HomeMy WebLinkAboutFY Ended September 30, 2016
TROPHY CLUB
MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2016
CONTENTS
FINANCIAL SECTION Page
ANNUAL FILING AFFIDAVIT .................................................................................................... i
INDEPENDENT AUDITOR’S REPORT .......................................................................................1
MANAGEMENT’S DISCUSSION AND ANALYSIS (unaudited) ...............................................3
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position .....................................................................................................11
Statement of Activities .........................................................................................................12
Fund Financial Statements
Governmental Funds
Balance Sheet ..................................................................................................................13
Reconciliation of the Governmental Funds Balance Sheet
To Statement of Net Position ......................................................................................14
Statement of Revenues, Expenditures and Changes in
Fund Balances .............................................................................................................15
Reconciliation of the Statement of Revenues, Expenditures
And Changes in Fund Balances of Governmental Funds
To the Statement of Activities ....................................................................................16
Notes to Basic Financial Statements .........................................................................................17
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule – General Fund ....................................................................40
Schedule of Changes in Net Pension Liability and Related Ratios – Last Ten Years...……...41
Schedules of TCDRS Contributions – Last Ten Years .............................................................42
INDIVIDUAL SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
TSI-1 Service and Rates ..................................................................................................43
TSI-2 General Fund Expenditures and Other Financing Uses ........................................46
TSI-3 Temporary Investments .........................................................................................47
TSI-4 Taxes Levied and Receivable ................................................................................48
TSI-5 Long-Term Debt Service Requirements – By Year ..............................................49
TSI-6 Changes in Long-Term Bonded Debt ...................................................................53
TSI-7 Comparative Schedules of Revenues and Expenditures – Five Years ..................54
TSI-8 Board Members, Key Personnel, and Consultants ................................................56
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 ...................................................................58
Susan LaFollett, CPA – Partner
Rod Abbott, CPA – Partner
LaFollett and Abbott PLLC
PO Box 717 · Tom Bean, TX · 75489
903-546-6975 · www.lafollettcpa.com
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
Trophy Club Municipal Utility District No. 1
Trophy Club, Texas
Report on the Financial Statements
We have audited the accompanying 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, 2016, and the related notes to the financial
statements, which collectively comprise the District’s basic financial statements as listed in the table of
contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
1
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. 1, as of September 30, 2016, 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 Supplementary 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 40-42 be presented to supplement the basic financial statements. Such information, although not a
part 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. 1’s basic financial statements. The
accompanying individual schedules and other supplementary information on pages 43-57 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 certain 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 17,
2017, on our consideration of Trophy Club Municipal Utility District No. 1’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 part of an audit performed in accordance with Government Auditing Standards in considering
Trophy Club Municipal Utility District No. 1’s internal control over financial reporting and compliance.
Tom Bean, Texas
January 17, 2017 2
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
3
Trophy Club Municipal Utility District No. 1, Texas (the “District”) Management’s Discussion
and Analysis (MD&A) is a narrative overview and analysis designed to provide the reader a
means to identify and understand the financial activity of the District and changes in the
District’s financial position during the fiscal year ended September 30, 2016.
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 and deferred outflows of the District exceeded its
liabilities and deferred inflows by $19,624,477. Of this amount, $1,617,405 is unrestricted
net position and may be used to meet the District’s ongoing commitments.
The District’s net position increased by $1,929,074 during 2016. Contributors to this result
include $584,570 in capital contributions and a $483,806 decrease in non-departmental
expenses.
At the end of the fiscal year, the District’s governmental type funds reported a combined
fund balance of $7,599,394. As of September 30, 2016, the unassigned fund balance of the
General Fund was $2,467,334.
Long-term debt activity for the District included debt principal repayments totaling
$1,153,966.
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 information in addition to the basic financial statements.
Government-Wide Financial Statements – the government-wide financial statements are
designed to provide the reader with a general overview of the District’s finances in a way that is
comparable with financial statements from the private sector.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
4
Overview of the Financial Statements – continued
The government-wide financial statements consist of two statements:
1. The Statement of Net Position – (Page 11) this statement presents information on all of
the District’s assets, deferred inflows, deferred outflows, liabilities, and net position. The
net position is the difference between assets plus deferred outflows less deferred inflows
plus liabilities. 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
5
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 17-39.
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 and deferred outflows
exceeded liabilities and deferred inflows by $19,624,477. Of this amount, $11,908,497 (61%)
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, $5,852,557 (30%) restricted for capital projects, $210,860 (1%) restricted for debt
service, and $35,158 (0.2%) restricted for other.
Table 1
Condensed Statements of Net Position
Governmental Governmental
Activities Activities
2016 2015
Current and other 10,394,192$ 18,858,744$
Capital assets 31,910,470 22,112,163
Total assets 42,304,662 40,970,907
Deferred outflows 196,115 135,002
Total deferred outflows 196,115 135,002
Long-term liabilities 20,025,206 21,197,497
Other liabilities 2,828,422 2,162,794
Total liabilities 22,853,628 23,360,291
Deferred inflows 22,672 6,175
Total deferred inflows 22,672 6,175
Net Position:
Net investment in capital assets 11,908,497 937,899
Restricted for capital projects 5,852,557 13,000,786
Restricted for debt service 210,860 -
Restricted for other 35,158 -
Unrestricted 1,617,405 3,800,758
Total Net Position 19,624,477$ 17,739,443$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
6
Government-wide Financial Analysis - continued
District operational analysis – The following table provides a summary analysis of the District’s
consolidated operations for the fiscal years ended September 30, 2016 and 2015. Governmental
activities have increased the District’s net position by $1,929,074, which amounts to a 10.9%
increase in net position for the year ended September 30, 2016.
Table 2
Changes in Net Position
Governmental Governmental
Activities Activities
2016 2015
Revenue:
Program revenue
Charges for services 6,848,105$ 6,447,364$
Grants and Contributions 594,570 397,739
General Revenue
Ad valorem taxes 2,038,634 1,880,390
Unrestricted investment earnings 44,116 25,454
Contributions not restricted to specific programs 146,125 30,645
Gain on sale of disposed assets 48,083 -
Miscellaneous 57,888 142,130
Total Revenue 9,777,521 8,923,722
Expenses:
Water & Wastewater operations 4,498,486 4,342,704
General government and other 1,698,173 2,351,712
Fire 1,098,445 954,698
Loss on sale of disposed assets - 21,450
Interest charges 553,343 460,109
Total Expenses 7,848,447 8,130,673
Increase in net position 1,929,074$ 793,049$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
7
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 District’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 $7,599,394, of which 32%, or $2,467,334, is unassigned and available to the District
for future spending.
General Fund budgetary highlights
The most significant amendment to the General Fund 2016 budget involved increasing capital
outlays by $405,250 to purchase an ammonia system and other additions.
Revenue: Revenues were $908,381 (9.7%) less than budgeted
Water and wastewater charges were $925,409 (12.1%) less than budgeted.
Oversize meter reimbursements were $35,876 (227%) more than budgeted.
Expenses: Expenses were $374,615 (4.2%) less than budgeted
Water operations expenditures were $1,130,933 (26.9%) less than budgeted.
Capital Outlay expenditures were $901,635 (110%) more than budgeted.
Capital Asset and Debt Administration
The District’s investment in capital assets for its governmental activities as of September 30,
2016 amounted to $31,910,470, 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 44.3% during 2016 primarily due to approximately $8.76 million of new
construction in progress for the water and wastewater system. Additional information about
capital assets may be found in Note 5 in the notes to financial statements.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
8
Debt administration
Long-Term Liabilities – at the end of the current fiscal year, the District had $19,903,583 of
general obligation bonds, revenue bonds, notes payable, capital leases, and accrued compensated
absences, which is a decrease of 5% from the previous fiscal year. Of this amount, $19,880,350
is backed by the full faith and credit of the District. No new debt was issued for the District
during 2016.
Table 3
Outstanding Debt at Year-end
Governmental Governmental
Activities Activities
2016 2015
General obligation bonds 10,160,000$ 10,845,000$
Revenue bonds 9,020,000 9,230,000
Notes payable - 152,000
Capital lease obligations 700,350 807,316
Compensated absences 23,233 23,233
Total 19,903,583$ 21,057,549$
Economic factors and next year’s budgets and rates:
General Fund fiscal year 2017 budgetary highlights:
Revenue: The District’s 2017 operational revenue is budgeted to increase by
$2,628,387 when compared to the actual fiscal year 2016 revenue.
Water revenue is budgeted to increase from $4,210,866 for fiscal year 2016 to
$6,436,734 for fiscal year 2017 for a total increase of $2,225,868.
Property tax revenue is budgeted to increase by $140,824 due to the adoption of a higher
property tax rate.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
9
Economic factors and next year’s budgets and rates: (Continued)
Expenses: The District’s 2017 operational expense is budgeted to decrease by
$1,066,746.
The largest increases are for Wholesale Water for $50,000, Revenue Bond payments and
Revenue Bond Reserves for $513,000, Cash Reserves for $400,000, and Capital Outlays
for $299,000.
Overall:
The District’s 2017 operational budget is anticipated to have expenses of $11,060,948 and
revenues of $11,074,404.
Debt Service Fund 2017 budget:
Debt service revenues are budgeted to increase from $1,451,061 in fiscal year 2016 to
$1,909,072 in fiscal year 2017. This is an increase of $458,011 and is attributable to
issuance of new debt in fiscal year 2015. There was an issuance of $5,765,000 in tax
bonds and $9,230,000 in revenue bonds in fiscal year 2015.
