HomeMy WebLinkAboutFY Ended September 30, 2005TROPHY CLUB MUNICIPAL UTII-ITY DIS'TRICT NO.?
MANAGEMENT REPORT
FOR THE YEAR ENDED SEPTEMBER 30,2005
TABLE OF CONTENTS
INTRODUCTORY LETTER
CURRENT YEAR ISSUES:
1. Automate Bank Reconciliations
2. Maintain Backup Documentation for Voided Checks
3.. Improve Controls Over Journal Entries
PAGE
1
CERTIFIED PUBLIC
ACCOUNTANTS-
AND CONSULTANTS
. .
. .
DALLAS
~- -. . . . .
Three Forert Plaza
-~ 12221 Merit Drive
Suite 1400
Dallas, Texas 75251 -2280
972.490.1910
F 972. 702.8321
I600 West Srurwrli Street
Suite 300~-
Fort Worth. Te.~aj 76102-2506
817..9.?2.7905
F 817.423.593(;
AN INDEPENDENTMEMBEROF
BAKER TILLY
INTERNATIONAI
To the Board of Dir-ectors
Trophy Club Municipal Utility District No. 1
Trophy Club, Texas
We have audited the financial statements of Trophy Club Municipal Utility District No. 1 (the
District), as of and for the year ended September 30, 2005, and have issued our report thereon
-dated December 12, 2005. As part of our audit, we made a study and evaluation of the
District's system of internal accounting control to the extent we considered necessary to
evaluate the system as required by generally accepted auditing standards. Under these
standards, the purpose of such evaluations is to establish a basis for reliance on the system of
internal accounting control in determining the nature, timing and extent of other auditing
procedures that are necessary for expressing an opinion on the financial statements.
The management of the District is responsible for establishing and maintaining a system of
internal accounting control. In fulfilling this responsibility, estimates and judgments by them are
required to assess the - expected benefits and related costs of control procedures. -The
objectives of such a system are to provide reasonable, but not absolute, assurance that assets
are safeguarded against- loss from unauthorized use or disposition and that transactions are
executed in accordance with required authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted accounting
principles.
Because of inherent limitations in any system of internal accounting control, errors or
irregularities may still occur without being detected. Also, projection of any evaluation of the
system to future peridsis subject to the risks that procedures may become inadequate
because of changes in conditions or that the degree of compliance with theprocedures may
deteriorate.-
Our study and evaluation was not designed for the purpose of expressing an opinion on the
internal accounting control and would not necessarily disclose all weaknesses in the system.
However, as a result of our study and evaluation, and in an effort to be of assistance to the
District, we are submitting for your consideration comments and recommendations intended to
improve operations and internal accounting control.
- -
After you have had an opportunity to consider our comments and recommendations, we would
be pleased to discuss them with you.
Very truly yours,
Weaver and Tidwell, L.L.P..
December 12,2005
CURRENT YEAR ISSUES:
1: Automate Bank Reconciliations
The District presently performs bank reconciliations of District depository accounts
manually. As a result, there is an increased risk that errors could occur without detection
in a timely manner.
We recommend the District consider automating the bank reconciliation process through
the use of Excel spreadsheets. This will help reduce the likelihood of clerical errors from
occurring, and will help facilitate review of the reconciliation.
2. Maintain Backup Documentation for Voided Checks
During our audit, we noted that the District does not maintain backup documentation to
support all voided checks. As a result, there is an increased risk that errors or
irregularities could occur without detection.
We recommend the District implement a formal policy requiring that backup
documentation (i.e. photocopy of check) be maintained for all voided checks. This will
help reduce the likelihood of errors or irregularities from occurring without detection.
3. Improve Controls Over Journal Entries
During our audit, we reviewed a sample of journal entries. While the entries appeared
reasonable in nature and were adequately supported by backup documentation, there
was no written documentation to evidence approval of each transaction by a person other
than the preparer of the entry. Additionally, we noted that journal entries can be deleted
by anyone in the Finance Department without approval.
We recommend that the District take action to ensure that journal entries are formally
documented to include the written approval of someone other that the preparer of the
entry. In addition, we recommend the District implement controls to prevent journal
entries from being deleted from the general ledger system. Implementation of this
recommendation will reduce the likelihood of unauthorized transactions from being input
into the District's accounting system.
TROPHY CLUB MUNICIPAL UTILITY
DISTRICT NO. 1
BASIC FINANCIAL
STATEMENTS
FOR THE FISCAL YEAR ENDED
SEPTEMBER 30,2005
CONTENTS
Page
FINANCIAL SECTION
ANNUAL FILING AFFIDAVIT. .. . . .. . ... .. . ... ... .. . . . . . . . . .. . . .. ... . ... ... ... .... ....... . . ... . ... . . . .. . ... .. . .. .. .. . ... .. .. .. . .. . .. ..... .. ... . .... i
INDEPENDENT AUDITOR'S REPORT .... . . . . . .. . . . . ... .. ... . ... ... ... .... . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
MANAGEMENT'S DISCUSSION AND ANALYSIS (unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Assets .......................................................................................................... 9
Statement of Activities.. . . . . . .. . . . . . . . . . .. . . . ... . . . . .. . . . . . . . . .. . . . . . ... . .. . .. . . . .. . . . . .. . .. . ... .. . . . . . . .. . . . .. .. .. . . . . .. . .. . . ... .. I0
Fund Financial Statements
Governmental Funds
Balance Sheet .................................................................................................................. 11
Reconciliation of the Governmental Funds Balance Sheet
to Statement of Net Assets ...... ........................ .... ......... . . . . . . . .............. . 12
Statement of Revenues, Expenditures and Changes in
Fund Balances ...... .... .. ..... ...... ... .... ...... ....... .... ........ ...... ... ... ... .. ..... . .... .. ...... .. ... . .. .... ... 13
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities ............................................................................... 14
Notes to Basic Financial Statements .......................................................................................... 15
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule - General Fund ........................................................................ 27
Notes to Required Supplementary Information .............................................................................. 28
INDIVIDUAL STATEMENTS AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
Budgetary Comparison Schedule -Debt Service Fund
TSI-1 Services and Rates
TSI-2 General Fund Expenditures
TSI-3 Temporary Investments
TSI-4 Taxes Levied and Receivable
TSI-5 Long-Term Debt Service Requirements - By Year
TSI-6 Changes in Long-Term Bonded Debt
TSI-7 Com parative Schedules of Revenues and Expenditures - Five Years
TSI-8 Board Members, Key Personnel, and Consultants
ANNUAL FILING AFFIDAVIT
THE STATE OF TEXAS 1
COUNTY OF DENTON 1
I
(Name of Duly Authorized District Representative)
Of the Trophv Club Municipal Utilitv District No.1
(Name of District)
hereby swear, or affirm, that the district named above has reviewed and approved at a meeting of the Board of
Directors of the District on the day of I , its annual audit report for the fiscal year or
period ended September 30, 2005 and that copies of the annual audit report have been filed in the district office,
located at 100 Municipal Drive, Trophv Club, Texas, 76262.
