HomeMy WebLinkAboutFY Ended September 30, 2014TROPHY CLUB
MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2014
ANNUAL FILING AFFIDAVIT
THE STATE OF TEXAS }
COUNTY OF DENTON }
I Jennifer McKnight/ General Manager
'--------------------------~------------------~-------------(Name of Duly Authorized District Representative)
Ofthe ________________ ~T~r~op~h~v~C~l~ub~M~llill~·c~ip~ru~U~til=i~cy~D~i~st~ri~ct~N~o.~l~---------
(Name ofDistrict)
Hereby swear, or affirm, that the district named above has reviewed and approved at a meeting
of the Board of Directors of the District on the 20th day of January, 2015, its annuru audit report
for the fiscal year or period ended September 30, 2014 and that copies of the annual audit report
have been filed in the district office, located at 100 Municipal Drive, Trophy Club, Texas, 76262 .
The annual filing affidavit and the attached copy of the audit report are being submitted to the
Texas Commission on the Environmental Quality in satisfaction of the annual filing
requirements ofTexas Water Code Section 49.194 . ·
Date: January 22
~~· ·~ LAURIE ELIZABETH SLAGHT [ i E @ Notary Public, State of Texa s
--.:;.;. .... ·~;:,l My Co mmi SSion Expires
'•,,,f,~.:.~~,,, August 23 , 2015
(Signature ofNotary)
My Commission Expires On: NUtaU<J .at3 , _c9~0=-.:..:l t ...... ')<-----
Notary Public in the State ofTexasU
CONTENTS
FINANCIAL SECTION Page
ANNUAL FILING AFFIDAVIT .................................................................................................... i
INDEPENDENT AUDITOR'S REPORT ....................................................................................... l
MANAGEMENT'S DISCUSSION AND ANALYSIS (unaudited) .............................................. J
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position ..................................................................................................... II
Statement of Activities ......................................................................................................... 12
Fund Financial Statements
Governmental Funds
Balance Sheet .................................................................................................................. 13
Reconciliation of the Governmental Funds Balance Sheet
To Statement of Net Position ...................................................................................... l4
Statement of Revenues, Expenditures and Changes in
Fund Balances ............................................................................................................. IS
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 .................................................................... 35
Budgetary Comparison Schedule-Debt Service Fund ............................................................ 36
Schedule of Funding Progress-Texas County and District Retirement System .................... .37
INDIVIDUAL SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
TSI-1 Service and Rates .................................................................................................. 38
TSI-2 General Fund Expenditures and Other Financing Uses ....................................... .41
TSI-3 Temporary Investments ......................................................................................... 42
TSI-4 Taxes Levied and Receivable ............................................................................... .43
TSI-5 Long-Term Debt Service Requirements-By Year ............................................. .44
TSI-6 Changes in Long-Term Bonded Debt .................................................................. .47
TSI-7 Comparative Schedules of Revenues and Expenditures-Five Years ................. .48
TSI-8 Board Members, Key Personnel, and Consultants ................................................ 50
REPORTS REQUIRED BY GOVERNMENTAL AUDITING STANDARDS
Independent Auditor's Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards ................................................................... 52
tt and Abbott PLLC
Certified Public A ca:>untan ts
INDEPENDENT AUDITOR 'S REPORT
To th e Board o f Di rector s
T ro ph y C lub M unic ip a l U tility D istri ct No. I
T roph y C lub , Texas
Report on the F inancial Statements
Su san La Foll ett, CPA -Partner
Ro d A bbo tt, CPA-Partn er
We have a udi ted th e accompa ny ing fin a nc ia l statemen ts of the governmenta l activ ities , each major fun d,
a nd t he aggregate re mainin g fu nd in fo rmation of Trophy Clu b M uni c ip a l U t i lity D is tr ict No. 1 (the
"Distri ct"), as of a nd f or the year en ded September 3 0 , 201 4, a nd t he r e lated notes to th e fin ancia l
stateme nt s, w hi c h co ll ecti ve ly co mpri se the D is t rict's basic fina nc ia l statem ents as li sted in the table of
contents.
Managem ent's Responsibility for the Financial Statements
Ma nageme nt is resp o ns ible for the pre pa ratio n a nd fa ir presenta ti o n o f these fin a nc ia l state me nts in
accord a nce w ith accounting princ iples gener a ll y accepted in the Unite d States of Ame ri ca; thi s in c ludes
the des ig n , imple m e ntation , a nd ma inte na nce of inte rn a l control re l evan t to the pre pa ra tion a nd fa ir
presenta ti o n of finan c ial st a te me nts th a t a re fr ee f rom m ateria l misstate me nt, wh e th e r du e to fra ud o r
e rro r.
Auditor's R espons ibility
O ur respo ns ib i li ty is to express o pini o ns on t hese fi nan cial stat em e nts based o n our a udi t. We conducted
o u r au di t in accorda nce w ith auditing standards generall y accepted in t he U nite d States of America and
the stand ards appl ica bl e to fi n a nc ia l au d its contained in Governm en t Auditing Sta ndards, issued by t he
Com pt ro ll e r Gene ra l o f the Un ite d S ta les. T hose sta nd ard s require th a t we p la n a nd perform t he a udit to
obtai n reasonable assura nce about w hether t he fina nc ia l stateme nts a re f ree from ma te ri a l mi sstatemen t.
A n a udi t in vo lves performing procedures to obta i n aud it evide n ce a bout th e amounts a nd d isclosures in
the fina nc ia l statements. T he p rocedu res se lecte d depend o n th e aud ito r 's judgment, inc lud ing the
assess me nt of t he r isks of ma te ri a l mi sstate me nt of th e fi na nc ia l sta te me nts, w heth e r due to fra ud o r e rror.
In ma king tho se ri sk assessment s, the a ud ito r co nsid ers inte rna l c ontro l re levant to the e ntity's prepara ti o n
a nd fa ir present a ti o n of t he fin a nc ia l sta te me nts in ord er to desig n a udi t pro cedures t ha t a re appropri a t e in
th e c irc umst a nces, but not f or th e purpose of expr ess ing a n op inion o n the effecti veness of th e enti ty's
inte rn a l control. According ly, we express no such op ini on. An audit a lso in c lud es eva lu a tin g t he
a p propri a te ness of acco un t ing p o licies used a nd the reasonable ness o f signi fica nt acco un t in g esti ma tes
made by manageme nt, as well as evalu atin g the ove ra ll presenta ti on of the fin a nc ia l state me nts.
We be li eve th a t th e au dit eviden ce we have obtained is sufficient a nd a ppro pr iate to provi d e a bas is fo r
our a ud it opini on s.
LaFoll ett and Abbott PLLC
PO Box 7 17 ·Tom Bea n, TX · 7 5489
903-546-6975 · www.lafoll ettcpa .com
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate remaining
fund information of the Trophy Club Municipal Utility District No. I, as of September 30, 2014, and the
respective changes in financial position, for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Other Matters
Required Supplemelltary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, budgetary comparisons, and retirement system funding information on pages 3-
10 and 35-37 be presented to supplement the basic financial statements. Such information, although not a
pmt of the basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to
the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because
the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Trophy Club Municipal Utility District No. I 's basic financial statements. The
accompanying individual schedules and other supplementary information listed in the table of contents
are presented for purposes of additional analysis and are not a required part of the basic financial
statements. The accompanying individual schedules and other supplementary information are the
responsibility of management and were derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and ce1tain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the accompanying individual schedules and other
supplementary information are fairly stated in all material respects in relation to the basic financial
statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 20,
2015, on our consideration of Trophy Club Municipal Utility District No. I 's internal control over
financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of
our testing of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on internal control over financial reporting or on compliance. That report is an
integral pa1t of an audit performed in accordance with Government Auditing Standards in considering
Trophy Club Municipal Utility District No. I 's internal control over financial reporting and compliance.
Tom Bean, Texas
January 20,2015 2
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
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, 2014.
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
$16,804,343. Of this amount, $2,961,240 is unrestricted net position and may be used to meet
the District's ongoing commitments.
The District's net position increased by $1,654,193 during 2014. The increase is mostly
attr·ibutable to $936,481 of developer capital contributions to the District's water and
wastewater systems.
At the end of the fiscal year, the District's governmental type funds reported a combined
fund balance of $2,962,683. As of September 30, 2014, the unassigned fund balance of the
General Fund was $488,818.
