HomeMy WebLinkAboutFY Ended September 30, 2019TROPHY CLUB
MUNICIPAL UTILITY DISTRICT NO. 1
BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2019
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 41
Schedules of Changes in Net Pension Liability and Related Ratios TCDRS — Last Ten Measured Years 42
Schedules of Pension Contributions TCDRS — Last Ten Calendar Years 43
Schedules of OPEB Contributions TCDRS — Last Ten Calendar Years 44
Schedules of Changes in Total OPEB Liability and Related Ratios TCDRS — Last Ten Measured Years 45
INDIVIDUAL SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION
REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ)
TSI -1 Service and Rates 46
TSI -2 General Fund Expenditures and Other Financing Uses 48
TSI -3 Temporary Investments 49
TSI -4 Taxes Levied and Receivable 50
TSI -5 Long -Term Debt Service Requirements — By Year 51
TSI -6 Changes in Long -Term Bonded Debt 56
TSI -7 Comparative Schedules of Revenues and Expenditures — Five Years 57
TSI -8 Board Members, Key Personnel, and Consultants 59
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 61
ANNUAL FILING AFFIDAVIT
THE STATE OF TEXAS }
COUNTY OF DENTON }
1, � .o 50 r \ (:1
(Name of Duly Authorized District Representative)
Of the Trophy Club Municipal Utility District NQ. 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 20st day of January, 2020, its annual audit report
for the fiscal year or period ended September 30, 2019 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 Qua!' ' in satisfaction of the annual filing
requirements of Texas Water Code Section 41.194. // A
Date: January 24th , 20?0 By:
(Signature of District Representative)
lreg Wilson, President, Rnnrd of Directnrc
(Typed Name & Title of above District Representative)
Sworn to and subscribed to before me this
11Y' p., ELLEN NICOLE D'ANDRIA
(S =Notary Public, State of Texas
t •
+` Comm. Expires 03-21-2022
''•';,1i,Zo` Notary ID 12430777-6 ;
My Commission Expires On: Y\1101,1 CII 12,0'
Notary Public in the State of Texas
daY °f
\)1i)ti-
(Signature of Notary)
O1
aFol. and Company PLLC
Certified Public Aco untants
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, 2019, 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 Goverwnent 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 District'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 District'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.
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 District, as of September 30, 2019, 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.
l
LaFollett & Company PLLC
PO Box 717 • Tom Bean, TX • 75489
903-546-6975 • www.Iafollettcpa.com
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 41-45 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 District's basic financial statements. The accompanying individual schedules and other
supplementary information on pages 46-57 are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The accompanying individual schedules and other
supplementary information are the responsibility of management and were derived from and relate
directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the accompanying
individual schedules and other supplementary information are fairly stated in all material respects in
relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 20,
2020, on our consideration of District'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 the District's internal control over
financial reporting and compliance.
Tom Bean, Texas
January 20, 2020
1
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
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, 2019.
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 $30,435,151. Of this amount, $3,749,584 is unrestricted
net position and may be used to meet the District's ongoing commitments.
The District's net position increased by $3,406,776 during 2019 (page 12). A significant
contributor to this result was the charges for services exceeded water and wastewater
operation and expenses by 3,963,647, which lead to a net surplus of $867,256 for all
governmental activities.
At the end of the fiscal year, the District's governmental type funds reported a combined
fund balance of $15,588,422. As of September 30, 2019, the unassigned fund balance of the
General Fund was $8,967,789.
At the end of the fiscal year, the District's governmental type funds reported a combined fund
balance of $15,588,422. As of September 30, 2019, the unassigned fund balance of the
General Fund was $8,967,789.
Long-term debt activity for the District included debt principal repayments totaling
$1,553,967.
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:
3
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
Overview of the Financial Statements — continued
1. The Statement of Net Position — (Page 11) this statement presents information on all of
the District's assets, deferred inflows, deferred outflows, liabilities, and net position. The
net position is the difference between assets plus deferred outflows less deferred inflows
plus liabilities. Over an extended period, the increase or decrease in net position will
serve as a good indicator of whether the financial position of the District is improving or
deteriorating.
2. The Statement of Activities — (Page 12) gives information showing how the District's net
position has changed during the fiscal year. All revenues and expenses are reported on
the full accrual basis.
Fund Financial Statements - Fund financial statements provide detailed information about the
most important funds and not about the District as a whole as in the government -wide financial
statements.
The District uses fund accounting to demonstrate compliance with finance related legal
requirements which can be categorized as governmental fund activities.
Governmental Funds — All of the District's activities are reported in governmental funds. They
are used to account for those functions known as governmental activities. But unlike
government -wide financial statements, governmental fund financial statements focus on how
monies flow into and out of those funds and their resulting balances at the end of the fiscal year.
Statements of governmental funds provide a detailed short-term view of the District's general
government operations and the basic services it provides. Such information can be useful in
evaluating a government's short-term financing requirements.
The District maintains three governmental funds. Information is presented separately in the
Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances for the General Fund, Debt Service Fund and
Capital Projects Fund.
The District adopts an annual appropriated budget for the General Fund. 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 17-40.
4
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
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 $30,435,151. Of this amount, $20,735,143 (68%)
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 unspent bond proceeds, $5,034,528 (17%) restricted for capital projects, and
$915,896 (3%) restricted for debt service.
Table 1
Condensed Statements of Net Position
Current and other
Capital assets
Total assets
Deferred outflows
Total deferred outflows
Governmental Governmental
Activities Activities
2019 2018
$ 17,473,509 $ 10,096,851
42,628,151 40,816,044
60,101,660 50,912,895
166,799 71,774
166,799 71,774
Long-term I iabi I ities 27,887,239 20,465,047
Other liabilities I,924,373 3,452,401
Total liabilities 29,81 I,612 23,917,448
Deferred inflows
Total deferred inflows
21,696 38,846
21,696 38,846
Net Position:
Net investment in capital assets 20,735, I43 18,657,642
Restricted for capital projects 5,034,528
Restricted for debt service 915,896 682,344
Unrestricted 3,749,584 7,688,389
Total Net Position $ 30,435,151 $ 27,028,375
5
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
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, 2019 and 2018. Governmental
activities have increased the District's net position by $3,406,776 which amounts to a 17%
increase in net position for the year ended September 30, 2019.
Table 2
Changes in Net Position
Governmental Governmental
Activities Activities
2019 2018
Revenue:
Program revenue
Charges for services $ 8,587,955 $ 9,308,951
General Revenue
Ad valorem taxes 1,918,080 1,878,557
Unrestricted investment earnings 233,313 112,040
Contributions not restricted to specific program 298,654 195,528
Gain on sale of asset 52,600 9,477
Miscellaneous 36,873 80,627
Total Revenue 11,127,475 11,585,180
Expenses:
Water & wastewater operations 4,576,113 4,602,955
General government and other 1,811,602 1,595,960
Fire 765,952 698,845
Interest charges 567,032 569,293
Total Expenses 7,720,699 7,467,053
Increase in net position $ 3,406,776 $ 4,118,127
6
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
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 $15,588,422, of which 43%, or $8,967,789, is unassigned and available to the
District for future spending.
General Fund budgetary highlights
Revenue: Revenues were $309,680 (3.1%) more than budgeted
• Water charges were $164,235 (3.2%) more than budgeted.
Expenditures: Expenditures were $295,396 (3.4%) less than budgeted
• Capital Outlay expenditures were $215,243 (11.8%) more than budgeted.
• Wastewater Operations were $164,578 (13.6%) less than budgeted.
• Administration expenditures were $150,637 (11.8%) less than budgeted.
Capital Asset and Debt Administration
The District's investment in capital assets for its governmental activities as of September 30,
2019 amounted to $42,628,151, 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 4.4% during 2019 primarily due to $1.5 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, 2019
Debt administration
Long -Term Liabilities - at the end of the current fiscal year, the District had $27,842,242 of
general obligation bonds, revenue bonds, notes payable, capital leases, and accrued compensated
absences, which is an increase of 265) from the previous fiscal year. Of this amount,
$27,804,967 is backed by the full faith and credit of the District, which does not include
compensated absences of $37,275.
