HomeMy WebLinkAboutFY Ended September 30, 2018Susan LaFollett, CPA—Partner
Rod Abbott, CPA—Partner
LaFoil tt and Abbott PLLC
Certified Public Accountants
January 21, 2019
To the Board of Directors
Trophy Club Municipal Utility District No. 1
We have audited the financial statements of Trophy Club Municipal Utility District No. 1 (the
District), for the year ended September 30, 2018, and have issued our report thereon dated January
21, 2019. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards and Government Auditing Standards
and the Water District Financial Management Guide issued by the Texas Commission on
Environmental Quality, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information in our engagement letter to you dated October
28, 2016. Professional standards also require that we communicate to you the following
information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the District are described in Note 1 to the financial
statements. No new accounting policies were adopted and the application of existing policies was
not changed during 2018. We noted no transactions entered into by the District during the year for
which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and
are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitive estimate affecting
the financial statements was:
• Management's allocations of costs to various departments. We evaluated the key
factors and assumptions used to develop these allocations in determining that they are
reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosure affecting the financial statements was:
• The disclosure of long-term debt in Note 6 to the financial statements. This disclosure
provides detail of debt terms, future payments, and other information.
LaFollett and Abbott PLLC
PO Box 717 • Tom Bean, TX • 75489
903-546-6975 • www.Iafollettcpa.com
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are clearly trivial, and communicate them to the appropriate
level of management. None of the misstatements detected as a result of audit procedures and
corrected by management were material, either individually or in the aggregate, to the financial
statements taken as a whole. See Attachment #1 for the list of adjustments.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditor's report. We are pleased to report
that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated January 21, 2019.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the District's financial statements or a
determination of the type of auditor' s opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the District's auditors.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
Other Information in Documents Containing Audited Financial Statements
With respect to the supplementary information accompanying the financial statements, we made
certain inquiries of management and evaluated the form, content, and methods of preparing the
information to determine that the information complies with U.S. generally accepted accounting
principles, the method of preparing it has not changed from the prior period, and the information
is appropriate and complete in relation to our audit of the financial statements. We compared and
reconciled the supplementary information to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
This information is intended solely for the use of the audit committee, board members, and
management of the District and is not intended to be and should not be used by anyone other than
these specified parties.
Very truly yours,
PAW604 abet pa4
LaFollett and Abbott PLLC
AJE # W/P Ref Account #
1
2
F-1
316-16000-000-000
316-26025-000-000
316-26025-000-000
316-26015-000-000
316-26030-000-000
316-26035-000-000
ATTACHMENT 1
Trophy Club MUD
Adjusting Journal Entries
FYE 9/30/18
Account Description
Amount to be Provided
GO Bonds
Revenue Bonds
Capital Leases
Def'd Gain/Loss on Refunding (Amortization)
Bond Premium ( Amortization)
To record the fiscal year 2018 changes in long-term debt as provided by the client.
F-1 122-69305-045-000
122-69009-010-000
Capital Leases - Principal
Capital Leases - Interest
To properly state capital lease principal and interest expenses.
3 C-1 136-15065-000-000
136-15050-000-000
Construction in Progress
Wastewater Collections
To properly state construction in progress.
Debit Credit
1,085,605
247,719
867
19,191
1,334,191 1,334,191
14,768
14,768
14,768 14,768
427
427 427
725,000
590,000
427
TROPHY CLUB
MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2018
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 42
Schedule of Changes in Net Pension Liability and Related Ratios — Last Ten Years 43
Schedules of TCDRS Pension Contributions — Last Ten Years 44
Schedules of TCDRS OPEB Contributions — Last Ten Years 45
Schedule of Changes in Net OPEB Liability and Related Ratios — Last Ten Years 46
INDIVIDUAL SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
TSI -1 Service and Rates 47
TSI -2 General Fund Expenditures and Other Financing Uses 49
TSI -3 Temporary Investments 50
TSI -4 Taxes Levied and Receivable 51
TSI -5 Long -Term Debt Service Requirements — By Year 52
TSI -6 Changes in Long -Term Bonded Debt 55
TSI -7 Comparative Schedules of Revenues and Expenditures — Five Years 56
TSI -8 Board Members, Key Personnel, and Consultants 58
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 60
THE STATE OF TEXAS }
COUNTY OF DENTON }
I,
ANNUAL FILING AFFIDAVIT
Gregory Wilson
(Name of Duly Authorized District Representative)
Of the Trophy Club Municipal Utility District No. 1
(Name of District)
Hereby swear, or affirm, that the district named above has reviewed and approved at a meeting
of the Board of Directors of the District on the 21st day of January, 2019, its annual audit report
for the fiscal year or period ended September 30, 2018 and that copies of the annual audit report
have been filed in the district office, located at 100 Municipal Drive, Trophy Club, Texas, 76262.
The annual filing affidavit and the attached copy of the audit report are being submitted to the
Texas Commission on the Environmental Quality in satisfaction of the annual filing
requirements of Texas Water Code Section 49.1
Date: January 21 , 2019 By:
(
nature of District Representative)
Gregory Wilson, President, Board of Directors
(Typed Name & Title of above District Representative)
Sworn to and subscribed to before me this 6113- day of V pl/V1J (LI , .
a,� LAURIE SLAGHT
Notary Public, State of Texas
:
Sar .;p= Comm. Expires 01-19-2020
"Tf , ,,,, Notary ID 128720534
My Commission Expires On:
Notary Public in the State of Texas
(Signature of ` otary)
Susan LaFollett, CPA — Partner
Rod Abbott, CPA — Partner
LaFo L tt and Abbott PLLC
Certified Public Accountants
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, 2018, 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
LaFollett and Abbott PLLC
PO Box 717 • Tom Bean, TX • 75489
903-546-6975 • www.lafollettcpa.com
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate remaining
fund information of the Trophy Club Municipal Utility District No. 1, as of September 30, 2018, 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 42-46 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 47-59 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 21,
2019, 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 21, 2019 2
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
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, 2018.
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 $27,028,375. Of this amount, $7,688,389 is unrestricted
net position and may be used to meet the District's ongoing commitments.
The District's net position increased by $4,118,127 during 2018 (age 12). A significant
contributor to this result was actual General Fund expenditures being $2,478,357 less than
budgeted, with the most favorable budget variances being for water department, capital
outlays, and fire protection expenditures (page 42).
At the end of the fiscal year, the District's governmental type funds reported a combined
fund balance of $8,355,328. As of September 30, 2018, the unassigned fund balance of the
General Fund was $7,254,013.
Long-term debt activity for the District included debt principal repayments totaling
$1,427,381.
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. 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.
3
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
Overview of the Financial Statements — continued
2. The Statement of Activities — (Page 12) gives information showing how the District's net
position has changed during the fiscal year. All revenues and expenses are reported on
the full accrual basis.
Fund Financial Statements - Fund financial statements provide detailed information about the
most important funds and not about the District as a whole as in the government -wide financial
statements.
The District uses fund accounting to demonstrate compliance with finance related legal
requirements which can be categorized as governmental fund activities.
Governmental Funds — All of the District's activities are reported in governmental funds. They
are used to account for those functions known as governmental activities. But unlike
government -wide financial statements, governmental fund financial statements focus on how
monies flow into and out of those funds and their resulting balances at the end of the fiscal year.
Statements of governmental funds provide a detailed short-term view of the District's general
government operations and the basic services it provides. Such information can be useful in
evaluating a government's short-term financing requirements.
The District maintains three governmental funds. Information is presented separately in the
Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues,
Expenditures and Changes in Fund Balances for the General Fund, Debt Service Fund and
Capital Projects Fund.
The District adopts annual appropriated budgets for the General Fund and Debt Service Funds. A
budgetary comparison statement is provided for each annually budgeted fund to demonstrate
compliance with its budget.
Notes to the Basic Financial Statements — The notes provide additional information that is
essential to a full understanding of the data presented in the government -wide and fund financial
statements. The notes to the basic financial statements can be found on pages 17-41.
4
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
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 $27,028,375. Of this amount, $18,657,642 (69%)
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 and $682,344 (2.5%) restricted for debt service.
Table 1
Condensed Statements of Net Position
Governmental Governmental
Activities Activities
2018 2017
Current and other $ 10,096,851 $ 13,619,882
Capital assets 40,816,044 35,396,802
Total assets 50,912,895 49,016,684
Deferred outflows 71,774 126,894
Total deferred outflows 71,774 126,894
Long-term liabilities 20,465,047 21,816,627
Other liabilities 3,452,401 4,384,519
Total liabilities 23,917,448 26,201,146
Deferred inflows 38,846 21,292
Total deferred inflows 38,846 21,292
Net Position:
Net investment in capital assets 18,657,642 12,152,794
Restricted for capital projects 5,178,262
Restricted for debt service 682,344 476,082
Restricted for other - 35,316
Unrestricted 7,688,389 5,078,686
Total Net Position $ 27,028,375 $ 22,921,140
5
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
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, 2018 and 2017. Governmental
activities have increased the District's net position by $4,118,127 which amounts to a 18%
increase in net position for the year ended September 30, 2018.