The annual filing affidavit and the attached copy of the audit report are being submitted to the Texas Commission on
Environmental Quality in satisfaction of the annual filing requirements of Texas Water Code Section 49.1 94.
Date: ,20 By:
(Signature of District Representative)
(Typed Name & Title of above District Representative)
Sworn to and subscribed to before me this day of ,
(SEAL)
(Signature of Notary)
My Commission Expires On: I
Notary Public in the State of Texas.
INDEPENDENT AUDITOR'S REPORT
L. I,. P
To the Board of Directors
CERTIFIED PUBLIC Trophy Club Municipal Utility District No. I
ACCOUNTANTS
ANDCONSIIL.TANTS Troph~CIubiTexas
We have audited the accompanying financial statements of the governmental activities
and each major fund of the Trophy Club Municipal Utility District No. 1, (the "District"), as
of and for the year ended September 30, 2005, 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 opinion.
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 the Trophy Club Municipal Utility District No. 1 as of September 30, 2005, and the
changes in financial position for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.
The management's discussion and analysis, and budgetary comparison information on
pages 2 through 8 and 27 through 28, 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 conducted for the purpose of forming an opinion 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 is presented for the purpose of additional analysis and is not a required part of
the basic financial statements. The accompanying supplemental information has been
subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
5f//le 500
loit Worth, 7pt(i, /(,I02 2506
817 3 32 7905
F 817 4.29 5936 WEAVER AND TIDWELL, L.L.P.
WWW WEAVERANDTIDWELL COM
AN INDEPENDENT MEMBER OF Dallas, Texas
HAK~R TILLY December 12,2005
INTERNATIONAL
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2005
Trophy Club Municipal Utility District No. 1, Texas (the "District") Management's Discussion and
Analysis (MD&A), is a narrative overview and analysis designed to provide the reader a means to
identify and understand the financial activity of the District and changes in the District's financial
position during the fiscal year ended September 30, 2005.
The Management's Discussion and Analysis is supplemental to, and should be considered along
with the District's financial statements.
Financial Highlights
At the close of the fiscal year, the assets of the District exceeded its liabilities by $5,403,537.
Of this amount, $3,473,984 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 $620,042 as a result of operations.
At the end of the fiscal year, the District's governmental funds reported a combined fund
balance of $355,699.
For the year ended September 30, 2005, the unreserved fund balance for the General Fund
was $297,288, 61 % of the total expenditures for the General Fund for 2005.
The governmental long-term debt obligations of the District decreased by $559,438.
Overview of the Financial Statements
The MD&A is intended to introduce the reader to the District's basic financial statements, which
are comprised of three components: 1. Government Wide Financial Statements, 2. Fund
Financial 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 - (Page 9) 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 - (Page 10) 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANAL YSIS
September 30, 2005
Fund Financial 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, governmental fund financial statements focus on how monies flow into
and out of those funds and their resulting balances at the end of the fiscal 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.
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 funds. 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 15-26.
Government-wide Financial Analysis
The management 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. At the end of the fiscal year, the District's assets exceeded liabilities by $5,403,537. Of
this amount $1,850,048 (34.2%) reflects the District's investment in capital assets (e.g., land,
buildings, machinery and equipment, 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2005
Table 1
Condensed Statement of Net Assets
Activities Activities
Current and other
Capital Asets
Total Assets
Long-term Liabilities
Other Liabilities
Total Liabilities
Net Assets:
Invested in capital
Net of related debt
Restricted
Unrestricted
Total Net Assets
District operational analysis - The following table provides a summary analysis of the District's
operations for the fiscal year ended September 30, 2005. Governmental activities have
increased the District's net assets by $620,042 which amounts to a 13% increase in total net
assets for the year.
Changes in net assets
Table 2
Changes in Net Assets
Governmental Governmental
Activities Activities
2005 2004
Revenue:
Program revenue
Charges for services
General Revenue
Ad Valorem Taxes 1,174,689 1,078,187
Unrestricted Investment earnings 20,639 10,041
Miscellaneous 2,123 9,801
Total Revenue 1,311,964 1,103,166
Expenses:
General Government 131,374 457,059
Fire 409,288 274,622
Interest and fiscal charges 151,260 141,789
Total Expenses
Increase in net assets
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANAL YSlS
September 30, 2005
Financial analysis of the District's funds
Government Funds - the main focus of the District's governmental funds is to provide information
on the flow of monies to and from the funds, and to note the unreserved fund balance, which is a
good indicator of resources available for spending in the near term. The information derived from
these funds is highly useful in assessing the District's financial requirements. The unreserved
fund balance may serve as a useful measure of the governments net resources available for use
at the fiscal year end.
At the end of the fiscal year, the District's governmental funds reported combined ending fund
balances of $355,699, of which 84%, or $297,288, is unreserved and available to the District for
future spending. The remaining fund balance is not available for spending and is committed to
pay debt service.
General fund budgetary highlights
Revenue: Revenues were $22,799 more than budgeted
Property Tax collections were $14,836 (3%) higher than budgeted. This includes current and prior
year property taxes for the operation and maintenance funds and the funds needed to pay for the
operation of the fire department per the inter local agreement with the Town.