Long-term debt activity for the District included debt principal repayments totaling
$1,040,991. No new debt was issued by the District during 2014.
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 Basic Financial Statements. The report also contains other
required supplementary infmmation 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.
3
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Overview of the Financial Statements-continued
The government-wide financial statements consist of two statements:
I. The Statement of Net Position-(Page 11) this statement presents information on all of
the District's assets and liabilities; the difference between the two is reported as net
position. Over an extended period, the increase or decrease in net position 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
position has changed during the fiscal year. All revenues and expenses are reported on
the full accrual basis.
Fund Financial Statements -Fund financial statements provide detailed information about the
most important funds and not about the District 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 governmental 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 three 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, Debt Service Fund and
Capital Projects Fund.
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 Basic 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 basic financial statements can be found on pages 17-34.
4
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Overview of the Financial Statements -continued
Government-wide Financial Analysis
The Management's Discussion and Analysis highlights the information provided in both the
Statement of Net Position 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
$16,804,343. Of this amount, $13,843,103 (82%) 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.
Table 1
Condensed Statements of Net Position
Current and other
Capital assets
Total Assets
Long-term liabilities
Other liabilities
Total liabilities
Net Position:
Net investment in capital assets
Unrestricted
Total Net Position
$
$
Governmental
Activities
2014
5
4,485,026
19,849,794
24,334,820
6,031,304
1,499,173
7,530,477
13,843,103
2,961,240
16,804,343
$
$
Governmental
Activities
2013
5,111,997
18,047,016
23,159,013
6,101,472
1,930,110
8,031,582
10,886,696
4,240,735
15,127,431
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Overview of the Financial Statements -continued
District operational analysis-The following table provides a summary analysis of the District's
consolidated operations for the fiscal years ended September 30, 2014 and 2013. Govermnental
activities have increased the District's net position by $1,654,193, which amounts to a 10.9%
increase in net position for the year ended September 30,2014.
Table 2
Changes in Net Position
Govermnenta1 Govermnenta1
Activities Activities
2014 2013
Revenue:
Program revenue
Charges for services $ 6, 150,179 $ 6,070,147
Grants and Contributions 946,481 284,684
General Revenue
Ad valorem taxes 1,740,079 1,619,051
Unrestricted investment earnings 6,255 16,649
Miscellaneous 115,102 114,036
Total Revenue 8,958,096 8,104,567
Expenses:
Water & Wastewater operations 4,083,929 3,759,269
General govermnent 2,113,413 2,290,093
Fire 901,351 811,552
Interest charges 205,210 256,272
Total Expenses 7,303,903 7,117,186
Increase in net position $ 1,654,193 $ 987,381
6
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Financial analysis of the District's funds
Governmental 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 unassigned 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 unassigned fund balance may serve as a useful measure of the government's
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 $2,962,683, of which 16%, or $488,818, is unassigned and available to the District
for future spending.
General Fund budgetary highlights
The most significant amendment to the General Fund 2014 budget involved increasing budgeted
capital expenditures by $868,681 for on-going water and wastewater system improvements.
Revenue: Revenues were $65,521 (0.8%) less than budgeted
• Water and wastewater charges were $120,058 (2.1 %) more than budgeted.
• Utility fees were $250,909 ( 43 .I%) less than budgeted.
Expenses: Expenses were $152,028 (1.8%) less than budgeted
• Water operations expenditures were $394,226 (9.6%) less than budgeted.
• Non-departmental expenditures were $394,226 (102.9%) more than budgeted and
attributable to budget overruns for legal expenses.
Debt Service Fund:
• Debt Service Fund budget versus actual results were generally in line with expectations.
The fund experienced a slight decrease in fund balance of $3,126 due to a small 0.9%
unfavorable budget variance for property tax revenue.
7
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Capital Asset and Debt Administration
The District's investment in capital assets for its governmental activities as of September 30,
2014 amounted to $19,849,794, 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.
Capital assets increased I 0% during 2014 primarily due to approximately $1.3 million of on-
going water and wastewater system improvements and $936,481 of capital contributions.
Additional information about capital assets may be found in Note 5 in the notes to fmancial
statements.
Debt administration
Long-Term Liabilities -at the end of the current fiscal year, the District had $6,031,304 of
general obligation bonds, notes payable and accrued compensated absences, which is a decrease
of 15.8% from the previous fiscal year. Of this amount, $7,065,539 is backed by the full faith
and credit of the government. No new debt was issued for the District during 2014.
Table 3
Outstanding Debt at Year-end
General obligation bonds
Contractual obligations
Notes payable
Compensated absences
Total
$
$
Governmental
Activities
2014
8
5,668,700
337,991
24,613
6,031,304
$
$
Governmental
Activities
2013
6,111,557
70,000
883,982
94,781
7,160,320
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Economic factors and next year's budgets and rates:
General fund fiscal year 2015 budgetary highlights:
Revenue: The District's 2015 operational revenue is budgeted to mcrease by
$1,298,499.
• Property tax revenue is budgeted to increase from $1,026,805 for fiscal year 2014 to
$1,040,716 for fiscal year 2015.
• Water and wastewater revenue is budgeted to increase by $2,099,396 due to an increase in
the number of utility customers and to a rate increase that was effective July 1, 2014.
• Utility fee revenue is budgeted to decrease by $398,109 due to slow down of expected
new home construction in the Public Improvement District.
• Reserve funds of$100,000 will be allocated to the Debt Service Fund.
Expenses: The District's 2015 operational expense is budgeted to increase by $1,298,499.
Overall:
The wholesale water expense will increase by $589,835 due to an increase in
the cost of water purchased from wholesaler.
The District's 2015 operational budget is anticipated to have expenses of $9,862,873 and
revenues of$9,862,873.
Debt Service Fund 2015 budget:
• Debt service revenues are budgeted to increase from $624,495 in fiscal year 2014 to
$1,078,256 in fiscal year 2015. This is an increase of $453,761 and is needed to cover
new debt service expenses.
• Property tax revenues are budgeted to increase by $76,803 due to an increase in taxable
property values.
• Reserve funds of$100,000 will be allocated to the Debt Service Fund in fiscal year 2015.
9
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2014
Economic factors and next year's budgets and rates: (Continued)
The consolidated District's overall budget for revenue increased from $9,188,869 in fiscal
year 2014 to $10,941,129, in fiscal year 2015, which is a 19.07% increase. The overall
budgeted expenses increased from $9,188,869 to $10,939,204, which is a 19.05% increase.
The O&M tax decreased and the debt service tax increased which resulted in the overall tax
rate remaining the same for 2015 as was assessed in 2014.
Requests for information
This financial report is designed to provide a general overview of the District's consolidated
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, Finance Manager, 100 Municipal Drive, Trophy Club, Texas 76262.
10
BASIC FINANCIAL STATEMENTS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
Governmental
Cash and cash equivalents
Receivables
Accounts receivable, net
Taxes
Due from other govermnents
Prepaids
Non-depreciable capital assets:
Land
Construction in progress
Depreciable capital assets: (net)
ASSETS
Buildings and other improvements
Machinery, vehicles, and other equipment
Water system
Organization costs
TOTAL ASSETS
Accounts payable
Accrued liabilities
Accrued interest payable
Customer deposits
Noncurrent liabilities:
Debt due within one year
LIABILITIES
Debt due in more than one year
TOTAL LIABILITIES
Net investment in capital assets
Umestricted
TOTAL NET POSITION
NET POSITION
$
$
$
$
Activities
3,431,448
969,666
38,046
31,886
13,980
648,178
1,366,502
3,099,011
1,313,382
13,365,163
57,558
24,334,820
1,148,882
35,418
14,876
299,997
625,991
5,405,313
7,530,477
13,843,103
2,961,240
16,804,343
The notes to financial the statements are an integral part of this statement.
11
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
STATEMENT OF ACTIVITIES
Program Activities
Governmental Activities
General government $
Water operations
Wastewater operations
Wastewater collection system
Non-Departmental
Directors
Fire
Interest on long term debt
Total governmental
activities $
YEAR ENDED SEPTEMBER 30, 2014
Expenses
1,320,187
3,160,821
688,212
234,896
781,325
11,901
901,351
205,210
7,303,903
Governmental Activities
Program Revenues
Operating Capital Grants
Charges for Grants and and
$
$
Services Contributions Contributions
419,307 $ $
3,534,240 224,812
2,196,632 711,669
10,000
6,150,179 $ 10,000 $ 936,481
General Revenues:
Ad valorem taxes
Investment income
Miscellaneous
Total general revenues
Change in net position
Net (Expenses)
Revenue and
Changes in Net
Assets
Governmental
$
$
Activities
(900,880)
598,231
2,220,089
(234,896)
(781,325)
(11,901)
(891,351)
(205,210)
(207,243)
1,740,079
6,255
115,102
1,861,436
1,654,193
Net Position-beginning of year 15,127,431
Prior period adjustments 22,719
Net Position-end of year =$~=1;;6;b,8;;0;;4,;;,3;;4;;3=
The notes to the financial statements are an integral part of this statement.