Table 3
Outstanding Debt at Year-end
Governmental Governmental
Activities Activities
2019 2018
Revenue bonds $ 18,995,000 $ 12,510,000
General obligation bonds 7,970,000 8,725,000
Capital lease obligations 839,967 838,430
Compensated absences 37,275 29,107
Total $ 27,842,242 $ 22,102,537
Economic factors and next year's budgets and rates:
General Fund 2019 budgetary highlights:
Revenue: The District's 2020 General Fund budgeted revenue reflects a projected increase of
$954,378 from the District's 2019 amended budget, and a projected increase of $1,158,785 when
comparing it to the 2019 actual accrued operational revenue.
• Water revenue is budgeted to increase from $5,243,386 for actual accrued in fiscal year
2019 to $6,486,623 for budgeted fiscal year 2020 for a total projected increase of
$1,243,237.
• Sewer revenue is budgeted to increase from $3,124,552 for actual accrued in fiscal year
2019 to $3,503,885 for budgeted fiscal year 2020 for a total projected increase of
$379,333.
• Even though the District's M&O tax rate decreased for fiscal year 2020 from fiscal year
2019, the District is projected to collect an M&O tax revenue increase of $118,121. The
segregated M&O property tax revenue from fiscal year 2020 to fiscal year 2019 is
budgeted to increase by $108,580 for Fire and increase by $9,541 for the MUD.
Expenses: The District's 2020 General Fund budgeted expense reflects a projected increase of
$1,367,128 from the amended 2019 budget, and a projected increase of $1,962,614 when
compared to the actual spending for fiscal 2019.
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
• The primary factors for the District's difference in actual spending in 2019 compared to
the 2020 budgeted expense is attributable to reduced or deferred expenses of several
significant factors; wholesale water purchases increasing expenses by $736,861 due to
the near record setting above average rainfall in 2019 causing a lack of water purchased
and sold in 2019, capital outlay decrease by $561,314 due to capital improvement
projects being completed in 2019 and less projected for 2020, long-term revenue debt
payments increase by $328,109 largely due to an additional revenue bond payment for
bond awarded in 2019, and overall salary increase by $376,156 due to unfilled staff
positions during 2019 that are projected to be filled in 2020 including adding a FTE
general manager position.
Overall: The District's 2020 operational budget is anticipated to have revenues of $10,645,077
and expenses of $10,638,853 netting a projected surplus of $6,224 for the year.
Debt Service Fund 2019 budgetary highlights:
• The District's Debt Service Fund is budgeted to increase from $2,092,893 in actual fiscal
year 2019 to $2,406,637 budgeted for fiscal year 2020. This is a total increase of
$313,744.
• Property tax revenues collected for Debt Service Fund are budgeted to increase from
$679,487 in actual fiscal year 2019 to $685,411 budgeted in fiscal year 2020 for a total
increase of $5,564.
Overall: The District's consolidated budgeted revenue increased from $12,971,826 in fiscal year
2019 amended budget to $14,278,444 in fiscal year 2020 budget totaling in a projected increase
of 10.07%. The District's consolidated budgeted expenses increased from $12,382,302 in fiscal
year 2019 amended budget to $14,069,340 in fiscal year 2020 budget totaling in a projected
increase of 13.62%.
Sewer and Water rate highlights:
Water base and volumetric rates were not changed during fiscal year 2019. 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 of billing; December, January, and
February. Effective April 1, 2019 the Sewer volumetric rates were increased for both the
commercial and residential customers by the District's Board of Directors to reflect the updated
winter average calculations. The District's Board of Directors adopted a new rate order effective
October 1, 2019 that will increase the Water base rates, while keeping Sewer base and
Water/Sewer volumetric equivalent to current rates.
9
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2019
Legal highlights:
There are two legal matters that will persist into the District's next fiscal year 2020. The first is
potential litigation with Webber Cadagua Partners, the contractor responsible for constructing the
upgrade to the District's wastewater treatment facility. This project is substantially complete,
except for the second crane structure. The District has made a claim against the contractor for
defective work which the contractor disputes that it is responsible for the costs of
repair/replacement of the crane structure. The District has a second potential claim against the
contractor for liquidated damages. The Contractor has also filed a claim against the District
related to the project. The second legal matter relates to an unauthorized easement
encroachment. The District initiated legal action against Acadia Services, Inc. and MRW
Investors, LLC in connection with the unauthorized construction of surface improvements within
the District's wastewater easement. The Court granted the District's motion for summary
judgement. The remaining dispute is related to the payment of legal representation expenses
incurred by the District.
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, 2019
Governmental
Activities
ASSETS
Cash and cash equivalents S 3,102,700
Pooled investments 5,844,683
Restricted assets:
Cash and cash equivalents 4,969,073
Pooled investments 2,152,173
Receivables
Accounts receivable, net 1,361,921
Taxes 33,461
Due from other governments 1,012
Prepaids 8,486
Non -depreciable capital assets:
Land 648,i78
Construction in progress 21,521,727
Water rights 864,678
Depreciable capital assets (net):
Buildings and other improvements 2,845,560
Machinery, vehicles, and other equipment 2,333,184
Water system 14,402,363
Organization costs 12,461
TOTAL ASSETS 60,101,660
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - pension
Deferred outflows - OPEB
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES
164,915
1,884
166,799
Accounts payable 1,482,956
Accrued liabilities 47,855
Accrued interest payable 72,753
Customer deposits 320,809
Noncurrent liabilities:
Due within one year 1,634,990
Due in more than one year 26,181,484
Net pension liability 54,020
Total OPEB liability 16,745
TOTAL LIABILITIES 29,811,612
DEFERRED INFLOWS OF RESOURCES
Deferred inflows - pension 19,244
Deferred inflows - OPEB 2,452
TOTAL DEFERRED INFLOWS OF RESOURCES 21,696
NET POSITION
Net investment in capital assets 20,735,143
Restricted for:
Capital projects 5,034,528
Debt service 915,896
Unrestricted 3,749,584
TOTAL NET POSITION 5 30,435,151
The notes to financial the statements are an integral part of this statement.
11
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2019
Program Activities
Governmental Activities:
Water operations
General government
Wastewater operations
Fire
Interest on long term debt
Non -Departmental
Wastewater collection system
Directors
Total governmental
activities
Expenses
3,325,173
1,561,141
1,250,940
765,952
567,032
179,748
68,213
2,500
Governmental Activities
Program Revenues
Operating
Charges for Grants and
Services Contributions
$ 5,358,205 $
48,195
3,181,555
Capital Grants
and
Contributions
Net (Expenses)
Revenue and
Changes in Net
Assets
Governmental
Activities
$ $ 2;033,032
(1,512,946)
1,930,615
(765,952)
(567,032)
(179,748)
(68,213)
(2,500)
$ 7,720,699 $ 8,587,955 $ $
General Revenues:
Ad valorem taxes
Contributions not restricted to specific programs
Investment income
Gain on sale of asset
Miscellaneous
Total general revenues
Change in net position
$ 867,256
1,918,080
298,654
233,313
52,600
36,873
2,539,520
3,406,776
Net Position - beginning of year 27,028,375
Net Position - end of year $ 30,435,151
The notes to the financial statements are an integral part of this statement.
12
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2019
General Fund
ASSETS
Debt Capital Total
Service Projects Governmental
Fund Fund Funds
Assets
Cash and cash equivalents $ 3,102,700 $ $ - $ 3,102,700
Pooled investments 5,844,683 - 5,844,683
Restricted assets:
Cash and cash equivalents 319,159 4,649,914 4,969,073
Pooled investments 915,896 1,236,277 2,152,173
Receivables:
Accounts receivables, net 1,361,921 - 1,361,921
Taxes 21,611 11,850 - 33,461
Due from other governments 1,012 1,012
Due from other funds 48,266 48,266
Prepaids 8,486 8,486
TOTAL ASSETS $ 10,707,838 $ 927,746 $ 5,886,191 $ 17,521,775
LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES
Liabilities
Accounts payable $ 679,559 $ $ 803,397 $ 1,482,956
Accrued Iiabilities 47,855 - 47,855
Customer deposits 320,809 320,809
Due to other funds - 48,266 48,266
Total liabilities 1,048,223 851,663 1,899,886
Deferred Inflows of Resources
Unavailable revenues - property taxes 21,617 11,850 33,467
Total deferred inflows of resources 21,617 11,850 33,467
Fund Balances
Non -spendable prepaids 8,486 8,486
Restricted -debt service 915,896 915,896
Restricted -capital projects 5,034,528 5,034,528
Assigned -capital outlays 661,723 661,723
Unassigned 8,967,789 - 8,967,789
Total fund balances 9,637,998 915,896 5,034,528 15,588,422
TOTAL LIABILITIES, DEFERRED
INFLOWS, AND FUND BALANCES $ 10,707,838 $ 927,746 $ 5,886,191 $ 17,521,775
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, 2019
Total fund balances - governmental funds $ I5,588,422
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. 42,628,151
Net pension liability is not a financial resource; therefore, it is not reported in the
governmental funds. (54,020)
Total OPEB liability is not a financial resource; therefore, it is not reported in the
governmental funds. (16,745)
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. 33,467
TCDRS pension and OPEB contributions are not current financial resources/burden;
therefore they are not reported in the governmental funds. The net of these amounts is: 77,618
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. (72,753)
Unamortized pension and OPEB investment gains/losses are not current financial
resources/burden; therefore they are not reported in the governmental funds. The net of
these amounts is:
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.