Investment income was over budget by $7,963 (3 18.5%).
Expenses: Expenses were $40,533 less than budgeted
Salaries and related expenses were $3,162 less than budget.
Professional and contractual expenses were $6,454 less than budgeted due mainly to decreased
legal fees.
There was a savings in the payment to the Town for operation of the fire department of $3 1,062
over the original budget.
The District contributed $2,500 towards the 4th of July celebration in the community.
Debt Service:
The debt service revenue exceeded the budget by $22,946, with the majority of the additional
revenue occurring in the ad valorem taxes as a result of supplemental additions to the taxable
valuation that occurred during the year.
The debt service expenses were $8,432 less than budget as a result of lower than anticipated
paying agent fees.
The debt service reserves were increased from $27,033 to $58,411.
Overall:
The District's revenue totaled $1,202,969 on expenses of $1,133,325.
The total fund balance increased from $286,699 to $355,699; an increase of $69,644, a 24.3%
increase in reserves.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30,2005
Capital asset and debt administration.
The District's investments of capital assets for its governmental activities as of September 30,
2005 amounted to $5,412.707 net of accumulated depreciation. This represents a broad range of
capital assets including, but not limited to land, buildings, improvements, machinery and
equipment, vehicles, and water, wastewater treatment, and wastewater collection systems.
Table 3
Capital Assets at Year-end
Net of Accumulated Depreciation
Governmental
Activity
2005
Land
Buildings
Improvements ofher than buildings
Machinery and equipment
Vehicles
Water System
Wastewater treatment system
Wastewater collection system
Organization costs
Total
Governmental
Activity
2004
There were no major additions to capital assets for the fiscal year.
Capital assets net of depreciation at year end: $5,412,707
Additional information about capital assets may be found in Notes 1 F and 3 in the notes to
financial statements.
Debt administration
Long-Term Debt - at the end of the current fiscal year the District had $3,562,659 in general
obligation bonds, contractual obligation bonds, capital lease obligations, notes payable, and
accrued compensated absences, a decrease of 13.8% from the previous fiscal year. Of this
amount, $3,538,000 is backed by the full faith and credit of the government.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANAL YSlS
September 30, 2005
General debt currently outstanding
Table 4
Outstanding Debt at Year-end
Activities Activities
2005 2004
General obligation bonds
Contract obilgations
Capital lease obligations
Notes Payable
Total
Economic factors and next year's budgets and rates:
General fund fiscal 2006 budgetary highlights
Revenue: The District's operational revenue budget decreased by $26,095.
Property tax revenue decreased by $26,095 due to increased district valuations.
Interest revenue increased by $5,500 as a result of higher fund balances and interest rates.
Expenses: The District's operational expense budget increased by $1,029.
Payroll and professional services decreased by approximately $4,200.
Operating expenses increased by $5,278 with the majority of the increase, $6,528 in fire
department funding.
The remainder of the budget lines in operating expenses remained the same.
Capital expenses remained the same.
Overall:
The District's operational budget is anticipated to have expenses of $524,972 on revenues of $524,972
resulting in an anticipated operating break even.
Debt Service:
The debt service revenues have decreased from $658,347 in fiscal 2005 to $656,357 in fiscal 2006,
a decrease of $1,990, or a .3% decrease.
Debt service expenditures decreased from $658,347 to $656,357 as a result of normal annual
variances in bond payments.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30,2005
The Districts overall budget for revenue increased from $1,157,224 in fiscal 2005 to $1,18 1,329 in
fiscal 2006 a 2.1% increase. The overall expenses decreased from $1,182,290 to $1,18 1,329 an .08%
decrease.
Requests for information
This financial report is designed to provide a general overview of the District's finances for all
interested parties. Questions concerning any of the information in this report or requests for
additional information should be directed to the Trophy Club Municipal Utility District No. 1,
Director of Finance, 1 00 Municipal Drive, Trophy Club, Texas 76262.
BASIC FINANCIAL STATEMENTS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.l
STATEMENT OF NET ASSETS
SEPTEMBER 30,2005
Governmental
Activities
Cash and cash equivalents
Investment in joint venture
Receivables
Taxes
Restricted assets:
Contracts receivable
Capital assets:
Land
Buildings
Improvements other than buildings
Machinery and equipment
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Organization costs
Accumulated depreciation
ASSETS
TOTAL ASSETS
LIABILITIES
Accounts payable
Accrued interest payable
Noncurrent liabilities:
Debt due within one year
Debt due in more than one year
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for debt service
Unrestricted
TOTAL NET ASSETS
The Notes to Basic Financial Statements
are an integral part of this statement.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30,2005
Net (Expenses)
Revenue and
Changes in
Program Net Assets
Revenues
Charges for Governmental
Program Activites Expenses Services Activities
Governmental activities
General government $ 131,374 $ 114,513 $ (16,861)
Fire 409,288 (409,288)
Interest on long term debt 151,260 (1 51,260)
Total governmental
activities $ 691,922 $ 114,513 (577,409)
General Revenues:
Ad valorem taxes
Investment income
Miscellaneous
The Notes to Basic Financial Statements
are an integral part of this statement.
Total general revenues 1,197,451
Change in net assets 620,042
Net Assets - beginning of year 4,783,495
Net Assets - end of year $ 5,403,537
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
BALANCE SHEET -
GOVERNMENTAL FUNDS
SEPTEMBER 30,2005
ASSETS
Debt Total
Service Governmental
General Fund Funds
Assets
Cash and cash equivalents
Receivables:
Taxes
Contracts receivable
TOTAL ASSETS
Liabilities
Accounts payable
Deferred revenue
LIABILITIES AND FUND BALANCES
Total liabilities 10,927 31,374 42,301
Fund Balances
Unreserved and undesignated, reported in:
General fund 297,288 297,288
Debt service fund 58,411 58,411
Total fund balances 297,288 58,411 355,699
TOTAL LIABILITIES AND FUND BALANCES $ 308,215 $ 89,785 $ 398,000
The Notes to Basic Financial Statements
are an integral part of this statement.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO STATEMENT OF NET ASSETS
SEPTEMBER 30,2005
Total fund balances - governmental funds
Amounts reported for governmental activities in the statement of net assets
are different because:
Capital assets used in governmental activities are not current financial resources
and therefore are not reported in the governmental funds balance sheet.
