HomeMy WebLinkAboutFY Ended September 30, 2007TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007
C O N T E N T S
Page
FINANCIAL SECTION
ANNUAL FILING AFFIDAVIT ......................................................................................................................i
INDEPENDENT AUDITOR'S REPORT..................................................................................................... 1
MANAGEMENT’S DISCUSSION AND ANALYSIS (unaudited)................................................................ 3
BASIC FINANCIAL STATEMENTS
Government–wide Financial Statements
Statement of Net Assets......................................................................................................... 11
Statement of Activities............................................................................................................ 12
Fund Financial Statements
Governmental Funds
Balance Sheet ................................................................................................................. 13
Reconciliation of the Governmental Funds Balance Sheet
to Statement of Net Assets ....................................................................................... 14
Statement of Revenues, Expenditures and Changes in
Fund Balances......................................................................................................... 15
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities................................................................................... 16
Notes to Basic Financial Statements............................................................................................. 17
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule – General Fund ....................................................................... 29
Notes to Required Supplementary Information............................................................................. 30
INDIVIDUAL SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
Budgetary Comparison Schedule -Debt Service Fund ..................................................................... 31
TSI-1 Service and Rates............................................................................................................. 32
TSI-2 General Fund Expenditures.............................................................................................. 35
TSI-3 Temporary Investments .................................................................................................... 36
TSI-4 Taxes Levied and Receivable........................................................................................... 37
TSI-5 Long-Term Debt Service Requirements – By Year .......................................................... 38
TSI-6 Changes in Long-Term Bonded Debt ............................................................................... 39
TSI-7 Comparative Schedules of Revenues and Expenditures - Five Years............................. 40
TSI-8 Board Members, Key Personnel, and Consultants........................................................... 42
1
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INDEPENDENT AUDITOR’S 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 the Trophy Club Municipal Utility District No. 1, (the “District”), as
of and for the year ended September 30, 2007, 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
opinions 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 and Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the 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 the Trophy Club Municipal Utility District No. 1 as of September 30, 2007, 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 3 through 10 and 29 through 30, 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.
In accordance with Government Auditing Standards, we have issued a report dated
February 5, 2008 on our consideration of the District’s internal control over financial
reporting and our tests of compliance with certain provisions of laws, regulations, contracts
and grants. The purpose of that report is to describe the scope of testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. The report is an
integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
2
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 individual schedules and other supplementary
information listed in the table of contents are presented for the purpose of additional
analysis and are not a required part of the basic financial statements. The accompanying
individual schedules and other supplementary 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.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
February 5, 2008
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
3
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, 2007.
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 $6,467,555.
Of this amount, $3,677,901 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 $253,128 as a result of operations.
At the end of the fiscal year, the District’s governmental funds reported a combined fund
balance of $545,858.
For the year ended September 30, 2007, the unreserved fund balance for the General Fund
was $471,024, 48% of the total expenditures for the General Fund for 2007.
The governmental long-term debt obligations of the District decreased by $605,670.
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 11) 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 12) 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).
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
4
Overview of the Financial Statements - continued
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 11 and 12 of this
report.
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 17-28.
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
$6,467,555. Of this amount $2,697,758 (41.7%) reflects the District’s investment in capital
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
5
Government-wide Financial Analysis - continued
assets (e.g., land, buildings, machinery and equipment, net of accumulated depreciation), less
any related outstanding debt used to acquire those assets. The District uses these capital
assets to provide service to the community, therefore these assets are not available for future
spending.
Table 1
Condensed Statement of Net Assets
Governmental Governmental
Activities Activities
2007 2006
Current and other 4,225,514$ 3,953,191$
Capital assets 5,079,118 5,245,889
Total Assets 9,304,632 9,199,080
Long-term liabilities 2,814,360 2,972,030
Other liabilities 22,717 12,623
Total Liabilities 2,837,077 2,984,653
Net Assets:
Invested in capital
Net of related debt 2,697,758 2,373,859
Restricted 91,896 78,640
Unrestricted 3,677,901 3,761,928
Total Net Assets 6,467,555$ 6,214,427$
District operational analysis – The following table provides a summary analysis of the District’s
operations for the fiscal year ended September 30, 2007. Governmental activities have
increased the District’s net assets by $253,128 which amounts to a 4% increase in total net
assets for the year.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
6
Changes in net assets
Table 2
Changes in Net Assets
Activities Activities
2007 2006
Revenue:
Program revenue
Charges for services 182,667$ 274,794$
General Revenue
Ad valorem taxes 1,149,031 1,215,315
Unrestricted investment earnings 53,820 36,471
Gain in Sale of Capital Asset 52,005 -
Total Revenue 1,437,523 1,526,580
Expenses:
General government 666,616 233,729
Fire 400,209 417,186
Interest and fiscal charges 117,570 64,775
Total Expenses 1,184,395 715,690
Increase in net assets 253,128$ 810,890$
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 $545,858, of which 86%, or $471,024, 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 $18,583 less than budgeted
• Property Tax collections were $3,807 (.7%) more than budgeted. This includes current
and prior year property taxes for the operation and maintenance funds and the funds
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
7
General fund budgetary highlights - continued
• needed to pay for the operation of the fire department per the inter local agreement with
the Town.
