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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATIERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCOROANCE WITH
GOVERNMENAL AUDITING STANDARDS
INOEPENDENT AUDITOR'S REPORT
To the Audit Committee
Trophy Club Municipal Utility District No.1
Trophy Club,Texas
We have audited the financial statements of the governmental actMties and
each major fund of the Trophy Club Municipal Utility District No.1 ("the District")
as of and for the year ended September 30,2008,which collectively comprise
the District's basic financial statements and have issued OUf report thereon dated
February 9,2009.We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit,we considered the District's internal control
over financial reporting in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and not to provide
assurance on the internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited
purpose described in the preceding paragraph and would not necessarity identify
all deficiencies in internal control over financial reporting that might be significant
deficiencies or material weaknesses.However,as discussed below,we
identified a deficiency in internal control over financial reporting that we consider
to be a significant deficiency.
A control deficiency exists when the design or operation of a control does not
allow management or employees,in the normal course of performing their
assigned functions,to prevent or detect misstatements on a timety basis.A
significant deficiency is a control deficiency,or a combination of control
deficiencies,that adversely affect the District's ability to initiate,authorize,
record,process,or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote likelihood
that a misstatement of the District's financial statements that is more than
inconsequential will not be detected by the District's internal control.We
consider the finding listed as 08-1 in the schedule of findings and questioned
costs to be a significant deficiency in internal control over financial reporting.
A material weakness is a significant deficiency,or combination of significant
deficiencies,that results in more than a remote likelihood that a material
misstatement of the financial statements will not be prevented or detected by the
District's internal control.
~fra:.S IN
1
Trophy Club Municipal Utility District NO.1
February 9,2009
Page 2
Our consideration of the internal control over financial repOrting was for the
limited purpose described in the first paragraph of this section,and would not
necessarily identify all deficiencies in the internal control that might be significant
deficiencies and,accordingly.would not necessarily disdose all significant
deficiencies that are also considered to be material weaknesses.However,we
believe that the significant deficiency described above is a not a material
weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial
statements are free of material misstatement,we perfonned tests of its
compliance with certain provisions of laws,regulations,contracts and grant
agreements,noncompliance with which could have a direct and material effect
on the determination of financial statement amounts.However,providing an
opinion on compliance with those provisions was not an objective of our audit
and,accordingly,we do not express such an opinion.The results of or our
tests disclosed no instances of noncompliance that are required to be reported
under Government Auditing Standards.
This report is intended for the information of the Audit Committee of the Boarc:l of
Directors,management,and others within the District,and is not intended to be
used and should not be used by anyone other than these specified parties.
WEAVER AND TIDWELL,L.L.P.
Dallas,Texas
February 9,2009
2
Trophy Club Municipal District No.1
Schedule of Findings
For the Year Ended September 30,2008
SECTION I -SUMMARY OF AUDITORS'RESULTS
Financial Statements
Type of auditor's report issued:
Internal rontrol over financial reporting:
•Material weakness(es)identified?
•Significant deficiency(s)identified
that are not ronsidered to be
material weakness(es)?
none reported
Nonrompliance material to financial state-
ments noted?
SECTION 11-FINANCIAl STATEMENT FINDINGS
08-1.Preparation of Flmmcial Statements
Unqualified
2.-yes __no
__yes _X_no
Statement on Auditing Standards No.112,-Communicating Internal Control
Related Matters Identified in an Audit-defines the inadequate design of internal
control over the preparation of financial statements being audited as a deficiency
in the design of internal controls.Auditors cannot be a part of the District's
intemal control system.As the District does not prepare full disclosure financial
statements as required by generally accepted accounting principles,this could
impact the District's ability to report financial data reliably such that there is more
than a remote likelihood that a misstatement of the District's financial statements
that is more than inconsequential will not be prevented or detected.
We recommend that the District evaluate the benefits of preparing its own
financial statements at year end against the cost to do so.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2008
CONTENTS
Page
FINANCIAL SECTION
ANNUAL FILING AFFIDAVIT 1
INDEPENDENT AUDITOR'S REPORT 1
MANAGEMENTS OISCUSSION AND ANALYSIS (unaudITed)3
BASIC FINANCIAL STATEMENTS
Govemment-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 NetAssets 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 30
Notes to Required Supplementary lnfonnation 31
INDIVIDUAL SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
Budgetary Comparison Schedule -Debt Service Fund 32
TSI-1 Service and Rates 33
TSI·2 General Fund Expenditures 36
TSI·3 Temporary Investments 37
TSI4 Taxes Levied and Receivable 38
TSI·5 Long-Term Debt Service Requirements -By Year 39
TSI~Changes in Long-Term Bonded Debt...40
TSI-7 Comparative Schedules of Revenues and Expenditures -Five Years 41
TSI-8 Board Members,Key Personnel,and Consultants 43
THE STATE OF TEXAS
COUNTY OF DENTON
ANNUAL FILING AFFIDAVIT
)
)
I _W.c..:.A::L::T.:E::.:Rc:R.:..:.F.:.IT::Z::.P::.:A::.T::.:R::.:IC::K=============-__Ofth.