Property tax revenues for the Debt Service Fund are budgeted to increase by $6,838 due
to an increase in valuations and a reduction in the debt service tax rate.
The consolidated District’s overall budget for revenue increased from $11,445,263 in fiscal
year 2016 to $12,983,476 in fiscal year 2017, which is a 19.45% increase. The overall
budgeted expenses increased from $11,443,573 to $12,966,730 which is a 13.31% increase.
Water and sewer rates were increased by the District’s Board of Directors with an effective
date of September 1, 2015. A petition for a rate challenge by retail customers was submitted
to the Public Utility Commission of Texas (PUCT) in August 2015. The rate challenge will
result in a review of water and sewer rates set by the Board of Directors and its outcome is
still unknown. The rate challenge before the PUCT may impact District water and sewer
rates negatively or positively and will therefore impact operational revenues for FY 2016.
Water and sewer rates were increased by the District’s Board of Directors with an effective
date of October 1, 2016. The rate challenge is still ongoing and may impact District revenues
for FY 2017.
Although the O&M tax rate increased and the debt service tax rate decreased, the overall tax
rate decreased for fiscal year 2017 from the overall tax rate for year 2016.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2016
10
Requests for information
This financial report is designed to provide a general overview of the District’s consolidated
finances for all interested parties. Questions concerning any of the information in this report or
requests for additional information should be directed to the Trophy Club Municipal Utility
District No. 1, Finance Manager, 100 Municipal Drive, Trophy Club, Texas 76262.
BASIC FINANCIAL STATEMENTS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF NET POSITION
SEPTEMBER 30, 2016
Governmental
Activities
Cash and cash equivalents 1,299,504$
Pooled investments 1,974,470
Restricted pooled investments 6,063,417
Restricted certificate of deposit 35,158
Receivables
Accounts receivable, net 973,445
Taxes 26,186
Due from other governments 17,568
Prepaids 3,486
Net pension asset 958
Non-depreciable capital assets:
Land 648,178
Construction in progress 10,639,507
Water Rights 796,145
Depreciable capital assets: (net)
Buildings and other improvements 2,953,487
Machinery, vehicles, and other equipment 2,151,068
Water system 14,687,805
Organization costs 34,280
TOTAL ASSETS 42,304,662$
Deferred TCDRS contributions 128,784
Deferred unamortized investment gains 67,331
TOTAL DEFERRED OUTFLOWS OF RESOURCES 196,115
Accounts payable 2,290,873$
Accrued liabilities 76,661
Accrued interest payable 60,767
Construction and retainage payable 43,608
Other deposits payable 35,158
Customer deposits 321,355
Noncurrent liabilities:
Debt due within one year 1,184,640
Debt due in more than one year 18,840,566
TOTAL LIABILITIES 22,853,628
Deferred unamortized investment losses 22,672
TOTAL DEFERRED INFLOWS OF RESOURCES 22,672
Net investment in capital assets 11,908,497
Restricted for capital projects 5,852,557
Restricted for debt service 210,860
Restricted for other 35,158
Unrestricted 1,617,405
TOTAL NET POSITION 19,624,477$
ASSETS
LIABILITIES
NET POSITION
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
The notes to financial the statements are an integral part of this statement.
11
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2016
Net (Expenses)
Revenue and
Changes in Net
Assets
Program Activities Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Governmental
Activities
Governmental Activities
General government 1,302,074$ 118,179$ -$ -$ (1,183,895)$
Water operations 3,254,882 4,325,300 - 584,570 1,654,988
Wastewater operations 1,175,588 2,404,626 - - 1,229,038
Wastewater collection system 68,016 - - - (68,016)
Non-Departmental 380,317 - - - (380,317)
Directors 15,782 - - - (15,782)
Fire 1,098,445 - 10,000 - (1,088,445)
Interest on long term debt 553,343 - - - (553,343)
Total governmental
activities 7,848,447$ 6,848,105$ 10,000$ 584,570$ (405,772)$
General Revenues:
Ad valorem taxes 2,038,634
Investment income 44,116
Contributions not restricted to specific programs 146,125
Miscellaneous 57,888
Gain on sale of disposed assets 48,083
Total general revenues 2,334,846
Change in net position 1,929,074
Net Position - beginning of year 17,739,443
Prior period adjustments (44,040)
Net Position - end of year 19,624,477$
Program Revenues
Governmental Activities
The notes to the financial statements are an integral part of this statement.
12
Debt Capital Total
Service Projects Governmental
General Fund Fund Fund Funds
Assets
Cash and cash equivalents 1,273,473$ 26,031$ -$ 1,299,504$
Pooled investments 1,974,470 - - 1,974,470
Restricted investments - 210,860 5,852,557 6,063,417
Restricted certificate of deposit 35,158 - - 35,158
Receivables:
Accounts receivables, net 973,445 - - 973,445
Taxes 16,678 9,508 - 26,186
Due from other governments 17,568 - - 17,568
Prepaids 3,486 - - 3,486
TOTAL ASSETS 4,294,278$ 246,399$ 5,852,557$ 10,393,234$
Liabilities
Accounts payable 871,351$ -$ 1,419,522$ 2,290,873$
Construction and retainage payable 43,608 - - 43,608
Deposits payable 35,158 - - 35,158
Accrued liabilities 76,661 - - 76,661
Customer deposits 321,355 - - 321,355
Total liabilities 1,348,133 - 1,419,522 2,767,655
Deferred Inflows of Resources
Unavailable revenues - property taxes 16,678 9,507 - 26,185
Total deferred inflows of resources 16,678 9,507 - 26,185
Fund Balances
Non-spendable prepaids 3,486 - - 3,486
Assigned-Capital outlays 458,647 - 4,433,035 4,891,682
Assigned-Debt service - 236,892 - 236,892
Unassigned 2,467,334 - - 2,467,334 - -
Total fund balances 2,929,467 236,892 4,433,035 7,599,394
TOTAL LIABILITIES, DEFERRED
INFLOWS, AND FUND BALANCES 4,294,278$ 246,399$ 5,852,557$ 10,393,234$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2016
ASSETS
LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES
The notes to financial statements are an integral part of this statement.
13
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO STATEMENT OF NET POSITION
SEPTEMBER 30, 2016
Total fund balances - governmental funds 7,599,394$
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.31,910,470
Net pension asset is not a financial resource; therefore, it is not reported in the
governmental funds.958
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.26,185
TCDRS contributions are not current financial resources/burden; therefore they are
not reported in the governmental funds. The net of these amounts is:128,784
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.(60,767)
Unamortized pension investment gains/losses are not current financial resources/burden;
therefore they are not reported in the governmental funds. The net of these amounts is:44,659
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.(23,233)
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.(20,001,973)
Net position of governmental activities 19,624,477$
The notes to the financial statements are an integral part of this statement.
14
Debt Capital Total
Service Projects Governmental
General Fund Fund Fund Funds
Revenues:
Water and wastewater charges 6,729,926$ -$ -$ 6,729,926$
Taxes 1,371,247 670,235 - 2,041,482
Utility Fees 55,200 - - 55,200
Miscellaneous 57,888 - - 57,888
Oversize meter reimbursements 51,654 - - 51,654
Intergovernmental revenues 156,125 - - 156,125
Investment income 12,652 2,564 28,900 44,116
Inspection and tap fees 11,325 - - 11,325
Total Revenues:8,446,017 672,799 28,900 9,147,716
Expenditures
Water 3,078,429 - - 3,078,429
Adminstration 992,616 - - 992,616
Wastewater 1,089,257 - - 1,089,257
Fire 1,010,938 - - 1,010,938
Non-Departmental 380,317 - - 380,317
Board of Directors 15,782 - - 15,782
Capital Outlay 1,713,885 - 8,308,528 10,022,413
Debt Service
Principal 258,966 895,000 - 1,153,966
Interest and fiscal charges 21,535 552,220 - 573,755
Bond Administrative Fees - 2,150 - 2,150
Total Expenditures:8,561,725 1,449,370 8,308,528 18,319,623
Excess (deficiency) of revenues
over (under) expenditures (115,708) (776,571) (8,279,628) (9,171,907)
Other Financing Sources (Uses)
Transfers in 8,034 902,259 - 910,293
Transfers out (902,259) - (8,034) (910,293)
Proceeds from Sale of Assets 90,935 - - 90,935
Total Other Financing Sources (Uses):(803,290) 902,259 (8,034) 90,935
Net change in fund balance (918,998) 125,688 (8,287,662) (9,080,972)
Fund Balances - beginning of year (restated)3,848,465 111,204 12,720,697 16,680,366
Fund Balances - end of year 2,929,467$ 236,892$ 4,433,035$ 7,599,394$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2016
The notes to financial statements are an integral part of this statement.
15
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
RECONCILIATION OF THE STATEMENT OF REVENUES
EXPENDITURES AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2016
Net change in fund balances - total governmental funds (9,080,972)$
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.(765,824)
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.10,022,413
Debt principal payments reduces long-term liabilities in the Statement of Net
Position, but it is recorded as an expenditure in the governmental funds.1,153,966
Current year contributions of capital assets are not recorded in the governmental funds,
but are recognized for the government-wide financial statements.584,570
Governmental funds report the effects of debt premiums, and debt discounts,
when debt is first issued, whereas the amounts are deferred and amortized
in the Statement of Activities.18,325
Governmental funds recognize the full amount of proceeds received for
sale of disposed assets, but net book values of the assets are factored in to
calculating a gain on sold assets for the government-wide financial statements.(42,852)
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 unavailable revenues and various other items. The net effect
of these reclassifications is to decrease net position.35,211
Current year changes in accrued interest payable do not require the use of current
financial resources and, therefore, are not reported as expenditures in the
governmental funds.4,237
Change in net position of governmental activities 1,929,074$
The notes to the financial statements are an integral part of this statement.