• Investment income was over budget by $11,105 (57%).
Expenses: Expenses were $4,838 less than budgeted
• Salaries and related expenses were $25 less than budget.
• Professional and contractual expenses were $101,260 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
$9,052 over the original budget.
Debt Service:
• The debt service revenue was $8,578 over budget with the majority of the excess
revenue occurring in the ad valorem taxes as a result of higher collections that occurred
during the year, and higher Income from investments.
• The debt service expenses were $101,260 less than budget as a result of lower than
anticipated paying agent fees.
• The debt service reserves were increased from $64,996 to $74,834.
Overall:
• The District’s revenue totaled $1,249,499 on expenses of $1,623,469.
• The total fund balance increased from $471,828 to $545,858; an increase of $74,030 a
15.7% increase in reserves.
Capital asset and debt administration.
The District’s investments of capital assets for its governmental activities as of September 30,
2007 amounted to $5,079,118 net of accumulated depreciation. This represents a broad range
of capital assets including, but not limited to land, buildings, improvements, machinery and
equipment, vehicles, and water, wastewater treatment, and wastewater collection systems.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
8
Capital asset and debt administration – continued
Table 3
Capital Assets at Year-end
Net of Accumulated Depreciation
Governmental Governmental
Activities Activities
2007 2006
Land 248,093$ 248,093$
Buildings 117,667 121,941
Improvements ofher than buildings 8,657 10,025
Machinery and equipment 117,603 132,818
Vehicles 10,290 15,689
Water system 864,583 902,604
Wastewater treatment system 1,874,507 1,943,015
Wastewater collection system 477,903 511,889
Organization costs 1,359,815 1,359,815
Total 5,079,118$ 5,245,889$
There were no major additions to capital assets for the fiscal year.
Capital assets net of depreciation at year end: $5,079,118
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 $2,814,360 in general
obligation bonds, contractual obligation bonds, capital lease obligations, notes payable, and
accrued compensated absences, a decrease of 5.3% from the previous fiscal year. Of this
amount, $2,793,000 is backed by the full faith and credit of the government.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
9
General debt currently outstanding
Table 4
Outstanding Debt at Year-end
Governmental Governmental
Activities Activities
2007 2006
General obligation bonds 2,360,000$ 2,895,000$
Contract obilgations 433,000 54,000
Notes payable 21,360 23,030
Total 2,814,360$ 2,972,030$
Economic factors and next year’s budgets and rates:
General fund fiscal 2008 budgetary highlights
Revenue: The District’s operational revenue budget decreased by $430,659.
• Property tax revenue increased by $70,932 due to a reduction in the tax rates.
• Interest revenue increased by $6,000 as a result of higher fund balances and interest
rates.
• Loan proceeds amounting to $448,000 were removed for the 2007/2008 year.
Expenses: The District’s operational expense budget decreased by $366,753.
• Payroll and professional services increased by approximately $17,402.
• Operating expenses increased by $111,145 with the majority of the increase, $106,032
in fire department funding.
• The remainder of the budget lines in operating expenses remained the same.
• Capital expenses decreased by $443,500 for capital expenditures.
Overall:
The District’s operational budget is anticipated to have expenses of $608,809 on revenues
of $608,809 resulting in an anticipated operating break even.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2007
10
Debt Service:
• The debt service revenues have decreased from $654,005 in fiscal 2007 to $652,500 in
fiscal 2008, a decrease of $1,505, or a .23% decrease.
• Debt service expenditures decreased from $754,005 to $629,500 as a result of normal
annual variances in bond payments.
The Districts overall budget for revenue decreased from $1,678,504 in fiscal 2007 to
$1,261,309 in fiscal 2008 a 24.9% decrease. The overall expenses decreased from
$1,629,567 to $1,261,309 a 22.6 % decrease.
Requests for information
This financial report is designed to provide a general overview of the District’s finances for all
interested parties. Questions concerning any of the information in this report or requests for
additional information should be directed to the Trophy Club Municipal Utility District No. 1,
Director of Finance, 100 Municipal Drive, Trophy Club, Texas 76262.
BASIC FINANCIAL STATEMENTS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2007
The Notes to Basic Financial Statements are
an integral part of this statement.
11
Cash and cash equivalents 553,687$
Investment in joint venture 3,623,834
Receivables
Taxes 42,717
Other 5,276
Capital assets:
Land 248,093
Buildings 213,694
Improvements other than buildings 54,749
Machinery and equipment 292,671
Vehicles 816,772
Water system 1,853,962
Wastewater treatment system 2,682,053
Wastewater collection system 1,224,677
Organization costs 1,359,815
Accumulated depreciation (3,667,368)
TOTAL ASSETS 9,304,632$
Accounts payable 13,105$
Accrued interest payable 9,612
Noncurrent liabilities:
Debt due within one year 610,711
Debt due in more than one year 2,203,649
Total liabilities 2,837,077
Invested in capital assets, net of related debt 2,697,758
Restricted for debt service 91,896
Unrestricted 3,677,901
TOTAL NET ASSETS 6,467,555$
LIABILITIES
NET ASSETS
ASSETS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2007
The Notes to Basic Financial Statements are
an integral part of this statement.