12
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2014
ASSETS
Debt Capital
Service Projects
General Fnnd Fnnd Fund
Assets
Cash and cash equivalents $ 3,264,105 $ 15,253 $ 152,090
Receivables:
Accounts receivables, net 969,666
Taxes 28,051 9,995
Due from other governments 31,886
Due from other funds 86,259
Prepaids 13,980
TOTAL ASSETS $ 4,393,947 $ 25,248 $ 152,090
LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES
Liabilities
Accounts payable $ 1,092,819 $ 500 $ 55,563
Accrued liabilities 35,418
Customer deposits 299,997
Due to other funds 86,259
Total liabilities 1,428,234 500 141,822
Deferred Inflows of Resources
Unavailable revenues-property taxes 28,051 9,995
Total deferred inflows of resources 28,051 9,995
Fund Balances
Non-spendable prepaids 13,980
Assigned-Capital outlays 2,~3~,8M 10,268
Assigned-Debt service 14,753
Unassigned 488,818
Total fund balances 2,937,662 14,753 10,268
TOTAL LIABILITIES, DEFERRED
INFLOWS, AND FUND BALANCES $ 4,393,947 $ 25,248 $ 152,090
The notes to financial statements are an integral part of this statement.
13
Total
Governmental
Fnnds
$ 3,431,448
969,666
38,046
31,886
86,259
13,980
$ 4,571,285
$ 1,148,882
35,418
299,997
86,259
1,570,556
38,046
38,046
13,980
2,445,132
14,753
488,818
2,962,683
$ 4,571,285
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
Total fund balances -governmental funds
Amounts reported for governmental activities in the statement of net position
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.
Unavailable tax revenues that are reported as deferred inflows of resources in the
governmental funds balance sheet is recognized as revenue in the government-wide
financial statements.
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.
Accrued compensated absences do not require the use of current financial resources;
therefore accrued vacation 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 position of governmental activities
The notes to the financial statements are an integral patt of this statement.
14
$ 2,962,683
19,849,794
38,046
(14,876)
(24,613)
(6,006,691)
$ 16,804,343
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2014
Debt Capital
Service Projects
General Fnnd Fund Fund
Revenues:
Water and wastewater charges $ 5,730,872 $ $
Taxes 1,340,502 389,668
Utility Fees 331,200
Miscellaneous 115,102
Oversize meter reimbursements 77,380
Inspection and tap fees 10,725
Intergovernmental revenues 10,000
Investment income 6,071 97 87
Total Revenues: 7,621,852 389,765 87
Expenditures
Water 3,031,672
Adminstration 990,577
Wastewater 621,108
Fire 879,830
Collections 185,561
Non-Departmental 776,992
Board of Directors 11,901
Capital Outlay 990,311 354,919
Debt Service
Principal 615,991 425,000
Interest and fiscal charges 26,656 197,195
Bond Administrative Fees 1,500
Total Expenditnres: 8,130,599 623,695 354,919
Excess (deficiency) of revenues
over (under) expenditures (508,747) (233,930) (354,832)
Other Financing Sources (Uses)
Transfers in 230,804 120,000
Transfers out (350,804)
Total Other Financing Sources (Uses): (350,804) 230,804 120,000
Net change in fund balance (859,551) (3,126) (234,832)
Fund Balances -beginning of year 3,797,213 17,879 245,100
Fund Balances -end of year $ 2,937,662 $ 14,753 $ 10,268
The notes to financial statements are an integral part of this statement.
15
Total
Governmental
Funds
$ 5,730,872
1,730,170
331,200
115,102
77,380
10,725
10,000
6,255
8,011,704
3,031,672
990,577
621,108
879,830
185,561
776,992
11,901
1,345,230
1,040,991
223,851
1,500
9,109,213
(1,097,509)
350,804
(350,804)
(1,097,509)
4,060,192
$ 2,962,683
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
RECONCILIATION OF THE STATEMENT OF REVENUES
EXPENDITURES AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2014
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.
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the costs of those assets is allocated over their
estimated useful lives and reported as depreciation expense. This is the
amount of capital assets recorded in the current period.
Debt principal payments reduces long-term liabilities in the statement of net
position, but it is recorded as an expenditure in the governmental funds.
Current year contributions of capital assets are not recorded in the governmental funds,
but are recognized for the government-wide financial statements.
Governmental funds report the effects of debt premiums, debt discounts, and deferred
losses on refunding when debt is first issued, whereas the amounts are deferred
and amortized in the statement of activities.
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing the change in deferred revenue and various other items. The net effect
of these reclassifications is to decrease net position.
Current year changes in accrued interest payable do not require the use of current
financial resources and, therefore, are not repm1ed as expenditures in the
governmental funds.
Change in net position of governmental activities
The notes to the financial statements are an integral part of this statement.
16
$
(1,097,509)
(671,240)
1,345,230
1,111,159
936,481
17,857
9,931
2,284
1,654,193
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Statement
Denton County Municipal Utility District No. l (the District) was created by the Texas Water
Rights Commission (later known as Texas Commission on Environmental Quality (TCEQ)) on
March 4, 1975 and confirmed by the electorate of the District at a confirmation election 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. Effective April 1,
1983, the District's name was officially changed by order from Denton County Municipal Utility
District No. 1 to Trophy Club Municipal Utility District No. 1.
On May 9, 2009, citizens voted to consolidate the District and Trophy Club Municipal Utility
District No. 2 (MUD2). As a result, the District reports consolidated activity and balances for the
District and the entities formerly known as MUD2 and the Trophy Club Master District Joint
Venture (a joint venture ofMUD1 and MUD2).
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.
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 fmancial 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, o;:
to impose specific financial burdens on, the primary government. A primary government may also
be financially accountable for governmental organizations that are fiscally dependent on it.
A primary government has the ability to impose its will on an organization if it can significantly
influence the programs, projects, or activities of, or the level of services performed or provided by,
the organization. A financial benefit or burden relationship exists if the primary government (a) is
entitled to the organization's resources; (b) is legally obligated or has otherwise assumed the
obligation to finance the deficits of, or provide financial support to, the organization; or (c) is
obligated in some marmer 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
17
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
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 position 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 oftl;le 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 fmancial management and to demonstrate legal compliance. These statements arP
required to present each major fund in a separate column on the fund financial statements. For
fiscal year 2014, the major fund is the General Fund. The non-major funds are the Capital
Projects Fund and Debt Service Fund.
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 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.
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.
18
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
Capital Projects Fund
The Capital Projects Fund is used to account for funds received and expended for the
acquisition and construction of infrastructure and other capital assets.
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 position and the operating statements present
increases (revenues) and decreases (expenses) in net total position. 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" mean8
collectible within the current period or soon enough thereafter to be used to pay liabilities of the
cunent 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 incuned. 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, ancl
short-term investments of three months or less from the date of acquisition.
19
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
E. Cash and Investments -Continued
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) 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.
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 cunent transaction between willing
parties.
F. Capital Assets
Capital assets, which include property, plant, and equipment, are reported in the government-wide
financial statements. All capital assets are valued at historical cost or estimated historical cost if
actual historical cost is not available. Donated assets are valued at their fair market value on the
date donated. Repairs and maintenance are recorded as expenses. Renewals and betterments are
capitalized. Interest has not been capitalized during the construction period on property, plant and
equipment.
Assets capitalized have an original cost of $5,000 or more and over one year of useful life.
Depreciation has been calculated on each class of depreciable property using the straight-line
method. Estimated useful lives are as follows:
Buildings
Improvements other than buildings
Machinery and equipment
Vehicles
Water and wastewater systems
20
50 Years
15-30 Years
5-15 Years
6-12 Years
30-65 Years
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
G. Accumulated Vacation Time
Employees earn vacation pay based upon seniority that accrues at various rates up to a maximum
four weeks per year. Upon termination, employees will be paid for their unused earned vacation.