(Name of Duly Authortzed Dislrid Repre$eflUltlve)
TROPHY CLUB MUNICIPAL UTILITY DISTRJCTNO.I
(Name of DislliCl.)
hereby swear,or affirm,thai the district named above has reviewed and approved at a meeting of the Board of Directors of the
District on the 41!1 day of _February ,.2009 _,
its annual audit report for the fiscal year or period ended_September 30,2008
and that copies of the annual audit report have been filed in the district office,located at _
100 Municipal Drive,Trophy Club,TX 76262
The annual filing affidavit and the attached copy of the audit r n are
Environmental Quality in satisfaction of the annual filing requirements f TeXaS~j"t":"~'C:f~~~1f~i'T
Date:February \2,2009
WALTER R.FITZPAT ..)
Swo,"to and "b,alb.d to b.foee m.thIRd-e,":;;,of fjt{dUg~.:?tX£?
,MARY ANN MOOeNotoryP"b"C.StateOIT.xa,~~ML
.,~~~M'I CommISSIOn Expires (Signature of Notary)
Dec.03.2009
My Commission Expires On:,---_--'-1~...,.I-I ..~"3'-J1c..1-""b,,aL<t::t-~~
Notary Public in the Slale of Texas.
Commission on
III
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Trophy Club Municipal Utiiity District No.1
Trophy Club,Texas
We have audited the accompanying financial statements of the govemmental
activ~ies and each major fund of the Trophy Club Municipai Util~District No.1,
(the "District"),as of and for the year ended September 3D,2008,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 30,2008,and the changes in financial position for the year then
ended,in confonnity with accounting principles generally accepted in the United
States of America.
The management's discussion and analysis,and budgetary comparison
infonnation on pages 3 through 10 and 30 through 31,are not a required part of
the basic financial statements but are supplementary information required by
accounting principles generally accepted in the Un~ed 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 9,2009 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.
01'ICes 1/1
FO/lfWO·H\,
1
Trophy Club Municipal Utility District NO.1
February 9,2009
Page 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 g,2009
2
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
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 3D,2008.
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 $6,168,820.Of this
amount,$3,847,534 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 $441,090 as a result of operations.
At the end of the fiscal year,the District's governmental funds reported a combined fund balance of
$496.812.
For the year ended September 30,2008,the unreserved fund balance for the General Fund was
$439,972,70%of the total expenditures for the General Fund for 2008.
The govemmentallong-term debt obligations of the District decreased by $610,711.
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).
3
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
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.Nonnally,these operations are
financed by property taxes.
Note:the Govemment·wide financial statements are found on pages 11 and 12 ofthis report..
Fund Financial Statements·A fund is a grouping of related accounts that is used to maintain control
over resources that ha ....e 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 governrnental activities.But unlike govemrnent-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 17-29.
Government-wide Financial Anatysis
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 $6,168,820.Of this amount $2,247,897
(39.2%)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.
4
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 3D,2008
Govemment~WldeFinancial Analysis -Continued
Table 1
Condensed Statement of Net Assets
Current and other
Capital assets
Total Assets
Long-term liabilities
other liablities
Total Uabilities
Net Assets:
Invested in capital
Net of related debt
Restricted
Unrestricted
Total Net Assets
GCNemmental Goverrmental
Activities Activities
2008 2007
$4,309,259 $4,305,979
4,072,546 4,258,828
8,381,805 8,584,807
2,203,649 2,814,360
9,338 22,717
2,212,985 2,837,On
2,247,897 1,877,468
73,389 91,898
3,847,534 3,758,366
$8,168,820 $5,rn,730
District operational analysis -The following table provides a summary analysis of the District's
operations for the fiscal year ended September 30,2008.Govemmental activities have increased the
District's net assets by $441,090 which amounts to a 7.3%increase in total net assets for the year.
5
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
Changes In Net Assets
Table 2
Changes in Net Assets
Governmental
Activities
2008
Governmental
Activities
2007
Revenue:
Program revenue
Ola-ges for services
General Revel'Lle
JvJ valorem taxes
UlYestricted .,vestmert earnings
Miscellaneous
Total Reveooe
Expenses:
General government
Fw.
Interest and fiscal charges
Total Expenses
Increase in net assets
Financial Analysis of the District's Funds
$
$
67,938 $263,132
1,180,298 1,149,031
30,059 53,820
21,313 52,005
1,299,608 1,517,988
247,118 691,679
515,293 400.209
96,107 117 ,570
858,518 1,209,458
44',090 $308,530
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 $496,812,of which 89%,or $439,972,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 $44,277 less than budgeted
•Property Tax collections were S9,665 (.2%)less than budgeted.This includes current and
prior year property taxes tor 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.
6
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
General Fund Budgetary Highlights -Continued
•Investment income was under budget by 57,291 (29%).
Expenses:Expenses were $13,225 less than budgeted
•Salaries and related expenses were the same as the budget.
•Professional and contractual expenses were $13,225Ies5 than bUdgeted due mainly to
decreased legal fees.
Debt Service:
•The debt service revenue was $934 under budget The debt service expenses were $1 more
than budget
•The debt service reserves decreased from $74,834 to 556,840.
Overall:
•The District's revenues totaled $1,235,904 on expenses of $1 ,284,950.
•Total fund balance decreased from $545,858 to $496,812;a decrease of $49,046 (a 9%
decrease in reserves).