Investment in joint venture does not represent current financial resources
and therefore is not reported in the governmental funds balance sheet.
Receivables which are unavailable to pay current period expenditures
are deferred from recognition as revenue in the governemntal
funds balance sheet.
l nterest payable on long term debt does not require current financial resources,
therefore interest payable is not reported as a liability in the governmental
funds balance sheet.
Long-term liabilities, including bonds payable are not due and payable in the
current period and therefore are not reported in the fund financial statements. (3,562,659)
Net assets of governmental activities $ 5,403,537
The Notes to Basic Financial Statements
are an integral part of this statement.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30,2005
Debt Total
Service Governmental
General Fund Funds
Revenues:
Taxes $ 51 1,213 $ 659,286 $ 1,170,499
Investment income 10,463 10,176 20,639
Miscellaneous revenues 11,831 11,831
Total revenues
Expenditures:
Current:
General government 74,122 74,122
Fire 409,288 409,288
Debt Service
Principal 307,795 307,795
Interest and fiscal charges 342,120 342,120
Total expenditures 483,410 649,915 1,133,325
Excess of revenues
over expenditures
Fund Balances - beginning of year 259,022 27,033 286,055
Fund Balances - end of year $ 297,288 $ 58,411 $ 355,699
The Notes to Basic Financial Statements
are an integral part of this statement.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30,2005
Net change in fund balances - total governmental funds
Amounts reported for governmental activities in the statement of activities
are different because:
Depreciation expense on capital assets reported in the statement of activities,
does not require the use of current financial resources. Therefore, depreciation
expense is not reported as expenditures in the governmental funds.
Investment in joint venture reported in the statement of activities, does not
require the use of current financial resources. Therefore, the current year
change in the investment is not reported in the governmental funds.
Certain revenues in the government wide financial statements that do not
produce current financial resources are not reported as revenue in
the governmental funds.
The issuance of long term debt (e.g. bonds) provides current financial resources
to governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets.
Current year accretion on capital appreciation bonds is not reflected in the fund
financial statements, but is shown as an increase in non-current liabilities in
the government wide financial statements
Interest on capital appreciation bonds is recognized as an expense when incurred
in the government wide financial statements, whereas in the fund financial
statements interest expenditures are reported when due.
Current year changes in accrued interest payable do not require the use of current
financial resources; and therefore, are not reported as expenditures in governmental
funds. 3,166
1
Change in Net Assets of Governmental activities $ 620,042
The Notes to Basic Financial Statements
are an integral part of this statement.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Statement
Trophy Club Municipal Utility District No. 1 (the District) was created by an order of the Texas
Commission on Environmental Quality (TCEQ) (formerly the Texas Natural Resources
Conservation 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. The 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 the 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.
The District holds legal title to all land for its benefit and MUD2. The proportionate allocation of
costs and related beneficial usage rights in the major assets is estimated as follows:
Master
MUD I MUD 2 District
Water plant wells
Twenty-one inch water line
Elevated tank
Wastewater treatment plant and land
First expanded treatment plant
Second expanded treatment plant
Administration building
2004 water plant expansion
B. Financial Reporting Entity
As required by accounting principals generally accepted in the United States of America, these
financial statements include the activities of the District and any organizations for which the
District is financially accountable or for which the nature and significance of their relationship
with the District are such that exclusion would cause the reporting entity's financial statements
to be misleading or incomplete.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
B. Financial Reporting Entity - continued
The definition of the reporting entity is based primarily on the notion of financial accountability.
A primary government is financially accountable for the organizations that make up its legal
entity. It is also financially accountable for legally separate organizations if its officials appoint a
voting majority of an organization's governing body and either it is able to impose its will on that
organization or there is a potential for the organization to provide specific financial benefits to, or
to impose specific financial burdens on, the primary government. A primary government may
also be financially accountable for governmental organizations that are fiscally dependent on it.
A primary government has the ability to impose its will on an organization if it can significantly
influence the programs, projects, or activities of, or the level of services performed or provided
by, the organization. A financial benefit or burden relationship exists if the primary government
(a) is entitled to the organization's resources; (b) is legally obligated or has otherwise assumed
the obligation to finance the deficits of, or provide financial support to, the organization; or (c) is
obligated in some manner for the debt of the organization. Some organizations are included as
component units because of their fiscal dependency on the primary government. An
organization is fiscally dependent on the primary government if it is unable to adopt its budget,
levy taxes, set rates or charges, or issue bonded debt without approval by the primary
government. Accordingly, the District has no component units.
C. Government-Wide and Fund Financial Statements
The government-wide financial statements (the statement of net assets and the statement of
activities) report information on all of the activities of the District, except for fiduciary funds. The
effect of interfund activity has been removed from these statements. Governmental activities,
which normally are supported by taxes and intergovernmental revenues, are reported separately
from business-type activities, which rely to a significant extent on fees and charges for support.
The activities of the District are comprised only of governmental activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
program are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific program. Program revenues include 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given
program and 2) operating or capital grants and contributions that are restricted to meeting the
operational or capital requirements of a particular program. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
Fund Financial Statements
The District segregates transactions related to certain functions or activities in separate funds in
order to aid financial management and to demonstrate legal compliance. Separate statements
are presented for governmental and proprietary activities. These statements present each
major fund as a separate column on the fund financial statements. The District does not report
any non-major funds.
Governmental funds are those funds through which most governmental functions typically are
financed. The measurement focus of governmental funds is on the sources, uses and balance
of current financial resources. The District has presented the following major governmental
funds:
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
C. Government-Wide and Fund Financial Statements - continued
General Fund
The General Fund is the main operating fund of the District. This fund is used to account for all
financial resources not accounted for in other funds. All general tax revenues and other
receipts that are not restricted by law or contractual agreement to some other fund are
accounted for in this fund. General operating expenditures, fixed charges and capital
improvement costs that are not paid through other funds are paid from the General Fund.