16
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
17
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Statement
Denton County Municipal Utility District No. 1 (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 of MUD1 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 financial accountability.
A primary government is financially accountable for the organizations that make up its legal
entity. It is also financially accountable for legally separate organizations if its officials appoint a
voting majority of an organization's governing body and either it is able to impose its will on that
organization or there is a potential for the organization to provide specific financial benefits to, or
to impose specific financial burdens on, the primary government. A primary government may also
be financially accountable for governmental organizations that are fiscally dependent on it.
A primary government has the ability to impose its will on an organization if it can significantly
influence the programs, projects, or activities of, or the level of services performed or provided by,
the organization. A financial benefit or burden relationship exists if the primary government (a) is
entitled to the organization's resources; (b) is legally obligated or has otherwise assumed the
obligation to finance the deficits of, or provide financial support to, the organization; or (c) is
obligated in some manner for the debt of the organization. Some organizations are included as
component units because of their fiscal dependency on the primary government. An organization
is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, set
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
18
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 of the District are comprised only of governmental activities.
The Statement of Activities demonstrates the degree to which the direct expenses of a given
program are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific program. Program revenues include 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given program
and 2) operating or capital grants and contributions that are restricted to meeting the operational or
capital requirements of a particular program. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
Fund Financial Statements
The District segregates transactions related to certain functions or activities in separate funds in
order to aid financial management and to demonstrate legal compliance. These statements are
required to present each major fund in a separate column on the fund financial statements. For
fiscal year 2016, the major funds are the General Fund and Capital Projects Fund. The non-
major fund is the 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
19
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” means
collectible within the current period or soon enough thereafter to be used to pay liabilities of the
current period. The District considers receivables collected within sixty days after year-end to be
available and recognizes them as revenues of the current year. Expenditures are recorded when the
related fund liability is incurred. However, debt service expenditures are recorded only when
payment is due.
The revenues susceptible to accrual are interest income and ad valorem taxes. All other
governmental fund revenues are recognized when received.
E. Cash and Investments
The District’s cash and cash equivalents are considered to be cash on hand, demand deposits, and
short-term investments of three months or less from the date of acquisition.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
20
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – 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 current 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 50 Years
Improvements other than buildings 15 - 30 Years
Machinery and equipment 5 - 15 Years
Vehicles 6 - 12 Years
Water and wastewater systems 30 - 65 Years
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
21
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 Accounting 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
22
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – 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 District’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, 2016, the carrying amount of the District’s deposits (cash, certificates of deposit,
and non-pooled savings accounts) was $1,312,877 and the bank balance was $1,894,905. The
District’s cash deposits at September 30, 2016, and during the year then ended were entirely covered
by FDIC insurance, pledged securities, or by a letter of credit pledged by the District’s agent bank in
the District’s name.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
23
NOTE 2. CASH AND INVESTMENTS – CONTINUED
The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in
the areas of investment practices, management reports and establishment of appropriate policies.
Among other things, it requires the District to adopt, implement, and publicize an investment policy.
That policy must address the following areas; (1) safety of principal and liquidity, (2) portfolio
diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6)
maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted
maturity, allowed based on the stated maturity date for the portfolio, (8) investment staff quality and
capabilities, and (9) bid solicitation preferences for certificates of deposit.
Statutes and the District’s investment policy authorized the District to invest in the following
investments as summarized below:
The Act also requires the District to have independent auditors perform test procedures related to
investment practices as provided by the Act. The District is in substantial compliance with the
requirements of the Act and with local policies.
Cash and investments as of September 30, 2016 are classified in the accompanying financial
statements as follows:
Statement of Net Position:
Primary Government:
Cash and cash equivalents 1,299,504$
Pooled Investments 1,974,470
Restricted certificate of deposit 35,158
Restricted pooled investments 6,063,417
Total cash and investments 9,372,549$
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio In One Issuer
U.S. Treasury Obligations 2 years 50%NA
U.S. Agencies Securities 2 years 50%NA
State of Texas Securities 2 years 50%NA
Certificates of Deposits 2 years 90%NA
Money Market 2 years 90%NA
Investment pools 2 years 90%NA
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
24
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Cash and investments as of September 30, 2016 consist of the following:
Petty Cash 600$
Deposits with financial institutions 1,277,719
Restricted Certificate of Deposit 35,158
Restricted Pooled Investments 6,063,416
Texpool Investments 1,995,656
Total cash, certificate of deposit, and pooled investments 9,372,549$
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its
fair value to changes in market interest rates. One of the ways that the District manages its exposure
to interest rate risk is by investing mainly in investment pools which purchase a combination of
shorter term investments with an average maturity of less than 60 days thus reducing the interest rate
risk. The District monitors the interest rate risk inherent in its portfolio by measuring the weighted
average maturity of its portfolio. The District has no specific limitations with respect to this metric.
As of September 30, 2016, the District had the following investment:
Weighted
Average
Investment Type Amount Maturity
TexPool 8,059,072$ 41 days
Total Investments 8,059,072$
As of September 30, 2016, the District did not invest in any securities which are highly sensitive to
interest rate fluctuations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where applicable)
the Public Funds Investment Act, the District’s investment policy, or debt agreements, and the actual
rating as of year-end for each investment type.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
25
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Minimum Rating as
Legal of Year
Investment Type Amount Rating End
TexPool 8,059,072$ AAAm AAAm
Total Investments 8,059,072$
Concentration of Credit Risk
The investment policy of the District contains no limitations on the amount that can be invested in
any one issuer. As of September 30, 2016, other than external investment pools, the District did
not have 5% or more of its investments with one issuer.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty to a transaction, a
government will not be able to recover the value of its investment or collateral securities that are
in the possession of another party. The Public Funds Investment Act and the District’s investment
policy do not contain legal or policy requirements that would limit the exposure to custodial credit
risk for deposits or investments, other than the following provision for deposits: The Public Funds
Investment Act requires that a financial institution secure deposits made by state or local
governmental units by 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 of TexPool shares.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
26
NOTE 3. ACCOUNTS RECEIVABLE
Receivables as of year-end, including the applicable allowances for uncollectible accounts, are as
follows:
Accounts Receivable:
MUD water 486,959$
MUD sewer 244,358
Unbilled receivables 135,086
Refuse (as agent for Town of Trophy Club)69,329
Refuse tax (as agent for Town of Trophy Club)5,948
PID Surcharge (as agent for Town of Trophy Club)936
Miscellaneous 2,586
Storm drainage (as agent for Town of Trophy Club)40,294
985,496
Allowance for uncollectible accounts (12,051)
Total (net)973,445$
Due from Other Governments:
Town of Trophy Club 17,568$
NOTE 4. INTERFUND TRANSFERS
Transfers between funds during the year are as follows:
Transfer In Transfer Out Amount Purpose
Debt Service General Fund 214,379$ Assist with fire station bond payment
Debt Service General Fund 119,706 Transfer of PID surcharges
Debt Service General Fund 123,336 Bond reserve account required payments
Debt Service General Fund 444,838 Assist with Revenue bond payments
General Fund Capital Projects 8,034 To repay advances for project costs
Total 910,293$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
27
NOTE 5. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2016, was as follows:
Beginning Retirements/Ending
Balances Additions Transfers Balance
Governmental Activities:
Capital assets - Non-Depreciable
Land 648,178$ -$ -$ 648,178$
Construction in progress 2,148,106 8,758,891 (267,490) 10,639,507
Water Rights - 796,145 - 796,145
Total capital assets
not being depreciated 2,796,284 9,555,036 (267,490) 12,083,830
Capital assets - Depreciable
Buildings 3,344,790 - - 3,344,790
Improvements other than buildings 314,459 - - 314,459
Machinery and equipment 1,570,955 100,548 (46,988) 1,624,515
Organization costs 2,331,300 - - 2,331,300
Vehicles 2,596,425 24,748 (314,781) 2,306,392
Water system 10,998,195 833,939 52,601 11,884,735
Wastewater treatment system 5,663,320 - - 5,663,320
Wastewater collection system 4,128,457 92,712 188,619 4,409,788
Total capital assets
being depreciated 30,947,901 1,051,947 (120,549) 31,879,299
Less accumulated
depreciation for:
Buildings (392,750) (67,071) - (459,821)
Improvements other than buildings (234,711) (11,231) - (245,942)
Machinery and equipment (715,758) (93,016) 30,406 (778,368)
Organization costs (2,289,727) (7,293) - (2,297,020)
Vehicles (1,132,266) (183,986) 314,781 (1,001,471)