Capttal Asset and Debt AdminlstratJon
The District's investment in capital assets for its governmental activities as of September 30,2008
amounted to $4,072,546,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.
7
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
Capital Asset and Debt Administration -Continued
Table 3
Capital Assets at Year-end
Net of Accumulated Depreciation
L~d
Buildings
Improvements other than bJildi'lgs
Ma:hinery aOO equipment
Vehicles
Water system
WasteNater treatment system
Wastewater collection system
Organization costs
Total
s
s
GC7v'emmental
Activities
2008
248,093
113,381
7,337
105,971
6.031
827,207
1,805,811
444,318
514,397
4,072,546
s
s
Governmental
Activities
2007
248,093
117,667
8,657
117.603
10.290
864,583
1,874,507
477,903
539,525
4,258,828
There were no major additions to capital assets for the fiscal year.
Capital assets net of depreciation at year end:$4,072,546
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 $2,203,649 in general obligation
bonds,contractual obligation bonds,capital lease obligations,notes payable,and accrued
compensated absences,a decrease of 21.6%from the previous fiscal year.Of this amount,
$2,184,000 is backed by the full faith and credit of the government
8
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
General Debt Currently Outstanding
Table 4
Outstanding Debt at Year-end
General obligation bonds
Contract ob~gations
Notes payable
$
GCNemmental
Activities
2006
1.805,000
379.000
19,649
$
Governmental
Activities
2007
2,360,000
433,000
21.360
Total
Economic Factors and Next year's Budgets and Rates:
General Fund Fiscal 2009 Budgetary Highlights
$2.203.649 $2,814.360
Revenue:The District's operational revenue budget decreased by $39,566.
•Property tax revenue increased by $57,460 due to increased valuations.
•Interest revenue decreased by $12,896 as a result of lower cash balances and
interest rates.
Expenses:The District's operational expense budget increased by 5120,093.
•Payroll and professional services decreased by approximately $3,832.
•Operating expenses increased by $146,114 with the majority of the increase,
$110,558,attributed to fire department funding.
•The remainder of the budget lines in operating expenses remained basically the
same.
•Capital expenses decreased tiy $443,500 for capital expenditures.
Overall:
The District's operational budget is anticipated to have expenses of $600,788 on
revenues of $631 ,840 resulting in an anticipated deficit of $31 ,052.
9
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30,2008
Economic Factors and Next Year's Budgets and Rates:•Continued
General Fund Fiscal 2009 Budgetary Highlights -Continued
Debt Service:
•Budgeted debt service revenues have decreased from $654,005 in fiscal 2008 to
$652,500 in fiscal 2009,a decrease of $1 ,505,or a 0.23%decrease.
•Debt service appropriations decreased from S654,005 to $652,500 as a result of
normal annual variances in bond payments.
The District's overall budget for revenue decreased from $1,678,504 in fiscal 2006 to
$1,261,309 in fiscal 2009;a 24.9%decrease.Overa!!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
infonnation should be directed to the Trophy Club Municipal Utility District No.1,Director of Finance,
100 Municipal Drive,Trophy Club,Texas 76262.
10
BASIC FINANCIAL STATEMENTS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO,1
STATEMENT OF NET ASSETS
SEPTEMBER 30,2008
ASSETS
Cash and cash equivalents
Investment in joint venture
Receivables
Taxes
Other
Prepaids
Capital assets:
Land
Buildings
Improvements other than buildings
Machinery and equipment
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Organization costs
Accumulated depreciation
TOTAL ASSETS
LIABILITIES
Accounts payable
Accrued interest payable
Due to other governments
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 Financial Statements are
an Integf21 palt of this statement
11
$495,739
3,772,237
38,483
2,475
325
248,093
213,694
54,749
148,121
816,772
1,853,962
2,682,053
1,224,677
1,359,815
(4,529,390)
$8,381,805
$1,402
7,609
325
638,754
1,564,895
2,212,985
2,247,897
73,389
3,647,534
$6,168,820
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30,2008
Program
Revenues
Net (Expenses)
Revenue and
Changes In
NelAssets
Program Activites
Govemmental activities
General government
Fire
Interest on long term debt
Expenses
$247,118
515,293
96,107
Charges for
Services
$67,938
Governmental
Activities
$(179,180)
(515,293)
(96,107)
Total governmental
activities $858,518 $67,938 (790,580)
General Revenues:
Ad valorem taxes
Investment income
Gain on sale of capital assets
Total general revenues
Change in net assets
Net Assets -beginning of year,as restated
Net Assets -end of year
The Notes to Finandal Statements are
an integral part of this statement.
12
$
1,180,298
30,059
21,313
1,231,670
441,090
5,727,730
6,168,820
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30,2008
ASSETS
Debt Total
General Service Govemmental
Fund Fund Funds
Assets
Cash and cash equivalents $438,899 $56,840 $495,739
Receivables:
Taxes 14,325 24,158 38,483
Other receivables 2,475 2,475
Prepaids 325 325
TOTAL ASSETS $456,024 $80,998 $537,022
LIABILITIES AND FUND BALANCES
Uabilities
Accounts payable $1,402 $$1,402
Due to other governments 325 325
Deferred revenue 14,325 24,158 38,483
Total liabilities 16,052 24,158 40,210
Fund Balances
Unreserved and undesignated,reported in:
General fund 439,972 439,972
Debt service fund 56,840 56,840
Total fund balances 439,972 56,840 496,812
TOTAL LIABILITIES AND FUND BALANCES $456,024 $80,998 $537,022
The Notes to Financial Statements are
an integral part of this statement
13
TROPHY CLUB MUNICIRAL UTILITY DISTRICT NO.1
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO STATEMENT OF NET ASSETS
SEPTEMBER 30,2008
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 governmental
funds balance sheet.
