date End of Year End oi Year
General Fund
TexPool 61 3300002 1.54% Demand 5 248,518 Paid daily
Debt Service Fund
TexPool 613300003 1.31% Demand 19,609 Paid Daily
Total - All Funds 5 268,127
Taxes receivable, beginning of year
2003 tax levy
Total to be accounted for
Less collections, write offs 8 adjustments:
Current year
Prior years
Total
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-4 TAXES LEVIED AND RECEIVABLE
September 30,2004
General Fund Debt
Operations Fire Total Service Total
Taxes receivable, end ot yea!
Taxes receivable by year
1993 and prior
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Taxes receivable, end of year
Property valuations (in 000's):
Land
Improvements
Personal property
Exemptions
Tax rate per 5100 valuation:
Operations
Fire Department
Debt Service
Total tax rate per 5100 valuation
Tax Levy:
Percent of taxes collected to taxes levied:
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-4 TAXES LEVIED AND RECEIVABLE (Continued)
September 30, 2004
Tax rate for any other special district which (a) encompass less than a county. (b) provides water, wastewater collection, drainage
or roads to properly in the district and (c) taxes property in the district.
Name of Special Districts Service Provided Tax Rate
Total rate (s) of special districts 5 -.
Tax rates (per $100 net taxable value) for all overlapping jurisdictions. Include any taxing entities which overlap 10% or more of
the District.
Denton Tarrant
County county
County Dentonirarrant 5 0.24717 $ 0.27250
City Town of Trophy Club 0.43051
School District Northwest iSDiCarroll ISD 1.83481 1.90250
2.51 249 2.17500
Special Districts not included above
Hospital District 0.23540
Tarrant County Comm. College 0.13938
Total Special Districts 0.37478
Total District Tax Rate 0.28000 0.28000
Total Overlapping Tax District $ 2.79249 $ 2.82978
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
September 30,2004
Series 2003 Unlimited Tax Bonds
Due During Fiscal Principal Due Interest Due
Years Ending I-Sep Mar 1ISep 1 Total
Series 1996 Public Property Finance Contractual Obligations
Due During Fiscal Principal Due Interest Due
Years Ending I-Sep Mar 11Sep 1 Total
2005 5 52,000 5 7,539 $ 59,539
2006 54,000 4,607 58,607
2007 57.000 1,563 58,563
Series 1997 Combination Tax Bonds
Due During Fiscal Principal Due lnterest Due
Years Ending I -Sep Mar 1ISep 1 Total
201 1 380.000 18.620 398,620
2,365,000 $ 426,905 5 2,791,905
Unaccreted discount (4431 1)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS (Continued)
September 30,2004
Series 1999 Public Property Finance Contractual Obligations
Due During Fiscal Principal Due lnterest Due
Years Ending I-Sep Mar IISep 1 Total
2005 5 10,000 5 1,100 5 11,100
2006 10,000 550 10,550
All Bonded Debt Series
Due During Fiscal Total Total Total Principal
Years Ending Principal Due Interest Due & Interest Due
201 1 625,000 26,583 651,583
4,133,000 5 630,752 5 4,783,752
Unaccreted discount (44,511)
$ 4,088,489
Interest rate
Date interest payable
Maturity date
Bonds outstanding at
beginning of year
Accretion of capital
appreciation bonds
Bonds sold during current
year
Retirements of principal
Bonds outstanding at end of
year
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-6 CHANGES IN LONG-TERM BONDED DEBT
September 30,2004
Series Series Series Series
1996 CO's 1997 Tax 1999 CO's 2003 Tax Total
Retirements of interest
Paying agents Name 8 City:
Series 1989, Series 1997, and Series 2003
Series 1996 and 1999
JP Morgan Chase
P.O. BOX 219053
Dallas, Texas 75221-9053
First Financial Bank
P.O. Box92840
Southlake. Texas 76092
General
Obligation
Bond Authority Bonds
Amount authorized by voters $ 12,344,217
Amount issued (I 1 ,I 15,000)
Remaining to be issued $ 1,229,217
The general obligation bonds were authorized on October 7, 1975.