12
Net (Expenses)
Revenue and
Changes in
Program Net Assets
Revenues
Charges for Governmental
Program Activites Expenses Services Activities
Governmental activities
General government 666,616$ 182,667$ (483,949)$
Fire 400,209 - (400,209)
Interest on long term debt 117,570 - (117,570)
Total governmental
activities 1,184,395$ 182,667$ (1,001,728)
General Revenues:
Ad valorem taxes 1,149,031
Investment income 53,820
Gain on sale of capital assets 52,005
Total general revenues 1,254,856
Change in net assets 253,128
Net Assets - beginning of year 6,214,427
Net Assets - end of year 6,467,555$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2007
The Notes to Basic Financial Statements are
an integral part of this statement.
13
Debt Total
Service Governmental
General Fund Funds
Assets
Cash and cash equivalents 478,853$ 74,834$ 553,687$
Receivables:
Taxes 16,043 26,674 42,717
Other Receivables 5,276 - 5,276
TOTAL ASSETS 500,172$ 101,508$ 601,680$
Liabilities
Accounts payable 13,105$ -$ 13,105$
Deferred revenue 16,043 26,674 42,717
Total liabilities 29,148 26,674 55,822
Fund Balances
Unreserved and undesignated, reported in:
General fund 471,024 - 471,024
Debt service fund - 74,834 74,834
Total fund balances 471,024 74,834 545,858
TOTAL LIABILITIES AND FUND BALANCES 500,172$ 101,508$ 601,680$
LIABILITIES AND FUND BALANCES
ASSETS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO STATEMENT OF NET ASSETS
SEPTEMBER 30, 2007
The Notes to Basic Financial Statements are
an integral part of this statement.
14
Total fund balances - governmental funds 545,858$
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. 5,079,118
Investment in joint venture does not represent current financial resources
and, therefore, is not reported in the governmental funds balance sheet. 3,623,834
Receivables which are unavailable to pay current period expenditures
are deferred from recognition as revenue in the governmental
funds balance sheet. 42,717
Interest 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. (9,612)
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. (2,814,360)
Net assets of governmental activities 6,467,555$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 2007
The Notes to Basic Financial Statements are
an integral part of this statement.
15
Debt Total
Service Governmental
General Fund Funds
Revenues:
Taxes 504,306$ 639,368$ 1,143,674$
Investment income 30,605 23,215 53,820
Total revenues 534,911 662,583 1,197,494
Expenditures:
Current:
General government 570,515 - 570,515
Fire 400,209 - 400,209
Debt Service
Principal - 535,000 535,000
Interest and fiscal charges - 117,745 117,745
Total expenditures 970,724 652,745 1,623,469
Excess (deficiency) of revenues
over (under) expenditures (435,813) 9,838 (425,975)
Other financing sources
Issuance of contractual obligations 448,000 - 448,000
Proceeds from sale of capital assets 52,005 - 52,005
Total other financing sources 500,005 - 500,005
Net change in fund balance 64,192 9,838 74,030
Fund Balances - beginning of year 406,832 64,996 471,828
Fund Balances - end of year 471,024$ 74,834$ 545,858$
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, 2007
The Notes to Basic Financial Statements are
an integral part of this statement.
16
Net change in fund balances - total governmental funds 74,030$
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. (166,771)
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. 182,667
Repayment of principal on long-term debt reduces long-term liabilities in the
statement of net assets, but it is recorded as an expenditure in
the governmental funds. 605,670
Certain revenues in the government-wide financial statements that do not
produce current financial resources are not reported as revenue in
the governmental funds. 5,357
The issuance of long-term debt provides current financial resources to governmental
funds, however has no effect on net assets. The effect of the current year
issuance of contractual obligations was to decrease net assets. (448,000)
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. 175
Change in net assets of governmental activities 253,128$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
17
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 Trophy Club Municipal Utility District
NO. 2 (MUD2). The proportionate allocation of costs and related beneficial usage rights in the
major assets is estimated as follows:
Master
MUD 1 MUD 2 District
Water plant wells 40.91% 59.09% 0.00%
Twenty-one inch water line 50.00% 50.00% 0.00%
Elevated tank 43.99% 56.01% 0.00%
Wastewater treatment plant and land 50.00% 50.00% 0.00%
First expanded treatment plant 50.00% 50.00% 0.00%
Second expanded treatment plant 50.00% 50.00% 0.00%
Administration building 23.38% 0.00% 76.62%
2004 water plant expansion 50.00% 50.00% 0.00%
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.
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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
18
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
B. Financial Reporting Entity – continued
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. 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:
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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
19
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
C. Government-Wide and Fund Financial Statements – continued
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.