The District records a liability for the value of these compensated absences.
H. Organizational Costs
The District, in conformance with requirements of the TCEQ, capitalized costs incurred in the
creation of the District. The TCEQ requires capitalization of organizational costs for the
construction period, 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.
I. Net Position
Net position represents the difference between assets and liabilities. Net position 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 position is 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.
J. Estimates
In preparing financial statements in conformity with accounting principles generally accepted in
the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosures of contingent assets and
liabilities, and the reported amounts of revenue and expenses/expenditures. Actual results could
differ from those estimates.
K. Fund Balances
Governmental Accotmting Standards Board (GASB) Statement No. 54, Fund Balance Reporting
and Governmental Fund Type Definitions (GASB 54) defines the different types of fund balances
that a governmental entity must use for financial reporting purposes in the fund financial
statements for governmental type funds. It does not apply for the government-wide financial
statements.
21
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
K. Fund Balances -Continued
GASB 54 requires the fund balance amounts to be properly reported within one of the following
fund balance categories:
Nonspendable -such as fund balance associated with inventories, prepaids, long-term loans and
notes receivable, and property held for resale (unless the proceeds are restricted, committed, or
assigned)
Restricted -fund balance category includes amounts that can be spent only for the specific
purposes stipulated by constitution, external resource providers, or through enabling legislation,
Committed -fund balance classification includes amounts that can be used only for the specific
purposes determined by a formal action of the Board of Directors (the district's highest level of
decision-making authority),
Assigned -fund balance classifications are assigned by the District Manager with the intentions to
be used by the government for specific purposes but do not meet the criteria to be classified as
restricted or committed, and
Unassigned-fund balance is the residual classification for the government's General Fund and
includes all spendable amounts not contained in the other classifications, and other fund's that
have total negative fund balances.
NOTE 2. CASH AND INVESTMENTS
The funds of the District must be deposited and invested under the terms of a contract, contents of
which are set out in the Depository Contract Law. The depository bank places approved pledged
securities for safekeeping and trust with the District's agent bank in an amount sufficient to protect
District funds on a day-to-day basis during the period of the contract. The pledge of approved
securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit
Insurance Corporation (FDIC) insurance.
At September 30, 2014, the carrying amount of the District's deposits (cash, certificates of deposit,
and non-pooled savings accounts) was $2,096,845 and the bank balance was $2,078,148. The
District's cash deposits at September 30, 2014, and during the year then ended were entirely covered
by FDIC insurance, pledged securities, or by a letter of credit pledged by the District's agent bank in
the District's name.
22
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 2. CASH AND INVESTMENTS-CONTINUED
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; (l) 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 ofPortfulio In One Issuer
U.S. Treasury Obligations 2 years 50% NA
U.S. Agencies Securities 2 years 50% NA
State ofTexas Securities 2 years 50% NA
Certificates o fDeposits 2 years 90% NA
Money Market 2 years 90% NA
Investment poo Is 2 years 90% 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, 2014 are classified in the accompanying financial
statements as follows:
Statement of Net Position:
Primary Government:
Cash and cash equivalents $ 3,431,448
Total cash and investments $ 3,431,448
23
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 2. CASH AND INVESTMENTS-CONTINUED
Cash and investments as of September 30,2014 consist of the following:
Petty Cash
Deposits with financial institutions
Texpool Investments
Total cash and pooled investments
Disclosures Relating to Interest Rate Risk
$ 600
2,096,845
1,334,003
$ 3,431,448
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 1isk 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 30,2014, the District had the following investment:
Weighted
Average
Investment Type Amount Maturity
TexPool $ 1,334,003 53 days
Total Investments $ 1,334,003
As of September 30, 2014, 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.
24
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 2. CASH AND INVESTMENTS-CONTINUED
Investment Type Amount
TexPool $ 1,334,003
Total Investments $ 1,334,003
Concentration of Credit Risk
Minimum
Legal
Rating
AAAm
Rating as
of Year
End
AAAm
The investment policy of the District contains no limitations on the amount that can be invested in
any one issuer. As of September 30, 2014, other than external investment pools, the District dicl
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 either 1) pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit), or 2) an
irrevocable standby letter of credit with the District named as the beneficiary. The market value of
pledged securities in the collateral pool or the value of the letter of credit must equal at least the
bank balance less FDIC insurance at all times.
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 ofTexPool shares.
25
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 3. ACCOUNTS RECEIVABLE
Receivables as of year-end, including the applicable allowances for uncollectible accounts, are as
follows:
Accounts Receivable:
MUD water
MUD sewer
Unbilled receivables
Refuse (as agent for Town of Trophy Club)
Refuse tax (as agent for Town of Trophy Club)
Storm drainage (as agent for Town of Trophy Club)
Allowance for uncollectible accounts
Total (net)
Due from Other Governments:
Town of Trophy Club
NOTE 4. INTERFUND TRANSFERS
Transfers between funds during the year are as follows:
Transfer In Transfer Out Amount
Capital Projects General Fund $ 120,000
Debt Service General Fund 230,804
Total $ 350,804
26
$
$
$
489,293
239,218
147,752
61,676
5,300
38,478
981,717
(12,051)
969,666
31,886
Purpose
Capital Imp. Reimbursements
Debt service
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 5. CAPITAL ASSETS
Capital asset activity for the year ended September 30,2014, was as follows:
Beginning Retirements/ Ending
Balances Additions Transfers Balance
Governmental Activities:
Capital assets-Non-Depreciable
Land $ 648,178 $ $ $ 648,178
Construction in progress (restated) 361,822 1,527,999 (523,319) 1,366,502
Total capital assets
not being depreciated 1,010,000 1,527,999 (523,319) 2,014,680
Capital assets -Depreciable
Buildings 3,344,790 3,344,790
hnprovements other than buildings 303,492 303,492
Machinery and equipment 1,651,136 15,505 1,666,641
Organization costs 2,331,300 2,331,300
Vehicles 1,477,017 1,477,017
Water system 9,720,832 412,091 214,566 10,347,489
Wastewater treatment system 5,663,320 341,641 6,004,961
Wastewater collection system 3,208,855 293,248 3,502,103
Total capital assets
being depreciated 27,700,742 753,732 523,319 28,977,793
Less accumnlated
depreciation fur:
Buildings (258,974) (66,888) (325,862)
Improvements other than buildings (212,591) (I 0,819) (223,410)
Machinery and equipment (648,301) (89,690) (737,991)
Organization costs (2,229,494) (44,248) (2,273, 742)
Vehicles (997,585) (94,701) (1,092,286)
Water system (3,081,035) (168,343) (3,249,378)
Wastewater treatment system (1,779,496) (140,977) (1,920,473)
Wastewater collection system (1,263,964) (55,574) (1,319,538)
Total accumnlated
depreciation (10,471,440) (671,240) (11,142,680)
Governmental activities capital
assets, net $ 18,239,302 $ 1,610,491 $ $ 19,849,793
27
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 5. CAPITAL ASSETS-CONTINUED
Depreciation expense was charged as direct expense to programs of the primary government as
follows:
General government
Water operations
Fire department
Non-Departmental
Wastewater operations
Wastewater collection systems
Total depreciation expense
NOTE 6. LONG-TERM DEBT
$
$
360,484
148,114
21,521
4,333
80,436
56,352
671,240
At September 30,2014, the District's long-term debt payable consisted of the following:
Interest Year Average
Rate of Final Annual Original
Description Payable Issue Maturity Payment Amount
Tax and revenue bonds:
Improvements 3.50-5.00% 2010 2031 148,205 2,000,000
Refunding 2.00-3.00% 2012 2023 251,373 2,355,000
Refunding 2.00-3.50% 2013 2023 224,734 1,905,000
Notes payable:
Equipment 3.90% 2010 2015 201,318 179,955
Water/Wastewater Imp.'s 1.85% 2013 2016 153,588 445,000
28
Outstanding
9/30/2014
$ 1,800,000
1,980,000
1,740,000
$ 5,520,000
$ 35,991
302,000
$ 337,991
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 6. LONG-TERM DEBT-CONTINUED
The following is a summary of long-term debt transactions of the District for the year ended
September 30,2014:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Tax, revenue, and refimding bonds $ 5,945,000 $ $ (425,000) $ 5,520,000 $ 440,000
Contractual obligations 70,000 (70,000)
Defurred loss on refimding (8,666) 867 (7,799)
Premium on bonding 175,223 (18,726) 156,497
6,181,557 (512,859) 5,668,698 440,000
Notes payable 883,982 (545,991) 337,991 185,991
Compensated absences 94,781 (70, 168) 24,613
Total Governmental Activities
Long-term Liabilities $ 7,160,320 $ $ (1,129,018) $ 6,031,302 $ 625,991
The annual requirements to amortize all debt outstanding as of September 30, 2014, are as follows:
Tax, revenue, and refunding bonds:
Year Ending
September 30, Principal Interest Total
2015 $ 440,000 $ 178,508 $ 618,508
2016 450,000 168,658 618,658
2017 470,000 155,783 625,783
2018 480,000 142,309 622,309
2019 505,000 128,534 633,534
2020-2024 2,270,000 401,015 2,671,015
2025-2029 620,000 140,160 760,160
2030-2031 285,000 18,276 303,276
Total $ 5,520,000 $ 1,333,243 $ 6,853,243
29
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. I
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 6. LONG-TERM DEBT-CONTINUED
Notes payable:
Year Ending
September 30,
2015
2016
Tax Revenue Bonds
Total
PrinciJ2al
$ 185,991
152,000
$ 337,991
$
$
Interest
5,623
1,406
7,029
$
$
Total
191,614
153,406
345,020
The tax revenue bonds are payable from the proceeds of arl 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 2010-All maturities from 2021 to 2025 are callable in principal increments of$5,000 on or
after September 1, 2020 at par plus unpaid accrued interest to the fixed date for redemptions.