Debt Service Fund
The Debt Service Fund is used to account for resources accumulated and payments made for
principal and interest on the long-term debt of governmental funds.
D. Measurement Focus and Basis of Accounting
Measurement focus refers to what is being measured; basis of accounting refers to when
revenues and expenditures are recognized in the accounts and reported in the financial
statements. Basis of accounting relates to the timing of the measurement made, regardless of
the measurement focus applied.
The government-wide statements are reported using the economic resources measurement
focus and the accrual basis of accounting. The economic resources measurement focus
means all assets and liabilities (whether current or non-current) are included on the statement of
net assets and the operating statements present increases (revenues) and decreases
(expenses) in net total assets. Under the accrual basis of accounting, revenues are recognized
when earned. Expenses are recognized at the time the liability is incurred.
Governmental fund financial statements are reported using the current financial resources
measurement focus and are accounted for using the modified accrual basis of accounting.
Under the modified accrual basis of accounting, revenues are recognized when susceptible to
accrual; i.e., when they become both 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 be used to pay liabilities of the
current period. The District considers receivables collected within sixty days after year-end to
be available and recognizes them as revenues of the current year. Expenditures are recorded
when the related fund liability is incurred. However, debt service expenditures are recorded only
when payment is due.
The revenues susceptible to accrual are interest income and ad valorem taxes. All other
governmental fund revenues are recognized when received.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
E. Cash and lnvestments
The District's cash and cash equivalents are considered to be cash on hand, demand deposits,
and short-term investments of three months or less from the date of acquisition.
The District's investment policy requires that all monies be deposited with the authorized District
depository or in (1) obligations of the United States or its agencies and instrumentalities; (2)
direct obligation 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 (I) - (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 primary government securities dealer.
lnvestments are stated at fair value per quoted prices.
All investments are recorded at fair value based on quoted market prices. Fair value is the
amount at which a financial instrument could be exchanged in a current transaction between
willing parties.
F. Capital Assets
Capital assets, which include property, plant, equipment, are reported in the government-wide
financial statements. All capital assets are valued at historical cost or estimated historical cost if
actual historical cost is not available. Donated assets are valued at their fair market value on
the date donated. Repairs and maintenance are recorded as expenses. Renewals and
betterments are capitalized. Interest has not been capitalized during the construction period on
property, plant and equipment.
Assets capitalized have an original cost of $5,000 or more and over one year of useful life.
Depreciation has been calculated on each class of depreciable property using the straight-line
method. Estimated useful lives are as follows:
Buildings
Improvements other than buildings
Machinery and equipment
Vehicles
Water and wastewater systems
G. Organizational Costs
50 Years
15 - 30 Years
6 - 15 Years
6 - 12 Years
30 - 65 Years
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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
H. Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in capital
assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by
the outstanding balances of any borrowing used for the acquisition, construction or improvements
of those assets, and adding back unspent proceeds. Net assets are reported as restricted when
there are limitations imposed on their use either through the enabling legislations adopted by the
District or through external restrictions imposed by creditors, grantors or laws or regulations of
other governments.
NOTE 2. CASH AND INVESTMENTS
At September 30, 2005, the carrying amount of the District's deposits (cash, certificates of deposit,
and interest-bearing savings accounts included in temporary investments) was $16,002 and the bank
balance was $16,002. The District's cash deposits at September 30, 2005, and during the year ended
2005 were entirely covered by FDIC insurance or by pledged collateral held by the District's agent
bank in the District's name.
The Public Funds lnvestment Act (Government Code Chapter 2256) contains specific provisions in
the areas of investment practices, management reports and establishment of appropriate policies.
Among other things, it requires the District to adopt, implement, and publicize an investment policy.
That policy must address the following areas; (1) safety of principal and liquidity, (2) portfolio
diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6)
maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted
maturity, allowed based on the stated maturity date for the portfolio, (8) investment staff quality and
capabilities, (9) and bid solicitation preferences for certificates of deposit. Statutes and the District's
investment policy authorized the District to invest in the following investments as summarized below:
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio In One Issuer
U.S. Treasury Obligations
U .S. Agencies Securities
State of Texas Securities
Certificates of Deposits
Municipal Securities
Money Market
Mutual Funds
lnvestment pools
2 years
2 years
2 years
2 years
2 years
2 years
2 years
2 years
The Act also requires the District to have independent auditors perform test procedures related to
investment practices as provided by the Act. The District is in substantial compliance with the
requirements of the Act and with local policies.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 2. CASH AND INVESTMENTS - continued
Cash and investments as of September 30, 2005 are classified in the accompanying financial
statements as follows:
Statement of Net Assets
Primary Government:
Cash and cash equivalents $ 356,303
Total cash and investments $ 356,303
Cash and investments as of September 30, 2005 consist of the following:
Deposits with financial institutions
Investments
Total cash and investments
Disclosures Relating to lnterest Rate Risk
lnterest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the District manages its
exposure to interest rate risk is by investing mainly in investment pools which purchase a
combination of shorter term investments with an average maturity of less than 60 days thus
reducing the interest rate risk. The District monitors the interest rate risk inherent in its portfolio by
measuring the weighted average maturity of its portfolio. The District has no specific limitations
with respect to this metric.
As of September 30, 2005, the District had the following investment:
Weighted
Average
Investment Type Amount Maturity
TexPool $ 340,301 18 days
Total Investments $ 340,301
As of September 30, 2005, the District did not invest in any securities which are highly sensitive to
interest rate fluctuations.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 2. CASH AND INVESTMENTS - continued
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. Presented below is the minimum rating required by
(where applicable) the Public Funds lnvestment Act, the District's investment policy, or debt
agreements, and the actual rating as of year end for each investment type.