Table 2
Changes in Net Position
Governmental Governmental
Activities Activities
2018 2017
Revenue:
Program revenue
Charges for services $ 9,308,951 $ 8,743,566
Grants and Contributions
General Revenue
Ad valorem taxes 1,878,557 1,785,407
Unrestricted investment earnings 112,040 20,864
Contributions not restricted to specific programs 195,528 54,791
Gain on sale of asset 9,477 1,906
Miscellaneous 80,627 108,799
Total Revenue 11,585,180 10,715,333
Expenses:
Water & Wastewater operations 4,602,955 4,494,439
General government and other 1,595,960 1,637,102
Fire 698,845 702,943
Interest charges 569,293 584,186
Total Expenses 7,467,053 7,418,670
Increase in net position $ 4,118,127 $ 3,296,663
6
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
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 $8,355,328, of which 73.8%, or $6,162,503, is unassigned and available to the
District for future spending.
General Fund budgetary highlights
Revenue: Revenues were $292,522 (2.6%) less than budgeted
• Water charges were $393,758 (5.9%) less than budgeted.
Expenditures: Expenditures were $1,991,731 (22.4%) less than budgeted
• Water operations expenditures were $718,241 (18.5%) less than budgeted.
• Capital Outlay expenditures were $979,566 (59.5%) less than budgeted.
Capital Asset and Debt Administration
The District's investment in capital assets for its governmental activities as of September 30,
2018 amounted to $40,816,042, net of accumulated depreciation. This represents a broad range
of capital assets including, but not limited to land, buildings, improvements, machinery and
equipment, vehicles, water, wastewater treatment, and wastewater collection systems.
Capital assets increased 15.3% during 2018 primarily due to $5.9 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.
7
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
Debt administration
Long -Term Liabilities — at the end of the current fiscal year, the District had $22,102,537 of
general obligation bonds, revenue bonds, notes payable, capital leases, and accrued compensated
absences, which is a decrease of 4.6% from the previous fiscal year. Of this amount, $22,073,430
is backed by the full faith and credit of the District.
Table 3
Outstanding Debt at Year-end
Revenue bonds
General obligation bonds
Capital lease obligations
Compensated absences
Total
Governmental
Activities
2018
$ 12,510,000 $
8,725,000
838,430
29,107
$ 22,102,537 $
Economic factors and next year's budgets and rates:
Governmental
Activities
2017
13,100,000
9,450,000
590,710
32,306
23,173,016
General Fund fiscal year 2019 budgetary highlights:
Revenue: The District's 2019 operational revenue budget reflects a decrease of $485,669
from the amended 2018 budget, and a decrease of $284,675 when compared to actual
accrued in 2018.
• Water revenue is budgeted to increase from $6,035,804 for actual accrued in fiscal year
2018 to $6,599,484 for budgeted fiscal year 2019 for a total projected increase of
$563,680.
• Sewer revenue is budgeted to increase from $3,035,824 for actual accrued in fiscal year
2018 to $3,412,665 for budgeted fiscal year 2019 for a total projected increase of
$376,841.
• Property tax revenue is budgeted to increase by $42,208 for Fire and decrease by
$13,717 for the MUD netting an overall increase for tax revenue by $28,491 due to
property value, even though the District's overall tax rate decreased for fiscal year 2019
from the overall tax rate for fiscal year 2018.
8
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
Expenses: The District's 2019 operational expense budget reflects a decrease of $289,353
from the amended 2018 budget, and an increase of $2,847,305 compared to the actual
spending fiscal 2018.
• The primary reason for the difference in actual spending in 2018 to 2019 budget is
attributable to reduced or deferred expenses. The most significant factors when
comparing actual spending to projected budget are; wholesale water purchases increasing
expenses by $755,901 due to above average rainfall in 2018, capital outlay increase by
$397,227 due to capital improvement projects deferred or overlapping in 2018, short-
term debt increase $153,685 due to new assets being added in fiscal year 2019, and
overall salary increase by $197,929 due to unfilled budgeted positions that are budgeted
to be filled in 2019.
Overall: The District's 2019 operational budget is anticipated to have expenses of
$10,271,365 and revenues of $10,613,202.
Debt Service Fund 2019 budgetary highlights:
• The District's Debt Service Fund is budgeted to decrease from $2,093,741 in actual fiscal
year 2018 to $2,089,126 budgeted for fiscal year 2019. This is a total decrease of $4,615.
• Property tax revenues for the Debt Service Fund are budgeted to increase from $681,687
in actual fiscal year 2018 to $690,975 budgeted for fiscal year 2019. This is a total
increase of $9,288 due to an increase in valuations and a reduction in the debt service tax
rate.
Overall: The District's consolidated budgeted revenue decreased from $14,718,243 in fiscal
year 2018 to $14,495,168 in fiscal year 2019. Resulting in a total decrease of 1.52%. The
District's consolidated budgeted expenses decreased from $14,000,357 in fiscal year 2018 to
$13,960,551 in fiscal year 2019. Resulting in a total decrease of 0.28%.
Water and Sewer rates were both increased by the Board on October 1, 2017 to start fiscal
year 2018. Sewer base and volumetric rates were both increased for residential and
commercial customers by the District's Board of Directors, with an effective date of October
1, 2018. The sewer charges are calculated based on the average water consumption for three
months, December, January, and February billing. Water base and volumetric rates were not
changed.
9
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2018
There are two legal matters that were not completed in fiscal year 2018. The first is potential
litigation with the contractor constructing the upgrade to the wastewater treatment
facility. This project is substantially complete, and the District has a potential claim for
liquidated damages to be settled through negotiation at the end of the project, or if that fails,
binding arbitration. The second legal matter relates to an unauthorized easement
encroachment. The technical aspects of this case are settled. The remaining dispute is
related to legal representation expenses incurred by the plaintiff.
Requests for information
This financial report is designed to provide a general overview of the District's consolidated
finances for all interested parties. Questions concerning any of the information in this report or
requests for additional information should be directed to the Trophy Club Municipal Utility
District No. 1, Finance Manager, 100 Municipal Drive, Trophy Club, Texas 76262.
10
BASIC FINANCIAL STATEMENTS
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF NET POSITION
SEPTEMBER 30, 2018
Governmental
Activities
ASSETS
Cash and cash equivalents $ 2,993,981
Pooled investments 4,368,107
Restricted pooled investments 1,442,546
Receivables
Accounts receivable, net 1,131,679
Taxes 26,454
Due from other governments 2,072
Prepaids 70,512
Net pension asset 61,500
Non -depreciable capital assets:
Land 648,178
Construction in progress 20,002,236
Water rights 796,145
Depreciable capital assets: (net)
Buildings and other improvements 2,930,259
Machinery, vehicles, and other equipment 2,025,579
Water system 14,393,913
Organization costs 19,734
TOTAL ASSETS 50,912,895
DEFERRED OUTFLOWS OF RESOURCES
Pension and other post employment benefits
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES
71,774
71,774
Accounts payable 1,295,338
Accrued liabilities 45,741
Accrued interest payable 59,415
Customer deposits 312,490
Net OPEB liability 16,955
Noncurrent liabilities:
Debt due within one year 1,564,224
Debt due in more than one year 20,623,285
TOTAL LIABILITIES 23,917,448
DEFERRED INFLOWS OF RESOURCES
Pension and other post employment benefits
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION
38,846
38,846
Net investment in capital assets 18,657,642
Restricted for debt service 682,344
Unrestricted 7,688,389
TOTAL NET POSITION $ 27,028,375
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, 2018
Program Activities
Governmental Activities
Water operations
General government
Wastewater operations
Fire
Interest on long term debt
Non -Departmental
Wastewater collection system
Directors
Expenses
$ 3,385,244
1,395,655
1,149,853
698,845
569,293
190,494
67,858
9,811
Governmental Activities
Program Revenues
Operating
Charges for Grants and
Services Contributions
$ 6,169,279 $
22,237
3,117,435
Total governmental
activities $ 7,467,053 $ 9,308,951 $
Capital Grants
and
Contributions
$
$
General Revenues:
Ad valorem taxes
Miscellaneous
Contributions not restricted to specific programs
Investment income
Gain on sale of assets
Total general revenues
Change in net position
Net Position - beginning of year
Prior period adjustments
Net Position - end of year
The notes to the financial statements are an integral part of this statement.
