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Agenda Packet TC 06/13/2017 - Supplemental Items Supplemental Item June 13, 2017 AGENDA ITEM NO. 6 Receive a report from the Northwest Metroport Chamber of Commerce; discussion of same (Staff). Supplemental Item June 13, 2017 AGENDA ITEM NO. 7 Consider and take appropriate action regarding the acceptance of the Audit for the Town of Trophy Club, Fiscal Year 2016 (Staff). OVERVIEW OF THE AUDIT PROCESS OVERVIEW OF THE AUDIT PROCESS OVERVIEW OF THE AUDIT PROCESS COMPREHENSIVE ANNUAL FINANCIAL REPORT PAGE vi – REFERENCE CAFR COMPONENTS OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT INDEPENDENT AUDITOR’S REPORT PAGE 1 – REFERENCE CAFR FINANCIAL HIGHLIGHTS PAGE 5 – REFERENCE CAFR STATEMENT REVENUES, EXPENDITURES & REFERENCE CAFR PAGE 22 CHANGES IN FUND BALANCE - YEAR ENDING 9/30/16 – GOVERNMENTAL FUNDS Governmental Activities REFERENCE CAFR PAGE 8 - YEAR ENDING 9/30/16 – Town Expenditures – GOVERNMENTAL FUNDS CHANGES IN FUND BALANCE (Budget & Actual) SCHEDULE OF REVENUES, EXPENDITURES & REFERENCE CAFR PAGE 66 - YEAR ENDING 9/30/16 – GENERAL FUND STATEMENT REVENUES, EXPENDITURES & REFERENCE AFR PAGE 26 CHANGES IN NET POSITION - YEAR ENDING 9/30/16 – PROPRIETARY FUNDS term earnings rate from 7% to 6.75% to account for inflation. 90% is considered above avg. by Standard and Poor’s. SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS REFERENCE AFR PAGE 56 - The Town’s current funded ratio is 82.63%, 80% - The actuary has reduced the estimated long - YEAR ENDING 9/30/2016 BC rooksardiel, PLLC Certified Public Accountants June8,2017 TotheHonorableMayor, MembersoftheTownCouncil andmanagement TownofTrophyClub,Texas WehaveauditedthefinancialstatementsoftheTownofTrophyClub,Texas(theȠ3µ½´ȡșȍ fortheyearendedSeptember30,2016,andhaveissuedourreportthereondatedJune8,2017. Professionalstandardsrequirethatweadviseyouofthefollowingmattersrelatingtoour audit. OurResponsibilityunderGovernmentAuditingStandards AscommunicatedinourengagementletterdatedAugust1,2016,ourresponsibility,as describedbyprofessionalstandards,istoplanandperformouraudittoformandexpressan opinionaboutwhetherthefinancialstatementsthathavebeenpreparedbymanagement withyouroversightarepresentedfairly,inallmaterialrespects,inconformitywith accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Ourauditofthe financialstatementsdoesnotrelieveyouormanagementofyourrespectiveresponsibilities. Ourresponsibility,asprescribedbyprofessionalstandards,istoplanandperformouraudit toobtainreasonable,ratherthanabsolute,assuranceaboutwhetherthefinancialstatements arefreeofmaterialmisstatement.Anauditoffinancialstatementsincludesconsiderationof internalcontroloverfinancialreportingasabasisfordesigningauditproceduresthatare appropriateinthecircumstances,butnotforthepurposeofexpressinganopiniononthe effectivenessofthe«´º¯º¿ȟ¹internalcontroloverfinancialreporting.Accordingly,aspartof ouraudit,weconsideredtheinternalcontrolofTownofTrophyClubsolelyforthepurpose ofdeterminingourauditproceduresandnottoprovideanyassuranceconcerningsuch internalcontrol. Wearealsoresponsibleforcommunicatingsignificantmattersrelatedtotheauditthatare,in ourprofessionaljudgment,relevanttoyourresponsibilitiesinoverseeingthefinancial reportingprocess.However,wearenotrequiredtodesignproceduresforthepurposeof identifyingothermatterstocommunicatetoyou. Wedidnotnoteanyfindingsregardingsignificantcontroldeficienciesoverfinancial reporting,materialweaknessesandmaterialnoncompliance,andothermatters. 1095 Evergreen Circle | Suite 200 | The Woodlands, TX 77380 | Tel: 281.907.8788 | Fax: 888.875.0587 | www.BrooksCardiel.com TownofTrophyClub »ª¯ºµ¸ȟ¹CommunicationwithGovernance Page2of7 PlannedScopeandTimingoftheAudit Weconductedourauditconsistentwiththeplannedscopeandtimingwepreviously communicatedtoyou. CompliancewithAllEthicsRequirementsRegardingIndependence Theengagementteam,othersinourfirm,asappropriate,ourfirm,andournetworkfirms havecompliedwithallrelevantethicalrequirementsregardingindependence. Ourfirmandstaffdonothaveanyexistingrelationships,conflictsofinterest,orother conditionsorcircumstancesthatwouldimpairourindependencewiththeTownunderU.S. GAASor GovernmentAuditingStandards Foranynonattestserviceprovidedbyourfirmmanagementmaintainedresponsibilityfor(a) makingallmanagementdecisionsandperformingallmanagementfunctions;(b)assigninga