Interest payable on long tenn 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.
Net assets of governmental activities
The Notes 10 Fmancial Statements are
an integral pan of this slatemanl
14
$496,812
4,072.546
3,772,237
38,483
(7,609)
(2,203,649)
$6,168,820
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30,2008
Debt Total
General Service Govemmental
Fund Fund Funds
Revenues:
Taxes $561,766 $622,766 $1,184,532
Utility rees 21,313 21,313
Investment income 17,709 12,350 30,059
Total revenues 600,788 635,116 1,235,904
Expend"u,es:
Current:
General govemment 116,547 116,547
Fire 515,293 515,293
Debt Service
Principal 555,000 555,000
Interest and fiscal charges 98,110 98,110
Total expend"u,es 831,840 653,110 1,284,950
DefICiency of revenues under expenditures (31,052)(17,994) (49,046)
Fund Balances -beginning of year 471,024 74,834 545,858
Fund Balances -end of year $439,972 $56,840 $496,812
T'he Notes to Fl'1ancial Statements are
an irtteg~1 part of this statement.
15
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 30,2008
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.
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.
Certain revenues in the govemment-wide financial statements that do not
produce current financial resources are not reported as revenue in
the governmental funds.
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.
Change in net assets of governmental activities
The Notes to Basic F"nancial Statements are
an integral pan of this statement
16
$(49,046)
(186,282)
67,938
610,711
(4,234)
2,003
$441,090
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
generalty accepted accounting principles (GAAP)as applied to govemment units.
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:
Water plant wells
Twenty-one inch water line
Elevated tank
Wastewater treabnent plant and land
First expanded treatment plant
Second expanded treabnent plant
Administration building
2004 water plant expansion
MUD 1
40.91%
50.00%
43.99%
50.00%
50.00%
50.00%
23.38%
50.00%
MUD2
59.09%
50.00%
56.01%
50.00%
50.00%
50.00%
0.00%
50.00%
Master
District
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
76.62%
0.00%
B.Financial Reporting Entity
As required by accounting principles 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.Jt 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 govemment may
also be financially accountable for governmental organizations that are fiscalfy dependent on it.
17
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
B.Financial Reporting Entity -continued
A primary government has the ability to impose its wilt 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 infonnation on all of the activities of the District,except for fiduciary funds.The
effect of intertund 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.
18
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
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;Le.,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 obligations of the State of Texas or its agencies;(3)other obligations,the principal of and
interest on which are unconditionally guaranteed or insured by the State of Texas or the United
States;(4)obligations of states,agencies,counties,cities,and other political subdivisions of any
state having been rated as to investment quality by a nationally recognized investment rating
firm and having received a rating of not less than A or its equivalent;(5)certificates of deposit
by state and national banks domiciled in this state that are (A)guaranteed or insured by the
Federal Deposit Insurance Corporation,or its successor,or,(B)secured by obligations that are
described by (1)-(4);or,(6)tully 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.
19
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
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.Capttal 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 dale 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 confonnance with requirements of the TCEa,capitalized costs incurred in the
creation of the District.The TCEa requires capitalization of organizational costs for the
construction period aU 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.The District amortizes the
organizational costs using the straight·line method over a period of 22 to 45 years.
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.
20
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 2.CASH AND INVESTMENTS
At September 30,2008,the carrying amount of the District's deposits (cash,certificates of deposit,
and interest~bearing savings accounts included in temporary investments)was $8,640 and the bank
balance was $8,640.The District's cash deposits at September 30,2008,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 specffic provisions in
the areas of investment practices,management reports and establishment of appropriate policies.
Among other things,it requires the District to adop~implemen~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,(6)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 Sewrities 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 '00%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 30,2006 are classified in the accompanying financial
statements as follows:
Statement of Net Assets
Primary Government
Cash and cash equivalents
Total cash and investments
21
$
$
495,739
495,739
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 2.CASH AND INVESTMENTS -CONTINUED
Cash and investments as of September 30,2008 consist of the following:
Deposits with financial institutions
Investments
Total cash and investments
Disclosures Relating to Interest Rate Risk
$
$
8,640
487,099
495,739
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 30,2008,the District had the following investment
Investment Type
TexPool
Amount
$487,099
Weighted
Average
Maturity
42 days
Total Investments $487,099
As of September 30,2008,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.
Investment Type
TexPool
Total Investments
Amount
$487,099
$487,099
22
Minimum
Legal
Rating
N/A
Rating as
of Year
End
AAAm
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 2.CASH AND INVESTMENTS -CONTINUED
Concentration of Credit Risk
The investment policy of the District contains no limitations on the amount thai can be invested in
anyone issuer.As of September 30,2008,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
govemment 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 At:;t requires that a financial institution secure deposits made by state or local
govemmental 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 mar1<:et 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 30,2008 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 mar1<:et 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.