Series 2012-All maturities from 2021 to 2023 are callable in principal increments of$5,000 on or
after September 1, 2020 at par plus unpaid accrued interest to the fixed date for redemptions.
Series 2013-The Series 2013 bonds are not subject to redemption prior to their stated maturity.
Contractual obligations and notes payable are liquidated from the General Fund. Tax and revenue
bonds are liquidated from the Debt Service Fund.
The provisions of the bond resolutions relating to debt service requirements have been met, and the
cash allocated for these purposes was sufficient to meet debt service requirements for the year ended
September 30,2014.
NOTE 7. PROPERTY TAXES
Prope1iy taxes are levied as of October 1, on the assessed value listed as of the prior January 1, for ali
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 prope1iy within the Appraisal District must be
reviewed every five years; however, the District may, at its own expense, require ammal reviews of
appraised values. The District may challenge appraised values established by the Appraisal District
30
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 7. PROPERTY TAXES-CONTINUED
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 2014
tax levies:
Adjusted taxable values $ 1,275,127,821
0 & M and Fire tax levy $0.09673/$100 1,316,961
I & S tax levy $0.03666/$100 383,932
Total tax levy $0.13339/$100 $ 1,700,893
NOTE 8. FUND BALANCE CLASSIFICATIONS
The District's authorized their Director to designate certain fund balances as assigned. Excluding
unassigned fund balances, the following describes the District's fund balance classifications at
September 30,2014:
Non-Spendable Fund Balances
The District's $13,980 non-spendable fund balance represents expenses prepaid at fiscal year-end.
Assigned Fund Balances
The District assigned a total of $2,434,864 of General Fund fund balances for the following future
capital outlays: $767,996 for wastewater system improvements, $810,100 for water system
improvements, $396,969 for vehicles, $308,906 for street projects, and $150,893 for other
improvements. Total fund balances for the Debt Service Fund and Capital Projects Fund have been
assigned by the District for those respective purposes.
31
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 9. RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; business interruption; errors and omissions; injuries to employees; employee health benefits; and
other claims of various nature. Commercial insurance is purchased for the risks of loss to which the
District is exposed. Any losses reported but unsettled or incurred and not reported, are believed to be
insignificant to the District's basic financial statements.
Additionally, the District must operate in compliance with rules and regulations mandated for public
water supply systems by federal and state governments. The District is subject to compliance oversight
by the Texas Commission on Environmental Quality (TCEQ).
NOTE 10. DUE TO AND FROM OTHER FUNDS
During the course of operations, the District has activity between funds for various purposes. Any
residual balances outstanding at year end are reported as due from/to other funds. While these balances
are reported in fund financial statements, balances between the funds included in governmental activitie~
(i.e., the governmental funds) are eliminated for the Statement of Net Position presentation.
At September 30, 2014, the General Fund was due $86,259 from the Capital Projects Fund for capital
project expenditures paid for by the General Fund.
NOTE 11. RETIREMENT PLAN
Plan Description
The District participates in a cost-sharing multiple-employer defined-benefit group-term life insurance
plan operated by the Texas County & District Retirement System (TCDRS). This plan is referred to as
the Group Term Life Fund (GTLF). This optional plan provides group term life insurance coverage to
current eligible employees and, if elected by employers, to retired employees. The coverage provided to
retired employees is a postemployment benefit other than pension benefits (OPEB). Retired employees
are insured for $5,000. The GTLF is a separate trust administered by the TCDRS Board of Trustees.
TCDRS issues a publicly available comprehensive annual financial report (CAFR) that includes
financial statements and required supplementary information for the GTLF. This repoti is available at
www.tcdrs.org. TCDRS' CAFR may also be obtained by writing to the Texas County & District
Retirement System, P.O. Box 2034, Austin, TX 78768-2034, or by calling 800-823-7782.
Benefits
Members can retire at ages 60 and above with five or more years of service, with 20 years of service
regardless of age, or when the sum of their age and years of service equals 7 5 or more. Members are
vested after five years of service, but must leave their accumulated contributions in the plan to receiv<'
any employer-financed benefit. Members who withdraw their personal contributions in a lump sum are
entitled to any amounts contributed by the District.
32
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 11. RETIREMENT PLAN-CONTINUED
Benefit amounts are determined by the sum of the employee's contributions to the plan, with interest
and employer-financed monetary credits. The level of these monetary credits is adopted by Board of
Directors, within the actuarial constraints imposed by the TCDRS Act so that the resulting benefits can
be expected to be adequately financed by the employer's commitment to contribute. At retirement,
death, or disability, the benefit is calculated by converting the sum of the employee's accumulated
contributions and the employer-financed monetary credits to a monthly annuity using annuity purchase
rates prescribed by the TCDRS Act.
Funding Policy
Each participating employer contributes to the GTLF at a contractually required rate. An annual
actuarial valuation is performed and the contractual rate is determined using the unit credit method for
providing one-year term life insurance. The District contributions to the GTLF for the year ended
September 30, 2014 were $99,082, which equaled the contractually required contribution.
Annual Pension Cost
The required contribution was determined as part of the Dec. 31, 2013 actuarial valuation using the entry
age actuarial cost method. The actuarial assumptions at Dec. 31, 2013 included (a) 8.0 percent
investment rate of return (net of administrative expenses), and (b) projected salary increases of 4.9
percent. Both (a) and (b) included an inflation component of 3.0 percent. The actuarial value of assets
was determined using techniques that spread the effects of short-term volatility in the market value of
investments over a thirty-year period. The unfunded actuarial accrued liability is being amortized as a
level percentage of payroll on an open basis. The remaining amortization period at Dec. 31, 2013 wa;
twenty-nine years.