12
Net (Expenses)
Revenue and
Changes in Net
Assets
Governmental
Activities
$ 2,784,035
(1,373,418)
1,967,582
(698,845)
(569,293)
(190,494)
(67,858)
(9,811)
$ 1,841,898
1,878,557
80,627
195,528
112,040
9,477
2,276,229
4,118,127
22,921,140
(10,892)
$ 27,028,375
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2018
General Fund
Debt Capital Total
Fund Fund Funds
ASSETS
Assets
Cash and cash equivalents $ 2,986,825 $ 7,156 $ - $ 2,993,981
Pooled investments 4,368,107 - - 4,368,107
Restricted investments 675,188 767,358 1,442,546
Receivables:
Accounts receivables, net 1,131,679 - - 1,131,679
Taxes 16,952 9,502 26,454
Due from other governments 2,072 2,072
Due from other funds 1,051,130 - - 1,051,130
Prepaids 70,512 - - 70,512
TOTAL ASSETS $ 9,627,277 $ 691,846 $ 767,358 $ 11,086,481
LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES
Liabilities
Accounts payable $ 487,600 $ - $ 807,738 $ 1,295,338
Accrued liabilities 45,741 - - 45,741
Customer deposits 312,490 - - 312,490
Due to other funds - 1,051,130 1,051,130
Total liabilities 845,831 - 1,858,868 2,704,699
Deferred Inflows of Resources
Unavailable revenues - property taxes 16,952 9,502 26,454
Total deferred inflows of resources 16,952 9,502 26,454
Fund Balances
Non -spendable prepaids 70,512 - - 70,512
Restricted -Debt service 682,344 682,344
Assigned -Capital outlays 1,439,969 - 1,439,969
Unassigned 7,254,013 - (1,091,510) 6,162,503
Total fund balances 8,764,494 682,344 (1,091,510) 8,355,328
TOTAL LIABILITIES, DEFERRED
INFLOWS, AND FUND BALANCES $ 9,627,277 $ 691,846 $ 767,358 $ 11,086,481
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, 2018
Total fund balances - governmental funds $ 8,355,328
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. 40,816,044
Net pension asset is not a financial resource; therefore, it is not reported in the 61,500
governmental funds.
Net OPEB liability is not a financial resource; therefore, it is not reported in the
governmental funds. (16,955)
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.
26,454
TCDRS contributions are not current financial resources/burden; therefore they are
not reported in the governmental funds. The net of these amounts is: 71,774
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.
(59,415)
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: (38,846)
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.
(29,107)
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. (22,158,402)
Net position of governmental activities $ 27,028,375
The notes to the financial statements are an integral part of this statement.
14
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
Revenues:
Water and wastewater charges
Taxes
Miscellaneous
Intergovernmental revenues
Investment income
Oversize meter reimbursements
Inspection and tap fees
Total Revenues:
Expenditures
Water
Wastewater
Adminstration
Fire
Non -Departmental
Board of directors
Capital outlay
Debt Service
Principal
Interest and fiscal charges
Bond administrative fees
Total Expenditures:
Excess (deficiency) of revenues
over (under) expenditures
Other Financing Sources (Uses)
Transfers in
Proceeds from sale of assets
Capital lease issuance cost
Capital lease issuance
Transfers out
Total Other Financing Sources (Uses):
Net change in fund balance
Fund Balances - beginning of year
Fund Balances - end of year
General Fund
$ 9,286,714 $
1,197,949
35,627
195,528
61,283
14,237
8,000
10,799,338
3,173,225
1,026,693
1,075,089
625,637
190,494
9,811
665,773
112,381
20,050
6,899,153
3,900,185
797,834
15,400
(1,500)
360,100
(1,390,151)
(218,317)
3,681,868
5,082,626
$ 8,764,494 $
Debt
Service
Fund
Capital
Projects
Fund
Total
Governmental
Funds
$ $ 9,286,714
681,688 - 1,879,637
- 45,000 80,627
- 195,528
21,903 28,854 112,040
- 14,237
- - 8,000
703,591 73,854 11,576,783
3,173,225
1,026,693
- - 1,075,089
- - 625,637
190,494
9,811
5,545,792 6,211,565
1,315,000 - 1,427,381
569,530 589,580
2,950 - 2,950
1,887,480 5,545,792 14,332,425
(1,183,889) (5,471,938) (2,755,642)
1,390,151 2,187,985
15,400
(1,500)
360,100
- (797,834) (2,187,985)
1,390,151 (797,834) 374,000
206,262 (6,269,772) (2,381,642)
476,082 5,178,262 10,736,970
682,344 $ (1,091,510) $ 8,355,328
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, 2018
Net change in fund balances - total governmental funds $ (2,381,642)
Amounts reported for governmental activities in the Statement of Activities
are different because:
Depreciation expense on capital assets reported in the Statement of Activities
does not require the use of current financial resources, therefore, depreciation
expense is not reported as expenditures in the governmental funds.
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the costs of those assets is allocated over their
estimated useful lives and reported as depreciation expense. This is the
amount of capital assets recorded in the current period.
(786,400)
6,211,565
Debt principal payments reduces long-term liabilities in the Statement of Net
Position, but it is recorded as an expenditure in the governmental funds. 1,427,381
Governmental funds report new debt issuances as other financing sources.
However, these amounts are removed and recognized as new long term debt on the
Statement of Net Position.
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.
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.
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, pension and OPEB expense, and
other items. The net effect of these reclassifications is to decrease net position.
Current year changes in accrued interest payable do not require the use of current
financial resources and, therefore, are not reported as expenditures in the
governmental funds.
(360,100)
18,325
(5,923)
(7,041)
1,962
Change in net position of governmental activities $ 4,118,127
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, 2018
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
17
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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 2018, the major funds are the General Fund, Capital Projects Fund, and 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.
18
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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.
19
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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
20
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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.
21
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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, 2018, the carrying amount of the District's deposits (cash, certificates of deposit,
and non -pooled savings accounts) was $2,632,956 and the bank balance was $3,224,980. The
District's cash deposits at September 30, 2018, and during the year then ended were entirely covered
by FDIC insurance, pledged securities, or by a letter of credit pledged by the District's agent bank in
the District's name.
22
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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:
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
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, 2018 are classified in the accompanying financial
statements as follows:
Primary Government:
Cash and cash equivalents $ 2,993,981
Pooled Investments 4,368,107
Restricted pooled investments 1,442,546
Total cash and investments $ 8,804,634
23
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 2. CASH AND INVESTMENTS — CONTINUED
Cash and investments as of September 30, 2018 consist of the following:
Petty Cash $ 600
Deposits with financial institutions 2,632,356
Restricted Pooled Investments 1,803,571
Unrestricted Texpool Investments 4,368,107
Total cash, certificate of deposit, and pooled investments $ 8,804,634
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, 2018, the District had the following investment:
Weighted
Average
Investment Type Amount Maturity
TexPool
$ 6,171,678 30 days
Total Investments $ 6,171,678
As of September 30, 2018, the District did not invest in any securities which are highly sensitive to
interest rate fluctuations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where applicable)
the Public Funds Investment Act, the District's investment policy, or debt agreements, and the actual
rating as of year-end for each investment type.
24
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 2. CASH AND INVESTMENTS — CONTINUED
Minimum Rating as
Legal of Year
Investment Type Amount Rating End
TexPool $ 6,171,678 AAAm AAAm
Total Investments $ 6,171,678
Concentration of Credit Risk
As of September 30, 2018, 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 have the following provision for deposits: They require 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.
25
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 3. ACCOUNTS RECEIVABLE
Receivables as of year-end, including the applicable allowances for uncollectible accounts, are as
follows:
Accounts Receivable:
MUD water
MUD sewer
Unbilled receivables
Refuse (as agent for Town of Trophy Club)
Storm drainage (as agent for Town of Trophy Club)
Refuse tax (as agent for Town of Trophy Club)
Miscellaneous
PID Surcharge (as agent for Town of Trophy Club)
Allowance for uncollectible accounts
Total (net)
Due from Other Governments:
Town of Trophy Club
NOTE 4. INTERFUND TRANSFERS
Transfers between funds during the year are as follows:
Transfer In Transfer Out Amount Purpose
General Fund Capital Projects $ 797,834
Debt Service General Fund 218,954
Debt Service General Fund 122,043
Debt Service General Fund 925,818
Debt Service General Fund 123,336
Total $ 2,187,985
$ 570,746
277,334
143,997
73,081
51,411
6,281
2,993
17,887
1,143,730
(12,051)
$ 1,131,679
$ 2,072
Reimburse GF for Phase 1 of the Fort Worth Water Main Project
Transfer for the fire station bond payment
Transfer of PID surcharge
Assist with revenue bond payments
Transfer to assist with the bond reserve payment.