23
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 3.CAPITAL ASSETS
Capital asset activity for the year ended September 30,2008.was as follows:
Beginning Retirements!Ending
Balance Additions Transfers Balance
Governmental Activities:
Capital assets,
not being depreciated
Land S 248.093 S S S 248.093
TotalcapttaJ assets
not being depreciated 248.093 248.093
Capital assets,
being depreciated
Buildings 213.694 213,694
Improvements other than buildings 54.149 54.149
Machinery and equipment 148.121 148.121
Organizatioo costs 1.359.815 1.359,815
Vehicles 816.rn 816.rn
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
Totar capital assets
being depreciated 8,353,843 8,353,843
Less accumulated
depreciation for:
Buildings (96,027)(4,286)(100,313)
Improvements other than buildings (46,092)(1,320)(47,412)
Machinery and equipment (30,518) (11,632)(42,150)
Organization costs (620,290)(25,126)(845,416)
Vehides (606,482)(4,259)(610,741)
Water system (969,379)(37,376)(1,026.155)
Wastewater treatment system (807,546)(68,696)(676,242)
Wastewater collection system (746,m)(33,585)(780,359)
Total accumulated
depreciation (4,343,109)(186,262)(4,529,390)
Governmental activities capital
assets,net S 4,258,626 S (166,262)S S 4,072,546
The entire amount of depreciation expense of $186,282 has been charged to general govemment
24
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
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 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 $67,938.A summary of net assets
and changes in net assets at and for the year ended September 30,2008 is as follows:
Total assets
Total liabilities
Net assets
Total revenue
Total expenses
Increase (decrease)in net assets
$8,450,555
(906,081)
$7,544474
$3,826,292
(3,690.416)
S 135 BI6,
The Master District Joint Venture financial statements are available at the District's administrative
offices.
25
TROPHY CLUB MUNICIPAL UTILITY OISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 5.LONG-TERM OEBT
At September 30,2008,the Districts long-term debt payable consisted of the following:
Interest Year Average
Rate of Final Annual Original OuIslanding
DescriPtion ~!§M Maturity Payment Am0'J nt 9!3Q!2QQ8
Tax and revenue bonds:
Refunding 3.25-5.90%1991 2011 S 398,800 S 3,015,000 S 1,090,000
Refunding 4.00-5.00%2003 2011 253,100 1,949)88 115,000
S 1,805,000
Contractual Obligations:
FJte Truck 4.33%2001 2014 56,000 448,000 S 319,000
S 319,000
Notes payable:
Equipment 2.50%1999 2018 2,245 35,000 S 19,649
The following is a summary of long-term debt transactions of the District for the year ended
September 3D,2008:
S 2,814,360 ~S~~_
Governmental Activities:
Tax and revenue bonds
Contractual obligations
Notes payable
Total Governmental Activities
long-term Liabilities
Beginning
Balance
S 2,360,000 S
433,000
2,193,000
21,360
Additions
Ending Due Within
Reductions Balance One Year
S (555,000)S 1,805,000 S 580,000
154,000)319,000 51,000
1609,000)2,164,000 631,000
(1,1111 19,649 1,154
S 1610,111)S 2,203,649 S 636,154
Contractual obligations and notes payable are liquidated from the general fund.Tax and revenue
bonds are liquidated from the debt service fund.
26
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 5.LONG·TERM DEBT -CONTINUED
The annual requirements to amortize all debts outstanding as of September 3D,2008,are as follows:
Year Ending
September 30,Principal Interest Total
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 67,000 5,932 72,932
2014 70,000 3,031 73,031
Total $2,184,000 $212,401 $2,396,401
Notes payable:
Year Ending
September 30,Principal Interest Total
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 1,936 309 11,224
2014-18 10,429 795 2,245
Total $19,649 $2,800 $22,449
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 trom 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.
27
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
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 30,2008.
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 "following the levy date.Taxes are due by January
31,following the levy date.Property taxes are recorded as receivables when levied.FolIO'Hing is
information regarding the 2007 tax levy:
Adjusted taxable values $510 923,012
0&M tax levy $0.10911$100 $557,589
1&S tax levy $0.12091$100 617.466
Total tax levy $0.2300/$100 $1,175,055
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 30,2008,MUD1 and
MUD2 contributed $515.293 (57.11 %)and $387.060 (42.89%),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.
28
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
NOTE 9.RESTATEMENT OF BEGINNING NET ASSETS
The District's October 1,2007 Net Assets have been restated as follows:
Per prior year financial statements $6,467,555
To correct accumulated amortization
of organization costs (820,290)
To correct the District's investment in
joint venture balance 80,485
Beginning net assets,as restated $5,727,730
29
REQUIRED SUPPLEMENTARY INFORMATION
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED SEPTEMBER 30,2008
Variance with
Budgeted amounts Final Budget
Original Final Adual Positive (Negative)
Revenues
Taxes $571.431 $571.431 $561,766 $(9,665)
Utility fees 12.378 48.634 21,313 (27,321)
Investment income 25,000 25,000 17,709 (7,291)
Total revenues 608,809 645,065 600,788 (44,277)
Expenditures:
Current
General government 93,516 129.772 116.547 13,225
Fire 515,293 515.293 515.293
Total expenditures 608,809 645.065 631.640 13,225
Excess of revenues over
expenditures (31.052)(31,052)
Fund Balances·beginning of year 471,024 471,024 471,024
Fund Balances -end of year $471,024 $471,024 $439.972 $(31,052)
30
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
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.-eash 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.