Funding Progress
The schedule of funding progress, presented as Required Supplementary Inf01mation (RSI) following
the notes to the financial statements, presents multi-year trend information about whether the actuarial
value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
NOTE 12. PRIOR PERIOD RESTATEMENTS
The following schedule itemizes the effects of prior period restatements on the government-wide
financial statements:
Government-wide effects
Net Position-beginning
Prior period adjustment -remove bond issuance costs per GASB 65
Prior period adjustment -unrecorded construction in progress
Net Position-beginning as adjusted
33
Governmental
Activities
$ 15,127,431
(169,567)
192,286
$ 15,150,150
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
NOTE 13. SUBSEQUENT EVENTS
The District has evaluated all events and transactions that occurred after September 30, 2014 up through
audit report date, which is the date the financial statements were issued. The District has the following
subsequent event:
On December 23, 2014, the District issued Series 2014 Unlimited Tax Bonds of $5,765,000 to finance
wastewater plant expansion. The following schedule shows how this issuance will increase future
minimum debt service:
Fiscal Year PrinciQal Interest Total
2015 $ $ 105,476 $ 105,476
2016 235,000 148,325 383,325
2017 240,000 144,800 384,800
2018 245,000 141,200 386,200
2019 250,000 137,525 387,525
2020-2024 1,360,000 618,024 1,978,024
2025-2029 1,575,000 446,675 2,021,675
2030-2034 1,860,000 194,588 2,054,588
$ 5,765,000 $ 1,936,613 $ 7,701,613
34
REQUIRED SUPPLEMENTARY INFORMATION
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS)
YEAR ENDED SEPTEMBER 30,2014
Budgeted amounts
Variance with
Original Final Actual Final Budget
Revenues
Water and wastewater charges $ 5,610,814 $ 5,610,814 $ 5,730,872 $ 120,058
Taxes 1,338,400 1,338,400 1,340,502 2,102
Utility fees 582,109 582,109 331,200 (250,909)
Intergovernmental revenues 10,000 10,000 10,000
Miscellaneous 42,463 46,550 115,102 68,552
Oversize meter reimbursements 84,000 84,000 77,380 (6,620)
Inspection and tap fees 5,600 7,700 10,725 3,025
Investment income tl,800 4,800 6,071 1,271
Total revenues 7,678,186 7,684,373 7,621,852 (62,521)
Expenditures:
Water operations 3,356,708 3,354,211 3,031,672 322,539
Fire 906,173 906,173 879,830 26,343
Wastewater operations 715,569 663,044 621,108 41,936
Wastewater collection system 333,333 224,694 185,561 39,133
Non-Departmental 166,940 382,766 776,992 (394,226)
Administration 1,055,198 1,056,619 990,577 66,042
Directors 22,661 22,881 11,901 10,980
Capital Outlay 161,000 1,029,681 990,311 39,370
Debt Service 642,558 642,558 642,647 (89)
Total expenditures 7,360,140 8,282,627 8,130,599 152,028
Excess of revenues over expenditures 318,046 (598,254) (508,747) 89,507
Other financing sources (uses):
Transfers out (214,279) (214,279) (350,804) (136,525)
Total other financing sources (uses) (214,279) (214,279) (350,804) (136,525)
Net change in fund balance 103,767 (812,533) (859,551) (47,018)
Fund Balances -beginning of year 3,797,213 3,797,213 3,797,213
Fund Balances -end of year $ 3,900,980 $ 2,984,680 $ 2,937,662 $ (47,018)
Notes to Required Supplementary Information:
The District annual budgets are approved on the budgetary basis. The Board also approves all revisions and
appropriations which lapse at each fiscal year-end.
35
TROPHY CLUB MUNICIPAL l: fiLITY DISTRICT NO.1
DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED SEPTEMBER 30, 2014
Budgeted Amounts
Original & Final Actual
Variance with
Final Budget
Revenues
Taxes $ 393,316 $ 389,668 $ (3,648)
(278) Investment income
Total revenues
Expenditures:
Debt service
Principal
Interest
Fees
Total expenditures
Deficiency of revenues under
expenditures
Other financing sources (uses)
Transfers in
Total other financing sources
Net change in fund balance
Fund Balances -beginning of year
Fund Balances -end of year $
Notes to Required Supplementary Information:
375
393,691
425,000
197,195
2,300
624,495
(230,804)
230,804
230,804
17,879
17,879 $
97
389,765
425,000
197,195
1,500
623,695
(233,930)
230,804
230,804
(3,126)
17,879
(3,926)
800
800
(3, 126)
(3,126)
14,753 ...;$;__~(3..:.;, 1;;;.2~6)
The District annual budgets are approved on the budgetary basis. The Board also approves all revisions and
appropriations which lapse at each fiscal year-end.
36
TROPHY CLUB MUNICIPAL UTILLITY DISTRICT NO. 1
SCHEDULE OF FUNDING PROGRESS-TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Actuarial
Valuation Date
12/31/2013
111/2013
Value of Assets
$ 265,646
$ 113,743
Accrued
Liability
$ 252,715
$ 208,703
(Overfunded)
or Unfunded
$ (12,931)
$ 94,960
37
Percentage
Funded
105.12%
54.50%
Annual
Covered Payroll
$ 963,243
$ 838,740
Ratio of
Unfunded
(Funded) to
Annual
Covered
Payroll
-1.34%
11.32%
INDIVIDUAL SCHEDULES AND OTHER
SUPPLEMENTARY INFORMATION REQUIRED
BY TEXAS COMMISSION ON
ENVIRONMENTAL QUALITY (TCEQ)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
SEPTEMBER 30, 2014
1. Services provided by the District:
a) Retail Water
b) Retail Wastewater
c) Wholesale Water
d) Wholesale Wastewater Treatment
e) Fire Protection
f) Irrigation
g) Participates in regional system and/or wastewater service (other than
emergency interconnect)
2. Retail service providers:
Current Rates
Water Base Rates
Meter Size
5/8"
1"
1.5"
2"
3"
WASTEWATER $
Base Rate
$12.71
16.71
26.42
38.06
65.23
Base Fee
14.58 0
Water Volumetric Rates
Rates per 1,000
Gallons Over
Base
$2.70
3.14
3.64
4.23
No
No
Gallons
0 to 6,000
6,001 to 17,000
17,001 to 25,000
25,001 to 50,000
$ 2.50
GOLF COURSE Subject to peak draw rates from Ft Worth water department.
NOTE: all rates noted above were amended effective July 1, 2014.
District employs winter averaging for wastewater usage? No
38
0 to 18,000
Caps at 18,000
b)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
SEPTEMBER 30, 2014
Total water and wastewater charges per 10,000 gallons usage (including surcharges)
effective July 1, 2014 (based on 5/8" & 3/4")
First 10,000gallonsused $ 41.47
Next 10,000 gallons used 32.90
Next 10,000 gallons used 39.35
Next 10,000 gallons used 42.30
Next 10,000 gallons used 42.30
Next 10,000 gallons used and subsequent 49.10
Maximum residential wastewater charge is for 18,000 gallons or $59.58
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).
Connections ESFC Active
Meter Size Total Active Factor ESFC's
Unmetered 1.0
Less than 3/4" 2,494.0 2,494.0 1.0 2,494.0
1" 496.0 496.0 2.5 1,240.0
1 1/2" 18.0 18.0 5.0 90.0
2" 88.0 88.0 8.0 704.0
3" 21.0 21.0 15.0 315.0
4" 13.0 13.0 25.0 325.0
6" 3.0 3.0 50.0 150.0
8" 80.0
10" 115.0
Total Water 3,133.0 3,133.0 5,318.0
Total Wastewater 3,140.0 3,140.0 1.0 3,140.0
* 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.
Note: District provides wholesale services to the Town of Trophy Club through 1,259 connections
3. Total water consumption (in thousands) during the fiscal year:
Gallons pumped into the system
Gallons billed to customers
Water accountability ratio
39
937,819
888,962
94.8%
4. Standby Fees:
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
SEPTEMBER 30, 2014
Does the District assess standby fees? No
For the most recent fiscal year, FY2014:
Debt Service
Operations and Maintenance
$
$
Total
Levy
389,651
1,028,121
Total
Collected
$ 198,179
$ 1,157,470
Percentage
Collected
50.9%
112.6%
Have standby fees been levied in accordance with Water Code Section 49.231, thereby
constituting a lien on property? No**
5. Location of District:
Counties in which District is located:
Is the District located entirely in one county?
Is the District located within a city?
Cities in which District is located:
a)
b)
Denton
Tarrant
No
Partially
Town ofTrophy Club
Town of Westlake
Is District located within a city's extra territorial jurisdiction (ET J)? 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
40
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-2
General Fund Expenditures and Other Financing Uses
Year Ended September 30, 2014
Current Year Prior Year
Administrative $
Water Operations
Wastewater Operations
Wastewater Collection Systems
Contribution to Trophy Club Fire Dept
Capital Outlay
Transfers Out and Debt Service
Total Expenditures $
Number of employees employed by the District:
Full time Equivalents (FTEs)
Part time
2014
1,779,470
3,031,672
621,108
185,561
879,830
990,3'1'1
993,451
8,481,403
18 •
0
$
$
2013
1 ,476,468
2,623,822
896,538
322,017
790,779
462,876
1 '115,390
7,687,890
32.5
1
The Fire Department personnel is paid by the Town and receive Town benefits.
The MUD reimburses the Town 50/50% of Payroll and related expenses. Fire
Department personnel have been excluded from FTE's.