competentindividualtooverseetheservices;(c)evaluatingtheadequacyoftheservices performed;(d)evaluatingandacceptingresponsibilityfortheresultsoftheservicesperformed; and(e)establishingandmaintaininginternalcontrols,includingmonitoringongoingactivities. QualitativeAspectsofthe$´º¯º¿ȟ¹SignificantAccountingPractices SignificantAccountingPolicies Managementhastheresponsibilitytoselectanduseappropriateaccountingpolicies.A summaryofthesignificantaccountingpoliciesadoptedbytheTownofTrophyClubis includedinNoteItothefinancialstatements.TheTownhasadoptedtheprovisionof GovernmentalAccountingStandardBoardStatementNo.72,entitled FairValueMeasurement andApplication;TheprovisionsofGASBStatementNo.72areeffectiveforreportingperiods beginningafterJune15,2015.Nomattershavecometoourattentionthatwouldrequireus, underprofessionalstandards,toinformyouabout(1)themethodsusedtoaccountfor significantunusualtransactionsand(2)theeffectofsignificantaccountingpoliciesin controversialoremergingareasforwhichthereisalackofauthoritativeguidanceorconsensus. SignificantAccountingEstimates Accountingestimatesareanintegralpartofthefinancialstatementspreparedby managementandarebasedon³§´§«³«´ºȟ¹currentjudgments.Thosejudgmentsare normallybasedonknowledgeandexperienceaboutpastandcurrenteventsand assumptionsaboutfutureevents.Certainaccountingestimatesareparticularlysensitive becauseoftheirsignificancetothefinancialstatementsandbecauseofthepossibilitythat futureeventsaffectingthemmaydiffermarkedlyfrom³§´§«³«´ºȟ¹currentjudgments. TownofTrophyClub »ª¯ºµ¸ȟ¹CommunicationwithGovernance Page3of7 Themostsensitiveaccountingestimatesaffectingthefinancialstatementsare: Managementsestimateoftheusefullivesofcapitalassets.Theestimateisbasedonindustry standardsrelatingtocapitalassets.Weevaluatedthekeyfactorsandassumptionsusedto developtheestimateanddeterminedthatitisreasonableinrelationtothebasicfinancial statementstakenasawholeandinrelationtotheapplicableopinionunits. FinancialStatementDisclosures Certainfinancialstatementdisclosuresinvolvesignificantjudgmentandareparticularly sensitivebecauseoftheirsignificancetofinancialstatementusers.Themostsensitive disclosuresaffectingTownofTrophy"²»¨ȟ¹financialstatementsrelatetocapitalassetsand longtermdebt. SignificantDifficultiesEncounteredduringtheAudit Weencounterednosignificantdifficultiesindealingwithmanagementrelatingtothe performanceoftheaudit. UncorrectedandCorrectedMisstatements Forpurposesofthiscommunication,professionalstandardsrequireustoaccumulateall knownandlikelymisstatementsidentifiedduringtheaudit,otherthanthosethatwebelieve aretrivial,andcommunicatethemtotheappropriatelevelofmanagement.Further, professionalstandardsrequireustoalsocommunicatetheeffectofuncorrectedmisstatements relatedtopriorperiodsontherelevantclassesoftransactions,accountbalancesordisclosures, andthefinancialstatementsasawholeandeachapplicableopinionunit.Wenotednosuch misstatementswhoseeffects,asdeterminedbymanagement,areimmaterial,both individuallyandintheaggregate,tothefinancialstatementstakenasawholeandeach applicableopinionunit. Inaddition,professionalstandardsrequireustocommunicatetoyouallmaterial,corrected misstatementsthatwerebroughttotheattentionofmanagementasaresultofouraudit procedures.AppendixAidentifiesmaterialmisstatementsthatweidentifiedasaresultofour auditprocedureswerebroughttotheattentionof,andcorrectedby,management. DisagreementswithManagement Forpurposesofthisletter,professionalstandardsdefineadisagreementwithmanagementas amatter,whetherornotresolvedtooursatisfaction,concerningafinancialaccounting, reporting,orauditingmatter,whichcouldbesignificanttoTownofTrophy"²»¨ȟ¹financial TownofTrophyClub »ª¯ºµ¸ȟ¹CommunicationwithGovernance Page4of7 statementsorthe§»ª¯ºµ¸ȟ¹report.Nosuchdisagreementsaroseduringthecourseofthe audit. RepresentationsRequestedfromManagement Wehaverequestedcertainwrittenrepresentationsfrommanagement,whichareincludedin theattachedletterdatedJune8,2017. ,§´§«³«´ºȟ¹ConsultationswithOtherAccountants Insomecases,managementmaydecidetoconsultwithotheraccountantsaboutauditingand accountingmatters.Managementinformedusthat,andtoourknowledge,therewereno consultationswithotheraccountantsregardingauditingandaccountingmatters. OtherSignificantFindingsorIssues