67,485
(37,275)
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. (27,779,199)
Net position of governmental activities $ 30,435, I51
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, 2019
Revenues:
Water and wastewater charges
Taxes
Intergovernmental revenues
Investment income
Oversize meter reimbursements
Miscellaneous
Inspection and tap fees
Debt
Service
General Fund Fund
$ 8,539,760 $
1,231,580
298,654
139,388
41,295
36,873
6,900
Total Revenues 10,294,450
Expenditures:
Water
Adminstration
Wastewater
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
Proceeds from bond issuance
Bond issuance cost
Bond premium
Bond discount
Proceeds from capital lease issuance
Capital lease issuance cost
Transfers out
Total Other Financing Sources (Uses)
Net change in fund balance
Fund Balances - beginning of year
Fund Balances - end of year
3,001,947
1,122,329
1,048,445
692,347
179,748
2,500
2,036,172
203,967
25,540
8,312,995
1,981,455
32,080
52,600
32,080
(39,160)
205,504
(1,500)
(1,389,555)
(1,107,951)
679,487
37,255
716,742
1,350,000
543,396
2,950
1,896,346
(1,179,604)
1,413,156
23,601
(23,601)
Capital
Projects
Fund
$
Total
Governmental
Funds
$ 8,539,760
- 1,911,067
298,654
56,670 233,313
41,295
- 36,873
6,900
56,670 11,067,862
654,100
3,001,947
1,122,329
1,048,445
692,347
179,748
2,500
2,690,272
1,553,967
568,936
- 2,950
654,100 10,863,441
(597,430) 204,421
I,445,236
52,600
7,024,319 7,080,000
(149,672) (212,433)
- 4,224 4,224
(99,722) (99,722)
205,504
- (1,500)
(55,681) (1,445,236)
1,413,156 6,723,468 7,028,673
873,504 233,552 6,126,038 7,233,094
8,764,494
$ 9,637,998 $
682,344 (1,091,510) 8,355,328
915,896 $ 5,034,528 $ 15,588,422
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
FOR THE YEAR ENDED SEPTEMBER 30, 2019
Net change in fund balances - total governmental funds $ 7,233,094
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.
(878,299)
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. 2,690,272
Debt principal payments reduces long-term liabilities in the Statement of Net Position,
but it is recorded as an expenditure in the governmental funds. I,553,967
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 new capital lease 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.
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
compensated absenses. 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.
(7,080,000)
(205,504)
110,740
(4,155)
(13,338)
Change in net position of governmental activities $ 3,406,777
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, 2019
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 MUD 1 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, 2019
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 2019, 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, 2019
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, 2019
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
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.
20
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
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 govemment-wide financial
statements.
'1
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
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, 2019, the carrying amount of the District's deposits (cash, restricted cash, and non -
pooled savings accounts) was $8,071,173 and the bank balance was $8,525,956. Of the District's
cash deposits at September 30, 2019 $3,876,042 were insured by FDIC and Pledged Securities,
$7,995,601 were insured through the Texas Local Government Investment Pool (TexPool), and
$4,649,914 were uninsured. Uninsured funds are held in escrow accounts in agreement with TCEQ.
The District maintains its cash balances in bank accounts that occasionally exceed federally insured
limits, as noted above. However, management does not believe it is exposed to any significant credit
risk in connection with these accounts.
a?
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
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, 2019 are classified in the accompanying financial
statements as follows:
Primary Government:
Cash and cash equivalents $ 3,102,700
Pooled investments 5,844,683
Restricted cash and cash equivalents 4,969,073
Restricted pooled investments 2,152,173
Total cash and investments $ 16,068,629
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO, 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 2. CASH AND INVESTMENTS — CONTINUED
Cash and investments as of September 30, 2019 consist of the following:
Petty Cash $ 600
Deposits with financial institutions 8,071,173
Unrestricted Texpool investments 5,844,683
Texpool restricted investments 2,152,173
Total Cash and Investments $ 16,068,629
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 monitors its interest rate risk, which is governed by
adopted Investment Policies.
As of September 30, 20I9, the District had the following investment:
Weighted
Carrying Average
Investment Type Amount Maturity
TexPool $ 7,996,856 30 days
Total Investments $ 7,996,856
As of September 30, 2019, the District did not invest in any securities which are highly sensitive to
interest rate fluctuations. The fair value of investments in TexSTAR is materially the same as the
value of the pooled shares held. Because the carrying value of the investment pool approximates fair
value at September 30, 2019, this investment is carried at cost.
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, 2019
NOTE 2. CASH AND INVESTMENTS — CONTINUED
Minimum Rating as
Legal of Year
Investment Type Amount Rating End
TexPool $ 7,996,856 AAAm AAAm
Total Investments $ 7,996,856
Concentration of Credit Risk
As of September 30, 2019, 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, 2019
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 CIub)
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
General Fund
Debt Service
Debt Service
Debt Service
Debt Service
Debt Service
Capital Projects
Capital Projects
General Fund
General Fund
General Fund
General Fund
Total
$ 32,080
23,601
215,979
120,053
873,139
180,384
$ 1,445,236
'76
$ 758,458
286,021
186,986
74,396
42,881
6,396
3,866
14,968
1,373,972
(12,051)
$ 1,361,921
$ 1,012
Purpose
Transfer General Fund portion of bond proceeds
Transfer Debt Service portion of bond proceeds
Transfer for the fire station bond payment
Transfer of PID surcharge
Assist with revenue bond payments
Transfer to assist with the bond reserve payment
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 5. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 20I9, 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
20,002,235
796,145
21,446,558
3,479,008
324,334
1,867,867
2,331,300
2,402,929
12,387,756
5,684,772
4,437,894
32,915,860
(604,814)
(268,269)
(1,003,483)
(2,3 1 1,566)
(1,241,735)
(4,043,068)
(2,471,687)
(1,601,754)
(13,546,376)
Retirements/
Additions Transfers
$
1,519,492
68,533
1,588,025
64,482
591,930
274,458
88,333
83,180
1,102,383
$
Ending
Balance
$ 648,178
21,521,727
864,678
- 23,034,583
- 3,479,008
324,334
1,932,349
- 2,331,300
(160,876) 2,833,983
12,662,214
- 5,773,105
4,521,074
(160,876) 33,857,367
(75,277) (680,091)
(9,422) - (277,691)
(121,309) (1,124,792)
(7,273) (2,318,839)
(227,497) 160,876 (1,308,356)
(218,275) (4,261,343)
(140,363) (2,612,050)
(78,883) (1,680,637)
(878,299) 160,876 (14,263,799)
$ 40,816,042 $ 1,812,109 $ - $ 42,628,151
27
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
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
$ 318,355
219,252
198,874
73,605
68,213
$ 878,299
At September 30, 2019, the District's long-term debt payable consisted of the following:
Description
Tax and revenue bonds:
Improvements
Refunding
Refunding
Improvements
Improvements
Improvements
Improvements
Capital leases payable:
Capital lease obligations
Capital lease obligations
Capital lease obligations
Interest
Rate
Payable
Year
of Final
Issue Maturity
Average
Annual
Payment
3.50-5.00% 2010 2031 $ 148,205
2.00-3.00% 2012 2023 251,373
2.00-3.50% 2013 2023 224,734
1.50-3.50% 2015 2034 199,898
2.00-3.25% 2015 2035 305,174
0.53-2.12% 2016 2036 275,259
3.00-3.50% 2019 2049 244,138
2.50% 2015 2022 $ 127,149
2.95% 2018 2023 78,456
3.95% 2019 2024 45,681
28
Original Outstanding
Amount 9/30/2018
$ 2,000,000
2,355,000
1,905,000
5,765,000
9,230,000
4,635,000
7,080,000