26
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 5. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2018, was as follows:
Governmental Activities:
Capital assets - Non -Depreciable
Land
Construction in progress
Water rights
Total capital assets
not being depreciated
Capital assets - Depreciable
Buildings
Improvements other than buildings
Machinery and equipment
Organization costs
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Total capital assets
being depreciated
Less accumulated
depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Organization costs
Vehicles
Water system
Wastewater treatment system
Wastewater collection system
Total accumulated
depreciation
Governmental activities capital
assets, net
Beginning
Balances
$ 648,178 $
14,127,488 5,932,219
796,145
Retirements/
Additions Transfers
15,571,811
3,479,008
324,334
1,809,967
2,331,300
2,384,649
12,218,223
5,663,320
4,410,351
32,621,152
(529,537)
(256,787)
(886,789)
(2,304,293)
(1,128,731)
(3,828,100)
(2,333,243)
(1,528,683)
(12,796,163)
$ 35,396,800
27
Ending
Balance
$ - $ 648,178
(57,472) 20,002,235
796,145
5,932,219 (57,472) 21,446,558
60,390
144,765
16,037
58,154
279,346
3,479,008
324,334
57,900 1,867,867
2,331,300
(42,110) 2,402,929
24,768 12,387,756
5,415 5,684,772
(30,611) 4,437,894
15,362 32,915,860
(75,277) (604,814)
(11,482) - (268,269)
(116,694) - (1,003,483)
(7,273) - (2,311,566)
(149,191) 36,187 (1,241,735)
(214,968) - (4,043,068)
(138,444) - (2,471,687)
(73,071) - (1,601,754)
(786,400) 36,187 (13,546,376)
$ 5,425,165 $ (5,923) $ 40,816,042
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 5. CAPITAL ASSETS - CONTINUED
Depreciation expense was charged as direct expense to programs of the primary government as
follows:
General government
Water operations
Wastewater operations
Fire department
Wastewater collection systems
Total depreciation expense
NOTE 6. LONG-TERM DEBT
$ 314,121
210,380
120,833
73,208
67,858
$ 786,400
At September 30, 2018, the District's long-term debt payable consisted of the following:
Description
Tax and revenue bonds:
Improvements
Refunding
Refunding
Improvements
Improvements
Improvements
Capital lease payable:
Capital lease obligations
Capital lease obligations
Interest Year Average
Rate of Final Annual Original
Payable Issue Maturity Payment Amount
3.50-5.00% 2010 2031 $ 148,205 $2,000,000
2.00-3.00% 2012 2023 251,373 2,355,000
2.00-3.50% 2013 2023 224,734 1,905,000
1.50-3.50% 2015 2034 199,898 5,765,000
2.00-3.25% 2015 2035 305,174 9,230,000
0.53-2.12% 2016 2036 275,259 4,635,000
2.50% 2015
2.95% 2018
28
Outstanding
9/30/2018
$ 1,490,000
1,170,000
1,020,000
5,045,000
8,280,000
4,230,000
$ 21,235,000
2022 $ 127,149 $1,057,316 $ 478,330
2023 78,456 360,100 360,100
$ 838,430
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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, 2018:
Governmental Activities:
Tax, revenue, and refunding bonds
Deferred loss on refunding
Premium on bonding
Capital lease obligations
Compensated absences
Total Governmental Activities
Long-term Liabilities
Beginning
Balance Additions
$ 22,550,000 $
(5,197)
108,496
22,653,299
590,711 360,100
590,711 360,100
Ending Due Within
Reductions Balance One Year
$ (1,315,000) $ 21,235,000 $ 1,350,000
866 (4,331)
(19,192) 89,304
(1,333,326) 21,319,973 1,350,000
(112,381) 838,430 185,117
(112,381) 838,430 185,117
32,306 (3,199) 29,107 29,107
32,306 (3,199) 29,107 29,107
$ 23,276,316 $ 360,100
$ (1,448,906) $ 22,187,510 $ 1,564,224
The annual requirements to amortize all debt outstanding as of September 30, 2018, are as follows:
Year Ending
September 30,
2019
2020
2021
2022
2023
2024-2028
2029-2033
2034-2036
Principal
$ 1,350,000
1,370,000
1,410,000
1,450,000
1,490,000
5,565,000
6,165,000
2,435,000
Total $ 21,235,000
29
Interest Total
$ 543,397
516,220
486,681
455,372
421,446
1,672,427
891,885
107,748
$ 5,095,176
$ 1,893,397
1,886,220
1,896,681
1,905,372
1,911,446
7,237,427
7,056,885
2,542,748
$ 26,330,176
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 6. LONG-TERM DEBT — CONTINUED
Capital lease obligations:
Year Ending
September 30, Principal Interest Total
2019 $ 185,117 $ 21,550 $ 206,667
2020 189,028 16,592 205,620
2021 193,027 11,532 204,558
2022 197,114 6,366 203,480
2023 74,144 1,094 75,238
Total $ 838,430 $ 57,133 $ 895,563
Tax and Revenue Bonds
Tax and 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 callable 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.
Series 2016 — All maturities from 2028 to 2036 are callable in principal increments of $5,000 on
or after September 1, 2027 at par plus unpaid 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, 2018.
30
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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 2018
tax levies:
Adjusted taxable values $ 1,555,617,669
0 & M and Fire tax levy $0.076580/$100 1,191,292
I & S tax levy $0.043630/$100 678,716
Total tax levy $0.120210/$100 $ 1,870,008
NOTE 8. FUND BALANCE CLASSIFICATIONS
The District authorized the District Manager to designate certain fund balances as assigned. Excluding
unassigned fund balances, the following describes the District's fund balance classifications at
September 30, 2018:
Non -Spendable Fund Balances
The District's $70,512 non -spendable fund balance represents expenses prepaid at fiscal year-end.
Assigned Fund Balances
The District assigned a total of $1,439,969 of General Fund balances for the following future capital
outlays: $963,543 for wastewater system improvements, $408,621 for vehicles, and $67,805 for other
improvements.
31
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
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.
Due to:
Capital Projects
Due from: General Fund Fund Total
General Fund $ - $ 45,000 $ 45,000
Capital Projects Fund 1,096,130 1,096,130
Total $ 1,096,130 $ 45,000 $ 1,141,130
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, 2017 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.
32
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
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.
• 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.
33
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
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.
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.
34
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
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.
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.
35
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
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.
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 2017 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.
36
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
Asset Class
US Equities
Private Equity
Global Equities
International Equities- Developed
International Equities- Emerging
Investment -Grade Bonds
Strategic Credit
Direct Lending
Distressed Debt
REIT Equities
Master Limited Partnerships (MLPs)
Private Real Estate Partnerships
Hedge Funds
Total
Contributions
Benchmark
Dow Jones U.S. Total Stock Market Index
Cambridge Associates Global Private Equity & Venture
Capital Index
MSCI World (net) Index
MSCI World Ex USA (net)
MSCI EM Emerging Markets (net) Index
Barclays Capital Aggregate Bond Index
FTSE High -Yield Cash -Pay Capped Index
S&P/LSTA Leveraged Loan Index
Cambridge Associates Distressed Securities Index
67% FTSE NAREIT Equity REITs Index + 33% FRSE
EPRA/NAREIT Global Real Estate Index
Alerian MLP Index
Cambridge Associates Real Estate Index
Hedge Fund Research, Inc. (HFRI) Fund of Funds
Composite Index
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULE OF CONTRIBUTIONS
Last 10 Calendar Years (will ultimately be displayed)
Target
Allocation
11.50%
16.00% 7.55%
1.50% 4.85%
11.00% 4.55%
8.00% 5.55%
3.00% 0.75%
8.00% 4.12%
10.00% 8.06%
2.00% 4.05%
2.00% 4.05%
3.00% 6.00%
6.00% 6.25%
18.00% 4.10%
100.00%
Geometric Real
Rate of Return
4.55%
2017 2016 2015 2014 2013
Actuarially Determined Contribution $ 102,802 97,875 97,043 93,694 84,476
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
$ 102,802 97,875 97,043 93,694 198,219
$ (113,743)
Covered employee payroll $ 1,140,976 1,119,822 1,116,721 1,068,342 963,243
Contributions as a percentage of covered
employee payroll 9.0% 8.5% 8.7% 8.8% 20.6%
37
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
Deferred Inflows/Outflows of Resources
At September 30, 2018, the District reported deferred inflows and outflows of resources are as follows:
Deferred Inflows/Outflows of Resources Deferred Inflows Deferred Outflows
of Resources of Resources
Differences between expected and actual experience $ 38,571 $
Changes of assumptions - 9,779
Net difference between projected and actual earnings 8,670
Contributions made subsequent to measurement date N/A 73,343
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
2018 $ (181)
2019 (2,187)
2020 (13,966)
2021 (16,075)
2022 (5,053)
Thereafter
Total $ (37,462)
38
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 11. RETIREMENT PLAN (CONTINUED)
Valuation Timing:
NOTES TO SCHEDULE OF CONTRIBUTIONS
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
Methods and As s umptions Used to Determine Contribution Rates:
Actuarial Cost Method
Asset Valuation Method
Inflation
Salary Increases
Investment Rate of Return
Cost -of -Living Adjustments
Retirement Age
Turnover
Mortality:
Deposting members
Service retirees, beneficiaries and non -
depositing members
Disabled retirees
Other Information:
Notes
Entry Age Normal
5 Year smoothed market
2.75%
Varies by age and service. 4.9% average over career including inflat:
8.00%
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.