InthenormalcourseofourprofessionalassociationwiththeTownofTrophyClub,we generallydiscussavarietyofmatters,includingtheapplicationofaccountingprinciplesand auditingstandards,operatingandregulatoryconditionsaffectingtheentity,andoperational plansandstrategiesthatmayaffecttherisksofmaterialmisstatement.Noneofthematters discussedresultedinaconditiontoourretentionastheTownofTrophy"²»¨ȟ¹auditors. OtherInformationinDocumentsContainingAuditedFinancialStatements(ifapplicable) Pursuanttoprofessionalstandards,ourresponsibilityasauditorsforotherinformationin documentscontainingtheTownofTrophy"²»¨ȟ¹auditedfinancialstatementsdoesnotextend beyondthefinancialinformationidentifiedintheauditreport,andwearenotrequiredto performanyprocedurestocorroboratesuchotherinformation. Ourresponsibilityalsoincludescommunicatingtoyouanyinformationwhichwebelieveisa materialmisstatementoffact.Nothingcametoourattentionthatcausedustobelievethatsuch information,oritsmannerofpresentation,ismateriallyinconsistentwiththeinformation,or mannerofitspresentation,appearinginthefinancialstatements. Thisreportisintendedsolelyfortheinformationanduseofthegoverningbodyand managementoftheTownofTrophyClubandisnotintendedtobeandshouldnotbeusedby anyoneotherthanthesespecifiedparties. Verytrulyyours, BrooksCardiel,PLLC TownofTrophyClub »ª¯ºµ¸ȟ¹CommunicationwithGovernance Page5of7 Corrected Misstatements TownofTrophyClub »ª¯ºµ¸ȟ¹CommunicationwithGovernance Page6of7 Client Proposed Entry TownofTrophyClub »ª¯ºµ¸ȟ¹CommunicationwithGovernance Page7of7 BC rooksardiel, PLLC Certified Public Accountants June8,2017 TotheTownCouncilandManagement TownofTrophyClub,Texas InplanningandperformingourauditofthefinancialstatementsoftheTownofTrophyClub, Texas(theȠ3µ½´ȡșȍasofandfortheyearendedSeptember30,2016,inaccordancewith auditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,weconsideredthe 3µ½´ȟ¹internalcontroloverfinancialreporting(internalcontrol)asabasisfordesigningour auditingproceduresforthepurposeofexpressingouropiniononthefinancialstatements,but notforthepurposeofexpressinganopinionontheeffectivenessofthe3µ½´ȟ¹internalcontrol. Accordingly,wedonotexpressanopinionontheeffectivenessofthe3µ½´ȟ¹internalcontrol. Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedinthepreceding paragraphandwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbe significantdeficienciesormaterialweaknessesandthereforetherecanbenoassurancethatall suchdeficiencieshavebeenidentified.However,asdiscussedbelow,weidentifieddeficiencies ininternalcontrolsthatweconsidertobematerialweaknesses. Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallow managementoremployees,inthenormalcourseofperformingtheirassignedfunctions,to prevent,ordetectandcorrectmisstatementsonatimelybasis.Amaterialweaknessisa deficiencyorcombinationofdeficienciesininternalcontrol,suchthatthereisareasonable possibilitythatamaterialmisstatementofthe«´º¯º¿ȟ¹financialstatementswillnotbe prevented,ordetectedandcorrectedonatimelybasis.Weconsiderthefollowingdeficiencyin the3µ½´ȟ¹internalcontroltobematerialweaknesses: 1.PIDɋREVIEWMONTHLYSTATEMENTS Finding ThePublicImprovementDistrict(PID)waspreviouslyreportedasanagencyfund ratherthanablendedcomponentunit. Recommendation TheTownshouldaccountfortheactivityofthePIDonanongoingbasis.Directorof FinanceshouldregularlyreviewmonthlystatementsreceivedfromthePID Administratorinordertoensurethereisanunderstandingoftheactivity. 1095 Evergreen Circle | Suite 200 | The Woodlands, TX 77380 | Tel: 281.907.8788 | Fax: 888.875.0587 | www.BrooksCardiel.com TownofTrophyClub CommunicationofSignificantDeficienciesandMaterialWeaknesses Page2of4 Othermattersareanyadditionalnoteworthyitemsthatareunrelatedtointernalcontrolsuchas compliancewithlawsandregulations.Inaddition,wenotedothermattersinvolvingthe internalcontrolanditsoperation: 2.MUNICIPALCOURTCODES Finding Officersdonotconsistentlyusethecorrectoffensecodes,whichrequiresthecourtclerk tomanuallyreviewandchangeifneeded.Thisisprimarilyduetoamultitudeofsimilar codesavailablewithinthesystem. Recommendation TheTownshouldconsiderprovidingatrainingovertheuseoftheticketwritersand commonlymisusedcodes,aswellaspotentiallyreducingthenumberofcodesavailable, inordertoreducetheneedformanualchangestothecitation. 