Debt Service Fund cash and cash equivalents balance as of September 30,2004: $=2&.zxi
Average annual debt service payment (principal & interest) for remaining term of debt: $i%B82iB
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-7 COMPARATIVE SCHEDULES OF REVENUE AND EXPENDITURES - FIVE YEARS - GENERAL FUND
September 30,2004
REVENUE
Water and sewer service
Inspection &tap connection fees
Ad valorem property taxes
Penalties and interest
Intergovernmental
Interest earned
Sale 01 assets
Miscellaneous and other
Proceeds from debt
Total revenue
Amounts
- 2004 2003 2002 2001 2000
$ $ 5 S $ 2,384,991
64,403
646,703 398,593 270.313 263,059 142,693
188 1.422 36,150
315,589
3,793 10,469 60,031 69,713 116,548
907,900
5.143 39.927 323.605 28.754 263.933
Percent of total revenue
2004 2003 2002 2001 2000 -----
0.0% 0.0% 0.096 O.00,0 79.3%
0.0% 0.0% 0.096 0.096 2.196
98.6% 52.196 17.396 72.596 47%
0.0% 0.0% 0.0% 0.496 1.256
0.0% 41.3% 0.0% 00% 00%
0.6% 1.4% 3.896 19.296 3.906
0.0% 0096 58.196 0.096 0.096
0.8% 5.2% 20.706 7.996 6.896
EXPENDITURES
Purchased water and sewer services
Salaries, wages and employee benefits
Professional fees
Recurring operating expenditures
Contribution to Trophy Club / Westlake
Dept. of Public Safety Joint Venture
Contribution to Trophy Club Fire Dept.
Contribution to joint venture
Capital outlay
Debt service
Payment to escrow agent
Total Expendilurss
Excess (deficiency) of revenues over
(under) expenditures $ 82.209 S (1,086,575) $ 364,784 $ (22,085) $ 268,509 12.5% -142.196 23.4% -6.1% 8.996 ----- -----
Total Active Retail Water and/or
Wastewater Connections 1.282 1,275 1,271 1.252 1,211
(Continued)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-7 COMPARATIVE SCHEDULES OF REVENUE AND EXPENDITURES - FIVE YEARS - DEBT SERVICE FUND (Continued)
September 30,2004
Amounts Percent of total revenue
REVENUE 2004 2003 2002 2001 2000 2004 2003 2002 2001 2000
Ad valorem property taxes $ 447.010 $ 792,142 S 753,137 S 740,089 $ 604.423 96.5% 27.5% 98.2% 91.5% 95.5%
Penalties and interest 4,344 3,211 4,984 4,800 0.0% 0.2% 0.45b 0.6% 0.0%
interest earned 6.249 6,958 10,456 23.352 23,642 1.3% 0.396 1.496 2.956 3.75;
Miscellaneous and ather 9,795 9,197 40,295 2.1% 0.3% 00% 5.0% 0.0::
Proceeds from debt issue
Total revenue
EXPENDiTURES
Principal retirement 510,000 575,000 585.000 515,000 455,000 110.156 20.096 76.356 63.7% 71 956
interest and fiscal charges 144,058 200,344 252.1 11 277,091 296,715 31.1% 7.0% 32.9% 34.3% 47.2%
Payment to refunding bond agent 1,950.000 0.096 67.8% 0.046 0.096 0.096
Debt issue costs 93.332 0.0% 3.2% 00% 00% 0096
Total Expenditures 654,056 2,818,676 837,111 792,091 753.715 141.2016 97.9% 109.256 97.9% 119.156
Excess (dsficiency) of revenues over
(under) expenditures S (191,004) S 59,231 $ (70.305) $ 16,629 S (120,850) -41.2% 2.1% -9.296 2.1% -19.1Y6
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS
September 30,2004
Complete District Mailing Address:
District Business Telephone Number:
100 Municipal Drive. Trophy Club, Texas 76262
Metro (682) 831 -4600
Term of Office Fees of Expense Title
ElectedIExpires Office Paid Reimbursements at
Name and address or Date Hired 913012004 913012004 Year End
Board Members
Constance S. White
11 9 Trophy Club Drive Secretary1
Trophy Club, TX 76262 5/02 - 5/06 5 1,900 $ - Treasurer