41
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI-3 TEMPORARY INVESTMENTS
September 30, 2014
Identification Interest Maturity Balance
Funds Number Rate Date End of Year
General Fund
TexPool 613300002 0.0333% Demand $ 1,171,507
General Fund
Bank of the West 4526372 0.3200% Demand 1,504,702
(money market)
Debt Service Fund
TexPool 613300003 0.0333% Demand 10,406
Capital Projects
Texpool 613300010 0.0333% Demand 152,090
Total-All Funds $ 2,838,705
42
Accrued Interest
End of Year
Paid daily
Paid monthly
Paid daily
Paid daily
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-4 TAXES LEVIED AND RECEIVABLE
SEPTEMBER 30, 2014
General Fund Debt
Oeerations Fire Total Service Total
Taxes receivable beginning of year $ 1,890 $ 14,384 $ 16,274 $ 11,863 $ 28,137
2013 tax levy 97,920 1,219,041 1,316,961 383,932 1,700,893
Total to be accounted for 99,811 1,233,425 1,333,236 395,795 1,729,031
Less collections and adjustments:
Current year (97,242) (1,212,546) (1 ,309,788) (381 ,273) (1,691,061)
Prior years (378) 4,981 4,603 ( 4,527) 76
Total to be accounted for (97,620) (1 ,207,565) (1,305,185) (385,800) (1 ,690,984)
Taxes receivable, end of year $ 2,191 $ 25,860 $ 28,051 $ 9,995 $ 38,046
Taxes receivable by year
1996 and prior $ 19 $ 108 $ 127 $ 454 $ 581
1997 7 41 48 150 198
1998 7 44 51 140 191
1999 7 48 55 108 163
2000 7 34 41 122 163
2001 7 36 43 120 163
2002 7 61 68 136 204
2003 70 126 196 132 328
2004 17 145 162 210 372
2005 59 199 258 283 541
2006 88 409 497 632 1,129
2007 52 508 560 621 1' 181
2008 96 2,461 2,557 612 3,169
2009 266 2,238 2,504 674 3,178
2010 189 4,224 4,413 1,652 6,065
2011 213 4,229 4,442 1,201 5,643
2012 247 4,210 4,457 488 4,945
2013 833 6,739 7,572 2,259 9,831
$ 2,191 $ 25,860 $ 28,051 $ 9,995 $ 38,046
FN FN FN FN FN
Property valuations (in OOO's) 13114 12113 11112 10111 09/10
Land $ 439,499 $ 431,312 $ 432,801 $ 442,492 $ 209,177
Improvements 573,454 551,135 516,182 518,390 786,539
Personal property 95,598 84,548 92,311 74,566 80,332
Exemptions (45, 150) (46,788) (43,476) (42,737) (40,057)
$ 1,063,401 $ 1,020,207 $ 997,818 $ 992,711 $ 1,035,991
Tax rate per $100 valuation
Operations 0.009350 0.009890 0.009890 0.008790 0.027140
Fire department 0.087380 0.104000 0.109250 0.109250 0.109140
Debt service 0.036660 0.019500 0.055860 0.076960 0.068720
Tax rate per $100 valuation 0.133390 0.133390 0.175000 0.195000 0.205000
Tax levy: $ 1,726,648 $ 1,581,619 $ 1,714,788 $ 1,934,045 $ 2,091,414
Percent of taxes collected to taxes levied 99.42% 99.72% 99.44% 99.59% 99.69%
43
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS-BY YEARS
SEPTEMBER 30, 2014
All Bonded Debt Series
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2015 $ 440,000 $ 178,508 $ 618,508
2016 450,000 168,658 618,658
2017 470,000 155,783 625,783
2018 480,000 142,309 622,309
2019 505,000 128,534 633,534
2020 510,000 114,083 624,083
2021 530,000 98,333 628,333
2022 550,000 81,958 631,958
2023 570,000 63,458 633,458
2024 110,000 43,183 153,183
2025 115,000 37,683 152,683
2026 115,000 33,083 148,083
2027 125,000 28,368 153,368
2028 130,000 23,243 153,243
2029 135,000 17,783 152,783
2030 140,000 12,113 152,113
2031 145,000 6,163 151,163
$ 5,520,000 $ 1,333,243 $ 6,853,243
44
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS-BY YEARS
SEPTEMBER 30, 2014
General Obligation Bonds -Series 2010
($2,000,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1-Se~ Mar 1/ Se~ 1 Total
2015 70,000 73,733 143,733
2016 75,000 71,283 146,283
2017 80,000 68,658 148,658
2018 85,000 65,858 150,858
2019 85,000 62,883 147,883
2020 90,000 59,908 149,908
2021 95,000 56,758 151,758
2022 100,000 53,433 153,433
2023 105,000 48,433 153,433
2024 110,000 43,183 153,183
2025 115,000 37,683 152,683
2026 115,000 33,083 148,083
2027 125,000 28,368 153,368
2028 130,000 23,243 153,243
2029 135,000 17,783 152,783
2030 140,000 12,113 152,113
2031 145,000 6,163 151,163
$ 1,800,000 $ 762,566 $ 2,562,566
45
TROPHY CLUB MUNICIPAL UTILITY DISTRICT N0.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS-BY YEARS
SEPTEMBER 30, 2014
General Obligation Bonds -Series 2012
(2,355,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1-SeE Mar 1/ SeE 1 Total
2015 195,000 53,250 248,250
2016 200,000 49,350 249,350
2017 205,000 44,350 249,350
2018 210,000 39,226 249,226
2019 225,000 33,976 258,976
2020 225,000 28,350 253,350
2021 230,000 21,600 251,600
2022 240,000 14,700 254,700
2023 250,000 7,500 257,500
$ 1,980,000 $ 292,302 $ 2,272,302
General Obligation Bonds -Series 2013
(1 ,905,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1-SeE Mar 1/ SeE 1 Total
2015 175,000 51,525 226,525
2016 175,000 48,025 223,025
2017 185,000 42,775 227,775
2018 185,000 37,225 222,225
2019 195,000 31,675 22G,G75
2020 195,000 25,825 220,825
2021 205,000 19,975 224,975
2022 210,000 13,825 223,825
2023 215,000 7,525 222,525
$ 1,740,000 $ 278,375 $ 2,018,375
46
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-6 CHANGES IN LONG-TERM BONDED DEBT
Interest rate
Date interest payable
Maturity date
Bonds outstanding at
beginning of year
Retirements of principal
Bonds outstanding at end of
fiscal year
Retirements of interest
Paying agent's name & city:
All Series
Bond Authority
Amount authorized by voters
Amount issued
Remaining to be issued
SEPTEMBER 30, 2014
Series 2010 Series 2012 Series 2013
GO Bonds GO Bonds GO Bonds
3.50-5.00% 2.00-3.00% 2.00-3.50%
3/1 & 9/1 3/1 & 9/1 3/1 & 9/1
9/1/2031 9/1/2023 9/1/2023
$ 1,870,000 $ 2,170,000 $ 1,905,000
$ 70,000 $ 190,000 $ 165,000
$ 1,800,000 $ 1,980,000 $ 1,740,000
$ 76,183 $ 57,050 $ 63,963
The Bank of New York Mellon, Newark, NJ
General
Obligation
Bonds
$ 29,094,217
(23,325,000)
$ 5,769,217
The general obligation bonds were authorized on October 7, 1975
Debt Service Fund cash and cash equivalents balance as of September 30, 2014:
Average annual debt service payment (principal & interest) for remaining term of debt:
47
Total
$ 5,945,000
$ 425,000
$ 5,520,000
$ 197,196
$ 10,264
$ 403,132
REVENUE
Ad valorem property taxes $
Water and wastewater charges
Utility Fees
Inspection and tap fees
Interest earned
Debt proceeds
Miscellaneous and other
Total revenue $
EXPENDITURES
Administrative $
Water operations
Wastewater operations
Wastewater collection system
Information systems
Contribution to Trophy Club Fire Dept
Capital outlay
Transfers Out and Debt Service
Total expenditures $
Excess (deficiency) of revenues
over (under) expenditures $
Total active retail water and/or
wastewater connections
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TS1-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES-FIVE YEARS
GENERAL FUND
SEPTEMBER 30, 2014
Amounts Percent of total revenue
2014 2013 2012 2011 2010 2014 2013 2012 2011
1,340,502 $ 1,426,185 $ 1,374,808 $ 1,313,027 $ 1,491,564 17.6% 16.1% 16.1% 18.8%
5,730,872 5,467,371 5,210,788 5,323,244 3,919,084 75.2% 60.9% 60.9% 76.3%