Members who are eligible for service retirement are assumed to
commence receiving benefit payments based on age. The average
age at service retirement for recent retirees is 61.
The rates vary by length of service, entry -age group (age at hire)
and sex
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 projected to 2014
with scale AA and then projected with 110% of the MP -2014
Ultimate scale after that.
The Rp-2000 Combined Mortality Table with the projection scale
AA and then projected with 110% of the MP -2014 Ultimate scale
after that, with a one-year set -forward for males and no age
adjustment for females.
RP -2000 Disabled Mortality Table projected to 2014 with scale AA
and then projected with 110% of the MP -2014 Ultimate scale after
that, with no age age adjustment for males and a two-year set -
forward for females.
There were no benefit changes during the year.
39
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 12. OTHER POST EMPLOYMENT BENEFITS
Trophy Club Municipal Utility District No 1 participates in the retiree Group Term Life program for the
Texas County & District Retirement System (TCDRS), which is a statewide, multiple -employer, public
employee retirement system.
A brief description of benefit terms:
All full- and part-time non -temporary employees participate in the plan, regardless of the number of
hours they work in a year and are eligible for the TCDRS pension plan. Only employers that have
elected participation in the retiree Group Term Life program are included in the OPEB plan.
The plan provides a $5,000 post-retirement death benefit to beneficiaries of service retirees and
disability retirees of employers that have elected participation in the retiree GTL program.
The OPEB benefit is a fixed $5,000 lump -sum benefit.
No future increases are assumed in the $5,000 benefit amount.
Benefit terms are established under the TCDRS Act. Participation in the retiree GTL program is optional
and the employer may elect to opt out of (or opt into) coverage as of Jan. 1 each year.
Membership information is shown in the chart below.
Inactive employees or beneficiaries currently receiving benefits 1
Inactive employees entitled to but not yet receiving benefits 5
Active employees 18
Total: 24
Contributions made to the retiree GTL Program are held in the GTL Fund. The GTL fund does not meet
the requirements of a trust under Paragraph 4b of GASB 75, as the assets of the GTL fund can be used to
pay active GTL benefits which are not part of the OPEB plan.
Benefit terms are established under the TCDRS Act. Participation in the retiree GTL program is optional
and the employer may elect to opt out of (or opt into) coverage as of Jan. 1 each year. The district's
contribution rate for the retiree GTL program is calculated annually on an actuarial basis, and is equal to
the cost of providing a one-year death benefit equal to $5,000.
40
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2018
NOTE 12. OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
Deferred Inflows/Outflows of Resources
At September 30, 2018, the District reported deferred inflows and outflows of resources are as follows:
Deferred Inflows/Outflows of Resources Deferred Inflows Deferred Outflows
of Resources of Resources
Differences between expected and actual experience $ 275 $ -
Changes of assumptions - 811
Contrbutions made subsequent to measurement date N/A $ 1,888
Amounts currently reported as deferred outflows of resources and deferred inflows of resources related
to OPEB benefits, excluding contributions made subsequent to the measurement date, will be recognized
in OPEB expense as follows:
Net deferred
outflows
(inflows) of
resources
2018 $ 89
2019 89
2020 89
2021 89
2022 90
Thereafter 90
Total $ 536
NOTE 13. PRIOR PERIOD RESTATEMENTS
Governmental
Governmental Fund Types Activities
Net Position - beginning $ 22,921,140
Implementation of GASB Statement 75 (10,892)
Net position - beginning as adjusted $ 22,910,248
NOTE 14. SUBSEQUENT EVENTS
The District has evaluated all events and transactions that occurred after September 30, 2018 up through
audit report date, which is the date the financial statements were issued. The District has no subsequent
events to disclose.
41
REQUIRED SUPPLEMENTARY INFORMATION
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS)
YEAR ENDED SEPTEMBER 30, 2018
Revenues
Water charges
Wastewater charges
Taxes
Miscellaneous
Intergovernmental revenues
Oversize meter reimbursements
Investment income
Inspection and tap fees
Total revenues
Expenditures:
Water operations
Wastewater operations
Administration
Fire
Non -Departmental
Directors
Capital Outlay
Debt Service
Total expenditures
Excess of revenues over expenditures
Other financing sources (uses):
Transfers out
Transfers in
Capital Lease Issuance Cost
Capital Lease Issuance
Proceeds from Sale of Assets
Total other financing sources (uses)
Net change in fund balance
Fund Balances - beginning of year
Fund Balances - end of year
Budgeted amounts
Original
$ 6,651,648
2,976,365
1,175,783
23,046
187,839
18,179
12,000
6,000
11,050,860
4,200,897
1,300,782
1,214,111
637,010
176,746
12,980
1,370,339
127,149
9,040,014
2,010,847
(1,790,150)
2,000
(1,788,150)
222,697
5,082,626
$ 5,305,323
Final
$ 6,644,648
2,976,365
1,175,783
33,046
187,839
18,179
50,000
6,000
11,091,860
3,891,767
1,195,782
1,204,111
637,010
176,746
12,980
1,645,339
127,149
8,890,884
2,200,977
(2,534,662)
796,145
15,400
(1,723,117)
477,860
5,082,626
$ 5,560,486
Actual
$ 6,250,890
3,035,824
1,197,949
35,627
195,528
14,237
61,283
8,000
10,799,338
3,173,225
1,026,693
1,075,089
625,637
190,494
9,811
665,773
132,431
6,899,153
3,900,185
(1,390,151)
797,834
(1,500)
360,100
15,400
(218,317)
3,681,868
5,082,626
$ 8,764,494
Variance with
Final Budget
$ (393,758)
59,459
22,166
2,581
7,689
(3,942)
11,283
2,000
(292,522)
718,542
169,089
129,022
11,373
(13,748)
3,169
979,566
(5,282)
1,991,731
1,699,208
1,144,511
1,689
(1,500)
360,100
1,504,800
3,204,008
$ 3,204,008
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.
42
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Years (will ultimately be displayed)
2017 2016 2015 2014
Total pension liability
Service Cost $ 176,975 $ 200,990 $ 150,689 $ 170,600
Interest (on the Total Pension Liability) 83,553 57,230 41,351 27,449
Changes of benefit terms (22,086)
Difference between expected and actual experience (25,170) (9,790) (11,320) (7,057)
Change of assumptions 5,971 - 7,686
Benefit payments (1,695) (2,091) (1,902) (3,156)
Net Change in Total Pension Liability 239,634 246,339 164,418 187,836
Total Pension Liability - Beginning 855,377 609,038 444,620 256,784
Total Pension Liability - Ending (a) $ 1,095,011 $ 855,377 $ 609,038 $ 444,620
Plan Fiduciary Net Position
Contributions - Employer $ 102,802 $ 95,185 $ 97,043 $ 93,694
Contributions - Employee 79,868 78,388 78,171 74,784
Net Investment Income 126,587 46,440 (15,011) 18,561
Benefit payments (1,695) (2,091) (1,902) (3,156)
Administrative Expense (769) (505) (394) (285)
Other 2,418 19,889 (47) (21)
Net Change in Plan Fiduciary Net Position 309,211 237,306 157,860 183,577
Plan Fiduciary Net Position - Beginning 847,300 609,994 452,134 268,557
Plan Fiduciary Net Position - Ending (b) $ 1,156,511 $ 847,300 $ 609,994 $ 452,134
Net Pension Liability - Ending (a) - (b) $ (61,500) $ 8,077 $ (956) $ (7,514)
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability 105.62% 99.06% 100.16% 101.69%
Covered Employee Payroll $ 1,140,976 $ 1,119,822 $ 1,116,721 1,068,342
Net Pension Liability as a Percentage
of Covered Employee Payroll -5.39% 0.72% -0.09%
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.