Minimum Rating as
Legal of Year
Investment Type Amount Rating End
TexPool $ 340,301 NIA AAAm
Total Investments $ 340,301
Concentration of Credit Risk
The investment policy of the District contains no limitations on the amount that can be invested in
any one issuer. As of September 30, 2005, other than external investment pools the District did
not have 5% or more of its investment with one issuer.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty to a transaction, a
government will not be able to recover the value of its investment or collateral securities that are in
the possession of another party. The Public Funds lnvestment Act and the District's investment
policy do not contain legal or policy requirements that would limit the exposure to custodial credit
risk for deposits or investments, other than the following provision for deposits: The Public Funds
lnvestment Act requires that a financial institution secure deposits made by state or local
governmental units by pledging securities in an undivided collateral pool held by a depository
regulated under state law (unless so waived by the governmental unit). The market value of the
pledged securities in the collateral pool must equal at least the bank balance less FDIC insurance
at all times.
As of September 30, 2005 the District deposits with financial institutions in excess of federal
depository insurance limits were fully collateralized.
lnvestment in State lnvestment Pools
The District is a voluntary participant in TexPool. The State Comptroller of Public Accounts
exercises responsibility over TexPool. This oversight includes the ability to significantly influence
operations, designation of management, and accountability for fiscal matters. Additionally, the
State Comptroller has established an advisory board composed of both participants in TexPool
and other persons who do not have a business relationship with TexPool. TexPool operates in a
manner consistent with the SEC's Rule 2a7 of the lnvestment Company Act of 1940. TexPool
uses amortized costs rather than market value to report net assets to compute share prices.
Accordingly, the fair value of the position in TexPool is the same as the value of TexPool shares.
21
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 3. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2005, was as follows:
Beginning Retirements1 Ending
Balance Additions Transfers Balance
Governmental Activities:
Capital assets,
not being depreciated
Land $ 248,093 $ - $ - $ 248,093
Organization costs
Total capital assets
not being depreciated 1,607,908 1,607,908
Capital assets,
being depreciated
Buildings
lmprovements other than buildings
Machinery and equipment
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Total capital assets
being depreciated
Less accumulated
depreciation for:
Buildings
lmprovements other than buildings
Machinery and equipment
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Total accumulated
depreciation
Governmental activities capital
assets, net $ 5,533,908 $ (121,201) $ - $ 5,412,707
The entire depreciation expense has been charged to governmental activities.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 4. 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 board 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 as an asset in the statement of net assets.
Contributions to and amounts received from the Master District are reported as revenues and
expenditures in the funds. In the government-wide statement of changes in net assets, contributions
and refunds of equity are reflected in the asset. Changes in equity due to operations are reported as
program costs or revenues. During the year, the District did not make any contributions to the Master
District. The District's share of income from operations was $1 14,513. A summary of net assets and
changes in net assets at and for the year ended September 30, 2005, is presented in the MD&A and
as follows:
Total assets
Total liabilities
Net assets
Total revenue
Total expenses
Increase (decrease) in net assets $ 229,025
The Master District Joint Venture financial statements are available at the District's administrative
offices.
NOTE 5. LONG-TERM DEBT
At September 30, 2005, the District's long-term debt payable consisted of the following:
Interest
Rate
Description Payable
Tax and revenue bonds:
Refunding 3.25-5.90%
Refunding 4.00-5.00%
Year
of
Issue
Average
Annual
Payment
Final
Maturity
Original Outstanding
Amount 9/30/2005
Capital appreciation bonds:
Refunding various
Contractual Obligations:
Equipment 5.50%
Equipment 5.50%
Notes payable:
Equipment
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 5. LONG-TERM DEBT-continued
The following is a summary of long-term debt transactions of the District for the year ended
September 30, 2005:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Taxand revenuebonds $ 3,110,000 $ - $ - $ 3,110,000 $ 21 5,000
Capital appreciation bonds 499,430 (297,795) 201,635 201,635
Contractual obligations 183,000 (65,000) 118,000 64,000
3,792,430 (362,795) 3,429,635 480,635
Accreted interest 296,059 29,511 (21 7,205) 108,365 108,365
Notes payable 26,248 (1,589) 24,659 1,628
Capital leases 7,360 (7,360)
Total Governmental Activities
Long-term Liabilities $ 4,122,097 $ 29,511 $ (588,949) $ 3,562,659 $ 590,628
The annual requirements to amortize all debts outstanding as of September 30, 2005, are as follows:
Bonds and contractual obligations:
Year Ending
September 30, Principal Interest Total
Total
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 5. LONG-TERM DEBT-continued
Notes payable:
Year Ending
September 30, Principal Interest Total
Total
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 1997 -All maturities from 2008 to 201 1 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.
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, 2005.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 6. PROPERTY TAXES
Property taxes are levied as of October 1, on the assessed value listed as of the prior Januaryl, for all
real and certain personal property located in the District. The appraisal of property within 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 the 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 2004 tax levy:
Adjusted taxable values
0 & M tax levy $0.12202/$100 $ 482,416
I & S tax levy $0.15798/$100 624,585
Total tax levy $0.28000/$100 $ 1,107,001
NOTE 7. CONTRACTS RECEIVABLE
Under the terms of a contract whereby MUD1 and MUD2 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 1,831,
including interest, to each district's debt service fund through 2006. At September 30, 2005, the
District's share (50%) of the receivable was $1 1,831.
NOTE 8. TOWN FIRE SERVICES
During 2004, Trophy Club Master District Joint Venture and the Town of Trophy Club, Texas entered
into an agreement for the administration of fire protection services within the boundaries of the Town,
MUDI, MUD2, and other defined areas. During the year ended September 30, 2005, MUD1 and
MUD2 contributed $409,288 (57.28%) and $305,251 (42.72%)) respectively, for the cost to operate
the fire department. MUD1 has retained ownership of the fire department building and equipment
along with liability for the related debt.
NOTE 9. 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.
REQUIRED SUPPLEMENTARY INFORMATION
Revenues
Taxes
Investment income
Total revenues
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED SEPTEMBER 30,2005
Variance with
Budgeted amounts Final Budget
Original Final Actual Positve (Negative)
Expenditures:
Current
General government 83,593 83,593 74,122 9,471
Fire 440,350 440,350 409,288 31,062
Total expenditures 523,943 523,943 483,410 40,533
Excess (deficiency) of revenues
over expenditures (25,066) (25,066) 38,266 63,332
Fund Balances - beginning of year 259,022 259,022 259,022
Fund Balances - end of year $ 233,956 $ 233,956 $ 297,288 $ 63,332
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE I. BUDGETARY CONTROL
The District Board ("Board") adopts an annual budget for the General Fund on the modified accrual
basis excepting recognition of non-cash grant and capital lease proceeds and related expenditures for
equipment. The District also does not budget developer contribution of infrastructure.