E. Cash and Investments
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 (1) – (4); or, (6) fully collateralized direct
repurchase agreements having a defined termination date, secured by obligations described by
(1), pledged with third party selected or approved by the District, and placed through a primary
government securities dealer.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
20
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
E. Cash and Investments – continued
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 50 Years
Improvements other than buildings 15 - 30 Years
Machinery and equipment 6 - 15 Years
Vehicles 6 - 12 Years
Water and wastewater systems 30 - 65 Years
G. 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.
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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
21
NOTE 2. CASH AND INVESTMENTS
At September 30, 2007, the carrying amount of the District’s deposits (cash, certificates of deposit,
and interest-bearing savings accounts included in temporary investments) was $5,113 and the bank
balance was $5,113. The District’s cash deposits at September 30, 2007, and during the year then
ended were entirely covered by FDIC insurance or by pledged collateral held by the District’s agent
bank in the District’s name.
The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in
the areas of investment practices, management reports and establishment of appropriate policies.
Among other things, it requires the District to adopt, implement, and publicize an investment policy.
That policy must address the following areas; (1) safety of principal and liquidity, (2) portfolio
diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6)
maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted
maturity, allowed based on the stated maturity date for the portfolio, (8) investment staff quality and
capabilities, (9) and bid solicitation preferences for certificates of deposit. Statutes and the District’s
investment policy authorized the District to invest in the following investments as summarized below:
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio In One Issuer
U.S. Treasury Obligations 2 years 85% NA
U.S. Agencies Securities 2 years 85% NA
State of Texas Securities 2 years 85% NA
Certificates of Deposits 2 years 85% NA
Municipal Securities 2 years 85% NA
Money Market 2 years 50% NA
Mutual Funds 2 years 50% NA
Investment pools 2 years 100% NA
The Act also requires the District to have independent auditors perform test procedures related to
investment practices as provided by the Act. The District is in substantial compliance with the
requirements of the Act and with local policies.
Cash and investments as of September 30, 2007 are classified in the accompanying financial
statements as follows:
Statement of Net Assets
Primary Government:
Cash and cash equivalents 553,687$
Total cash and investments 553,687$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
22
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Cash and investments as of September 30, 2007 consist of the following:
Deposits with financial institutions 5,113$
Investments 548,574
Total cash and investments 553,687$
Disclosures Relating to Interest Rate Risk
Interest 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, 2007, the District had the following investment:
Weighted
Average
Investment Type Amount Maturity
TexPool 548,574$ 33 days
Total Investments 548,574$
As of September 30, 2007, the District did not invest in any securities which are highly sensitive
to interest rate fluctuations.
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 Investment Act, the District’s investment policy, or debt
agreements, and the actual rating as of year end for each investment type.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
23
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Minimum Rating as
Legal of Year
Investment Type Amount Rating End
TexPool 548,574$ N/A AAAm
Total Investments 548,574$
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, 2007, other than external investment pools, the District did
not have 5% or more of its investments 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 Investment 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 Investment 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, 2007 the District deposits with financial institutions were not in excess of
federal depository insurance limits.
Investment in State Investment 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 Investment 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
24
NOTE 3. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2007, was as follows:
Beginning Retirements/ Ending
Balance Additions Transfers Balance
Governmental Activities:
Capital assets,
not being depreciated
Land 248,093$ -$ -$ 248,093$
Organization costs 1,359,815 - - 1,359,815
Total capital assets
not being depreciated 1,607,908 - - 1,607,908
Capital assets,
being depreciated
Buildings 213,694 - - 213,694
Improvements other than buildings 54,749 - - 54,749
Machinery and equipment 292,671 - (144,550) 148,121
Vehicles 816,772 - - 816,772
Water system 1,853,962 - - 1,853,962
Wastewater treatment system 2,682,053 - - 2,682,053
Wastewater collection system 1,224,677 - - 1,224,677
Total capital assets
being depreciated 7,138,578 - (144,550) 6,994,028
Less accumulated
depreciation for:
Buildings (91,753) (4,274) - (96,027)
Improvements other than buildings (44,724) (1,368) - (46,092)
Machinery and equipment (159,853) (15,215) 144,550 (30,518)
Vehicles (801,083) (5,399) - (806,482)
Water system (951,358) (38,021) - (989,379)
Wastewater treatment system (739,038) (68,508) - (807,546)
Wastewater collection system (712,788) (33,986) - (746,774)
Total accumulated
depreciation (3,500,597) (166,771) 144,550 (3,522,818)
Governmental activities capital
assets, net 5,245,889$ (166,771)$ -$ 5,079,118$
The entire amount of depreciation expense has been charged to general government.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
25
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 all
directors of the District and MUD2 serve on the Master District board of directors.