43
-0.70%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULE OF PENSION CONTRIBUTIONS
Last 10 Calendar Years (will ultimately be displayed)
Actuarially Determined Contribution $
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
Covered employee payroll
Contributions as a percentage of covered
employee payroll
Valuation Timing:
2017 2016 2015
102,802 97,875 97,043
102,802 97,875 97,043
1,140,976 1,119,822 1,116,721
9.0%
2014 2013
93,694 84,476
93,694 198,219
(113,743)
1,068,342 963,243
8.5% 8.7% 8.8% 20.6%
NOTES TO SCHEDULE OF PENSION CONTRIBUTIONS
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
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method
Asset Valuation Method
Inflation
Salary Increases
Investment Rate of Return
Cost -of -Living Adjustments
Retirement Age
Turnover
Mortality:
Deposting members
Service retirees, beneficiaries and non -
depositing members
Disabled retirees
Other Information:
Notes
Entry Age Normal
5 Year smoothed market
2.75%
Varies by age and service. 4.9% average over career including inf
8.00%
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.
Members who are eligible for service retirement are assumed to
commence receiving benefit payments based on age. The
average age at service retirement for recent retirees is 61.
The rates vary by length of service, entry -age group (age at hire)
and sex.
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
projected to 2014 with scale AA and then projected with 110%
of the MP -2014 Ultimate scale after that.
The Rp-2000 Combined Mortality Table with the projection
scale AA and then projected with 110% of the MP -2014
Ultimate scale after that, with a one-year set -forward for males
and no age adjustment for females.
RP -2000 Disabled Mortality Table projected to 2014 with scale
AA and then projected with 110% of the MP -2014 Ultimate
scale after that, with no age age adjustment for males and a two-
year set -forward for females.
There were no benefit changes during the year.
44
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULE OF OPEB CONTRIBUTIONS
Last 10 Calendar Years (will ultimately be displayed)
Actuarially Determined Contribution
Contributions in relation to the actuarially
determined contribution
2017
$ 2,673
2,673
Contribution deficiency (excess) -
Covered employee payroll $ 1,140,976
Contributions as a percentage of covered
employee payroll
Valuation Timing:
0.2%
NOTES TO SCHEDULE OF CONTRIBUTIONS
Actuarially determined contribution rates are calculated on a
calendar year basis as of December 31, two years prior to the
end of the fiscal year in which the contributions are reported.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method
Inflation
Salary Increases
Investment Rate of Return
Cost -of -Living Adjustments
Retirement Age
Mortality:
Depositing members
Service retirees, beneficiaries and non -
depositing members
Disabled retirees
Other Information:
Notes
Entry Age Normal
Does not apply
Does not apply
3.44%
Does not apply.
Members who are eligible for service retirement are assumed to
commence receiving benefit payments based on age. The
average age at service retirement for recent retirees is 61.
90% of the RP -2014 Active Employee Mortality Table for males
and 90% of the RP -2014 Active Employee Mortality Table for
females, projected with 110% of the MP -2014 Ultimate scale
after 2014.
130% of the RP -2014 Healthy Annuitant Mortality Table for
males and 110% of the RP -2014 Healthy Annuitant Mortality
Table for females, both projected with 110% of the MP -2014
Ultimate scale after 2014.
130% of the RP -2014 Disabled Annuitant Mortality Table for
males and 115% of the RP -2014 Disabled Annuitant Mortality
Table for females, both projected with 110% of the MP -2014
Ultimate scale after 2014
There were no benefit changes during the year.
45
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS
Last 10 Years (will ultimately be displayed)
2017
Total OPEB liability
Service Cost $ 2,889
Interest (on the Total OPEB Liability) 595
Effect of plan changes
Effect of assumption changes or inputs 946
Effect of economic/demographic (gains) or losses (321)
Benefit payments
Net Change in Total OPEB Liability 4,109
Total OPEB Liability - Beginning 12,846
Total OPEB Liability - Ending (a) $ 16,955
Pensionable Covered Payroll $ 1,140,976
Net OPEB Liability as a Percentage
of Covered Employee Payroll 1.49%
Notes to Schedule:
This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of
prior years are not reported in accordance with the standards of GASB 74/75, they should not be shown here. Therefore,
we have shown only years for which the new GASB statements have been implemented.
INDIVIDUAL SCHEDULES AND OTHER
SUPPLEMENTARY INFORMATION REQUIRED
BY TEXAS COMMISSION ON
ENVIRONMENTAL QUALITY (TCEQ)
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -1 SERVICES AND RATES
SEPTEMBER 30, 2018
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
Residential and Commercial
Water Volumetric Rates
Meter Size Base Rate Rates per 1,000 Gallons
5/8" $17.15
1" $32.23 $3.96 0 to 6,000
1.5" $56.94 $4.61 6,001 to 17,000
2" $86.58 $5.34 17,001 to 25,000
3" $155.76 $6.20 25,001 to 50,000
4" $254.59 $7.21 50,001 +
6" $501.64
Sewer Base Fee Sewer Volumetric Rates
Base Rate Rates per 1,000 Gallons
Residential* $19.60 $3.18 0 to 4,000
$4.51 4,001 to 8,000
$6.43 8,001 to 12,000
$9.14 12,000 +
Commercial** $19.60 $5.92 1,000 +
*Effective October 1, 2016 Winter Averaging for Sewer Rates were adopted for Residential
Customers. Residential sewer rates each year are based on average water usuage for the months
of December, January, and February. Effective April 1, 2018 the above rates were adopted for all
residential sewer customers.
**Commercial sewer usage is billed based on actual water usage per month
NOTE: all rates noted above were amended effective April 1, 2018.
District employs winter averaging for wastewater usage? Yes
***Total water and wastewater charges per 10,000 gallons usage (including surcharges)
effective April 1, 2018 (based on 5/8" & 3/4")
First 10,000 gallons used 10,000 $ 122.57
Next 10,000 gallons used 20,000 $ 170.86
Next 10,000 gallons used 30,000 $ 228.56
Next 10,000 gallons used 40,000 $ 290.56
Next 10,000 gallons used 50,000 $ 352.56
Next 10,000 gallons used and subsequent 60,000 $ 424.66
*** The above sewer calculations are based on a Winter Average of 10,000 gallons per month.
47
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -1 SERVICES AND RATES
SEPTEMBER 30, 2018
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).
Connections ESFC Active
Meter Size Total Active Factor ESFC's
Unmetered - 1.0 -
Less than 3/4" 2,499.0 2,491.0 1.0 2,491.0
1" 623.0 622.0 2.5 1,555.0
1 1/2" 28.0 27.0 5.0 135.0
2" 92.0 84.0 8.0 672.0
3" 37.0 37.0 15.0 555.0
4" 15.0 15.0 25.0 375.0
6" 3.0 3.0 50.0 150.0
8" - 80.0 -
10" - 115.0 -
Total Water 3,297.0 3,279.0 5,933.0
Total Wastewater 3,304.0 3,284.0 1.0 3,284.0
* Number of connections relates to water service if provided. Otherwise, the number of wastewater
connections should be provided.
Note: Total water connections does not include Fire Lines or Portable meters
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 1,444 connections
3. Total water consumption (in thousands) during the fiscal year:
Gallons pumped into the system
Gallons billed to customers
Water accountability ratio
955,151
884,662
92.62%
4. Standby Fees:
Does the District assess standby fees? No
For the most recent fiscal year, FY2018:
Total Total Percentage
Levy Collected Collected
Debt Service $ 678,716 $ 677,052 99.8%
Operations and Maintenance $ 1,191,292 $ 1,188,371 99.8%
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:
Denton
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 Board membership appointed by an office outside the District? No
48
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -2
General Fund Expenditures and Other Financing Uses
Year End September 30, 2018
Current Year Prior Year
2018 2017
Administrative $ 1,275,394 $ 1,150,421
Water Operations $ 3,173,225 $ 2,994,623
Wastewater Operations $ 1,026,693 $ 1,061,896
Wastewater Collection Systems 0 0
Contribution to Trophy Club Fire Dept $ 625,637 $ 625,083
Capital Outlay $ 665,773 $ 744,828
Transfers Out and Debt Service $ 1,524,082 $ 1,529,319
Total Expenditures $ 8,290,804 $ 8,106,170
* In FY 2015 Wastewater Operations and Wastewater Collection Systems were merged together.
Number of employees employed by the District:
Full time Equivalents (FTEs) 17 17
Part time 0 0
** The Town of Trophy Club handles the operations of the Fire Department based on an
Interlocal Agreement with Trophy Club Municipal Utility District No.1 effective 10/1/16.