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.
All annual appropriations lapse at fiscal year end.
THIS PAGE INTENTIONALLY BLANK
Revenues
Taxes
Investment income
Miscellaneous revenues
Total revenues
Expenditures:
Debt service
Principal
Interest
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED SEPTEMBER 30,2005
Variance with
Budgeted amounts F~nal Budget
Original Final Actual Positve (Negative)
Total expenditures 658,347 658,347 649,915 8,432
Excess of revenues over expenditures 31,378 31,378
Fund Balances - beginning of year 27,033 27,033 27,033
Fund Balances - end of year
INDIVIDUAL STATEMENTS AND OTHER
SUPPLEMENTARY INFORMATION REQUIRED BY
TEXAS COMMlSlON ON ENVIRONMENTAL QUALITY (TCEQ)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
September 30,2005
1. Services provided by the District:
a) Retail Water
b) Retail Wastewater
c) Fire Protection
d) Irrigation
e) Participates in joint venture, regional system andlor wastewater service (other than
emergency interconnect)
2. Retail service providers:
a) Retail rates-based on 518" meter:
Most prevalent type of meter (if not a 518"): NIA
Flat Rates per 1,000
Admin Minimum Rate Gallons Over
Fee Usage YIN Minimum Usage Levels
WATER $ 11.50 0 No $ 2.05 0 to 6,000
No 2.50 6,000 to 12,000
No 2.70 12,000 to 25,000
No 2.80 More than 25,000
Note: Out of district water rates are determined by contract.
WASTEWATER $ 11.50 0 No $ 2.05 0 to 6,000
No 2.45 6,000 to 12,000
No 2.45 More than 12,000
GOLF COURSE Subject to peak draw rates from Ft Worth water department.
NOTE: all rates noted above were amended effective October 1, 2004.
District employs winter averaging for wastewater usage? No
Total water and wastewater charges per 10,000 gallons usage (including surcharges)
effective October 1, 2004:
First 10,000 gallons used $ 67.40
Next 10,000 gallons used 31 -50
Next 10,000 gallons used and subsequent 27.50
Maximum residential wastewater charge is for 12,000 gallons or $38.50.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
September 30,2005
b) Retail service providers: number of retail water andlor wastewater* connections within the District as
of the fiscal year end. Provide actual numbers and single family equivalents (ESFC).
Connections ESFC
Meter Size Total Active Factor
Active
ESFC's
Unmetered
Less than 314"
1"
1 112"
2"
3"
4"
6"
8"
10"
Total Water
Total Wastewater
* Number of connections relates to water service if provided. Otherwise, the number of wastewater
connections should be provided.
Note: "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 the system
Gallons billed to customers
Water accountability ratio
4. Standby Fees:
Does the District assess standby fees? Yes
For the most recent fiscal year, FY2005:
Total Total Percentage
Levy Collected Collected
Debt Service $ - $ 0%
Operations and Maintenance 1,169 1,162 99.4%
Have standby fees been levied in accordance with Water Code Section 49.231, thereby
constituting a lien on property? No**
** Standby fees are levied by the District and constitute a lien under recorded deed restrictions or
covenants pursuant to Section 293.1 50 of Title 30 of Texas Administrative Code.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
September 30,2005
5. Location of District:
Counties in which District is located: a) Denton
b) Tarrant
Is the District located entirely in one county? No
Is the District located within a city? Partially
Cities in which District is located: Town of Trophy Club
Town of Westlake
Is District located within a city's extra territorial jurisdiction (ETJ)? Unknown
ETJ's in which District is located: Unknown
Is the general membership of the Board appointed by an office outside the District? No
Current:
Professional Fees:
Auditing
Legal
Contract Services:
Tax administration fee
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-2 GENERAL FUND EXPENDITURES
September 30,2005
Fire department operations
Administrative expenditures:
Director Fees
Other administrative expenditures
Current Year
Joint venture contribution
Capital outlay 31,381
Total Expenditures $ 483,410
Number of employees employed by the District:
Full time
Part time
Prior Year
None
None
Note: During 2004, MUD1 and MUD2 transferred operations of the fire department to the Town of Trophy Club.