3.PENSIONLIABILITY Finding Duringthe2015fiscalyear,theTownadoptedtheGovernmentalAccountingStandard Board(GASBStatementNo.68,entitled AccountingandFinancialReportingforPensions, anamendmentofGASBStatementNo.27 andStatementNo.71,PensionTransitionfor ContributionsMadeSubsequenttotheMeasurementDate.AspartofGASB68theTownis requiredtorecorditsnetfundedpensionliabilitywhichtotaled$2,835,287asof September30,2016.Thisisanincreaseof$983,826overtheprioryearbalanceof $1,851,461. Theprimaryreasonforthisincreaseisduetoadecreaseintheestimatedearningsrate from7%to6.75%.Theeffectofthisdifferenceissmoothedoutover5yearssotheTown willnotincurthefullimpactin2016. AlthoughtheTownisrequiredtorecordthisliability,itdoesnotreflectanunderfunded plan.Theliabilityrepresentsfutureprojectedpensionpaymentsanddoesnotreflect futurecontributionsofcurrentplanmembersandinvestmentearnings.Currentassets andprojectedfuturecontributionsandearningsaresufficienttocovertheprojected futurepensionpaymentstocurrentplanmembers. Thisliabilitywillcontinuetobereflectedonthe3µ½´ȟ¹financialreportandshouldbe consideredwhensettingareserveforunrestrictednetposition.Althoughthe unrestrictednetpositionatthegovernmentwidereportinglevelisnotascriticalasa 2 TownofTrophyClub CommunicationofSignificantDeficienciesandMaterialWeaknesses Page3of4 fundbalanceoperatingreserve,itmaybeconsideredbylendinginstitutionsandcould negativelyaffectthe3µ½´ȟ¹interestrates. The3µ½´ȟ¹currentfundedratiois82.63%.Standardand/µµ¸ȟ¹considersabove averagetobe80%90%. Recommendation TheTownshouldcontinuetomonitorthebalanceofunrestrictednetpositionandthe pensionliabilities.TheTownshouldstrivetoincreaseunrestrictednetpositionuntilthe deficitisresolved. RecentandUpcomingAccountingPronouncements GASB77TaxAbatements EffectiveforperiodsbeginningafterDecember15,2015(FiscalyearSeptember30,2017)the Townwillberequiredtodiscloseinformationrelatedtotaxabatements.Thiscanbeintheform ofpropertytaxorsalestax. Specificdisclosuresinclude: Governmentsmaychoosetodiscloseinformationaboutindividualtaxabatement agreementsorpresentthemintheaggregate.Ifagovernmentchoosestopresent individualtaxabatementagreements,itshouldbeonlythoseagreementsthatmeetor exceedaquantitativethresholdselectedbythegovernment.Forexample,agovernment maychoosetopresentindividualtaxabatementagreementsthatexceed$100,000.This thresholdshouldbedisclosedaspartofthenotes. Briefdescriptionofthenamesandpurposeofprogram,typeoftaxbeingabated, authorityundertheagreementisenteredinto,eligibility,mechanismbywhichtaxesare reduced(assessedvalue,$amount,%oftotal)provisionforrecapturingabatedtaxes, typesofcommitmentsrequiredforabatementbytherecipients. Gross$amountofthereducedtaxrevenues,ontheaccrualbasis. Iftherearecommitmentsmadebythegovernmentotherthantoreducetaxes,a descriptionofthetypesofcommitmentsmadeandthemostsignificantindividual commitmentsmade(thisparticulardisclosurewillbemadeuntilthegovernmenthas fulfilleditscommitment); Asdiscussedabove,thequantitativethresholdsetbythegovernmentusedtodetermine whichagreementstodiscloseindividually;andifinformationislegallyprohibitedfrom 3 TownofTrophyClub CommunicationofSignificantDeficienciesandMaterialWeaknesses Page4of4 beingdisclosed,thegovernmentwoulddisclosethegeneralnatureofthetaxabatement informationomittedandthespecificsourceofthelegalprohibition. Recommendation IftheTowncurrentlyhasanytaxabatementagreementsorifanywillbeenteredintoduring the2017fiscalyear,theinformationrequiredfordisclosureshouldbetracked.Bytrackingthis informationduringtheyear,theTownwillbepreparedfortheupcomingauditandwillreduce thepossibilityofdelays. ThiscommunicationisintendedsolelyfortheinformationanduseoftheTownCounciland management,andotherswithintheTown,andisnotintendedtobeandshouldnotbeusedby anyoneotherthanthesespecifiedparties. Verytrulyyours, BrooksCardiel,PLLC CertifiedPublicAccountants TheWoodlands,Texas 4 Letter of Transmittali Certificate of Achievementvi Organization Structurevii Elected Officials, Appointed Officials and Key Staffviii Independent Auditor’s Report1 5 Statement of Net Position Statement of Activities Balance Sheet1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Statement of Net Position Statement of Revenues, Expenses, and Changes in Net Position Statement of Cash Flows Combining Statement of Net Position Combining Statement of Activities Texas Municipal Retirement System - Schedule of Changes in Net Pension Liability and Related Ratios