Water system (3,425,338) (194,025) - (3,619,363)
Wastewater treatment system (2,056,180) (138,721) - (2,194,901)
Wastewater collection system (1,385,292) (70,481) - (1,455,773)
Total accumulated
depreciation (11,632,022) (765,824) 345,187 (12,052,659)
Governmental activities capital
assets, net 22,112,163$ 9,841,159$ (42,852)$ 31,910,470$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
28
NOTE 5. CAPITAL ASSETS - CONTINUED
Depreciation expense was charged as direct expense to programs of the primary government as
follows:
General government 325,655$
Water operations 184,378
Fire department 87,507
Non-Departmental -
Wastewater operations 100,268
Wastewater collection systems 68,016
Total depreciation expense 765,824$
NOTE 6. LONG-TERM DEBT
At September 30, 2016, the District's long-term debt payable consisted of the following:
Interest Year Average
Rate of Final Annual Original Outstanding
Description Payable Issue Maturity Payment Amount 9/30/2016
Tax and revenue bonds:
Improvements 3.50-5.00%2010 2031 148,205$ 2,000,000$ 1,655,000$
Refunding 2.00-3.00%2012 2023 251,373 2,355,000 1,585,000
Refunding 2.00-3.50%2013 2023 224,734 1,905,000 1,390,000
Improvements 1.50-3.50%2015 2034 199,898 5,765,000 5,530,000
Improvements 2.00-3.25%2015 2035 305,174 9,230,000 9,020,000
19,180,000$
Capital lease payable:
Capital lease obligations 2.50%2015 2022 127,149 807,316 700,350
700,350$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
29
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, 2016:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Tax, revenue, and refunding bonds 20,075,000$ -$ (895,000)$ 19,180,000$ 1,075,000$
Deferred loss on refunding (6,932) - 867 (6,065) -
Premium on bonding 146,880 - (19,192) 127,688 -
20,214,948 - (913,325) 19,301,623 1,075,000
Notes payable 152,000 - (152,000) - -
152,000 - (152,000) - -
Capital lease obligations 807,316 - (106,966) 700,350 109,640
807,316 - (106,966) 700,350 109,640
Compensated absences 23,233 - - 23,233 -
23,233 - - 23,233 -
Total Governmental Activities
Long-term Liabilities 21,197,497$ -$ (1,172,291)$ 20,025,206$ 1,184,640$
The annual requirements to amortize all debt outstanding as of September 30, 2016, are as follows:
Tax, revenue, and refunding bonds:
Year Ending
September 30,Principal Interest Total
2017 1,075,000$ 531,221$ 1,606,221$
2018 1,100,000 506,847 1,606,847
2019 1,135,000 481,897 1,616,897
2020 1,155,000 456,096 1,611,096
2021 1,195,000 428,083 1,623,083
2022-2026 5,075,000 1,693,713 6,768,713
2027-2031 4,900,000 1,041,045 5,941,045
2032-2035 3,545,000 272,113 3,817,113
Total 19,180,000$ 5,411,015$ 24,591,015$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
30
NOTE 6. LONG-TERM DEBT – CONTINUED
Notes and capital leases payable:
Year Ending
September 30,Principal Interest Total
2017 109,640$ 17,509$ 127,149$
2018 112,381 14,768 127,149
2019 115,190 11,958 127,148
2020 118,070 9,078 127,148
2021 121,022 6,127 127,149
2022 124,047 3,101 127,148
Total 700,350$ 62,541$ 762,891$
Tax Revenue Bonds
The tax revenue bonds are payable from the proceeds of ad valorem taxes levied upon all property
subject to taxation within the District, without limitation as to rate or amount, and are further payable
from, and secured by a lien on and pledge of the net revenue to be received from the operation of the
District’s waterworks and sanitary sewer system.
The outstanding bonds are callable for redemption prior to maturity at the option of the District as
follows:
Series 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.
Series 2014 – All maturities from 2024 to 2034 are callable in principal increments of $5,000 on
or after September 1, 2025 at par plus unpaid accrued interest to the fixed date for redemptions.
Series 2015 – All maturities from 2025 to 2035 are callable in principal increments of $5,000 on
or after September 1, 2025 at par plus unpaid accrued interest to the fixed date for redemptions.
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, 2016.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
31
NOTE 7. PROPERTY TAXES
Property taxes are levied as of October 1, on the assessed value listed as of the prior January 1, for all
real and certain personal property located in the District. The appraisal of property within the District
is the responsibility of Denton Appraisal District (Appraisal District) as required by legislation passed
by the Texas legislature. The Appraisal District is required under such legislation to assess all
property within the Appraisal District on the basis of 100% of its appraised value and is prohibited
from applying any assessment ratios. The value of property within the Appraisal District must be
reviewed every five years; however, the District may, at its own expense, require annual reviews of
appraised values. The District may challenge appraised values established by the Appraisal District
through various appeals and, if necessary, legal action. Property taxes for the District are not limited
as to rate or amount. In an election held October 7, 1975, the electorate of the District authorized the
levy of up to $0.25 per $100 valuation for the operations and maintenance of the District. Property
taxes attach as an enforceable lien on property as of January 1, following the levy date. Taxes are due
by January 31, following the levy date.
Property taxes are recorded as receivables when levied. Following is information regarding the 2016
tax levies:
Adjusted taxable values 1,187,666,399$
O & M and Fire tax levy $0.07694/$100 929,469
I & S tax levy $0.05420/$100 654,760
Total tax levy $0.131140/$100 1,584,228$
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, 2016:
Non-Spendable Fund Balances
The District’s $3,486 non-spendable fund balance represents expenses prepaid at fiscal year-end.
Assigned Fund Balances
The District assigned a total of $458,647 of General Fund balances for the following future capital
outlays: $241,897 for wastewater system improvements, $178,945 for vehicles, and $37,805 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.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
32
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 activities
(i.e., the governmental funds) are eliminated for the Statement of Net Position presentation.
At September 30, 2016, none of the funds have outstanding due from/to other funds.
NOTE 11. RETIREMENT PLAN
Introduction
The funding policy governs how the Texas County & District Retirement System (TCDRS) determines
the employer contributions required to ensure that benefits provided to TCDRS members are funded in a
reasonable and equitable manner. The goals of TCDRS’ funding policy are to fully fund benefits over
the course of employees’ careers to ensure intergenerational equity, and to balance rate and benefit
stability with the need for the plan funding to be reflective of current plan conditions.
This policy documents the current funding policies in effect for the Dec. 31, 2015 actuarial valuation as
established by state law, administrative rule and action by the TCDRS Board of Trustees (the board).
The policy serves as a comprehensive funding overview and complies with the GASB reporting
requirements for an agent multiple-employer plan.
TCDRS Funding Overview
TCDRS is a model for responsible, disciplined funding. TCDRS does not receive any state funding. As
an agent, multiple-employer plan, each participating employer in the system funds its plan
independently. A combination of three elements funds each employer’s plan: employee deposits,
employer contributions and investment income.
The deposit rate for employees is 7% of compensation, as adopted by the employer’s
governing body.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
33
NOTE 11. RETIREMENT PLAN (CONTINUED)
Participating employers are required to contribute at actuarially determined rates to ensure
adequate funding for each employer’s plan. Employer contribution rates are determined
annually and approved by the TCDRS Board of Trustees.
Investment income funds a large part of the benefits employees earn.
Pursuant to state law, employers participating in the system must pay 100% of their actuarially
determined required contributions on an annual basis.
Each employer has the opportunity to make additional contributions in excess of its annual required
contribution rate either by adopting an elected rate that is higher than the required rate or by making
additional contributions on an ad hoc basis. Employers may make additional contributions to pay down
their liabilities faster, pre-fund benefit enhancements and/or buffer against future adverse experience.
In addition, employers annually review their plans and may adjust benefits and costs based on their local
needs and budgets. Although accrued benefits may not be reduced, employers may reduce future benefit
accruals and immediately reduce costs.
Methodology for Determining Employer Contribution Rates
The board hires independent outside consulting actuaries to conduct an annual valuation to measure the
funding status and to determine the required employer contribution rate for each employer plan. In order
to calculate the employer contribution rate, the actuary does the following:
Studies each employer’s adopted plan of benefits and the profile of its plan participants, and uses
assumptions established by the board to estimate future benefit payments.
Discounts the estimate of future benefit payments to the present based on the long-term rate of
investment return to determine the present value of future benefits.
Compares the present value of future benefits with the plan’s assets to determine the difference
that needs to be funded based on the funding policy.
The valuation of each employer plan is based on the system funding policy and the assets, benefits and
participant profile of each participating employer plan. The four key components in the determination of
employer contribution rates are: the actuarial cost method, amortization policy, the asset valuation
method and the actuarial assumptions.
Actuarial Cost Method
TCDRS has adopted the replacement life entry age cost method, a conservative cost method and an
industry standard. The goal of this cost method is to fund benefits in an orderly manner for each
participant over his or her career so that sufficient funds are accumulated by the time benefit payments
begin. Under this approach, benefits are funded in advance as a level percentage of pay. This portion of
the contribution rate is called the normal cost rate and generally remains stable from year to year.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
34
NOTE 11. RETIREMENT PLAN (CONTINUED)
Amortization Policy
The portion of the contribution rate that funds any remaining unfunded amounts for benefits that are not
covered by the normal cost is called the unfunded actuarial accrued liability (UAAL) rate. UAAL
amounts occur when benefit enhancements are adopted that have not been funded in advance, or when
actual investment or demographic experience varies from the actuarial assumptions (actuarial gains and
losses). UAAL amounts are amortized on a level-percentage-of-covered-payroll basis over a closed
period with a layered approach. The closed periods ensure all unfunded liabilities are financed over no
more than 20 years from the time they occur. Each year new layers are established to amortize changes
in the UAAL due to actuarial gains or losses, as well as any plan benefit changes elected by an employer
for that year.