The MUDS contribute the entire cost of operations.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-3 TEMPORARY INVESTMENTS
September 30, 2005
Identification Interest Maturity Balance Accrued Interest
Funds Number Rate Date End of Year End of Year
General Fund
Texpool 61 3300002 3.81 % Demand $ 289,938 Paid daily
Debt Service Fund
TexPool 61 3300003 3.81 % Demand 50,363 Paid daily
Total - All Funds $ 340,301
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-4 TAXES LEVIED AND RECEIVABLE
September 30, 2005
Taxes receivable beginning of year
2004 tax levy
Total to be accounted for
Less collections and adjustments:
Current year
Prior years
Total to be accounted for
Taxes receivable, end of year
Taxes receivable by year
1994 and prior
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
General Fund Debt
Operations Fire Total Service Total
Property valuations (in 000's) 2005 2004 2003 2002 200 1
Land
Improvements
Personal property
Exemptions
Tax rate per $1 00 valuation
Operations
Fire department
Debt service
Tax rate per $1 00 valuation
Tax levy: $ 1,107,000 $ 1,070,316 $ 1,211,210 $ 1,026,892 $ 1,005,235
Percent of taxes collected to taxes levied 100.05% 101.30% 98.26% 99.39% 98.99%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-4 TAXES LEVIED AND RECEIVABLE
September 30, 2005
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
None $
Total rate(s) of special districts $
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
City
School District
County County
$ 0.246480 $ 0.272500
Town of Trophy Club 0.43051 3
Northwest l~~j~arroll ISD 1.81 9300 1.935000
2.496293 2.207500
Special Districts not included above
Hospital District 0.235397
Total Special Districts
Total District Tax Rate
Total Overlapping Tax District
Tarrant County Comm. College 0.139388
0.374785
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.l
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
September 30, 2005
Series 2003 Unlimited Tax Bonds
Due During Fiscal Principal Due lnterest Due
Years Ending I -Sep Mar 11 Sep 1 Total
Series 1996 Public Property Finance Contractual Obligations
Due During Fiscal Principal Due lnterest Due
Years Ending I -Sep Mar 11 Sep I Total
Series 1997 Combination Tax Bonds
Due During Fiscal Principal Due lnterest Due
Years Ending I -Sep Mar 11 Sep 1 Total
2006 $ 201,635 $ 83,380 $ 285,015
2007 31 5,000 83,380 398,380
2008 330,000 68,575 398,575
2009 345,000 53,065 398,065
201 0 365,000 36,505 401,505
201 1 380,000 18,620 398,620
1,936,635 $ 343,525 $ 2,280,160
Accreted interest 108.365
Series 1999 Public Property Finance Contractual Obligations
Due During Fiscal Principal Due lnterest Due
Years Ending I -Sep Mar 11 Sep 1 Total
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.l
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
September 30,2005
All Bonded Debt Series
Due During Fiscal Principal Due Interest Due
Years Ending I -Sep Mar I1 Sep I Total
2006 $ 480,635 $ 129,797 $ 6 1 0,432
2007 589,000 120,415 709,415
2008 555,000 96,590 651,590
2009 580,000 74,893 654,893
2010 600,000 51,517 651,517
201 1 625,000 26,583 651,583
3,429,635 499,795 3,929,430
Accreted interest 108,365 108,365
$ 3,538,000 $ 499,795 $ 4,037,795
Interest rate
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-6 CHANGES IN LONG-TERM BONDED DEBT
September 30, 2005
Series Series Series Series
1996 CO's 1997 Tax 1999 CO's 2003 Tax Total
Date interest payable 1211 & 611 311 & 911 411 311 & 911
Maturity date
Bonds outstanding at
beginning of year $ 163,000 $ 2,150,142 $ 20,000 $ 1,459,288 $ 3,792,430
Retirements of principal (55,000) (2 1 3,507) (1 0,000) (84,288) (362,795)
Bonds outstanding at end of
year $ 108,000 $ 1,936,635 $ 10,000 $ 1,375,000 $ 3,429,635
Retirements of interest $ 7,421 $ 174,873 $ 1,481 $ 165,690 $ 349,465
Paying agents name & city:
Series 1997 and Series 2003
Series 1996 and Series 1999
JP Morgan Chase
P.O. Box 21 9053
Dallas, Texas 75221 -9053
First Financial Bank
P.O. Box 92840
Southlake, Texas 76092
General
Obligation
Bond Authority Bonds
Amount authorized by voters $ 12,344,217
Amount issued (1 1,115,000)
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, 2005: $ 58,411
Average annual debt service payment (principal & interest) for remaining term of debt: $ 672,965
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES-FIVE YEARS
GENERAL FUND
September 30, 2005
Amounts Percent of total revenue
REVENUE 2005 2004 2003 2002 2001 2005 2004 2003 2002 2001
Ad valorem property taxes $ 511,213 $ 646.703 $ 398.593 $ 270.313 $ 263.059 98.0% 98.6% 52.1 % 17.3% 72.5% .. .
Penalties and interest
lntergovenmental
Interest earned
Sale of assets
Miscellaneous and other
Total revenue
EXPENDITURES
Salaries, wages and employee benefits
Professional fees
Recurring operating expenditures
Contribution to Trophy ClubWestlake
Dept of Public Safety Joint Venture
Contribution to Trophy Club Fire Dept
Contribution to ioint venture
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures $ 38,266 $ 82,209 $ (1.086.575) $ 364,784 $ (22.085) 7.3% 12.5% -142.1% 23.4% -6.1%
Total active retail water and/or
wastewater connections
(Continued)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO, 1
TSI-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES-FIVE YEARS (Continued)
DEBT SERVICE FUND
September 30, 2005
Amounts Percent of total revenue
REVENUE 2005 2004 2003 2002 2001 2005 2004 2003 2002 200 1
Ad valorem property taxes $ 659,286 $ 447,010 $ 792,142 $ 753,137 $ 740,089 96.8% 96.5% 97.2% 98.2% 91.5%
Penalties and interest
lnterest earned
Miscellaneous and other
Total revenue
EXPENDITURES
Principal retirement
Interest and fiscal charges
Debt issue costs
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS
September 30,2005
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 FY05 FY05 Year End
Board Members:
Constance S. White
11 9 Trophy Club Drive
Trophy Club, TX 76262
Jim Hase
209 lverness
Trophy Club, TX 76262
Dean Henry
308 Oakmont Drive
Trophy Club, TX 76262
Ted Neidenberger
1033 Sunset
Trophy Club, TX 76262
Gary Cantrell
1 105 Sunset
Trophy Club, TX 76262
Appointed
6/02-5106 $ - $
Appointed
9/04-5106 $ 1,200 $
Director
President
Vice-President
217 Director
Note: No Director is disqualified from serving on this board under the Texas Water Code.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS (Continued)
September 30,2005
Term of Office Fees of Title
ElectedIExpires Office Paid at
Name and Address or Date Hired FY05 Year End
Key Personnel:
Walter R. Fitzpatrick, Jr.
7 Creekmere Drive
Trophy Club, TX 76262 2/1/2003 $
** Assumed responsibility of District Manager on 2/1/2003
Consultants:
Denton County Appraisal District
P.O. Box 2816
Denton, TX 76202
Rutledge, Crain & Company, PC
1601 E. Lamar, Suite 109
Arlington, TX 7601 1
Whitaker, Chalk, Swindle & Sawyer, L.L.P.
3500 City Center, Tower II
Fort Worth, TX 761 02
District
Manager
411 /I 981 $ 10,527 Appraiser
9/5/1997 $ 7,650 Auditors
10/1/1999 $ 4,729 Legal Counsel