31
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 30,2008
Variance with
Budgeted Amounts Final Budget
Original Final Actual Positive (Negative)
Revenues
Taxes S 633,000 S 622.650 S 622,766 $116
Invesbnent income 19,500 13,400 12.350 (1,050)
Total revenues 652,500 636.050 635,116 (934)
Expenditures:
Debt service
Principal 555,000 555,000 555,000
Interest 97,500 98,109 98,110 (1)
Total expendrrures 652,500 653,109 653,110 (1)
Deficiency of revenues under expenditures (17,059) (17,994)(935)
Fund Balances·beginning of year 74.634 74,634 74,634
Fund Balances·end of year $74.634 $57.n5 $56.640 $(935)
32
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-1
SERVICE AND RATES
YEAR ENDED SEPTEMBER 30,2008
TSI-1 SERVICE AND RATES
a)Retail Water
b)Retail Wastewater
c)Fire Protection
d)Irrigation
e)Participates in joint venbJre.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 518"):NIA
Admin
Fee
Minimum
Usage
Flat
Rate
YIN
Rales per 1,000
Gallons Over
Minimum Usage Levels
WATER $11.50 o No
No
No
No
$2.19
2.64
2.84
2.84
Ote 5,999
6,000 to 11.999
,2,000 to 24,999
More than 25,000
Note:Out of district waler rates afe detennined by contract.
WASTEWATER $11.50 o No
No
No
$2.19
2.64
oto 6,000
6,000 to 12,000
Caps at 12,000
GOLF COURSE Subject to peak draw rates from Ft Worttl water department.
NOTE:all rates noted above were amended effective November 1,2007
District employs winter averaging for wastewater usage?No
71.68
34.20
32.72
$
Total water and wastewater charges per 10,000 gallons usage (lndudfng surcharges)
effective November 1,2005:
First 10,000 gallons used
Next 10,000 gallons used
Next 10,000 gallons used and subsequent
Maximum residential wastewater charge is for 12,000 gallons or $41.26.
33
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI - 1 (CONTINUED)
SERVICE AND RATES
YEAR ENDED SEPTEMBER 30,2008
TSI-1 SERVICE AND RATES -CONTINUED
bJ Retail service providers:number of retail water and/Of waslewate~connections within the District as
of the fiscal year end.Provide adual numbers and single family equivalents (ESFC).
Connections ESFC Active
Meter Size Total Active Factor ESFC's
Unmetered 1.0
less than 314-1,186.0 1,183.0 1.0 1,183.0
,"63.0 63.0 2.5 157.5
1 112-9.0 9.0 5.0 45.0
2"40.0 35.0 8.0 280.0
3"12.0 11.0 15.0 165.0
4"8.0 8.0 25.0 200.0
6"1.0 1.0 SO.O SO.O
8"80.0
10"115.0
Total Water 1,319.0 1,310.0 2,080.5
Total Wastewater 1,324.0 1.309.0 1.0 1,309.0
Number of connections relates 10 water service if provided.Otherwise.the number of wastewater
connections shoukl be provided.
Note:-inactive-means that water and wastewater connections were made,but service is not
being provided.
Tota!water consumption (in thousands)during the fiscal year:
Gallons pumped into the system
Galloos billed to ClJstomers
Water accountability ratio
Standby Fees:
Does the District assess standby fees?
760,061
692,517
91.1%
Ves
For the most recent fiscal year,FY2007:
Total
Levy
Debt Service
Operations and Maintenance
$617,466
557,589
Total
Collected
$611,755
552,432
Percentage
Collected
99.1%
99.1%
Have standby fees been levied in accordance with Water Gode 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 sectioo 293.150 of Title 30 of Texas Administrative Code.
34
TROPHY CLUB MUNICIPAL UTILITY OISTRICT NO.1
TSI-1 (CONTINUED)
SERVICE AND RATES
YEAR ENDED SEPTEMBER 30,2008
TSI-1 SERVICE AND RATES -CONTINUED
Location of District
Counties in which District is located:
Is the District located entirety in one county?
Is the District located within a city?
Cities in which District is located:
a)Denton
b)Tarrant
No
Partially
Town of Trophy Club
Town of Westlake
Is District located within a city's extra territorial jurisdiction (ETJ)?Unknown
ET J's in which District is located:Unknown
Is the general membership of the Board appointed by an office outside the District?No
35
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-2
GENERAL FUND EXPENDITURES
YEAR ENDED SEPTEMBER 3D,2008
Current Year Prior Year
Current:
Professional Fees:
Auditi n9 $10,081 $7,933
Legal 27,304 37,463
Contract Services:
Tax administration fee 11,131 13,363
Fire department operations 515,293 400,209
Administrative expenditures:
Director Fees 13,200 9,700
Other administrative expenditures 25,452 59,274
Joint venture contribution
Cap~al outlay 29,379 442,782
Total Expenditures $631,840 $970,724
Number of employees employed by the District:
Full time
Part time
None
None
Note:During 2004,MU01 and MUD2 transferred operations of the fire
department to the Town of Trophy Club.