331,200 508,300 647,080 165,600 80,500 4.3% 7.6% 7.6% 2.4%
10,725 9,600 10,250 7,800 5,775 0.1% 0.1% 0.1% 0.1%
6,071 4,641 5,706 5,534 6,171 0.1% 0.1% 0.1% 0.1%
1 '100,000 0.0% 12.8% 12.8% 0.0%
202,481 214,294 213,277 159,221 191,498 2.7% 2.5% 2.5% 2.3%
7,621,851 $ 7,630,391 $ 8,561,909 6,974,426 5,694,592 100.0% 100.0% 100.0% 100.0%
1,779,470 $ 1,476,468 $ 1,097,547 $ 1,042,073 $ 993,986 23.3% 12.8% 12.8% 14.9%
3,031,672 2,623,822 2,503,331 2,737,946 1,912,511 39.8% 29.2% 29.2% 39.3%
621 '108 896,538 614,102 727,272 961,382 8.1% 7.2% 7.2% 10.4%
185,561 322,017 260,895 300,215 308,798 2.4% 3.0% 3.0% 4.3%
173,386 150,516 209,569 0.0% 2.0% 2.0% 2.2%
879,830 790,779 822,307 1 ,429,159 876,521 11.5% 9.6% 9.6% 20.5%
990,311 462,876 1,562,809 13.0% 18.3% 18.3% 0.0%
993,450 1,115,390 1,011,260 308,000 558,000 13.0% 11.8% 11.8% 4.4%
8,481,402 $ 7,687,890 $ 8,045,637 6,695,181 5,820,767 111.3% 94.0% 94.0% 96.0%
(859,551! $ (57,499) $ 516,272 $ 279,245 $ (126, 175) -11.3% 6.0% 6.0% 4.0%
3,140 3,096 3,887 3,554 3,361
48
2010
26.2%
68.8%
1.4%
0.1%
0.1%
0.0%
3.4%
100.0%
17.5%
33.6%
16.9%
5.4%
3.7%
15.4%
0.0%
9.8%
102.2%
-2.2%
REVENUE
Ad valorem property taxes
Penalties and interest
Intergovernmental
Interest earned
Miscellaneous and other
Total revenue
EXPENDITURES
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES-FIVE YEARS (Continued)
DEBT SERVICE FUND
SEPTEMBER 30, 2014
Amounts
2014 2013 2012 2011 2010 2014 2013
$ 386,992 $ 201,207 $ 547,587 $ 771,631 $ 740,420 62.4% 28.0%
2,676 1,688 3,226 6,018 0.4% 0.2%
230,804 503,000 308,000 554,100 653,000 37.2% 70.1%
97 11,900 5,956 985 4,848 0.0% 1.7%
6,120 1,000 0.0% 0.0%
620,569 717,795 870,889 1,332,734 1,399,268 100.0% 100.0%
425,000 605,000 565,000 1,115,000 1,055,000 68.5% 84.3%
198,695 231,333 277,319 382,019 311,570 32.0% 32.2%
623,695 836,333 842,319 1,497,019 1,366,570 100.5% 116.5%
$ (3, 126) $ (118,538) $ 28,570 $ (164,285) $ 32,698 -0.5% -16.5%
49
Percentage
2012 2011 2010
62.9% 57.9% 52.9%
0.4% 0.5% 0.0%
35.4% 41.6% 46.7%
0.7% 0.1% 0.3%
0.7% 0.0% 0.1%
100.0% 100.0% 100.0%
64.9% 83.7% 75.4%
31.8% 28.7% 22.3%
63.2% 112.3% 97.7%
36.8% -12.3% 2.3%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1 CONSOLIDATED
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS
September 30, 2014
Complete District Mailing Address: 100 Municipal Drive, Trophy Club, Texas 76262
District Business Telephone Number: Metro (682) 831-4600
Limit of Fees of Office that a Director may receive during a fiscal year:
(Set by Board Resolution -TWC Section 49.060)
Name and Address
Board Members:
James Moss
979 Trophy Club Drive
Trophy Club, TX 76262
Jim Hase
315 Lakewood Drive
Trophy Club, TX 76262
Kevin Carr
15 Edgemere Drive
Trophy Club, TX 76262
Neil Twomey
203 Oakmont Drive
Trophy Club, TX 76262
James C. Thomas
7 Meadowbrook Lane
Trophy Club, TX 76262
William Armstrong
18 Avenue Twenty
Trophy Club, TX 76262
C. Nick Sanders
7 Hayes Court
Trophy Club, TX 76262
Term of Office
Elected/Expires
or Date Hired
05/1 0-05/16
05/14-05/18
05/04-05/18
06/14-05/16
05/04-05/18
05/1 0-05/14
05/1 0-05/16
Fees of
Office Paid
FY14
$ 1,900
$ 700
$ 2,000
$ 600
$ 1,700
$ 1,300
$ 1,200
50
$6,000
Expense
Reimbursements
FY14
$
$
$ 42
$
$
$
$
Title
at
Year End
President
Vice-President
Secretary/Treasurer
Director
Director
Director
Resigned 5/10/14
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS (Continued)
SEPTEMBER 30, 2014
Term of Office Fees of Title
Elected/Expires Office Paid at
Name and Address or Date Hired FY14 Year End
Key Personnel:
Jennifer McKnight
122 Reatta Drive
Justin, Texas 76247 3/19/2012 $ General Manager
Consultants:
Denton Central Appraisal District
P.O. Box 2816
Denton, TX 76202 4/1/1981 $ 7,657 Appraiser
Tarrant Appraisal District
2500 Handley-Ederville Rd.
Fort Worth, TX 76262 10/1/2007 $ 2,416 Appraiser
LaFollett & Abbott PLLC
P.O. Box 717
Tom Bean, TX 75489 10/1/2010 $ 26,200 Auditors
The Wallace Group
P.O. Box 22007
Waco, TX 76702 5/1/2012 $ 886,331 Engineers
Whitaker, Chalk, Swindle & Sawyer, L.L.P.
3500 City Center, Tower II
Fort Worth, TX 76102 10/1/1999 $ 87,671 Legal Counsel
Liston Law Firm
2801 Weems Way, Suite B
Rowlett, TX 75088 7/1/2002 $ 46,749 Legal Counsel
Freeman & Corbett
8500 Bluffstone Cove
Suite B-1 04
Austin, TX 78759 12/17/2012 $ 80,743 Legal Counsel
Booth, Ahrens & Werkenthin P. C.
515 Congress Ave., Suite 1515
Austin, Texas 78701 10/1/2012 $ 19,330 Legal Counsel
J Stowe & Company
1300 E. Lookout Dr., Suite 100
Richardson, TX 75082 7/1/2013 $ 6,798 Consultant
Fulbright & Jaworski LLP
P. 0. Box 844284
Dallas, Texas 75284-4284 4/1/2014 $ 509,874 Legal Counsel
51
REPORTS REQUIRED BY
GOVERNMENTAL AUDITING STANDARDS
tt and Abbott PLLC
Certified Public Acoountants
Susan La Follett, CPA-Partner
Rod Abbott, CPA-Partner
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Board of Directors
Trophy Club Municipal Utility District No. 1
Trophy Club, Texas
We have audited , in accordance with the auditing standards generally accepted in the United
States of America and the standards app licabl e to fmancial audits contained in Government
Auditing Standard issued by the Comptro ller General of the United States, the financial
statements of the governmental activities , each major fund, and the aggregate remaining fund
information of Trophy Club Municipal Utility District No. 1 (the District), as of and for the year
ended September 30, 2014, and the related notes to the financial statements, which collectively
comprise the District's basic financial statements, and have issued our report thereon dated
January 20, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's
internal control over financia l reporting (internal contro l) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the District's
internal control. Accordingly, we do not express an opinion on the effectivene ss ofthe District's
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or emp lo yees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies , in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented ,
or detected and corrected on a timely basis. A significant deficiency is a deficiency , or a
combination of deficiencies , in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
52
LaFollett and Abbott PLLC
PO Box 717 · Tom Bean, TX · 75489
903-546-6975 · www.lafollettcpa.com
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or, significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are
free from material misstatement, we performed 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 detennination 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 our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
We noted certain matters that we reported to management of the District in a separate letter dated
January 20,2015.
Purpose ofthis Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Tom Bean, Texas
January 20, 2015
53