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 the income from operations was $182,667. A summary of net assets
and changes in net assets at and for the year ended September 30, 2007 is as follows:
Total assets $ 8,165,549
Total liabilities (917,882)
Net assets $ 7,247,667
Total revenue $ 3,761,144
Total expenses ( 3,395,810)
Increase (decrease) in net assets $ 365,334
The Master District Joint Venture financial statements are available at the District’s administrative
offices.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
26
NOTE 5. LONG-TERM DEBT
At September 30, 2007, the District's long-term debt payable consisted of the following:
Interest Year Average
Rate of Final Annual Original Outstanding
Description Payable Issue Maturity Payment Amount 9/30/2007
Tax and revenue bonds:
Refunding 3.25-5.90% 1997 2011 398,800$ 3,075,000$ 1,420,000$
Refunding 4.00-5.00% 2003 2011 253,100 1,949,288 940,000
2,360,000$
Contractual Obligations:
Fire Truck 4.33% 2007 2014 56,000 448,000 433,000$
433,000$
Notes payable:
Equipment 2.50% 1999 2018 2,245 35,000 21,360$
The following is a summary of long-term debt transactions of the District for the year ended
September 30, 2007:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Tax and revenue bonds 2,895,000$ -$ (535,000)$ 2,360,000$ 555,000$
Contractual obligations 54,000 448,000 (69,000) 433,000 54,000
2,949,000 448,000 (604,000) 2,793,000 609,000
Notes payable 23,030 - (1,670) 21,360 1,711
Total Governmental Activities
Long-term Liabilities 2,972,030$ 448,000$ (605,670)$ 2,814,360$ 610,711$
Contractual obligations and notes payable are liquidated from the general fund
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
27
NOTE 5. LONG-TERM DEBT – CONTINUED
The annual requirements to amortize all debts outstanding as of September 30, 2007, are as follows:
Bonds and contractual obligations:
Year Ending
September 30, Principal Interest Total
2008 609,000 115,339 724,339
2009 637,000 91,304 728,304
2010 659,000 65,460 724,460
2011 687,000 37,971 724,971
2012 64,000 8,703 72,703
2013-14 137,000 8,963 145,963
Total 2,793,000$ 327,740$ 3,120,740$
Notes payable:
Year Ending
September 30, Principal Interest Total
2008 1,711$ 534$ 2,245$
2009 1,754 491 2,245
2010 1,798 447 2,245
2011 1,843 402 2,245
2012 1,889 356 2,245
2013-17 10,175 1,049 11,224
2018 2,190 55 2,245
Total 21,360$ 3,334$ 24,694$
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 2011 are callable in principal increments of $5,000 on
or after September 1, 2007 at par plus unpaid accrued interest to the fixed date for redemptions.
Series 2003 – No bonds are subject to redemption prior to maturity.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
28
NOTE 5. LONG-TERM DEBT – CONTINUED
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, 2007.
NOTE 6. PROPERTY TAXES
Property taxes are levied as of October 1, on the assessed value listed as of the prior January 1, 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 2006 tax levy:
Adjusted taxable values $ 447,030,715
O & M tax levy $0.11011/$100 $ 492,246
I & S tax levy $0.13988/$100 625,333
Total tax levy $0.25000/$100 $ 1,117,579
NOTE 7. 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,
MUD1, MUD2, and other defined areas. During the year ended September 30, 2007, MUD1 and
MUD2 contributed $400,209 (55.14%) and $TBLink #VALUE! (44.86%), respectively, for the cost to
operate the fire department. MUD1 has retained ownership of the existing fire department building
and a portion of equipment, along with liability for the related debt. Furthermore, any capital assets
acquired after the creation of the Trophy Club Master District Joint Venture are recorded in the
Trophy Club Master District, and the ownership of the related assets are equally shared between
MUD1 and MUD2.
NOTE 8. RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; business interruption; errors and omissions; injuries to employees; employee health benefits;
and other claims of various nature. Commercial insurance is purchased for the risks of loss to which
the District is exposed. Any losses reported but unsettled or incurred and not reported, are believed
to be insignificant to the District’s basic financial statements.
REQUIRED SUPPLEMENTARY INFORMATION
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED SEPTEMBER 30, 2007
29
Variance with
Final Budget
Original Final Actual Positive (Negative)
Revenues
Taxes 500,499$ 500,499$ 504,306$ 3,807$
Investment income 19,500 19,500 30,605 11,105
Miscellaneous revenues 28,500 85,500 - (85,500)
Total revenues 548,499 605,499 534,911 (70,588)
Expenditures:
Current
General government 70,901 566,301 570,515 (4,214)
Fire 409,261 409,261 400,209 9,052
Total expenditures 480,162 975,562 970,724 4,838
Excess of revenues over
expenditures 68,337 (370,063) (435,813) (65,750)
Other financing sources
Proceeds from the sale of capital assets- - 52,005 52,005
Issuance of contractual obligations - 448,000 448,000 -
Total other financing sources - 448,000 500,005 52,005
Net change in fund balance 68,337 77,937 64,192 (13,745)
Fund Balances - beginning of year 406,832 406,832 406,832 -
Fund Balances - end of year 475,169$ 484,769$ 471,024$ (13,745)$
Budgeted amounts
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
30
NOTE 1. 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 contributions 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.