$1,057,316
360,100
205,504
$ 1,405,000
945,000
825,000
4,795,000
7,900,000
4,015,000
7,080,000
$ 26,965,000
$ 363,139
290,174
186,654
$ 839,967
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
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, 2019:
Governmental Activities:
Tax, revenue, and refunding bonds
Deferred loss on refunding
Bond premium
Bond discount
Capital lease obligations
Compensated absences
Beginning
Balance Additions Reductions
$ 21,235,000
(4,331)
89,304
21,319,973
838,430
838,430
$ 7,080,000 $ (1,350,000)
868
(19,328)
3,217
(1,365,243)
4,225
(99,722)
6,984,503
205,504
205,504
29,107 8,168
29,107 8,168
Total Governmental Activities
Long-term Liabilities $ 22,187,510
Long-term liabilities due in more than one year
$ 7,198,175
(203,968)
(203,968)
$(1,569,211)
Ending
Balance
$ 26,965,000
(3,463)
74,201
(96,505)
26,939,233
839,966
839,966
37,275
37,275
$ 27,816,474
$ 26,181,484
Due Within
One Year
$ 1,370,000
1,370,000
227,715
227,715
37,275
37,275
$ 1,634,990
The annual requirements to amortize all debt outstanding as of September 30, 2019, are as follows:
Year Ending
September 30,
2020
2021
2022
2023
2024
2025-2029
2030-2034
2035-2039
2040-2044
2045-2049
Total
Principal
$ 1,370,000
1,565,000
1,610,000
1,655,000
1,225,000
6,650,000
7,300,000
2,415,000
1,460,000
1,715,000
$ 26,965,000
2.9
Interest
842,906
710,269
674,310
635,584
593,635
2,504,444
1,532,832
683,930
436,800
179,806
$ 8,794,516
Total
2,212,906
2,275,269
2,284,310
2,290,584
1,818,635
9,154,444
8,832,832
3,098,930
1,896,800
1,894,806
$ 35,759,516
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 6. LONG-TERM DEBT — CONTINUED
The future lease payments for capital lease obligations at September 30, 2019 are as follows:
Year Ending
September 30, Principal Interest Total
2020 $ 227,715 $ 23,587 $ 251,302
2021 233,257 16,983 250,240
2022 238,949 10,213 249,162
2023 117,648 3,271 120,919
2024 22,398 442 22,840
Total $ 839,967 $ 54,496 $ 894,463
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.
Series 2019 — All maturities from 2028 to 2049 are callable in principal increments of $100,000 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.
30
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 6. LONG-TERM DEBT — CONTINUED
The provisions of the bond resolutions relating to debt service requirements have been met, and the
cash allocated for these purposes was sufficient to meet debt service requirements for the year ended
September 30, 2019.
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 2019
tax levies:
Adjusted taxable values $ 1,652,594,439
0 & M and Fire tax levy $0.067384/$100 1,113,591
I & S tax levy $0.048796/$100 806,393
Total tax levy $0.116180/$100 $ 1,919,984
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, 2019:
Nan -Spendable Fund Balances
The District's $8,486 non -spendable fund balance represents expenses prepaid at fiscal year-end.
31
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 8. FUND BALANCE CLASSIFICATIONS — CONTINUED
Assigned Fund Balances
The District assigned a total of $2,863,718 of General Fund balances for the following future capital
outlays: $2,230,872 for wastewater system improvements, $535,041 for vehicles, and $97,805 for other
improvements.
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:
Due from: General Fund
Capital Projects Fund 48,266
Total $ 48,266
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, 2018 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, 2019
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, 2019
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, 2019
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, 2019
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 2018 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.
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
Benchmark Allocution
Dow Jones U.S. Total Stock Market Index 10.50%
Cambridge Associates Global Private Equity & Venture.
Capital Index
MSCI World (net) Index
MSCI World Ex USA (net)
MSCI EM Emerging Markets (net) Index
Bloomberg Barclays U.S. 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/NARE1T Global Real Estate Index
Alerian MLP Index
Cambridge Associates Real Estate Index
Hedge Fund Research. Inc. (FIERI) Fund of Funds Composite
Index
36
18.(x)%
2.50%
10.00%
7.00%
3.00%
12.(x1%
1 l.(x)%
2.(x1%
Rate of Return
5.40%
8.40%
5.70%
5.40%
5.90%
1.60%
4.39%I
7.95%
7.20%
2.00% 4.15%
3.00% 5.35%
6.00% 6.30%
13.00% 3.90%
I (x).00%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 11. RETIREMENT PLAN (CONTINUED)
Contributions
SCHEDULE OF PENSION CONTRIBUTIONS
Last 10 Calendar Years (will ultimately be displayed)
2018 2017 2016 2015 2014 2013
Actuarially Determined Contribution $ 92,56I $ 102,802 $ 97,875 $ 97.043 $ 93,694 $ 84,476
Contributions in relation to the actuarially
determined contribution
94,803 102,802 97,875 97,043 93.694 198,219
Contribution deficiency (excess) (2,242)
Covered payroll
Contributions as a percentage of covered
payroll
(113,743)
$ 1,055,433 $ 1,140,976 $ 1.119,822 $ I ,116,721 $ 1,068,342 $ 963.243
9.0% 9.0%
Deferred Inflows/Outflows of Resources
8.5% 8.7% 8.8% 20.6q
At September 30, 2019, the District reported deferred inflows and outflows of resources are as follows:
Deferred Outflows 1 (Inflows) of Resources Deferred Outflows Deferred (Inflows)
of Resources of Resources
Differences between expected and actual experience $ - $ (19,244)
Changes of assumptions 7,824
Net difference between projected and actual earnings 81,357
Contributions made subsequent to measurement date 75,734
$ 164,915 $ (19,244)
The $75,734 contributions made after the measurement date of the net pension liability but before the
end of the City's reporting period will be recognized as a reduction of the net pension liability in the
subsequent fiscal period. The other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Net deferred outflows
(inflows) of resources
2020 $ 24,044
2021 12,266
2022 10,157
2023 21,182
2024 2,288
Thereafter
Total $ 69,937
37
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 11. RETIREMENT PLAN (CONTINUED)
Valuation Timing:
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 Entry Age Normal
Asset Valuation Method
Inflation
Salary Increases
Investment Rate of Return
Cost -of -Living Adjustments
Retirement Age
'[urnoser
Mortality_
Deposting members
Service retirees, beneficiaries and non -
depositing members
Disabled retirees
Other Information:
Notes
5 Year smoothed market
2.75%
Varies by age and service. 4.9% average over career including inflation.
8.00%
Cost -of -Living Adjustments for Trophy Club Municipal Utility District No 1 arc 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 arc 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 1 I0% 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.
38
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
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 6
Active employees 18
Total: 25
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.
Deferred Inflows/Outflows of Resources
At September 30, 2019, the District reported deferred inflows and outflows of resources are as follows:
Deferred Outflows / (Inflows) of Resources Deferred Outflows Deferred (Inflows)
of Resources of Resources
Differences between expected and actual experience $ - (1,642)
Changes of assumptions - (810)
Contributions made subsequent to measurement date 1,884
$ 1,884 $ (2,452)
39
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
NOTE 12. OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
The $1,884 contributions made after the measurement date of the total OPEB liability but before the end
of the District's reporting period will be recognized as a reduction of the total OPEB liability in the
subsequent fiscal period. The other amount reported as deferred outflows of resources related to OPEB
will be recognized in OPEB expense as follows:
Net deferred
outflows
(inflows) of
resources
2020 $ (394)
2021 (394)
2022 (394)
2023 (394)
2024 (394)
Thereafter (482)
Total $ (2,452)
NOTE 13. SUBSEQUENT EVENTS
The District has evaluated all events and transactions that occurred after September 30, 2019 up through
audit report date, which is the date the financial statements were issued. The District has no subsequent
events to disclose.