Texas Municipal Retirement System - Schedule of Contributions Retiree Health Plan - Schedule of Funding Progress Budgetary Comparison Schedule - General Fund Notes to Required Supplementary Information Budgetary Comparison Schedule - Debt Service Fund Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Balance Sheet-4B Economic Development Fund Reconciliation of the Economic Development Fund 4B Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balance-4B Economic Development Fund Reconciliation of the Economic Development Fund 4B Statement of Revenues Expenditures, and Changes in Fund Balance to the Statement of Net Activities Balance Sheet-Tax Increment Reinvestment Zone #1 Reconciliation of the Tax Increment Reinvestment Zone #1 Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balance-Tax Increment Reinvestment Zone #1 Reconciliation of the Tax Increment Reinvestment Zone #1 Statement of Revenues Expenditures, and Changes in Fund Balance to the Statement of Net Activities Table of Contents Net Position By Component1 Changes in Net Position2 Fund Balances, Governmental Funds3 Changes in Fund Balances, Governmental Funds4 Assessed Value and Estimated Actual Value of Taxable Property5 Direct and Overlapping Property Tax Rates6 Principal Property TaxPayers7 Ad Valorem Tax Levies and Collections8 Ratios of Outstanding Bonded Debt by Type9 Ratios of General Bonded Debt Outstanding10 Direct and Overlapping Debt11 Demographic and Economic Statistics12 Principal Employers13 Full-Time Government Employees by Function/Program14 Operating Indicators by Function/Program15 June8, 2017 Honorable Mayor,MembersoftheTownCouncil, AndtheCitizensofthe TownofTrophyClub, Texas The Town’s Finance Department has prepared a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) which were audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. The Comprehensive Annual Financial Report (CAFR) for the Town of Trophy Club, Texas for the fiscal year ended September 30, 2016 is hereby issued. This report consists of management’s representations concerning the finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making the representations, management of the Town has established a comprehensive internal control framework that is designed both to protect the Town’s assets from loss, theft, or misuse and to compile sufficient and reliable information for the preparation of the Town’s financial statements in conformity with GAAP. Internal controls should not outweigh their benefits; therefore, the Town’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute assurance, that the financial statements are free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town’s financial records have been audited by BrooksCardiel, PLLC, Certified Public Accountants, as required by the Town Charter. This CAFR has been prepared based upon those audited records. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town are presented fairly, in all material respects, for the fiscal year ended September 30, 2016. This independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town’s financial statements for the fiscal year ended September 30, 2016, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Town’s MD&A can be found immediately following the report of the independent auditor. The Town of Trophy Club, Texas incorporated in 1985 as Texas’ first premiere master planned community, is located in the North Central portion of Texas. This area of the State has proven to be one of the top growth areas in Texas and the United States. The Town currently occupies a land area of just over 4 square miles and serves a growing population of approximately 12,677. The Town is empowered to levy a property tax on real property located within its boundaries. Trophy Club is also empowered, by State statute, to extend its corporate limits by annexation, which has occurred periodically when deemed appropriate by the governing council of the Town. Trophy Club has operated as a Home Rule municipality utilizing the Council-Manager form of government since 2004. With the Charter Amendments passed at the May 11, 2013 election policy-making and legislative authority are vested in the Town Council consisting of the Mayor and six other council members. The Town Council is responsible for, among