The MUDs contribute the entire cost of operations.
36
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-3
TEMPORARY INVESTMENTS
SEPTEMBER 30,2008
Identification Interest Maturity Balance Accrued Interest
Funds Number Rate Date End of Year End of Year
General Fund
Texpool 613300002 2.28%Demand $430.159 Paid daily
Debt Service Fund
TexPool 613300003 2.28%Demand 56.940 Paid daily
Total-All Funds $487.099
37
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-4
TAXES LEVIED AND RECEIVABLE
YEAR ENDED SEPTEMBER 30,2008
General Fund Debt
Operations Fire Total
.._
Total
Taxes receivable beginning of year •2,445 •13,598 •16,043 •26,674 •42,717
2007 tax levy 52,111 505,478 557,589 617,466 1,175,055
Total to be accounted for 54,556 519,076 573,632 644,140 1,217,772
Less collections and adjustments:
Current year (51,629)(500,803)(552,432)(611,755)(1,164,187)
Prior years (',048)(S,827)(6,875)I 8,227)(15,'02)
Total to be accounted for (52,677)(50S,S3G)(559,307)(619,982)(1,179,289)
Taxes receivable,end of year •1,879 •12,446 •14,325 •24,158 •38,483
Tou receivable by year
1996 and prior •19 •109 •128 •453 •581
1997 ,.81 95 297 392
1998 35 225 2llO 710 970
1999 34 239 273 543 81.
2000 33 '"198 598 796
2001 2.127 151 '21 572
2002 509 3,926 4,435 10,844 15,279
2003 70 128 196 132 328
2004 227 93 320 104 .2.
2005 81 289 350 383 733
2006 351 2,411 2,762 3,962 6,724
2007 482 4,675 5,157 5,711 10.868•1,879 •12,446 •14,325 •24,158 •38,483
FlY FlY FlY FlY FlY
Property valuations (In 000'5)07/08 08/f)7 05106 04105 03104
land 122,308 •111,410 •91,302 •97,311 •84,615
Improvements 337,2.1 303,658 277,879 261,606 284,086
Personal property 86,217 56,873 60,162 .5,945 22,239
Exemptions (2.,927)(20,129)(5,219)(9,504)(6,697)•520,839 •.51,610 •424,124 •395,358 •382,243
Tax rate per $100 valuation
Operations 0.0102 0.0309 0.0309 0.0600 0.0100
Fire department 0.1209 0.1027 0.1464 0.1076 0.0900
Debt service 0.0989 0.1464 0.1027 0.1124 0.2000
Tax rate per $1 00 valuation 0.2300 0.2800 0.2800 0.2800 0,3000
Tax levy:•1,175,055 $1,117,579 •,,209,259 S ','07,000 •',070,316
Percent of taxes collected 10 taxes levied 100.36%100.62%98.04%99.99%99.78%
38
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-5
LONG·TERM DEBT SERVICE REQUIREMENTS -BY YEAR
SEPTEMBER 30,2008
Series 2003 Unlimited Tax Bonds
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/Sep 1 Total
2009
2010
2011
235,000
235,000
245,000
$715,000
21,828
15,012
7,963
$44,603
256,626
250,012
252,963
$759,803
Series 1997 Combination Tax Bonds
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/Sep 1 Total
2009
2010
2011
345,000
365,000
380,000
1,090,000
53,065
36,505
18,620
$108,190
398,065
401,505
398,620
$1,198,190
Due During Fiscal
Years Ending
All Bonded Debt Series
Principal Due Interest Due
1-Sep Mar 1/Sep 1 Total
2009
2010
2011
580,000
600,000
625,000
$1,805,000
39
74,893
51,517
26,583
$152,993
654,893
651,517
651,583
$1,957,993
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-6
CHANGES IN LONG-TERM BONDED DEBT
YEAR ENDED SEPTEMBER 30,2008
Series Series
1997 Tax 2003 Tax Total
Interest rate
3.25-5.9%3.25%
Date interest payable
311 &9/1 311 &9/1
Maturity date 9/1198 to
9/112011 9/112001
Bonds outstanding at
beginning of year
$1,420,000 $940,000 $2.360.000
Retirements of principal
(330,000) (225,000)(555,000)
Bonds outstanding at end of
year
$1,090.000 $715.000 $1,805.000
Retirements of interest
$68.575 $28.015 $96.590
Paying agent's name &city:
Series 1997 and Series 2003
Bond Authority
Amount authorized by voters
Amount issued
Remaining to be issued
General
Obligation
Bonds
$12,344.217
(11,115.000)
$1,229.217
Bank of New York Mellon
2001 Bryan Street,10th Floor
Dallas,Texas 75201
The general obligation bonds were authorized on October 7,1975
Debt Service Fund cash and cash equivalents balance as of September 3D,2008:
Average annual debt service payment (principal &interest)for remaining term of debt
40
$56.840
$652,664
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-7
GENERAL FUND
COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES -FIVE YEARS
SEPTEMBER 3D,2008
Amounts Percent of tolal revenue
REVENUE 2008 2007 2006 2005 2OIl4 2008 2007 2006 2005 2004
Ad valorem property laxes S 561,766 S 504,306 S 575,988 S 511,213 S 646,703 93.5%85.9%96.8%98.0%98.6%
Interest earned 17,709 30,605 19,282 10,463 3,793 2.9%52%3.2%2.0%0.6%
Misc.ellaneous and oltW!r 21,313 52,005 5,143 3.5%B.9%0.0%0.0%0.8%
Total revenue 600,786 586,916 595,270 521,676 655,639 10110%100.0%100.0%100.0%100.0%
EXPENDITURES
Salaries,wages and employee benefits ~5.212 0.0%D...0.0%0.0%63.2%
Professional rees 63,517 "5,396 12,379 12,945 38,850 10.6%7.7%2.1%2.5%5.9%
RecutTi1g operaling expenditures 23,651 62,337 30,362 164,185 275,717 3.9%'4.0%5.1%31.5%42.1%
Contribution to Troplly Club Fire Dept 515,293 400,209 409,288 274,622 85.8%66.2%58.8%52.6%D...