40
REQUIRED SUPPLEMENTARY INFORMATIOI
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS)
YEAR ENDED SEPTEMBER 30, 2019
Revenues
Water charges
Wastewater charges
Taxes
Intergovernmental revenues
Investment income
Oversize meter reimbursements
Miscellaneous
Inspection and tap fees
Total revenues
Expenditures:
Water operations
Administration
Wastewater operations
Fire
Non -Departmental
Directors
Capital Outlay
Debt Service
Total expenditures
Budgeted amounts
Original Final Actual
$ 6,752,902
3,472,665
1,334,837
171,983
20,000
18,522
28,146
6,000
11,805,055
4,234,026
1,295,333
1,243,523
852,305
184,314
13,230
1,063,000
286,116
9,171,847
Excess of revenues over expenditures 2,633,208
Other financing sources (uses):
Transfers out
Transfers in
Capital Lease Issuance
Capital Lease Issuance Cost
Bond issuance
Bond issuance cost
Proceeds from Sale of Assets 10,000
$ 5,193,970 $ 5,358,205
3,172,665 3,181,555
1,249,984 1,231,580
171,983 298,654
130,000 139,388
18,522 41,295
41,646 36,873
6,000 6,900
9,984,770 10,294,450
3,081,969 3,001,947
1,272,966 1,122,329
1,213,023 1,048,445
792,452 692,347
184,314 179,748
13,230 2,500
1,820,929 2,036,172
229,508 229,507
8,608,391 8,312,995
1,376,379 1,981,455
(1,789,951) (1,389,643) (1,389,555)
- 32,080
205,504
(1,500)
32,080
(1,500) (39,160)
55,000 52,600
Total other financing sources (uses) (1,779,951)
Net change in fund balance
Fund Balances - beginning of year
Fund Balances - end of year
853,257
8,764,494
$ 9,617,751
(1,336,143) (1,107,951)
40,236
8,764,494
$ 8,804,730
Variance with
Final Budget
$ 164,235
8,890
(18,404)
126,671
9,388
22,773
(4,773)
900
309,680
(80,022)
(150,637)
(164,578)
(100,105)
(4,566)
(10,730)
215,243
(1)
(295,396)
14,284
88
32,080
205,504
(1,500)
32,080
(37,660)
(2,400)
228,192
873,504 242,476
8,764,494
$ 9,637,998 $ 242,476
Notes to Required Supplementary Information:
The District annual budgets are approved on the budgetary basis. The Board also approves all revisions and
appropriations which !apse at each fiscal year-end.
41
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS - TCDRS
LAST 10 MEASURED YEARS (WILL ULTIMATELY BE DISPLAYED)
2018 2017 2016 2015 20I4
Total pension liability
Service Cost $ 153,752 5 176,975 5 200,990 $ 150.689 5 170,600
Interest (on the Total Pension Liability) 100,515 83,553 57,230 41,351 27,449
Changes of benefit terms - (22,086)
Difference between expected and actual experience 13,723 (25,170) (9,790) (11,320) (7,057)
Change of assumptions - 5,971 7,686
Benefit payments 1 refunds of contributions (15,970) (1,695) (2,091) (1.902) (3.156)
Net Change in Total Pension Liability 252,020 239,634 246,339 164,418 187,836
Total Pension Liability - Beginning 1,095,011 855,377 609,038 444,620 256,784
Total Pension Liability - Ending (a) 5 1,347.031 S 1,095,011 5 855,377 $ 609,038 $ 444,620
Plan Fiduciary Net Position
Contributions - Employer $ 94,803 5 102,802 5 95.185 5 97,043 $ 93,694
Contributions - Employee 73,880 79,868 78,388 78,171 74,784
Net Investment Income (19,840) 126.587 46,440 (15,010 18,561
Benefit payments l refunds of contributions (15,970) (1,695) (2,091) (1,902) (3.156)
Administrative Expense (1,039) (769) (505) (394) (285)
Other 4,666 2,418 19.889 (47) (21)
Net Change in Plan Fiduciary Net Position 136,500 309,211 237,306 157.860 183.577
Plan Fiduciary Net Position - Beginning 1,156,511 847.300 609,994 452.134 268,557
Plan Fiduciary Net Position - Ending (h) $ 1,293,011 $ 1,156.511 $ 847,300 $ 609,994 $ 452,134
Net Pension Liability - Ending (a) - (b) $ 54,020 5 (61,500) 5 8.077 5 (956) $ (7.514)
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability 95.996 105 629 99.06% 100.16% 101.69%
Covered Payroll S 1,055,433 5 1,140,976 $ 1.119,822 5 1.116,721 1,068,342
Net Pension Liability as a Percentage
of Covered Payroll 5.12'i. -5.39`1- 0.72% -0.09% -0.70%
Notes to Schedule:
This schedule is presented to illustrate the requirement to show information for ten years However, until a full ten-year trend is compiled, only available
information is shown.
42
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF PENSION CONTRIBUTIONS - TCDRS
LAST 10 CALENDAR YEARS (WILL ULTIMATELY BE DISPLAYED)
Actuarially Determined Contribution
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered
payroll
Valuation Timing:
2018 2017 2016 2015 2014 2013
$ 92,561 $ 102,802 $ 97,875 $ 97,043 $ 93,694 $ 84,476
94,803 102,802 97,875 97,043 93,694
(2,242) - - -
$ 1,055,433 $ 1,140,976 $ 1,119,822 $ 1,116,721 $ 1,068,342 $
9.0% 9.0%
198,219
(113,743)
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 Entry Age Normal
Asset Valuation Method
Inflation
Salary Increases
Investment Rate or Return
Cost -of -Living Adjustments
Retirement Age
Turnover
Mortality:
Deposting members
Service retirees, beneficiaries and non -
depositing members
Disabled retirees
Other Information:
Notes
5 Year smoothed market
2.75%
Varies by age and service. 4.9% average over career including inflation.
8.00%
Cost -of -Living Adjustments for Trophy Club Municipal Utility District No I 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 -20I4 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 1 I0% of the MP -20I4 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.
This schedule is presented to illustrate the requirement to show information for ten years.
However, until a full ten-year trend is compiled, only available information is shown.
43
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF OPEB CONTRIBUTIONS - TCDRS
LAST 10 CALENDAR YEARS (WILL ULTIMATELY BE DISPLAYED)
2018 2017
Actuarially Determined Contribution $ 2,635 $ 2,673
2,635 2,673
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered
payroll
$ 1,055,433 $ 1,140,976
0.2% 0.2%
NOTES TO SCHEDULE OF CONTRIBUTIONS
Valuation Timing: 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.
This schedule is presented to illustrate the requirement to show
information for ten years. However, until a full ten-year trend is
compiled, only available information is shown.
44
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
SCHEDULES OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOS - TCDRS
LAST 10 MEASURED YEARS (WILL ULTIMATELY BE DISPLAYED)
2018 2017
Total OPEB liability
Service Cost $ 2,503 $ 2,889
Interest (on the Total OPEB Liability) 669 595
Effect of plan changes
Effect of assumption changes or inputs (2,704) 946
Effect of economic/demographic (gains) or losses (678) (321)
Benefit payments
Net Change in Total OPEB Liability (210) 4,109
Total OPER Liability - Beginning 16,955 12,846
Total OPEB Liability - Ending (a) $ 16,745 $ 16,955
Covered Payroll $ 1,055,433 $ 1,140,976
Total OPEB Liability as a Percentage
of Covered Payroll
1.59% 1.49%
Notes to Schedule:
This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year
trend is compiled, only available information is shown.
45
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, 2019
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 I
Residential and Commercial
Meter Size Base Rate
5/8" $17.15
1.. $32.23
1.5" $56.94
2" $86.58
3" $155.76
4" $254.59
6" $501.64
I
Water Volumetric Rates
Rates per 1,000
$3.96
$4.61
$5.34
$6.20
$7.21
Gallons
0 to 6,000
6,001 to 17,000
17,001 to 25,000
25,001 to 50,000
50,001 +
Sewer Base Fee 1 I Sewer Volimetric Rates
Base Rate Rates per 1,000 Gallons
Residential' $20.60 $3.80 0 to 4,000
$5.40 4,001 to 8,000
$7.65 8,001 to 12,000
$10.90 12,000 +
Commercial" $20.60 $6.37 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.
"'Commercial sewer usage is billed based on actual water usage per month
NOTE: all rates noted above were amended effective April 1, 2019.