other things, passing ordinances, adopting the budget, appointing boards and committees, and hiring the Town Manager, Town Secretary, Municipal Judge, and Town Attorney. The Town Council is elected on a non-partisan basis. With the Charter Amendments passed at the May 9, 2009 election, Council members are elected from the Town at-large-by-placein the manner, for a term of three (3)years or until their successors have been elected and take office. Each Council member shall be elected to and occupy a place on the Council, such Places being numbered (e.g., Place 1, Place 2,Place 3, etc.). No person shall serve as Mayor or Council member for successive elected full terms totaling more than six years. The Town Manager is responsible for carrying out the policies and ordinances of the Town Council, overseeing the day-to-day operations of the government and for appointing the heads of the various Town departments. The Town of Trophy Club provides a full range of municipal services including general government, public safety (police and EMS), streets, parks and recreation, planning and zoning, code enforcement, and drainage utilities. Water/wastewater and Fire protection are provided through the Municipal Utility District. Fast-paced growth is one of the Town’s identifying characteristics, identified by boththe Dallas Business Journal and Fort Worth Builders Association. Trophy Club’s location between DFW and Alliance Airports is ideal for businesses and residents, as well as those who commute to Dallas, Denton, Las Colinas, and Fort Worth. Trophy Club maintains a small-town, picturesque feel while taking advantage of nearby metro areas. The Town offers an outstanding quality of life, with great educational and recreational amenities as well as two 18-hole premier golf courses including the only course designed by Ben Hogan. The North Texas region possesses diverse research and education institutions, logistics, oil and gas, manufacturing and industrial, and a professional services base that has contributed to the relative stability of the unemployment rate with approximately half of the local workforce employed in management, professional, and related occupations. Figures from the Bureau of Labor Statistics indicate a DentonCounty unemployment rate of 3.6% while the national unemployment rate is 4.7% as ofDecember2016. Trophy Club has worked diligently to position itself for a significant future within DFW and the Alliance corridor. The Town has issued over 1,000 building permits for high end homes over the past 5 years, with another 60building permits anticipated for Fiscal Year 2017. Additionally, the Town’s tax base exceeded $1.5 billion net taxable value in 2016. Business growth continues to be strong in Trophy Club and the Highway 114 region. The Town directly benefits from those businesses locatingwithin the Town or professionals moving to our neighborhoods who work at nearby corporations. In December of 2015, the Town refunded the Trophy Club Public Improvement District #1 (PID) bonds which will help residents of the PID realize over $16.4M in savings over the life of the debt. In May of 2016 the Town issued $5,245,000 in General Obligation Bonds for the purpose of constructing a new Town Hall and $4,210,000 in Certificates of Obligation of which $2,260,000is funded by the Crime Control Prevention District to help fund thepolice portion of the new Town Halland $1,950,000 is for street and drainage projects. The Town of Trophy Club uses a program-based budgeting process. Each budgeting unitprovides for the expenditures associated with services and supplies appropriated for in the prior year budget. Personnel expenditures are compiled by the Finance and Human Resource departments.Any funding request that represents new expenditures and programs must be submitted as a separate supplemental request.Capital items are funded based on a replacement schedule, need, and available resources. Revenue Projection The budget revenue projections for the new fiscal year begin early in the current fiscal year. The projections are made by the departments responsible for the revenues with help from the Finance staff. Projections are based upon consultations with state and local agencies, trend analysis, anticipated changes in the local and regional