Benefit enhancements are amortized over a 15-year closed period. All other changes in the UAAL are
amortized over 20-year closed periods. These amortization periods are generally more conservative than
those of most other public retirement plans and are stricter than the minimum amortization period
required under state law.
For newly participating districts that have five or fewer employees who are all within five years of
retirement eligibility, any initial UAAL and any subsequent adoption of prior service credits are
amortized over a five-year closed amortization period. This ensures that benefits are appropriately
funded over the current generation of employees.
Notwithstanding the layered approach, the total UAAL payment may not be less than the required
payment obtained by amortizing the entire UAAL over a 20-year period.
If a plan is overfunded, the overfunded actuarial accrued liability (OAAL) is calculated annually using a
30-year open amortization period.
Asset Valuation Method
When determining the actuarial value of assets used for measuring a plan’s funded status, TCDRS
smooths each year’s actuarial investment gains and losses and recognizes them over a five-year period
to better reflect the system’s long-term investment horizons and to keep employer contribution rates
more stable. As actuarial asset investment gains and losses are recognized, they become part of the
actuarial gains and losses for the year and are funded according to the amortization policy. The five-year
period helps stabilize employer rates while still ensuring that rates are reflective of current market
conditions.
In addition, the board has the ability to set aside reserves from investment earnings that are used to help
offset future negative economic cycles. These reserves are held separately and are not counted as part of
a participating employer’s plan assets until they are passed through to employers when determined
necessary by the board. Reserves help maintain rate stability for employers. In addition, reserves ensure
that employers do not adopt benefit increases based on a temporarily lower plan cost at a high point in a
market cycle and, conversely, are not as pressured to immediately reduce benefit levels during a low
point in a market cycle.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
35
NOTE 11. RETIREMENT PLAN (CONTINUED)
Actuarial Assumptions
Demographic and economic assumptions are used to estimate employer liabilities and to determine the
amount of funding required from employer contributions as opposed to investment earnings. These
assumptions reflect a long-term perspective of 30 years or more. Examples of key economic
assumptions include long-term investment return, long-term inflation and annual payroll increase.
Demographic assumptions are the actuary’s best estimate of what will happen to TCDRS members and
retirees. Examples of demographic assumptions are employment termination rates, retirement rates and
retiree mortality rates. A complete listing of all actuarial assumptions can be found in the annual system-
wide valuation report.
Oversight
The board has established review policies to ensure that actuarial assumptions are appropriate and that
the methodology for determining employer contribution rates is being correctly applied.
Review of Actuarial Assumptions
TCDRS’ actuarial assumptions are periodically reviewed and revised as deemed necessary to reflect best
estimates of future experience. Every four years, the TCDRS consulting actuary conducts an
investigation of experience. TCDRS assumptions are compared to plan experience and future
expectations, and changes to the assumptions are recommended as needed. The board adopts actuarial
assumptions to be used in the valuation based on the results of this study.
An actuarial audit of every investigation of experience is required and must be performed by an
independent auditing actuary to review the consulting actuary’s analysis, conclusions and
recommendations for accuracy, appropriateness and reasonableness. These audits alternate between a
peer review and a full replication audit of the investigation of experience. In a peer review audit of the
investigation, the reviewing actuary uses the raw results of the investigation for demographic
assumptions as calculated by the consulting actuary to test the conclusions and recommendations. In
addition, the reviewing actuary independently analyzes economic assumptions to test the results and
recommendations of the consulting actuary. The reviewing actuary also examines the consulting
actuary’s methods and assumptions for reasonableness and internal consistency. In a full replication
audit of the investigation, in addition to performing all of the steps of a peer review, the auditing actuary
fully replicates the calculation of the investigation’s raw results.
Review of Employer Contribution Rates
In order to test accuracy and ensure that the actuarial methods and assumptions are being correctly
applied, an audit of the valuation is required every four years. These audits are conducted by an
independent reviewing actuary and alternate between a peer review and a full replication audit of the
valuation. In the peer review audit of the valuation, the actuary uses a sample of participant data and
TCDRS plans to test the results of the valuation. The reviewing actuary also examines the consulting
actuary’s methods and assumptions for reasonableness and internal consistency. In a full replication
audit of the valuation, the auditing actuary performs all the steps of a peer review audit but instead of
analyzing sample data and plans, the auditing actuary fully replicates the original actuarial valuation.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
36
NOTE 11. RETIREMENT PLAN (CONTINUED)
Review and Modification of Funding Policy
The board will review this policy on a regular basis and may modify this policy at its discretion.
Modifications to the policy may be submitted for consideration to the board by staff and/or outside
consulting actuaries as circumstances warrant.
Long-Term Expected Rate of Return
The long-term expected rate of return on TCDRS assets is determined by adding expected inflation to
expected long-term real returns, and reflecting expected volatility and correlation. The capital market
assumptions and information shown below are provided by TCDRS’ investment consultant, Cliffwater
LLC. The numbers shown are based on January 2016 information for a 7-10 year time horizon.
Note that the valuation assumption for long-term expected return is re-assessed at a minimum of every
four years, and is set based on a 30-year time horizon; the most recent analysis was performed in 2013.
See Milliman’s TCDRS Investigation of Experience report for the period January 1, 2009 – December
31, 2012 for more details.
Long-term Expected
Target Real of Return
Asset Class Benchmark Allocation (arithmetic)
US Equities Dow Jones U.S. Total Stock Market Index 14.50%5.45%
Private Equity Cambridge Associates Global Private Equity & Venture
Capital Index 14.00%8.45%
Global Equities MSCI World (net) Index 1.50%5.75%
International Equities- Developed 50% MSCI World Ex USA (net) + 50% MSCI World
ex USA 100% Hedged to USD (net) Index 10.00%5.45%
International Equities- Emerging 50% MSCI EM Standard (net) + 50% MSCI EM USA
100% Hedged to USD (net) Index 8.00%6.45%
Investment-Grade Bonds Barclays Capital Aggregate Bond Index 3.00%1.00%
High-Yield Bonds Citigroup High-Yield Cash-Pay Capped Index 3.00%5.10%
Opportunistic Credit Citigroup High-Yield Cash-Pay Capped Index 2.00%5.09%
Direct Lending Citigroup High-Yield Cash-Pay Capped Index 5.00%6.40%
Distressed Debt Citigroup High-Yield Cash-Pay Capped Index 3.00%8.10%
REIT Equities 67% FTSE NAREIT Equity REITs Index + 33% FRSE
EPRA/NAREIT Global Real Estate Index 3.00%4.00%
Master Limited Partnerships (MLPs)Alerian MLP Index 3.00%6.80%
Private Real Estate Partnerships Cambridge Associates Real Estate Index 5.00%6.90%
Hedge Funds Hedge Fund Research, Inc. (HFRI) Fund of Funds
Composite Index 25.00%5.25%
Total 100.00%80.19%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
37
NOTE 11. RETIREMENT PLAN (CONTINUED)
Contributions
2013 2014 2015
Actuarially Determined Contribution $84,476 93,694 97,043
Contribution deficiency (excess)$(113,743) - -
Covered employee payroll $963,243 1,068,342 1,116,721
8.7%
Contributions in relation to the actuarially
determined contribution $ 198,219 93,694
SCHEDULE OF CONTRIBUTIONS
Last 10 Calendar Years (will ultimately be displayed)
97,043
Contributions as a percentage of covered
employee payroll 20.6%8.8%
Deferred Inflows/Outflows of Resources
At September 30, 2016, the District reported deferred inflows and outflows of resources are as follows:
Deferred Inflows/Outflows of Resources Deferred Inflows
of Resources
Deferred Outflows
of Resources
Differences between expected and actual experience 15,198$ -$
Changes of assumptions - 6,725
Net difference between projected and actual earnings - 53,132
Contributions made subsequent to measurement date N/A 128,784$
Amounts currently reported as deferred outflows of resources and deferred inflows of resources related
to pensions, excluding contributions made subsequent to the measurement date, will be recognized in
pension expense as follows:
Net deferred
outflows
(inflows) of
resources
2016 12,448$
2017 12,448
2018 12,448
2019 10,442
2020 (1,336)
Thereafter (1,791)
Total 44,659$
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
38
NOTE 11. RETIREMENT PLAN (CONTINUED)
Valuation Timing:
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Asset Valuation Method 5 Year non-asymptotic; no corridor
Inflation 3.0%
Salary Increases 3.50% including inflation
Investment Rate of Return 8.10%
Cost-of-Living Adjustments
Retirement Age
Turnover
Mortality:
Deposting members
Service retirees, beneficiaries and non-
depositing members
Disabled retirees
Other Information:
Notes There were no benefit changes during the year.
RP-2000 Disabled Mortality Table for males with no age
adjustment and RP-2000 Disabled Mortality Table for females
with a two-year set-forward, both with the projection scale AA
Actuarially determined contribution rates are calculated as of
December 31, two years prior to the end of the fiscal year in which
the contributions are reported
Cost-of-Living Adjustments for Trophy Club Municipal Utility
District No 1 are not considered to be substantively automatic
under GASB 68. Therefore, no assumption for future cost-of-
living adjustment is included in the GASB calculations. No
assumption for future cost-of-living adjustments is included in the
funding valuation.
The RP-2000 Active Employee Mortality Table for males with a
two-year set-forward and the RP-2000 Active Employee
Mortality Table for females with a four-year setback, both with
the projection scale AA.
Experience-based table or rates that are specific to the District's
plan of benefits.