The MUD reimburses the annual Town's Fire Budget in equal monthly payments.
49
Funds
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI -3 TEMPORARY INVESTMENTS
September 30, 2018
Identification Interest Maturity Balance Accrued Interest
Number Rate Date End of Year End of Year
General Fund
Bank of the West Closed 0.250 Demand $ - Paid monthly
(Money Market)
General Fund
TexPool 613300002 2.1244 Demand $ 4,368,107 Paid daily
Debt Service Fund
TexPool 613300003 2.1244 Demand $ 48,716 Paid daily
Debt Service -Revenue
Bond
Texpool 613300013 2.1244 Demand $ 19,562 Paid daily
Revenue Bond
Reserve
Texpool 613300014 2.1244 Demand $ 606,910 Paid daily
Capital Projects
Tax Bond Construction
Texpool 613300011 2.1244 Demand $ - Paid daily
Capital Projects
Revenue Bond
Construction Closed
Texpool 613300012 2.1244 Demand $ - Paid daily
Capital Projects
SWIFT Revenue Bond
Construction
Texpool 613300015 2.1244 Demand Paid daily
SWIFT Revenue Bond
Debt Service
Texpool
613300017
2.1244 Demand $ 2,584 Paid daily
SWIFT Revenue Bond
Escrow Account
Bank of Texas BOKF 82-1747-01-1 1.560 Demand $ 767,358 Paid daily
Vaccon Capital Lease -8076
Escrow Account
UMB 147404.1 1.700 Demand $ 361,026 Paid daily
Total - All Funds $ 6,174,262
50
Taxes receivable beginning of year
2017 tax levy
Total to be accounted for
Less collections and adjustments:
Current year
Prior years
Total to be accounted for
Taxes receivable, end of year
Taxes receivable by year
1996 and prior
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Property valuations (in 000's)
Land
Improvements
Personal property
Exemptions
Tax rate per $100 valuation
Operations
Fire department
Debt service
Tax rate per $100 valuation
Tax levy:
Percent of taxes collected to taxes levied
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -4 TAXES LEVIED AND RECEIVABLE
SEPTEMBER 30, 2018
Operations
$ 1,662
116,591
118,253
(116,364)
(244)
(116,609)
$ 1,644
General Fund
Fire
$ 15,752
1,017,196
1,032,948
(1,014,497)
(3,142)
(1,017,640)
$ 15,308
$ - $
$ 2 $
$ 2 $
$ 2 $
$ 2 $
$ 2 $
$ 2 $
$ 24 $
$ 5 $
$ 12 $
$ 50 $
$ 42 $
$ 72 $
$ 184 $
$ 136 $
$ 138 $
$ 146 $
$ 150 $
$ 263 $
$ 91 $
$ 91 $
$ 301 $
$ 1,718 $
F/Y
17/18
$ 620,210 $
908,581
105,783
(82,556)
$ 1,552,018 $
0.007880
0.068700
0.043630
0.120210
15
16
17
12
13
22
42
43
40
233
404
564
740
1,693
1,525
1,533
1,398
1,369
1,387
1,542
2,620
15,230
F/Y
16/17
562,280
798,401
99,772
(57,745)
1,402,708
0.004380
0.074450
0.048390
0.127220
$ 1,870,008 $ 1,779,098
99.75%
99.60%
51
Total
$ 17,414
1,133, 787
1,151,201
(1,130,862)
(3,387)
(1,134,248)
$ 16,952
17
18
20
15
16
25
66
48
52
284
446
635
924
1,829
1,663
1,679
1,548
1,632
1,478
1,633
2,921
16,948
F/Y
15/16
$ 497,482
719,295
71,096
(57,305)
$ 1,230,568
0.004720
0.072220
0.054200
0.131140
Debt
Service
$ 10,120
645,946
656,066
$
(644,287)
( 2,278)
(646,565)
F/Y
14/15
9,501
54
50
39
44
43
49
44
62
58
360
494
458
466
1,192
780
287
587
731
1,041
1,002
1,664
9,507
$ 474,068
630,249
80,605
(52,617)
$ 1,132,305
0.014860
0.077270
0.041260
0.133390
$ 2,000,874 $ 1,870,728
99.70%
98.91%
Total
$ 27,534
1,779,733
1,807,267
(1,775,149)
(5,665)
(1,780,813)
$ 26,454
$
$ 71
$ 69
$ 59
$ 59
$ 59
$ 74
$ 110
$ 110
$ 110
$ 644
$ 940
$ 1,093
$ 1,390
$ 3,021
$ 2,443
$ 1,967
$ 2,135
$ 2,363
$ 2,519
$ 2,635
$ 4,585
$ 26,454
F/Y
13/14
$ 439,499
573,454
95,598
(45,150)
$ 1,063,401
0.009350
0.087380
0.036660
0.133390
$ 1,726,648
99.42%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2018
All Bonded Debt Series
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
2019 1,350,000 543,398 1,893,398
2020 1,370,000 516,221 1,886,221
2021 1,410,000 486,682 1,896,682
2022 1,450,000 455,373 1,905,373
2023 1,490,000 421,447 1,911,447
2024 1,055,000 384,448 1,439,448
2025 1,085,000 360,776 1,445,776
2026 1,105,000 336,246 1,441,246
2027 1,145,000 309,818 1,454,818
2028 1,175,000 281,143 1,456,143
2029 1,215,000 250,027 1,465,027
2030 1,250,000 216,334 1,466,334
2031 1,295,000 179,054 1,474,054
2032 1,185,000 140,162 1,325,162
2033 1,220,000 106,312 1,326,312
2034 1,270,000 70,287 1,340,287
2035 895,000 31,737 926,737
2036 270,000 5,724 275,724
$ 21,235,000 $ 5,095,186 $ 26,330,186
General Obligation Bonds - Series 2010 (Fire Station)
($2,000,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
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
$ 1,490,000 $ 483,034 $ 1,973,034
52
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2018
General Obligation Bonds - Series 2012
(2,355,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
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
$ 1,170,000 $ 106,126 $ 1,276,126
General Obligation Bonds - Series 2013
(1,905,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
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
$ 1,020,000 $ 98,825 $ 1,118,825
General Obligation Bonds - Series 2014
(5,765,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
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
$ 5,045,000 $ 1,396,813 $ 6,441,813
53
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2018
Revenue Bonds - Series 2015
(9,230,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
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
$ 8,280,000 $ 2,288,150 $ 10,568,150
Revenue Bonds - Series 2016
(4,635,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
2019 215,000 61,501 276,501
2020 215,000 60,125 275,125
2021 215,000 58,599 273,599
2022 220,000 56,965 276,965
2023 220,000 55,139 275,139
2024 220,000 53,115 273,115
2025 225,000 50,893 275,893
2026 225,000 48,463 273,463
2027 230,000 45,875 275,875
2028 230,000 42,862 272,862
2029 235,000 39,619 274,619
2030 240,000 35,671 275,671
2031 245,000 31,303 276,303
2032 250,000 26,624 276,624
2033 250,000 21,749 271,749
2034 260,000 16,749 276,749
2035 265,000 11,262 276,262
2036 270,000 5,724 275,724
$ 4,230,000 $ 722,238 $ 4,952,238
54
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -6 CHANGES IN LONG-TERM BONDED DEBT
SEPTEMBER 30, 2018
Series 2010 Series 2012 Series 2013 Series 2014 Series 2015 Series 2016
GO Bonds GO Bonds GO Bonds GO Bonds Revenue 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% 0.53-2.12%
Date interest payable 3/1 & 9/1 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 9/1/2036
Bonds outstanding at
beginning of year $ 1,575,000 $ 1,380,000 $ 1,205,000 $ 5,290,000 $ 8,655,000 $ 4,445,000 $ 22,550,000
Retirements of principal $ 85,000 $ 210,000 $ 185,000 $ 245,000 $ 375,000 $ 215,000 $ 1,315,000
Bonds outstanding at end of
fiscal year $ 1,490,000 $ 1,170,000 $ 1,020,000 $ 5,045,000 $ 8,280,000 $ 4,230,000 $ 21,235,000
Retirements of interest
Paying agent's name & city:
Bond Authority
$ 65,858 $ 39,225 $ 37,225 $ 141,200 $ 223,338 $ 62,685 $ 569,530
The Bank of New The Bank of New The Bank of New The Bank of TX The Bank of TX The Bank of TX