economy, and discussions with directly associated staff members. Although revenue projections are prepared early in the budget process, the budget revenue analysis continues with departmental budget development and extends until the budget is adopted based upon any new information. Proposed Budget Analysis/Compilation The Finance Department reviews and compiles a preliminary departmental budgetto present to the Budget Team, which is comprised of the Town Manager, Assistant Town Manager/CFO, Controller, and Strategic Services Coordinator. During Budget Team discussions, each department director answers questions from the entire group concerning their budget. Given revenue projections and baseline funding requirements, budget funding changes are made according to necessity and priority. A total recommended funding level is determined and is weighed against available resources. Proposed Budget Development The Town Managershall prepare and submit to the Town Secretary, the annual budget covering the next fiscal year. The Town Manager’s proposed budget should assume, for each fund, operating revenues and resources that are equal to, or exceed operating expenditures. The Town Manager’s budget message summarizes funding requirements, major changes in programs, and alternatives for funding. Town Council Budget Study Each fund’s information, supplemental items, capital replacement data, and the five year capital improvement program are presented to the Council duringevery Council meeting from May until the budget is adopted.This approach allows the Council to discuss items and give direction prior to the proposed budget being submitted. Capital Program The Town Manager shall prepare and submit to the Council a five (5) year capital program no later than three months before the final date for submission of the budget. The capital program shall be revised and extended each year with regard to capital improvements still pending or in process of construction or acquisition (Charter Section 9.08). Public Hearing/Budget Adoption A public hearing on the proposed budget and two public hearings on the tax rate (if applicable) are held in August and September prior to final budget consideration. At the public hearings, citizens may make formal comments concerning the proposed budget. The public also has the opportunity to attend Town Council budget work sessions from May through budget adoption. Budget adoption occurs in September after Town Council deliberations and the public hearing(s). The Town Council adopts a tax rate to support adopted funding levels. Pursuant to Town Charter, the budget in place for the preceding year shall remain in place on a month-to-month basis until such time as a new budget has been adopted if no Town Council action is taken before the end of the fiscal year, September 30. Compilation of Adopted Budget/Budget Maintenance The adopted budget is compiled and published during the first months of the new fiscal year. The adopted budget in the form of an amended proposed budget is available for public inspection in October. Ledger accounts are prepared for the new fiscal year prior to October 1. Budget maintenance is a year-round activity of divisions/departments and Finance Department staff. Other spending control mechanisms include monthly review of expenditures by Finance Department staff. During the budget process, departments make revenue and expenditure estimates for the current year. Finally, program goals, objectives, and measures are evaluated during budget implementation to determine the effectiveness of program activities and levels of appropriate funding for subsequent years. During Fiscal Year 2010, the Town established a Cash Management Program and Policy for the purpose of ensuring adequate internal controls to account for the handling of Town cash and to maintain public trust. Staff also created the Town’s Investment Policy. The purpose of the investment policy was to comply with Chapter 2256 of the Government Code (“Public Funds Investment Act”), which requires the Town of Trophy Club to adopt a written investment policy regarding the investment of its funds and funds under its control. The Investment Policy addresses the methods, procedures, and practices that must be exercised to ensure effective and judicious