The rates vary by length of service, entry-age group (age at hire)
and sex.
NOTES TO SCHEDULE OF CONTRIBUTIONS
The Rp-2000 Combined Mortality Table with the projection scale
AA, with a one-year set-forward for males and no age adjustment
for females.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
39
NOTE 12. PRIOR PERIOD RESTATEMENTS
The District has made multiple changes of software for utility billing over the past five years, resulting
in each software recognizing utility billing differently. A variance was found between the reconciliation
of aging reports and the liability to the Town of Trophy Club. The chart below will summarize the
effect on the financial statements:
Governmental Fund Types General Fund
Fund balances - beginning 3,892,505$
Prior period adjustment for understated payables (44,040)
Fund balances - beginning as adjusted 3,848,465$
Governmental
Government-wide effects Activities
Unrestricted Net Position - beginning 3,800,758$
Prior period adjustment for understated payables (44,040)
Unrestricted Net Position - beginning as adjusted 3,756,718$
NOTE 13. SUBSEQUENT EVENTS
The District has evaluated all events and transactions that occurred after September 30, 2016 up through
audit report date, which is the date the financial statements were issued. The District has the following
subsequent event:
On October 18, 2016, the District issued Series 2016 Water and Sewer System Revenue Bonds of
$4,635,000 to finance water and wastewater system improvements. The bondholder is the Texas Water
Development Board (TWDB) and the bond term is twenty years. Interest rates vary from .53% to 2.12%
and interest is payable each March 1st and September 1st. Principal is due each September 1st and the
bonds will mature with the final principal payment in fiscal year 2036.
The following schedule shows how this issuance will increase future minimum debt service:
Principal Interest Total
2017 190,000$ 50,422$ 240,422$
2018 215,000 62,683 277,683
2019 215,000 61,500 276,500
2020 215,000 60,125 275,125
2021 215,000 58,598 273,598
2022-2026 1,110,000 264,572 1,374,572
2027-2031 1,180,000 195,331 1,375,331
2032-2036 1,295,000 82,108 1,377,108
4,635,000$ 835,339$ 5,470,339$
REQUIRED SUPPLEMENTARY INFORMATION
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS)
YEAR ENDED SEPTEMBER 30, 2016
Original Final Actual
Variance with
Final Budget
Revenues
Water charges 5,241,559$ 5,241,559$ 4,370,811$ (870,748)$
Wastewater charges 2,413,776 2,413,776 2,359,115 (54,661)
Taxes 1,363,390 1,362,640 1,371,247 8,607
Utility fees 69,000 55,000 55,200 200
Intergovernmental revenues 156,125 156,125 156,125 -
Miscellaneous 131,195 91,195 57,888 (33,307)
Oversize meter reimbursements 15,778 15,778 51,654 35,876
Inspection and tap fees 8,325 8,325 11,325 3,000
Investment income 6,000 10,000 12,652 2,652
Total revenues 9,405,148 9,354,398 8,446,017 (908,381)
Expenditures:
Water operations 4,067,905 4,209,362 3,078,429 1,130,933
Fire 942,436 961,687 1,010,938 (49,251)
Wastewater operations 1,052,760 1,075,515 1,089,257 (13,742)
Non-Departmental 422,945 424,234 380,317 43,917
Administration 1,154,322 1,146,369 992,616 153,753
Directors 26,573 26,368 15,782 10,586
Capital Outlay 407,000 812,250 1,713,885 (901,635)
Debt Service 280,555 280,555 280,501 54
Total expenditures 8,354,496 8,936,340 8,561,725 374,615
Excess of revenues over expenditures 1,050,652 418,058 (115,708) (533,766)
Other financing sources (uses):
Transfers In - 540,648 8,034 (532,614)
Transfers out (1,050,652) (1,058,672) (902,259) 156,413
Proceeds from Sale of Assets - 90,935 90,935 -
Total other financing sources (uses)(1,050,652) (427,089) (803,290) (376,201)
Net change in fund balance - (9,031) (918,998) (909,967)
Fund Balances - beginning of year (restated)3,848,465 3,848,465 3,848,465 -
Fund Balances - end of year 3,848,465$ 3,839,434$ 2,929,467$ (909,967)$
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.
Budgeted amounts
40
2015 2014
Total pension liability
Service Cost $150,689 $170,600
Interest (on the Total Pension Liability)41,351 27,449
Changes of benefit terms (22,086) -
Difference between expected and actual experience (11,320) (7,057)
Change of assumptions 7,686 -
Benefit payments, including refunds of employee contributions (1,902) (3,156)
Net Change in Total Pension Liability 164,418 187,836
Total Pension Liability - Beginning 444,620 256,784
Total Pension Liability - Ending (a)$609,038 $444,620
Plan Fiduciary Net Position
Contributions - Employer $97,043 $93,694
Contributions - Employee 78,171 74,784
Net Investment Income (15,011) 18,561
Benefit payments, including refunds of employee contributions (1,902) (3,156)
Administrative Expense (394) (285)
Other (47) (21)
Net Change in Plan Fiduciary Net Position 157,860 183,577
Plan Fiduciary Net Position - Beginning 452,134 268,557
Plan Fiduciary Net Position - Ending (b)$609,994 $452,134
Net Pension Liability - Ending (a) - (b)$(956) $(7,514)
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability 100.16%101.69%
Covered Employee Payroll $1,116,721 1,068,342
Net Pension Liability as a Percentage
of Covered Employee Payroll -0.09%-0.70%
Notes to Schedule:
GASB 68 requires 10 fiscal years of data to be provided in this schedule. The employer will be required to build this
schedule over the next 10 year period.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Years (will ultimately be displayed)
41
2015 2014 2013
Actuarially Determined Contribution $97,043 93,694 84,476
Contributions in relation to the actuarially
determined contribution $ 97,043 93,694 198,219
Contribution deficiency (excess)$- - (113,743)
Covered employee payroll $1,116,721 1,068,342 963,243
Contributions as a percentage of covered
employee payroll 8.7%8.8%20.6%
Valuation Timing:
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Asset Valuation Method 5 Year non-asymptotic; no corridor
Inflation 3.0%
Salary Increases 3.50% including inflation
Investment Rate of Return 8.10%
Cost-of-Living Adjustments
Retirement Age
Turnover
Mortality:
Deposting members
Service retirees, beneficiaries and non-
depositing members
Disabled retirees
Other Information:
Notes There were no benefit changes during the year.
RP-2000 Disabled Mortality Table for males with no age adjustment
and RP-2000 Disabled Mortality Table for females with a two-year
set-forward, both with the projection scale AA
Actuarially determined contribution rates are calculated as of
December 31, two years prior to the end of the fiscal year in which the
contributions are reported
Cost-of-Living Adjustments for Trophy Club Municipal Utility
District No 1 are not considered to be substantively automatic under
GASB 68. Therefore, no assumption for future cost-of-living
adjustment is included in the GASB calculations. No assumption for
future cost-of-living adjustments is included in the funding valuation.
The RP-2000 Active Employee Mortality Table for males with a two-
year set-forward and the RP-2000 Active Employee Mortality Table
for females with a four-year setback, both with the projection scale
AA.
Experience-based table or rates that are specific to the District's plan
of benefits.
The rates vary by length of service, entry-age group (age at hire) and
sex.
NOTES TO SCHEDULE OF CONTRIBUTIONS
SCHEDULE OF CONTRIBUTIONS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
Last 10 Calendar Years (will ultimately be displayed)
The Rp-2000 Combined Mortality Table with the projection scale
AA, with a one-year set-forward for males and no age adjustment for
females.
42
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
SEPTEMBER 30, 2016
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 Water Volumetric Rates
Rates per 1,000
Gallons Over
Meter Size Base Rate Base Gallons
5/8"$12.99
1"20.39 $3.03 0 to 6,000
1.5"32.23 3.53 6,001 to 17,000
2"46.43 4.09 17,001 to 25,000
3"79.58 4.75 25,001 to 50,000
4"126.93 5.52 50,001 +
6"245.29
Base Fee
WASTEWATER $15.35 0 No 2.63$ 0 to 18,000
No - Caps at 18,000
*Commercial sewer usage is billed based on actual water usage per month
GOLF COURSE Subject to peak draw rates from Ft Worth water department.
NOTE: all rates noted above were amended effective September 1, 2015.
District employs winter averaging for wastewater usage?No
43
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
SEPTEMBER 30, 2016
Total water and wastewater charges per 10,000 gallons usage (including surcharges)
effective September 1, 2015 (based on 5/8" & 3/4")
First 10,000 gallons used 86.94$
Next 10,000 gallons used 58.02
Next 10,000 gallons used 44.20
Next 10,000 gallons used 47.50
Next 10,000 gallons used 47.50
Next 10,000 gallons used and subsequent 55.20
Maximum residential wastewater charge is for 18,000 gallons or $62.69
b)Retail service providers: number of retail water and/or wastewater* connections within the District as
of the fiscal year end. Provide actual numbers and single family equivalents (ESFC).
ESFC Active
Meter Size Total Active Factor ESFC's
Unmetered - - 1.0 -
Less than 3/4"2,522.0 2,497.0 1.0 2,497.0
1"692.0 673.0 2.5 1,682.5
1 1/2"23.0 23.0 5.0 115.0
2"120.0 98.0 8.0 784.0
3"38.0 32.0 15.0 480.0
4"15.0 15.0 25.0 375.0
6"5.0 5.0 50.0 250.0
8"- - 80.0 -
10"- - 115.0 -
Total Water 3,415.0 3,343.0 6,183.5
Total Wastewater 3,422.0 3,348.0 1.0 3,343.0
*Number of connections relates to water service if provided. Otherwise, the number of wastewater
connections should be provided.