Jim Hase
209 lnverness
Trophy Club, TX 76262 5/04 - 5/08 5 2.500 $ 51 Director
Dean Henry
308 Oakmont Drive
Trophy Club, TX 76262 5/04 - 5/08 $ 2,600 $ 482 President
Wesley W. Obermeier
207 Oakmont 5/02 - 5/06
Trophy Club, TX 76262 Resigned 9/04 $ 1,700 $ 106 Vice-Presidenl
Ted Neidenberger
1033 Sunset Appointed
Trophy Club. TX 76262 6/02 - 5/06 5 $ - Vice-Presiden
Note: No director is disqualified from sewing on this board under the Texas Water Code
(Continued)
TROPHY CLUB MUNICIPAL UTILITY DlSTRlCT NO. 1
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS (Continued)
September 30,2004
Term of Office Fees of Title
Elected/Expires Office Paid at
Name and address or Date Hired 9/30/2004 Year End
Key Personnel:
Walter R. FitzpatricB, Jr.
7 Creekmere Dr District
Trophy Club. Texas 76262 21112003 $ Manager
** Assumed responsibility of District Manager on 21112003
Consultants:
Denton County Appraisal District
P.O. Box 2816
Denton. TX 76202
Rutiedge Crain & Company. PC
1601 E. Lamar. Suite 109
Arlinglon, TX 7601 1
Camp, Dresser & McKee. Inc
P.O. BOX 74594
Dept. Member 44
Chicago, IL 60690
Whitaker, Chalk, Swindle & Sawyer. L.L.P
3500 City Center, Tower II
Fort Worth, TX 76102
4/1/1981 S 10,733 Appraiser
91511 997 $ 5,000 Auditors
Consulting
10111200D $ Engineer
Legal
101111999 S 8,566 Counsel
ANNUAL FlLiNG AFFIDAVIT
THESTATEOFTEXAS 1
I
COUNTY OF DENTON 1
, Walter Fitzpatrick
(Name of Duly Authorized District Representative)
of the Trophy Club Municipal Utilitv District No. 1
(Name of District)
hereby swear, or affirm, that the District above has reviewed and approved at a meeting of the District's Board of Directors on
the ahday of February , 2005 , its annual audit repori of the fiscal period ended September 30. 2004
and that copies of the annual audit repori have been filed in the DistricSs office, located at 100 Municipal Drive. Trophv Club,
Texas. 76262.
This annual filing affidavit and the attached copy of the
Environmental Quality in satisfaction of all annual filing
~~t~:February 14,2005 - BY: j.4 , !.
/ 1
Walter Fitzpatrick, District ManageF
(Typed Name and Title of District ~fficiil)
Sworn to and subscribed to before me this 14eh day of February ,2005 .
(Signature of Notary)
My Commission Expires On:
Notary Public in and for the
ANNUAL FILING AFFIDAVIT
THE STATE OF TEXAS 1
COUNTY OF DENTON 1
(Name of Duly Authorized District Representative)
of the Troohv Club Municipal Utility District No. 1
(Name of District)
hereby swear, or affirm, that the District above has reviewed and approved at a meeting of the District's Board of Directors on
the - day of , its annual audit report of the fiscal period ended September 30. 2004
and that copies of the annual audit report have been filed in the District's office, located at 100 Municipal Drive. Troohv Club,
Texas, 76262.
This annual fiiing affidavit and the attached copy of the annual audit report are being submitted to the Texas Commission on
Environmental Quality in satisfaction of all annual fiiing requirements of Texas Water Code Section 49.1 94.
Date: .20- By:
(Signature of District Representative)
(Typed Name and Title of District OFiiciai)
Sworn to and subscribed to before me this - day of
(Seal) (Signature of Notary)
My Commission Expires On:
Notary Public in and for the State of Texas.