Expenditures in excess of appropriations for the year ended September 30, 2007 are as follows:
General Fund:
• General government $ 4,214
INDIVIDUAL SCHEDULES AND OTHER
SUPPLEMENTARY INFORMATION REQUIRED
BY TEXAS COMMISSION ON
ENVIRONMENTAL QUALITY (TCEQ)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED SEPTEMBER 30, 2007
31
Variance with
Final Budget
Original Final Actual Positive (Negative)
Revenues
Taxes 635,505$ 635,505$ 639,368$ 3,863$
Investment income 18,500 18,500 23,215 4,715
Total revenues 654,005 654,005 662,583 8,578
Expenditures:
Debt service
Principal 635,000 635,000 535,000 100,000
Interest 119,005 119,005 117,745 1,260
Total expenditures 754,005 754,005 652,745 101,260
Excess of revenues over expenditures (100,000) (100,000) 9,838 109,838
Fund Balances - beginning of year 64,996 64,996 64,996 -
Fund Balances - end of year (35,004)$ (35,004)$ 74,834$ 109,838$
Budgeted Amounts
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 1
SERVICE AND RATES
YEAR ENDED SEPTEMBER 30, 2007
32
TSI – 1 SERVICE AND RATES
a) Retail Water
b) Retail Wastewater
c) Fire Protection
d) Irrigation
e) Participates in joint venture, regional system and/or wastewater service (other than
emergency interconnect)
Retail service providers:
a) Retail rates-based on 5/8" meter:
Most prevalent type of meter (if not a 5/8"): N/A
Flat Rates per 1,000
Admin Minimum Rate Gallons Over
Fee Usage Y/N Minimum Usage Levels
WATER $ 11.50 0 No 2.15$ 0 to 6,000
No 2.60 6,000 to 12,000
No 2.80 12,000 to 25,000
No 2.90 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 November 1, 2005.
District employs winter averaging for wastewater usage? No
Total water and wastewater charges per 10,000 gallons usage (including surcharges)
effective November 1, 2005:
First 10,000 gallons used 68.40$
Next 10,000 gallons used 32.50
Next 10,000 gallons used and subsequent 28.50
Maximum residential wastewater charge is for 12,000 gallons or $38.50.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 1
SERVICE AND RATES
YEAR ENDED SEPTEMBER 30, 2007
33
TSI – 1 SERVICE AND RATES – CONTINUED
b) Retail service providers: number of retail water and/or wastewater* connections within the District as
of the fiscal year end. Provide actual numbers and single family equivalents (ESFC).
ESFC Active
Meter Size Total Active Factor ESFC's
Unmetered - - 1.0 -
Less than 3/4" 1,286.0 1,277.0 1.0 1,277.0
1" 21.0 21.0 2.5 52.5
1 1/2" - - 5.0 -
2" 5.0 5.0 8.0 40.0
3" 2.0 2.0 15.0 30.0
4" 4.0 3.0 25.0 75.0
6" 1.0 1.0 50.0 50.0
8" - - 80.0 -
10" - - 115.0 -
Total Water 1,316.0 1,306.0 1,524.5
Total Wastewater 1,319.0 1,309.0 1.0 1,309.0
* Number of connections relates to water service if provided. Otherwise, the number of wastewater
connections should be provided.
Note: "inactive" means that water and wastewater connections were made, but service is not
being provided.
Total water consumption (in thousands) during the fiscal year:
Gallons pumped into the system 570,589
Gallons billed to customers 560,674
Water accountability ratio 98.3%
Standby Fees:
Does the District assess standby fees? Yes
For the most recent fiscal year, FY2006:
Total Total Percentage
Levy Collected Collected
Debt Service 625,333$ 618,204$ 98.9%
Operations and Maintenance 492,246 486,635 98.9%
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 293.150 of Title 30 of Texas Administrative Code.
Connections
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 1
SERVICE AND RATES
YEAR ENDED SEPTEMBER 30, 2007
34
TSI – 1 SERVICE AND RATES – CONTINUED
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
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 2
GENERAL FUND EXPENDITURES
YEAR ENDED SEPTEMBER 30, 2007
35
Current Year Prior Year
Current:
Professional Fees:
Auditing 7,933$ 8,799$
Legal 37,463 3,951
Contract Services:
Tax administration fee 13,363 8,605
Fire department operations 400,209 417,186
Administrative expenditures: -
Director Fees 9,700 8,500
Other administrative expenditures 59,274 9,306
Capital outlay 442,782 29,379
Total Expenditures 970,724$ 485,726$
Number of employees employed 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 entire cost of operations.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 3