District employs winter averaging for wastewater usage? Yes
"'Total water and wastewater charges per 10,000 gallons usage (including surcharges)
effective April 1, 2019 (based on 5/8" & 3/4")
First 10,000 gallons used 10,000 $
Next 10,000 gallons used 20,000 $
Next 10,000 gallons used 30,000 $
Next 10,000 gallons used 40,000 $
Next 10,000 gallons used 50,000 $
Next 10,000 gallons used and subsequent 60,000 $
132.05
180.34
238.04
300.04
362.04
434.14
""' The above sewer calculations are based on a Winter Average of 10,000 gallons per month.
46
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -1 SERVICES AND RATES
SEPTEMBER 30, 2019
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).
Meter Size
Connections ESFC Active
Total Active Factor ESFC's
Unmetered 1 -
Less than 314" 2,499 2,491 1 2,491
1" 654 652 3 1,630
1112" 28 27 5 135
2" 104 94 8 752
3" 41 41 15 615
4" 16 16 25 400
6" 4 4 50 200
8" 80 -
10" 115 -
Total Water 3,346 3,325 6,223
Total Wastewater 3,353 3,330 1 3,330
" 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 862,486
Gallons billed to customers 746,055
Water accountability ratio 86.50%
4. Standby Fees:
Does the District assess standby fees? No
For the most recent fiscal year, FY2019:
Total Total Percentage
Levy Collected Collected
Debt Service $ 683,183 $ 679,673 99.5%
Operations and Maintenance $ 1,236,802 $ 1,230,448 99.5%
Have standby fees been levied in accordance with Water Code Section 49.231, thereby
constituting a lien on property? No
5. Location 01 District:
Counties in which District Is located: Denton
Tarrant
Is the District located entirety 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)?
ETJ's in which District is located:
Is the general membership of the Board appointed by an office outside
the District?
47
Unknown
Unknown
No
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI 2
General Fund Expenditures and Other Financing Uses
Year End September 30, 2019
Current Year Prior Year
2019 2018
Administrative $ 1,304,577 $ 1,275,394
Water Operations $ 3,001,947 $ 3,173,225
Wastewater Operations $ 1,048,445 $ 1,026,693
Wastewater Collection Systems 0 0
Contribution to Trophy Club Fire Dept $ 692,347 $ 625,637
Capital Outlay $ 2,036,172 $ 665,773
Transfers Out and Debt Service $ 1,619,062 $ 1,522,562
Total Expenditures $ 9,702,550 $ 6,289,304
* In FY 2015 Wastewater Operations and Wastewater Collection Systems were merged together.
Number of employees employed by the District:
Full time Equivalents (FTEs) 17
Part time 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 1011116.
The MUD reimburses the annual Town's Fire Budget in equal monthly payments.
48
17
0
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI -3 TEMPORARY INVESTMENTS
September 30, 2019
Funds
Reserve Fund
Prosperity Bank
General Fund
Prosperity Bank
General Fund
TexPool
Debt Service Fund
TexPool
Capital Projects
Tax Bond Construction
Texpool
Capital Projects
Revenue Bond
Construction
Texpool
Debi Service -Revenue
Bond
Texpool
Revenue Bond
Reserve
Texpool
Capital Projects
SWIFT Revenue Bond
Construction
Texpool
SWIFT Revenue Bond
Debt Service
Texpool
Identification
Number
216267724
7318701
613300002
613300003
613300011
Closed
613300012
613300013
613300014
613300015
613300017
W&WW 19 Revenue Bond
Construction
Texpool
613300018
W&WW 19 Revenue Bond
Reserve
Texpool
613300019
W&WW 19 Revenue Bond
Debt Service
Texpool
SWIFT Revenue Bond
Escrow Account
Bank of Texas BOKF
TCEO Revenue Bond
Escrow Account
Bank of Texas BOKF
613300020
82-1747-01-1
82-3288-01-4
Vaccon Capital Lease -8076
Escrow Account Closed
UMB 147404.1
Total - All Funds
Interest Maturity
Rate Date
1.220 Demand
(Money Market)
0.500 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
2.1371 Demand
1.560 Demand
1.300 Demand
1.700 Demand
49
Balance Accrued Interest
End of Year End of Year
$ 1,395,947
$ 2,480,095
$ 5,843,875
$ 82,507
Paid monthly
Paid monthly
Paid daily
Paid daily
$ 644,683 Paid daily
$
Paid daily
$ 24,518 Paid daily
$ 803,457 Paid daily
$ Paid daily
$ 4,967 Paid daily
$ 591,594 Paid dally
$ Paid daily
$ Paid daily
$ 780,339 Paid daily
$ 3,869,575 Paid daily
$ 16,521,557
Paid daily
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -4 TAXES LEVIED AND RECEIVABLE
SEPTEMBER 30, 2019
General Fund Debt
Operations Fire Total Service Total
Taxes receivable beginning of year $ 1,644 $ 15,308 $ 16,952 $ 9,502 $ 26,454
2018 tax levy 126,736 1.113.125 1,239,862 684,873 1,924,734
Total to be accounted for 128,380 1,128,433 1,256,814 694,375 1,951,189
Less collections and adjustments:
Current year (126,087) (1,107,421) (1,233,508) (681,363) (1,914,871)
Prior years (205) {1,489) 1,695)1,162 (2,856)
Total to be accounted for (126, 92) (1,108,911 (1,2 5,203) 6821,5125 (1,917,728)
Taxes receivable, end of year $ 2.088 $ 19,523 $ 21,611 $ 11,849 $ 33,461
Taxes receivable by year
1996 and prior $ - $ - $ - $ - $
1997 $ - $ - $ - $ - $
1998 $ 2 $ 16 $ 18 $ 50 $ 69
1999 $ 2 $ 17 $ 20 $ 39 $ 59
2000 $ 2 $ 12 $ 15 $ 44 $ 59
2001 $ 2 $ 13 $ 16 $ 43 $ 59
2002 $ 2 $ 22 $ 25 $ 49 $ 74
2003 $ 24 $ 42 $ 66 $ 44 $ 110
2004 $ 5 $ 43 $ 48 $ 62 $ 110
2005 $ 12 $ 40 $ 52 $ 58 $ 110
2006 $ 32 $ 147 $ 178 $ 227 $ 405
2007 $ 27 $ 261 $ 288 $ 319 $ 608
2008 $ 72 $ 564 $ 635 $ 458 $ 1,093
2009 $ 184 $ 740 $ 924 $ 466 $ 1,390
2010 $ 136 $ 1,693 $ 1,829 $ 1,192 $ 3,021
2011 $ 138 $ 1,525 $ 1,663 $ 780 $ 2,443
2012 $ 146 $ 1,530 $ 1,676 $ 287 $ 1,963
2013 $ 149 $ 1,397 $ 1,546 $ 586 $ 2,132
2014 $ 259 $ 1,349 $ 1,608 $ 720 $ 2,328
2015 $ 89 $ 1,361 $ 1,450 $ 1,022 $ 2,472
2016 $ 89 $ 1,515 $ 1,604 $ 985 $ 2,588
2017 $ 164 $ 1,431 $ 1,596 $ 909 $ 2,505
2018 $ 649 $ 5,704 $ 6,353 $ 3,509 $ 9,863
$ 2,188 $ 19,423 $ 21,611 $ 11,850 $ 33,461
FN
FN F/Y FN FIV
Property valuations (in 000's) 18/19 17/18 16/17 15/16 14/15
Land $ 667,906 $ 620,210 $ 562,280 $ 497,482 $ 474,068
improvements 981,366 908,581 798,401 719,295 630,249
Personal property 103,985 105,783 99,772 71,096 80,605
(82,556)031,906) (57,745)
Exemptions $ 1,671,351 $ 1,552,018 $ 1,402,708 $ 1,2 } f�)
0,568 $ 1,132 305
Tax rate per $100 valuation
Operations 0.00765 0.00788 0.00438 0.00472 0.01486
Fire department 0.06719 0.06870 0.07445 0.07222 0.07727
Debt service 0.04134 0.04363 0.04839 0.05420 0.04126
Tax rate per $100 valuation 0.11618 0.12021 0.12722 0.13114 0.13339
Tax levy: $ 1,919,984 $ 1,870,008 $ 1,779,098 $ 2,000,874 $ 1,870,728
Percent of taxes collected to taxes levied 99.48% 99.75% 99.60% 99.70% 98.91%
50
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2019