Note: "inactive" means that water and wastewater connections were made, but service is not
being provided.
Note: District provides wholesale services to the Town of Trophy Club through 1,436 connections
3.Total water consumption (in thousands) during the fiscal year:
Gallons pumped into the system 894,859
Gallons billed to customers 830,653
Water accountability ratio 92.83%
Connections
44
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-1 SERVICES AND RATES
SEPTEMBER 30, 2016
4.Standby Fees:
Does the District assess standby fees?No
For the most recent fiscal year, FY2016:
Total Total Percentage
Levy Collected Collected
Debt Service 659,926$ 657,421$ 99.6%
Operations and Maintenance 936,803$ 933,247$ 99.6%
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: a)Denton
b)Tarrant
Is the District located entirely in one county?No
Is the District located within a city?Partially
Cities in which District is located:Town of Trophy Club
Town of Westlake
Is District located within a city's extra territorial jurisdiction (ETJ)?Unknown
ETJ's in which District is located:Unknown
Is the general membership of the Board appointed by an office outside the District? No
45
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI - 2
General Fund Expenditures and Other Financing Uses
Year Ended September 30, 2016
Current Year Prior Year
2016 2015
Administrative 1,388,715$ 1,672,124$
Water Operations 3,078,429 3,151,533
Wastewater Operations 1,089,257 1,103,884
Wastewater Collection Systems * 0 * 0
Contribution to Trophy Club Fire Dept 1,010,938 928,607
Capital Outlay 1,713,885 1,755,603
Transfers Out and Debt Service 1,182,760 1,224,719
Total Expenditures 9,463,984$ 9,836,470$
* In FY 2015 Wastewater Operations and Wastewater Collection Systems were merged together.
Number of employees employed by the District:
Full time Equivalents (FTEs)17 *18
Part time 0 0
*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.
46
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI-3 TEMPORARY INVESTMENTS
September 30, 2016
Identification Interest Maturity Balance Accrued Interest
Number Rate Date End of Year End of Year
General Fund
TexPool 613300002 0.373 Demand 1,974,470$ Paid daily
General Fund
Bank of the West 4526372 0.250 Demand 712,189$ Paid monthly
(money market)
Debt Service Fund
TexPool 613300003 0.373 Demand 21,185$ Paid daily
Debt Service-Revenue
Bond
Texpool 613300013 0.373 Demand 15,097$ Paid daily
Revenue Bond
Reserve
Texpool 613300014 0.373 Demand 195,762$ Paid daily
Capital Projects
Texpool 613300010 0.373 Demand -$ Paid daily
Capital Projects
Tax Bond Construction
Texpool 613300011 0.373 Demand 4,391,204$ Paid daily
Capital Projects
Revenue Bond
Construction
Texpool 613300012 0.373 Demand 1,461,353$ Paid daily
Total - All Funds 8,771,260$
Funds
47
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-4 TAXES LEVIED AND RECEIVABLE
SEPTEMBER 30, 2016
Debt
Operations Fire Total Service Total
Taxes receivable beginning of year 2,357$ 16,824$ 19,181$ 9,853$ 29,034$
2015 tax levy 57,020 872,449 929,469 654,760 1,584,228
Total to be accounted for 59,377 889,273 948,650 664,613 1,613,263
Less collections and adjustments:
Current year (56,957) (869,701) (926,658) (651,856) (1,578,514)
Prior years (677) (4,637) (5,314) ( 3,249) (8,563)
Total to be accounted for (57,634) (874,338) (931,972) (655,105) (1,587,077)
Taxes receivable, end of year 1,743$ 14,935$ 16,678$ 9,508$ 26,186$
Taxes receivable by year
1996 and prior 6$ 41$ 47 175$ 222$
1997 2 15 17 54 71
1998 2 16 18 51 69
1999 2 17 19 40 59
2000 2 12 14 45 59
2001 2 13 15 44 59
2002 2 22 24 50 74
2003 24 42 66 44 110
2004 5 43 48 62 110
2005 41 137 178 194 372
2006 76 354 430 548 978
2007 43 417 460 510 970
2008 72 564 636 457 1,093
2009 184 740 924 466 1,390
2010 136 1,693 1,829 1,192 3,021
2011 153 1,693 1,846 865 2,711
2012 183 1,925 2,108 361 2,469
2013 195 1,827 2,022 766 2,788
2014 390 2,027 2,417 1,083 3,500
2015 218 3,338 3,556 2,505 6,061
1,738$ 14,936$ 16,674$ 9,512$ 26,186$
F/Y F/Y F/Y F/Y F/Y
Property valuations (in 000's)15/16 14/15 13/14 12/13 11/12
Land 497,482$ 474,068$ 439,499$ 431,312$ 432,801$
Improvements 719,295 630,249 573,454 551,135 516,182
Personal property 71,096 80,605 95,598 84,548 92,311
Exemptions (57,305) (52,617) (45,150) (46,788) (43,476)
1,230,568$ 1,132,305$ 1,063,401$ 1,020,207$ 997,818$
Tax rate per $100 valuation
Operations 0.004720 0.014860 0.009350 0.009890 0.009890
Fire department 0.072220 0.077270 0.087380 0.104000 0.109250
Debt service 0.054200 0.041260 0.036660 0.019500 0.055860
Tax rate per $100 valuation 0.131140 0.133390 0.133390 0.133390 0.175000
Tax levy: 2,000,874$ 1,870,728$ 1,726,648$ 1,581,619$ 1,714,788$
Percent of taxes collected to taxes levied 99.70%98.91%99.42%99.72%99.44%
General Fund
48
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2016
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2017 1,075,000 531,221 1,606,221
2018 1,100,000 506,847 1,606,847
2019 1,135,000 481,897 1,616,897
2020 1,155,000 456,096 1,611,096
2021 1,195,000 428,083 1,623,083
2022 1,230,000 398,408 1,628,408
2023 1,270,000 366,308 1,636,308
2024 835,000 331,333 1,166,333
2025 860,000 309,883 1,169,883
2026 880,000 287,783 1,167,783
2027 915,000 263,943 1,178,943
2028 945,000 238,281 1,183,281
2029 980,000 210,408 1,190,408
2030 1,010,000 180,663 1,190,663
2031 1,050,000 147,751 1,197,751
2032 935,000 113,538 1,048,538
2033 970,000 84,563 1,054,563
2034 1,010,000 53,538 1,063,538
2035 630,000 20,475 650,475
19,180,000$ 5,411,015$ 24,591,015$
All Bonded Debt Series
49
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2016
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
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
1,655,000$ 617,550$ 2,272,550$
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
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
1,585,000$ 189,702$ 1,774,702$
General Obligation Bonds - Series 2012
(2,355,000)
General Obligation Bonds - Series 2010
($2,000,000)
50
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2016
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2017 185,000 42,775 227,775
2018 185,000 37,225 222,225
2019 195,000 31,675 226,675
2020 195,000 25,825 220,825
2021 205,000 19,975 224,975
2022 210,000 13,825 223,825
2023 215,000 7,525 222,525
1,390,000$ 178,825$ 1,568,825$
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2017 240,000 144,800 384,800
2018 245,000 141,200 386,200
2019 250,000 137,525 387,525
2020 255,000 133,775 388,775
2021 265,000 129,313 394,313
2022 270,000 124,013 394,013
2023 280,000 118,613 398,613
2024 290,000 112,313 402,313
2025 295,000 105,063 400,063
2026 305,000 97,688 402,688
2027 315,000 90,063 405,063
2028 325,000 81,400 406,400
2029 335,000 72,463 407,463
2030 345,000 62,413 407,413
2031 360,000 51,200 411,200
2032 370,000 39,500 409,500
2033 385,000 27,475 412,475
2034 400,000 14,000 414,000
5,530,000$ 1,682,813$ 7,212,813$
General Obligation Bonds - Series 2014
(5,765,000)
General Obligation Bonds - Series 2013
(1,905,000)
51
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI-5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2016
Due During Fiscal Principal Due Interest Due
Years Ending 1-Sep Mar 1/ Sep 1 Total
2017 365,000 230,638 595,638
2018 375,000 223,338 598,338
2019 380,000 215,838 595,838
2020 390,000 208,238 598,238
2021 400,000 200,438 600,438
2022 410,000 192,438 602,438
2023 420,000 184,238 604,238
2024 435,000 175,838 610,838
2025 450,000 167,138 617,138
2026 460,000 157,013 617,013
2027 475,000 145,513 620,513
2028 490,000 133,638 623,638
2029 510,000 120,163 630,163
2030 525,000 106,138 631,138
2031 545,000 90,388 635,388
2032 565,000 74,038 639,038
2033 585,000 57,088 642,088
2034 610,000 39,538 649,538
2035 630,000 20,475 650,475
9,020,000$ 2,742,125$ 11,762,125$
(9,230,000)
Revenue Bonds - Series 2015