TEMPORARY INVESTMENTS
SEPTEMBER 30, 2007
36
Identification Interest Maturity Balance Accrued Interest
Funds Number Rate Date End of Year End of Year
General Fund
Texpool 613300002 5.04% Demand 473,740$ Paid daily
Debt Service Fund
TexPool 613300003 5.04% Demand 74,834 Paid daily
Total - All Funds 548,574$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 4
TAXES LEVIED AND RECEIVABLE
YEAR ENDED SEPTEMBER 30, 2007
37
Debt
Operations Fire Total Service Total
Taxes receivable beginning of year 2,222$ 11,737$ 13,959$ 23,364$ 37,323$
2006 tax levy 87,309 404,937 492,246 625,333 1,117,579
Total to be accounted for 89,531 416,674 506,205 648,697 1,154,902
Less collections and adjustments:
Current year (86,314) (400,373) (486,687) (618,162) (1,104,849)
Prior years (772) (2,703) (3,475) (3,861) (7,336)
Total to be accounted for (87,086) (403,076) (490,162) (622,023) (1,112,185)
Taxes receivable, end of year 2,445$ 13,598$ 16,043$ 26,674$ 42,717$
Taxes receivable by year
1996 and prior 112$ 661$ 773$ 2,591$ 3,364$
1997 14 81 95 297 392
1998 35 225 260 710 970
1999 34 239 273 543 816
2000 33 165 198 598 796
2001 24 127 151 421 572
2002 509 4,584 5,093 10,187 15,280
2003 70 126 196 132 328
2004 155 1,279 1,434 1,857 3,291
2005 464 1,547 2,011 2,205 4,216
2006 995 4,564 5,559 7,133 12,692
2,445$ 13,598$ 16,043$ 26,674$ 42,717$
Property valuations (in 000's) 2007 2006 2005 2004 2003
Land 111,410$ 91,302$ 97,311$ 84,615$ 79,752$
Improvements 303,656 277,879 261,606 284,086 302,463
Personal property 56,873 60,162 45,945 22,239 30,320
Exemptions (20,129) (5,219) (9,504) (8,697) (8,799)
451,810$ 395,358$ 382,243$ 403,736$ 403,736$
Tax rate per $100 valuation
Operations 0.0309 0.0309 0.0600 0.0100 0.0100
Fire department 0.1027 0.1464 0.1076 0.0900 0.0532
Debt service 0.1464 0.1027 0.1124 0.2000 0.1768
Tax rate per $100 valuation 0.2800 0.2800 0.2800 0.3000 0.2400
Tax levy: 1,117,579$ 1,209,259$ 1,107,000$ 1,070,316$ 1,211,210$
Percent of taxes collected to taxes levied 99.52% 100.62% 98.04% 99.99% 99.78%
General Fund
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 5
LONG-TERM DEBT SERVICE REQUIREMENTS – BY YEAR
SEPTEMBER 30, 2007
38
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2008 225,000 28,015 253,015
2009 235,000 21,828 256,828
2010 235,000 15,012 250,012
2011 245,000 7,963 252,963
940,000$ 72,818$ 1,012,818$
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2008 330,000$ 68,575$ 398,575$
2009 345,000 53,065 398,065
2010 365,000 36,505 401,505
2011 380,000 18,620 398,620
1,420,000$ 176,765$ 1,596,765$
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2008 555,000$ 96,590$ 651,590$
2009 580,000 74,893 654,893
2010 600,000 51,517 651,517
2011 625,000 26,583 651,583
2,360,000$ 249,583$ 2,609,583$
All Bonded Debt Series
Series 2003 Unlimited Tax Bonds
Series 1997 Combination Tax Bonds
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 6
CHANGES IN LONG-TERM BONDED DEBT
YEAR ENDED SEPTEMBER 30, 2007
39
Series Series Series
1996 CO's 1997 Tax 2003 Tax Total
Interest rate 5.5% 3.25-5.9% 3.25%
Date interest payable 12/1 & 6/1 3/1 & 9/1 3/1 & 9/1
12/1/99 to 9/1/98 to
Maturity date 12/1/2006 9/1/2011 9/1/2001
Bonds outstanding at
beginning of year 54,000$ 1,735,000$ 1,160,000$ 2,949,000$
Retirements of principal (54,000) (315,000) (220,000) (589,000)
Bonds outstanding at end of
year -$ 1,420,000$ 940,000$ 2,360,000$
Retirements of interest 2,970$ 83,380$ 34,065$ 120,415$
Paying agents name & city:
Series 1997 and Series 2003 JP Morgan Chase
P.O. Box 219053
Dallas, Texas 75221-9053
General
Obligation
Bond Authority Bonds
Amount authorized by voters 12,344,217$
Amount issued (11,115,000)
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, 2007: 74,834$