Due During Fiscal
Years Ending_
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
All Bonded Debt Series
Principal Due
1 -Sep
1,370,000
1,565,000
1,610,000
1,655,000
1,225,000
1,260,000
1,285,000
1,330,000
1,365,000
1,410,000
1,455,000
1,505,000
1,400, 000
1,440,000
1,500,000
1,130,000
515,000
250,000
255,000
265,000
275,000
285,000
290,000
300,000
310,000
320,000
330,000
345,000
355,000
365,000
$ 26,965,000
Interest Due
Mar 1/ Sep 1 Total
842,907 2,212,907
710,270 2,275,270
674,311 2,284,311
635,585 2,290,585
593,636 1,818,636
564,864 1,824,864
535,084 1,820,084
503,256 1,833,256
469,030 1,834,030
432,215 1,842,215
392,672 1,847,672
349,241 1,854,241
304,049 1,704,049
263,749 1,703,749
221,124 1,721,124
175,675 1,305,675
142,612 657,612
129,538 379,538
122,038 377,038
114,069 379,069
105,788 380,788
96,850 381,850
87,588 377,588
78,163 378,163
68,413 378,413
58,338 378,338
47,538 377,538
36,400 381,400
24,756 379,756
12,775 377,775
$ 8,792,524 $ 35,757,524
51
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2019
Due During Fiscal
Years Ending
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Due During Fiscal
Years Ending
2020
2021
2022
2023
General Obligation Bonds - Series 2010 (Fire Station)
($2,000,000)
Principal Due
1 -Sep
90,000
95,000
100,000
105,000
110,000
115,000
115,000
125,000
130,000
135,000
140,000
145,000
$ 1,405,000
Interest Due
Mar 1/ Sep 1
59,908
56,758
53,433
48,433
43,183
37,683
33,083
28,368
23,243
17,783
12,113
6,163
$ 420,151
General Obligation Bonds - Series 2012
(2,355,000)
Principal Due
1 -Sep
225,000
230,000
240,000
250,000
$ 945,000
Interest Due
Mar 1/ Sep 1
28,350
21,600
14,700
7,500
$ 72,150
52
Total
149,908
151,758
153,433
153,433
153,183
152,683
148,083
153,368
153,243
152,783
152,113
151,163
$ 1,825,151
Total
253,350
251,600
254,700
257,500
$ 1,017,150
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2019
Due During Fiscal
Years Ending_
2020
2021
2022
2023
Due During Fiscal
Years Ending
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
General Obligation Bonds - Series 2013
(1,905,000)
Principal Due
1 -Sep
195,000
205,000
210,000
215,000
$ 825,000
Interest Due
Mar 1/ Se i
2,825
19,975
13,825
7,525
$ 67,150
General Obligation Bonds - Series 2014
(5,765,000)
Principal Due
1 -Sep
255,000
265,000
270,000
280,000
290,000
295,000
305,000
315,000
325,000
335,000
345,000
360,000
370,000
385,000
400,000
$ 4,795,000
Interest Due
Mar 1/ Se 1
13,775
129,313
124,013
118,613
112,313
105,063
97,688
90,063
81,400
72,463
62,413
51,200
39,500
27,475
14,000
$ 1,259,288
53
Total
220,825
224,975
223,825
222,525
$ 892,150
Total
388,775
394,313
394,013
398,613
402,313
400,063
402,688
405,063
406,400
407,463
407,413
411,200
409,500
412,475
414,000
$ 6,054,288
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2019
Due During Fiscal
Years Ending
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Due During Fiscal
Years Ending
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Revenue Bonds - Series 2015
(9,230,000)
Principal Due
1 -Sep
390,000
400,000
410,000
420,000
435,000
450,000
460,000
475,000
490,000
510,000
525,000
545,000
565,000
585,000
610,000
630,000
$ 7,900,000
Interest Due
Mar 1/ Sep 1 Total
208,238 598,238
200,438 600,438
192,438 602,438
184,238 604,238
175,838 610,838
167,138 617,138
157,013 617,013
145,513 620,513
133,638 623,638
120,163 630,163
106,138 631,138
90,388 635,388
74,038 639,038
57,088 642,088
39,538 649,538
20,475 650,475
$ 2,072,313 $ 9,972,313
Revenue Bonds - Series 2016
(4,635,000)
Principal Due
1 -Sep
215,000
215,000
220,000
220,000
220,000
225,000
225,000
230,000
230,000
235,000
240,000
245,000
250,000
250,000
260,000
265,000
270,000
Interest Due
Mar 1/ Sep 1 Total
60,125 275,125
58,599 273,599
56,965 276,965
55,139 275,139
53,115 273,115
50,893 275,893
48,463 273,463
45,875 275,875
42,862 272,862
39,619 274,619
35,671 275,671
31,303 276,303
26,624 276,624
21,749 271,749
16,749 276,749
11,262 276,262
5,724 275,724
$ 4,015,000 $ 660,737 $ 4,675,737
54
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO.1
TSI -5 LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS
SEPTEMBER 30, 2019
Revenue Bonds - Series 2019
(7,080,000)
Due During Fiscal Principal Due Interest Due
Years Ending 1 -Sep Mar 1/ Sep 1 Total
2020 0 326,686 326,686
2021 155,000 223,588 378,588
2022 160,000 218,938 378,938
2023 165,000 214,138 379,138
2024 170,000 209,188 379,188
2025 175,000 204,088 379,088
2026 180,000 198,838 378,838
2027 185,000 193,438 378,438
2028 190,000 187,888 377,888
2029 195,000 182,188 377,188
2030 205,000 176,338 381,338
2031 210,000 170,188 380,188
2032 215,000 163,888 378,888
2033 220,000 157,438 377,438
2034 230,000 150,838 380,838
2035 235,000 143,938 378,938
2036 245,000 136,888 381,888
2037 250,000 129,538 379,538
2038 255,000 122,038 377,038
2039 265,000 114,069 379,069
2040 275,000 105,788 380,788
2041 285,000 96,850 381,850
2042 290,000 87,588 377,588
2043 300,000 78,163 378,163
2044 310,000 68,413 378,413
2045 320,000 58,338 378,338
2046 330,000 47,538 377,538
2047 345,000 36,400 381,400
2048 355,000 24,756 379,756
2049 365,000 12,775 377,775
$ 7,080,000 $ 4,240,736 $ 11,320,736
55
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO 1
TSI -6 CHANGES IN LONGTERM BONDED DEBT
SEPTEMBER 30, 2019
Series 2010 Series 2012 Series 2013 Series 2014 Series 2015 Series 2016 Series 2019
GO Bonds GO Bonds GO Bonds GO Bonds Revenue 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% 3.00.3.50%
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 3/1 & 9/1
Maturity date 9/1/2031 9/1/2023 9/1/2023 9/1/2034 9.112035 9/1/2036 911!2049
Bonds outstanding at
beginning of year $ 1,490,000 $ 1,170,000 $ 1,020 000 $ 5,045,000 $ 8,280,000 $ 4,230,000 $ 7,080,000 $ 28,315,000
Retirements of principal $ 85,000 $ 225,000 $ 195,000 $ 250,000 $ 380,000 $ 215,000 $ $ 1,350,000
Bonds outstanding at end of
fiscal year $ 1.405.000 $ 945.000 $ 525.000 $ 4,795,000 $ 7,900,000 $ 4,015,000 $ 7,080,000 $ 26,965.000
Retirements of interest
$ 82,883 $ 33,975 $ 31.675 $ 137.525 $ 215.838 $ 61.501 $ - $ 543.396
Paying agent's name & city: The Bank of New The Bank of New The Bank of New The Bank of TX The Bank of TX The Bank of TX The Bank of TX
York Mellon York Mellon York Me Ion Corporate Trust Corporate Trust Corporale Trust Corporate Trust
Newark, NJ Newark, NJ Newark, NJ Austin TX Austin, TX Austin, TX Austin, TX
Bond Authority
General
Obligation
Bonds
Amount authorized by voters $ 34,859217
Amount Issued $ 34,855 000