Contribution to joinl venture 95,000 D...0.0%0.0%18.2%D...
Capital outlay 29,379 442,782 31,381 26,678 991,374 4.9%75.4%5.3%5.1%151.2%
Total expenditures 631,840 970,724 483,410 573,430 1,851,153 105.2%165.4%81.2%109.9%282.3%
Exees.(deflelency)of revenue.
over (under)IXpenditures S (31,052)$(383,808)S 111,860 S (51,754)S (1,195,514)-5.2%-65 ..(%18.8%-9.9%-182.3%
Totallctlve retail water and/or
wastewater connections 1,562 1,306 1,300 1,272 1,282
41
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-7
DEBT SERVICE FUND
COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES -FIVE YEARS
SEPTEMBER 30,2008
TSI-7 COMPARATIVE SCHEOULES OF REVENUES AND EXPENITURES -FIVE YEARS -CONTINUED
""""'""Percent of toIall'1Mlf1Ufl
REVENUE 2008 2001 2008 2005 2004 2008 2001 2008 2005 2004
M valorem property taxes 622,766 639,368 I 631,833 I 659,266 $447,010 98.1%96.5"-95.6%98.8%96.5'"
Inl8(8lt earned 12,350 23,215 17,189 10,176
6,249 I.'"3.5%2.6%Hi%1.3%
Miscellaneous and other 11,831 11,631 9,195 0....0....'.6%1.7'"2,1%
Total revenue 635.'16 662.583 660,853
681,293 -463,054 100.0%100.0%100.0%100.0%l00J)%
EXPENDITURES
Principal rtltrement 555,000 535,000
416,635 307,795 510,000 87.4'"80.7'"63 ....45.2%110.'%
Inlerest and fisclIl charges 98,110 117,745 231,833 342,120 144,058 15."%17.8%36 ....50.'"31.1"-
Total expenditures 653,110 652,745 65<,263 &49,915 654,053 102.8%98.5%99 ....95."'"141.2%
Excess (deficiency)of revenues
o"er (under)expenditures _S.(11,994)$9,838 $6,585 I 31,378 $(191,004)-2.8'"1.5%I ....4.6%-41.2%
42
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-8
BOARD MEMBERS,KEY PERSONNEL,AND CONSULTANTS
SEPTEMBER 30,2008
Term of Office Fees of Expense Title
ElectedfExpires Office Paid Reimbursements at
Name and Address or Date Hired FY08 FY08 Year End
Board Members:
Constance S.White
119 Trophy Club Drive
Trophy Club,TX 76262 05/06·05/10 $2,500 $1,590 Secretaryrrreasurer
Jim Hase
2091vemess
Trophy Club,TX 76262 5/04·5/08 $2,900 $1,275 Director
Dean Henry
308 Oakmont Drive
Trophy Club,TX 76262 5/04·5/08 $2,700 $President
Neil Twomey
203 Oakmont Drive
Trophy Club,TX 76262 05/06·05/10 $3,100 $Director
Gary Cantrell
1105 Sunset
Trophy Club,TX 76262 05/06·05/10 $2,000 $Vice President
Note:No Director is disqualified from serving on this board under the Texas Water Code.
43
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI - 8 (CONTINUED)
BOARD MEMBERS,KEY PERSONNEL,AND CONSULTANTS
SEPTEMBER 3D,2008
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 FY08 Year End
Key Personnel:
Waher R.Fitzpatrick,Jr.
7 Creekmere Drive District
Trophy Club,TX 76262 2/112003 S Manager
...Assumed responsibility of
District Manager on 211/2003
Consultants:
Denton County Appraisal District
P.O.Box 2816
Denton,TX 76202 4/111981 S 6,020 Appraiser
Tarrant Appraisal District
2500 Handley-Ederville Rd.
Fort Worth,TX 76262 101112007 S 3,724 Appraiser
Weaver and Tidwell,L.L.P.
12221 Merit Drive Suite 1400
Dallas,Texas 75251-2280 10/112005 $10,081 Auditors
Whitaker,Chalk,Swindle &Sawyer,L.L.P.
3500 City Center,Tower II
Fort Worth,TX 76102 1011/1999 $27,304 Legal Counsel
44