Average annual debt service payment (principal & interest) for remaining term of debt: 652,396$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 TSI – 7 GENERAL FUND COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES – FIVE YEARS SEPTEMBER 30, 2007 40 REVENUE2007 2006 2005 2004 2003 2007 2006 2005 2004 2003Ad valorem property taxes 504,306$ 575,988$ 511,213$ 646,703$ 398,593$ 85.9% 96.8% 98.0% 98.6% 52.1%Penalties and interest - - - - 0.0% 0.0% 0.0% 0.0% 0.0%Intergovenmental - - - 315,589 0.0% 0.0% 0.0% 0.0% 41.3%Interest earned 30,605 19,282 10,463 3,793 10,469 5.2% 3.2% 2.0% 0.6% 1.4%Sale of assets - - - - 0.0% 0.0% 0.0% 0.0% 0.0%Miscellaneous and other 52,005 - 5,143 39,927 8.9% 0.0% 0.0% 0.8% 5.2%Total revenue586,916 595,270 521,676 655,639 764,578 100.0% 100.0% 100.0% 100.0% 100.0%EXPENDITURESSalaries, wages and employee benefits - - - 545,212 220,695 0.0% 0.0% 0.0% 83.2% 28.9%Professional fees 45,396 12,379 12,945 38,850 40,750 7.7% 2.1% 2.5% 5.9% 5.3%Recurring operating expenditures 82,337 30,362 164,185 275,717 106,963 14.0% 5.1% 31.5% 42.1% 14.0%Contribution to Trophy Club/Westlake0.0% 0.0% 0.0% 0.0% 0.0% Dept of Public Safety Joint Venture - - - - 367,281 0.0% 0.0% 0.0% 0.0% 48.0%Contribution to Trophy Club Fire Dept 400,209 409,288 274,622 - - 68.2% 68.8% 52.6% 0.0% 0.0%Contribution to joint venture - - 95,000 - - 0.0% 0.0% 18.2% 0.0% 0.0%Capital outlay 442,782 31,381 26,678 991,374 461,564 75.4% 5.3% 5.1% 151.2% 60.4%Total expenditures970,724 483,410 573,430 1,851,153 1,197,253 165.4% 81.2% 109.9% 282.3% 156.6%Excess (deficiency) of revenuesover (under) expenditures (383,808)$ 111,860$ (51,754)$ (1,195,514)$ (432,675)$ -65.4% 18.8% -9.9% -182.3% -56.6%Total active retail water and/orwastewater connections- 1,300 1,272 1,282 1,275 Amounts Percent of total revenue
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 TSI – 7 DEBT SERVICE FUND COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES – FIVE YEARS SEPTEMBER 30, 2007 41 TSI – 7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENITURES – FIVE YEARS – CONTINUED REVENUE2007 2006 2005 2004 2003 2007 2006 2005 2004 2003Ad valorem property taxes 639,368 631,833$ 659,286$ 447,010$ 792,142$ 96.5% 95.6% 96.8% 96.5% 97.2%Penalties and interest - - - 4,344 0.0% 0.0% 0.0% 0.0% 0.5%Interest earned23,215 17,189 10,176 6,249 8,958 3.5% 2.6% 1.5% 1.3% 1.1%Miscellaneous and other 11,831 11,831 9,795 9,197 0.0% 1.8% 1.7% 2.1% 1.1%Total revenue662,583 660,853 681,293 463,054 814,641 100.0% 100.0% 100.0% 100.0% 100.0%EXPENDITURESPrincipal retirement535,000 416,635 307,795 510,000 575,000 80.7% 63.0% 45.2% 110.1% 70.6%Interest and fiscal charges117,745 237,633 342,120 144,058 200,344 17.8% 36.0% 50.2% 31.1% 24.6%Debt issue costs - - - 93,332 0.0% 0.0% 0.0% 0.0% 11.5%Total expenditures652,745 654,268 649,915 654,058 868,676 98.5% 99.0% 95.4% 141.2% 106.6%Excess (deficiency) of revenuesover (under) expenditures 9,838$ 6,585$ 31,378$ (191,004)$ (54,035)$ 1.5% 1.0% 4.6% -41.2% -6.6%Amounts Percent of total revenue
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI – 8
BOARD MEMBERS, KEY PERSONNEL, AND CONSULTANTS
SEPTEMBER 30, 2007
42
Complete District Mailing Address: 100 Municipal Drive, Trophy Club, Texas 76262
District Business Telephone Number: Metro (682) 831-4600
Term of Office Fees of Expense Title
Elected/Expires Office Paid Reimbursements at
Name and Address or Date Hired FY07 FY07 Year End
Board Members:
Constance S. White
119 Trophy Club Drive
Trophy Club, TX 76262 05/06-05/10 1,800$ Secretary/Treasurer
Jim Hase
209 Iverness
Trophy Club, TX 76262 5/04-5/08 2,000$ 253$ Director
Dean Henry
308 Oakmont Drive
Trophy Club, TX 76262 5/04-5/08 2,300$ 2,294$ President
Neil Twomey
203 Oakmont Drive
Trophy Club, TX 76262 05/06-05/10 3,100$ 741$ Director
Gary Cantrell
1105 Sunset
Trophy Club, TX 76262 05/06-05/10 500$ 200$ Vice President
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
SEPTEMBER 30, 2007
43
TSI – 8 BOARD MEMBERS, KEY PERSONNEL, AND CONSULTANTS – CONTINUED
Term of Office Fees of Title
Elected/Expires Office Paid at
Name and Address or Date Hired FY06 Year End
Key Personnel:
Walter R. Fitzpatrick, Jr.
7 Creekmere Drive District
Trophy Club, TX 76262 2/1/2003 -$ Manager
** Assumed responsibility of District Manager on 2/1/2003
Consultants:
Denton County Appraisal District
P.O. Box 2816
Denton, TX 76202 4/1/1981 14,148$ Appraiser
Weaver and Tidwell, L.L.P.
12221 Merit Drive Suite 1400
Dallas, Texas 75251-2280 10/1/2005 7,933$ Auditors
Whitaker, Chalk, Swindle & Sawyer, L.L.P.
3500 City Center, Tower II
Fort Worth, TX 76102 10/1/1999 37,688$ Legal Counsel