52
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-6 CHANGES IN LONG-TERM BONDED DEBT
SEPTEMBER 30, 2016
Series 2010 Series 2012 Series 2013 Series 2014 Series 2015
GO Bonds GO Bonds GO Bonds GO Bonds Revenue Bonds
Total
Interest rate 3.50-5.00%2.00-3.00%2.00-3.50%1.50-3.50%2.0-3.25%
Date interest payable 3/1 & 9/1 3/1 & 9/1 3/1 & 9/1 3/1 & 9/1 3/1 & 9/1
Maturity date 9/1/2031 9/1/2023 9/1/2023 9/1/2034 9/1/2035
Bonds outstanding at
beginning of year 1,730,000$ 1,785,000$ 1,565,000$ 5,765,000$ 9,230,000$ 20,075,000$
Retirements of principal 75,000$ 200,000$ 175,000$ 235,000$ 210,000$ 895,000$
Bonds outstanding at end of
fiscal year 1,655,000$ 1,585,000$ 1,390,000$ 5,530,000$ 9,020,000$ 19,180,000$
Retirements of interest 71,283$ 49,350$ 48,025$ 148,325$ 234,838$ 551,821$
Paying agent's name & city:The Bank of New The Bank of New The Bank of New The Bank of TX The Bank of TX
York Mellon York Mellon York Mellon Corporate Trust Corporate Trust
Newark, NJ Newark, NJ Newark, NJ Austin, TX Austin, TX
General
Obligation
Bond Authority Bonds
Amount authorized by voters 29,094,217$
Amount issued 29,090,000$
Remaining to be issued 4,217$
The general obligation bonds were authorized on October 7, 1975
Debt Service Fund cash and cash equivalents balance as of September 30, 2016:236,891$
Average annual debt service payment (principal & interest) for remaining term of debt:647,132$
53
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TS1-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES-FIVE YEARS
GENERAL FUND
SEPTEMBER 30, 2016
REVENUE 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012
Ad valorem property taxes 1,371,247$ 1,419,548$ 1,340,502$ 1,426,185$ 1,374,808$ 16.0%14.2%17.6%16.1%16.1%
Water and wastewater charges 6,729,926 6,138,766 5,730,872 5,467,371 5,210,788 78.8%61.5%75.2%60.9%60.9%
Utility Fees 55,200 239,200 331,200 508,300 647,080 0.6%2.4%4.3%7.6%7.6%
Inspection and tap fees 11,325 11,375 10,725 9,600 10,250 0.1%0.1%0.1%0.1%0.1%
Interest earned 12,652 6,117 6,071 4,641 5,706 0.1%0.1%0.1%0.1%0.1%
Debt proceeds - - - - 1,100,000 0.0%0.0%0.0%12.8%12.8%
Transfers In 8,034 1,074,337 - - - 0.1%10.8%0.0%0.0%0.0%
Proceeds from Sale of Assets 90,935 46,750 - - - 1.1%0.5%0.0%0.0%0.0%
Capital Lease Financing - 807,316 - - - 0.0%8.1%0.0%0.0%0.0%
Miscellaneous and other 265,667 240,591 202,481 214,294 213,277 3.1%2.4%2.7%2.5%2.5%
Total revenue 8,544,986$ 9,984,000$ 7,621,851$ 7,630,391$ 8,561,909$ 100.0%100.0%100.0%100.0%100.0%
EXPENDITURES
Administrative 1,388,715$ 1,672,123$ 1,779,470$ 1,476,468$ 1,097,547$ 16.3%16.7%23.3%12.8%12.8%
Water operations 3,078,429 3,151,532 3,031,672 2,623,822 2,503,331 36.0%31.6%39.8%29.2%29.2%
Wastewater operations 1,089,257 864,305 621,108 896,538 614,102 12.7%8.7%8.1%7.2%7.2%
Wastewater collection system - - 185,561 322,017 260,895 0.0%0.0%2.4%3.0%3.0%
Information systems - - - - 173,386 0.0%0.0%0.0%2.0%2.0%
Contribution to Trophy Club Fire Dept 1,010,938 928,610 879,830 790,779 822,307 11.8%9.3%11.5%9.6%9.6%
Capital outlay 1,713,885 1,755,603 990,311 462,876 1,562,809 20.1%17.6%13.0%18.3%18.3%
Transfers Out and Debt Service 1,182,760 656,984 993,450 1,115,390 1,011,260 13.8%6.6%13.0%11.8%11.8%
Total expenditures 9,463,984$ 9,029,157$ 8,481,402$ 7,687,890$ 8,045,637$ 110.8%90.4%111.3%94.0%94.0%
Excess (deficiency) of revenues
over (under) expenditures (918,998)$ 954,843$ (859,551)$ (57,499)$ 516,272$ -10.8%9.6%-11.3%6.0%6.0%
Total active retail water and/or
wastewater connections 3,422 3,376 3,140 3,096 3,887
Amounts Percent of total revenue
54
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES-FIVE YEARS (Continued)
DEBT SERVICE FUND
SEPTEMBER 30, 2015
REVENUE 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012
Ad valorem property taxes 666,225$ 468,194$ 386,992$ 201,207$ 547,587$ 42.3%48.8%62.4%28.0%62.9%
Penalties and interest 4,010 2,021 2,676 1,688 3,226 0.3%0.2%0.4%0.2%0.4%
Intergovernmental 902,259 465,409 230,804 503,000 308,000 57.3%48.5%37.2%70.1%35.4%
Interest earned 2,564 13,976 97 11,900 5,956 0.2%1.5%0.0%1.7%0.7%
Miscellaneous and other - 9,573 - - 6,120 0.0%1.0%0.0%0.0%0.7%
Total revenue 1,575,058 959,173 620,569 717,795 870,889 100.0%100.0%100.0%100.0%100.0%
EXPENDITURES
Principal retirement 895,000 440,000 425,000 605,000 565,000 56.8%45.9%68.5%84.3%64.9%
Interest and fiscal charges 552,220 422,722 198,695 231,333 277,319 35.1%44.1%32.0%32.2%31.8%
Bond admin fees 2,150 - - - - 0.1%0.0%0.0%0.0%0.0%
Total expenditures 1,449,370 862,722 623,695 836,333 842,319 92.0%89.9%100.5%116.5%96.7%
Excess (deficiency) of revenues
over (under) expenditures 125,688$ 96,451$ (3,126)$ (118,538)$ 28,570$ 8.0%10.1%-0.5%-16.5%3.3%
`
Amounts Percentage
55
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS
September 30, 2016
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:$6,000
(Set by Board Resolution - TWC Section 49.060)
Term of Office Fees of Expense Title
Elected/Expires Office Paid Reimbursements at
Name and Address or Date Hired FY16 FY16 Year End
Board Members:
James Moss
979 Trophy Club Drive
Trophy Club, TX 76262 05/12-05/16 1,200$ -$
Jim Hase
315 Lakewood Drive
Trophy Club, TX 76262 05/14-05/18 2,000$ -$ Secretary/Treasurer
Kevin Carr
15 Edgemere Drive
Trophy Club, TX 76262 05/14-05/18 2,300$ 1,110$ President
Neil Twomey
203 Oakmont Drive
Trophy Club, TX 76262 06/14-05/16 1,500$ 816$
James C. Thomas
7 Meadowbrook Lane
Trophy Club, TX 76262 05/14-05/18 1,600$ -$ Director
Gregory Wilson
2013 Churchill Downs Lane
Trophy Club, TX 76262 05/16-05/20 100$ 595$ Vice-President
William Rose
219 Inverness Drive
Trophy Club, TX 76262 05/16-05/20 -$ 792$ Director
56
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI-8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS (Continued)
SEPTEMBER 30, 2016
Term of Office Fees of Title
Elected/Expires Office Paid at
Name and Address or Date Hired FY16 Year End
Key Personnel:
Jennifer McKnight
122 Reatta Drive 3/19/2012 to
Justin, Texas 76247 8/25/2016 -$ General Manager
Consultants:
Denton Central Appraisal District
P.O. Box 2816
Denton, TX 76202 4/1/1981 7,978$ Appraiser
Tarrant Appraisal District
2500 Handley-Ederville Rd.
Fort Worth, TX 76262 10/1/2007 2,235$ Appraiser
LaFollett & Abbott PLLC
P.O. Box 717
Tom Bean, TX 75489 10/1/2010 24,152$ Auditors
The Wallace Group
P.O. Box 22007
Waco, TX 76702 5/1/2012 716,262$ Engineers
Whitaker, Chalk, Swindle & Sawyer, L.L.P.
3500 City Center, Tower II
Fort Worth, TX 76102 10/1/1999 1,313$ Legal Counsel
Liston Law Firm
2801 Weems Way, Suite B
Rowlett, TX 75088 7/1/2002 103,622$ Legal Counsel
Freeman & Corbett
8500 Bluffstone Cove
Suite B-104
Austin, TX 78759 12/17/2012 11,808$ Legal Counsel
Norton Rose Fulbright US LLP
Fulbright & Jaworski LLP
P. O. Box 844284
Dallas, Texas 75284-4284 4/1/2014 1,173$ Legal Counsel
New Gen Strategies & Solutions
1300 E. Lookout Dr. Suite 100
Richardson, TX 75082 7/1/2013 10,280$ Water Consultant
57
REPORTS REQUIRED BY
GOVERNMENTAL AUDITING STANDARDS
Susan LaFollett, CPA – Partner
Rod Abbott, CPA – Partner
LaFollett and Abbott PLLC
PO Box 717 · Tom Bean, TX · 75489
903-546-6975 · www.lafollettcpa.com
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 applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller 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, 2016, 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 17, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s
internal control over financial reporting (internal control) 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 effectiveness of the District’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect 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.
58
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 determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this 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 17, 2017
59