York Mellon York Mellon York Mellon Corporate Trust Corporate Trust Corporate Trust
Newark, NJ Newark, NJ Newark, NJ Austin, TX Austin, TX Austin, TX
General
Obligation
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, 2018: $ 682,344
Average annual debt service payment (principal & interest) for remaining term of debt: $ 1,893,397
55
REVENUE
Ad valorem property taxes
Water and wastewater charges
Utility Fees
Inspection and tap fees
Interest earned
Debt proceeds
Transfers In
Proceeds from Sale of Assets
Capital Lease Financing
Miscellaneous and other
Total revenue
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TS1-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES -FIVE YEARS
GENERAL FUND
SEPTEMBER 30, 2018
2018
$ 1,197,949
9,286,714
8,000
61,283
797,834
15,400
358,600
245,392
$ 11,971,172
EXPENDITURES
Administrative $ 1,275,394
Water operations 3,173,225
Wastewater operations 1,026,693
Wastewater collection system -
Information systems -
Contribution to Trophy Club Fire Dept 625,637
Capital outlay 665,773
Transfers Out and Debt Service 1,522,582
Total expenditures $ 8,289,304
Excess (deficiency) of revenues
over (under) expenditures $ 3,681,868
Total active retail water and/or
wastewater connections
3,284
2017
$ 1,105,820
8,632,747
7,200
18,940
Amounts
2016
$ 1,371,247
6,729,926
55,200
11,325
12,652
8,034
3,550 90,935
233,282
$ 10,001,539
$ 1,150,421
2,994,623
1,061,896
625,083
744,828
1,529,319
$ 8,106,170
265,667
$ 8,544,986
$ 1,388,715
3,078,429
1,089,257
1,010,938
1,713,885
1,182,760
$ 9,463,984
2015 2014
$ 1,419,548 $ 1,340,502
6,138,766 5,730,872
239,200 331,200
11,375 10,725
6,117 6,071
1,074,337
46,750
807,316
240,591 202,481
$ 9,984,000 $ 7,621,851
$ 1,672,123
3,151,532
864,305
928,610
1,755,603
656,984
$ 9,029,157
$ 1,895,369 $ (918,998) $ 954,843
3,244 3,422
56
Percent of total revenue
2018 2017 2016 2015 2014
10.0% 11.1% 16.0% 14.2% 17.6%
77.6% 86.3% 78.8% 61.5% 75.2%
0.0% 0.0% 0.6% 2.4% 4.3%
0.1% 0.1% 0.1% 0.1% 0.1%
0.5% 0.2% 0.1% 0.1% 0.1%
0.0% 0.0% 0.0% 0.0% 0.0%
6.7% 0.0% 0.1% 10.8% 0.0%
0.1% 0.0% 1.1% 0.5% 0.0%
3.0% 0.0% 0.0% 8.1% 0.0%
2.0% 2.3% 3.1% 2.4% 2.7%
100.0% 100.0% 100.0% 100.0% 100.0%
$ 1,779,470 10.7% 11.5% 16.3% 16.7% 23.3%
3,031,672 26.5% 29.9% 36.0% 31.6% 39.8%
621,108 8.6% 10.6% 12.7% 8.7% 8.1%
185,561 0.0% 0.0% 0.0% 0.0% 2.4%
0.0% 0.0% 0.0% 0.0% 0.0%
879,830 5.2% 6.2% 11.8% 9.3% 11.5%
990,311 5.6% 7.4% 20.1% 17.6% 13.0%
993,450 12.7% 15.3% 13.8% 6.6% 13.0%
$ 8,481,402 69.2% 81.0% 110.8% 90.4% 111.3%
$ (859,551) 30.8% 19.0% -10.8% 9.6% -11.3%
3,376 3,140
REVENUE
Ad valorem property taxes
Penalties and interest
Intergovernmental
Interest earned
Miscellaneous and other
Total revenue
EXPENDITURES
Principal retirement
Interest and fiscal charges
Bond admin fees
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES -FIVE YEARS (Continued)
DEBT SERVICE FUND
SEPTEMBER 30, 2018
2018
$ 679,678
2,010
1,390,151
21,903
2017
$ 675,944
2,294
1,402,170
8,174
2,093,742 2,088,582
Amounts
2016
$ 666,225
4,010
902,259
2,564
1,575,058
2015
$ 468,194
2,021
465,409
13,976
9,573
959,173
2014 2018 2017
$ 386,992 32.5% 32.4%
2,676 0.1% 0.1%
230,804 66.4% 67.1%
97 1.0% 0.4%
0.0% 0.0%
620,569 100.0% 100.0%
1,315,000 1,265,000 895,000 440,000 425,000
569,530 581,844 552,220 422,722 198,695
2,950 2,548 2,150 - -
1,887,480 1,849,392 1,449,370 862,722 623,695
Percentage
2016
42.3%
0.3%
57.3%
0.2%
0.0%
100.0%
2015
48.8%
0.2%
48.5%
1.5%
1.0%
100.0%
2014
62.4%
0.4%
37.2%
0.0%
0.0%
100.0%
62.8% 60.6% 56.8% 45.9% 68.5%
27.2% 27.9% 35.1% 44.1% 32.0%
0.1% 0.1% 0.0% 0.0% 0.0%
90.1% 88.5% 91.9% 89.9% 100.5%
$ 206,262 $ 239,190 $ 125,688 $ 96,451 $ (3,126) 9.9% 11.5% 8.1% 10.1% -0.5%
57
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI -8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS
September 30, 2018
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: $0
(Set by Board Resolution)
Name and Address
Board Members:
Term of Office Fees of Expense Title
Elected/Expires Office Paid Reimbursements at
or Date Hired FY18 FY18 Year End
Gregory Wilson
2013 Churchill Downs Lane
Trophy Club, TX 76262 05/16-05/20 $ $ 915 President
William Rose
219 Inverness Drive
Trophy Club, TX 76262 05/16-05/20 $ - $ 951 Vice -President
Steve Flynn
417 Ramsey Trail
Trophy Club, TX 76262 05/18-05/22 $ - $ 949 Secretary/Treasurer
Kelly Castonguay
402 Parkview Drive
Trophy Club, TX 76262 05/18-5/22 $ - $ 1,039 Director
Mark Chapman
197 Durango Dr
Trophy Club, TX 76262 05/18-05/22 $ - $ - Director
58
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS (Continued)
SEPTEMBER 30, 2018
Name and Address
Key Personnel:
Term of Office Fees of Title
Elected/Expires Office Paid at
or Date Hired FY18 Year End
Carman Consulting LLC.
2600 Museum Way
Fort Worth, Texas 8/1/2017 $ 147,857 General Manager
Consultants/Legal:
Denton Central Appraisal District
P.O. Box 2816
Denton, TX 76202 4/1/1981 $ 8,047 Appraiser
Tarrant Appraisal District
2500 Handley-Ederville Rd.
Fort Worth, TX 76262 10/1/2007 $ 2,648 Appraiser
LaFollett & Abbott PLLC
P.O. Box 717
Tom Bean, TX 75489 10/1/2010 $ 25,659 Auditors
CP&Y/The Wallace Group
P.O. Box 22007
Waco, TX 76702 5/1/2012 $ 364,267 Engineers
Halff Associates, Inc.
P.O. Box 678316
Dallas, TX 75267-8316 1/1/2017 $ 215,794 Engineers
The AL Law Group
12400 W. Highway 71, Suite 350-150
Austin, TX 78738 9/4/2017 $ 21,797 Legal Counsel
McLean & Howard, L.L.P.
901 S. Mopac Expressway
Building 2, Suite 225
Austin, TX 78746 3/1/2017 $ 70,044 Legal/Bond Counsel
DuBois Bryant Campbell LLP
303 Colorado, Suite 2300
Austin, TX 78701 5/18/2017 $ 12,070 Legal Counsel
Whitaker Chalk Swindle & Schwartz PLLC
301 Commerce St, Suite 3500
Fort Worth, TX 76102-4186 4/30/2018 $ 81,087 Legal Counsel
New Gen Strategies & Solutions
1300 E. Lookout Dr. Suite 100
Richardson, TX 75082 7/1/2013 $ 5,825 Water Consultant
59
REPORTS REQUIRED BY
GOVERNMENTAL AUDITING STANDARDS
tt and Abbott PLLC
Certified Public Accountants
Susan LaFollett, CPA — Partner
Rod Abbott, CPA — Partner
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Board of Directors
Trophy Club Municipal Utility District No. 1
Trophy Club, Texas
We have audited, in accordance with the auditing standards generally accepted in the United
States of America and the standards 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, 2018, 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 21, 2019.
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.
60
LaFollett and Abbott PLLC
PO Box 717 • Tom Bean, TX • 75489
903-546-6975 • www.lafollettcpa.com
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or, significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are
free from material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the 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 21, 2019
61