Remaining 10 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, 2019: 5 803,457
Average annual debt service payment (principal & interest} for remaining term of debt 5 231:8.710
SG
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
EXPENDITURES
Administrative
Water operations
Wastewater operations
Wastewater collection system
Information systems
Contribution to Trophy Club Fire Dept
Capital outlay
Transfers Out and Debt Service
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Total active retell water and/or
wastewater connections
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TS1-7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES -FIVE YEARS
GENERAL FUND
SEPTEMBER 30, 2019
2019
$ 1,231,580
8,539,760
6,900
139,388
(7,080)
32,080
52,600
204,004
376,822
$ 10,576,054
$ 1,304,577
3,001,947
1,048,445
692,347
2,036,172
1,619,062
$ 9,702,550
2018
$ 1,197,949
9,286,714
8,000
61,283
797,834
15,400
358,600
245,392
$ 11,971,172
$ 1,275,394
3,173,225
1,026,693
625,637
665,773
1,522,582
$ 8,289,304
Amounts
2017
$ 1,105,820
8,632,747
7,200
18,940
2016
$ 1,371,247
6,729,926
55,200
11,325
12,652
8,034
3,550 90,935
233,282 265,667
$10,001,539 $ 8,544,986
$ 1,150,421
2,994,623
1,061,896
625,083
744,828
1,529,319
$ 8,106,170
$ 873,504 $ 3,681,868 $ 1,895,369
3,330
3,284
2015
$ 1,419,548
6,138,766
239,200
11,375
6,117
1,074,337
46,750
807,316
240,591
$ 9,984,000
Percent of total revenue
2019 2018 2017 2016 2015
11.6% 10.0% 11.1% 16.0% 14.2%
80.7% 77.6% 86.3% 78.8% 61.5%
0.0% 0.0% 0.0% 0.6% 2.4%
0.1% 0.1% 0.1% 0.1% 0.1%
1.3% 0.5% 0.2% 0.1% 0.1%
-0.1% 0.0% 0.0% 0.0% 0.0%
0.3% 6.7% 0.0% 0.1% 10.8%
0.5% 0.1% 0.0% 1.1% 0.5%
1.9% 3.0% 0.0% 0.0% 8.1%
3.6% 2.0% 2.3% 3.1% 2.4%
100.0% 100.0% 100.0% 100.0% 100.0%
$ 1,388,715 $ 1,672,123 12.3% 10.7% 11.5% 16.3% 16.7%
3,078,429 3,151,532 28.4% 26.5% 29.9% 36.0% 31.6%
1,089,257 864,305 9.9% 8.6% 10.6% 12.7% 8.7%
- - 0.0% 0.0% 0.0% 0.0% 0.0%
- - 0.0% 0.0% 0.0% 0.0% 0.0%
1,010,938 928,610 6.5% 5.2% 6.2% 11.8% 9.3%
1,713,885 1,755,603 19.3% 5.6% 7.4% 20.1% 17.6%
1,182,760 656,984 15.3% 12.7% 15.3% 13.8% 6.6%
$ 9,463,984 $ 9,029,157 91.7% 69.2% 81.0% 110.8% 90.4%
$ (918,998) $ 954,843
3,244 3,422 3,376
57
8.3% 30.8% 19.0% -10.8% 9.6%
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -7 COMPARATIVE SCHEDULES OF REVENUES AND EXPENDITURES -FIVE YEARS (Continued)
DEBT SERVICE FUND
SEPTEMBER 30, 2019
Amounts Percentage
REVENUE 2019 2018 2017 2016 2015 2019 2018 2017 2016 2015
Ad valorem property taxes $ 677,477 $ 679,678 $ 675,944 $ 666,225 $ 468,194 31.8% 32.5% 32.4% 42.3% 48.8%
Penalties and interest 2,010 2,010 2,294 4,010 2,021 0.1% 0.1% 0.1% 0.3% 0.2%
Intergovemmental 1,413,156 1,390,151 1,402,170 902,259 465,409 66.3% 66.4% 67.1% 57.3% 48.5%
Interest earned 37,255 21,903 8,174 2,564 13,976 1.7% 1.0% 0.4% 0.2% 1.5%
Miscellaneous and other - - - 9,573 0.0% 0.0% 0.0% 0.0% 1.0%
Total revenue 2,129,898 2,093,742 2,088,582 1,575,058 959,173 100.0% 100.0% 100.0% 100.0% 100.0%
EXPENDITURES
Principal retirement 1,350,000 1,315,000 1,265,000 895,000 440,000 63.4% 62.8% 60.6% 56.8% 45.9%
Interest and fiscal charges 543,396 569,530 581,844 552,220 422,722 25.5% 27.2% 27.9% 35.1% 44.1%
Bond admin fees 2,950 2,950 2,548 2,150 0.1% 0.1% 0.1% 0.1% 0.0%
Total expenditures 1,896,346 1.887,480 1.849.392 1,449.370 862,722 89.0% 90.1% 88.5% 92.0% 89.9%
Excess (deficiency) of revenues
over (under) expenditures $ 233.552 $ 206.262 $ 239.190 $ 125.688 $ 96.451 11.0% 9.9% 11.5% 8.0% 10.1%
58
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 CONSOLIDATED
TSI -8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS
September 30, 2019
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 - TWC Section 49.060)
Name and Address
Board Members:
Term of Office Fees of Expense Title
Elected/Expires Office Paid Reimbursements at
or Date Hired FY19 FY19 Year End
Gregory Wilson
2013 Churchill Downs Lane
Trophy Club, TX 76262 05/16-05/20 $ - - President
William Rose
219 Inverness Drive
Trophy Club, TX 76262 05/16-05/20 $ $ 800 Vice -President
Steve Flynn
417 Ramsey Trail
Trophy Club, TX 76262 05/18-05/22 S - S - Secretary/Treasurer
Kelly Castonguay
402 Parkview Drive
Trophy Club, TX 76262 05/18-5/22 $ - 5 Director
Mark Chapman
197 Durango Dr
Trophy Club, TX 76262 05/18-05/22 $ $ - Director
59
TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1
TSI -8 BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS (Continued)
SEPTEMBER 30, 2019
Name and Address
Key Personnel:
Term of Office Fees of Title
Elected/Expires Office Paid at
or Date Hired FY19 Year End
Carman Consulting LLC.
2600 Museum Way
Fort Worth, Texas 8/1/2017 $ 141,760 General Manager
Consultants/Legal:
Denton Central Appraisal District
P.O. Box 2816
Denton, TX 76202 4/1/1981 $ 8,444 Appraiser
Tarrant Appraisal District
2500 Handley-Ederville Rd.
Fort Worth, TX 76262 10/1/2007 $ 2,612 Appraiser
LaFollett & Company PLLC
P.O. Box 717
Tom Bean, TX 75489 10/1/2010 $ 26,681 Auditors
CP&Y/The Wallace Group
P.O. Box 22007
Waco, TX 76702 5/1/2012 $ 139,706 Engineers
Halff Associates, Inc.
P.O. Box 678316
Dallas, TX 75267-8316 1/1/2017 $ 205,579 Engineers
Wiss Janney Elstner
P.O. Box 678316
Dallas, TX 75267-8316 1/1/2017 $ 38,596 Engineers
McLean & Howard, L.L.P.
901 S. Mopac Expressway
Building 2, Suite 225
Austin, TX 78746 3/1/2017 $ 67,160 Legal/Bond Counsel
DuBois Bryant Campbell LLP
303 Colorado, Suite 2300
Austin, TX 78701 5/18/2017 $ 27,920 Legal Counsel
Whitaker Chalk Swindle & Schwartz PLLC
301 Commerce St, Suite 3500
Fort Worth, TX 76102-4186 4/30/2018 $ 74,613 Legal Counsel
New Gen Strategies & Solutions
1300 E. Lookout Dr. Suite 100
Richardson, TX 75082 7/1/2013 $ 10,000 Water Consultant
60
REPORTS REQUIRED BY
GOVERNMENTAL AUDITING STANDARDS
f
t aFoLL
and Company PLLC
Certified Public Accountants
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. I (the District), as of and for the year ended September 30, 2019, and the related notes
to the financial statements, which collectively comprise the District's basic financial statements, and have
issued our report thereon dated January 20, 2020.
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.
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.
61
LaFollett & Company PLLC
PO Box 717 • Tom Bean, TX • 75489
903-546-6975 • www.Iafollettcpa.com
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 District'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 District's internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
w&it
Tom Bean, Texas
January 20, 2020
62