fiscal management of Trophy Club’s funds. The investment policy received the Government Treasurers’ of Texas Certificate of Distinction for Investment Policy in June 2011. The Town Council adopted a fund balance policy in September 2011 which established new fund balance categories (as recommended by Statement No. 54 by the Governmental Accounting Standards Board) and established a minimum unassigned fund balance goal (30% of annual operating expenditures). In December 2013, Town Council adopted a debt management policy in order to provide parameters for the issuance and management of debt used to construct or acquire major capital assets. In September 2016 the Town implemented revised purchasing and travel and training policies. The Town Council has continued its strategic planning process to identify goals and objectives for long range planning. Each year, the Council meets in strategic planning retreats to review and refine those goals. Management Teammembersutilizethestrategicplanningdocumentstohelpguidetheirbudget planningandservice/programimplementation. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Trophy Club for itsCAFR for the fiscal year ended September 30, 2015. This was the consecutive year that the Townhas received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report could not be accomplished without the dedicated services of the entire staff of the Finance Department. We would also like to express our appreciation to all staff members who assisted and contributed to the preparation of this report. is also given to representatives of BrooksCardiel, PLLC, Certified Public Accountants. Special acknowledgement is given to the Mayor and the members of the Town Council for theirsupport for maintaining the highest standards of professionalism in the management of the Town of Trophy Club finances. Respectivelysubmitted, Thomas M. Class, Sr. Steven Glickman, CPA Town Manager Assistant Town Manager/CFO Town Council Pictured left to right: (seated) Council Member Jim Parrow, Mayor Nick Sanders, Mayor Pro Tem Greg Lamont, (standing) Council Member Garrett Reed, Council Member Rhylan Rowe, Council Member Tim Kurtz, and Council Member Philip Shoffner Patrick Arata David Dodd Holly Fimbres Honorable Mark Chambers Management Team Steven Glickman, CPA Interim Emergency Medical Services & Fire ChiefRick Lasky Human Resources DirectorCarmel Fritz Information Systems DirectorMike Pastor Infrastructure & Development Services ManagerPat Cooke Parks & Recreation DirectorAdam Adams Police ChiefPatrick Arata BC rooksardiel, PLLC Certified Public Accountants INDEPENDENT 4#(3.1ȟ2REPORT TotheHonorableMayorand MembersoftheTownCouncil TownofTrophyClub,Texas: ReportontheFinancialStatements Wehaveauditedtheaccompanyingfinancialstatementsofthegovernmentalactivities,the businesstypeactivities,thediscretelypresentedcomponentunits,eachmajorfund,andthe aggregateremainingfundinformationoftheTownofTrophyClub,Texas(theȠ3µ½´ȡșȍasof andfortheyearendedSeptember30,2016,andtherelatednotestothefinancialstatements, whichcollectivelycomprisethe3µ½´ȟ¹basicfinancialstatementsaslistedinthetableof contents.Thesefinancialstatementsaretheresponsibilityofthe3µ½´ȟ¹management.Our responsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit. ,§´§«³«´ºȟ¹ResponsibilityfortheFinancialStatements The3µ½´ȟ¹managementisresponsibleforthepreparationandfairpresentationofthese financialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnited StatesofAmerica;thisincludesthedesign,implementation,andmaintenanceofinternalcontrol relevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrom materialmisstatement,whetherduetofraudorerror. »ª¯ºµ¸ȟ¹Responsibility Ourresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit.We conductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnited StatesofAmerica.Thosestandardsrequirethatweplanandperformtheaudittoobtain reasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement. Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsand disclosuresinthefinancialstatements.Theproceduresselecteddependonthe§»ª¯ºµ¸ȟ¹ judgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancial statements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditor considersinternalcontrolrelevanttothe«´º¯º¿ȟ¹preparationandfairpresentationofthe financialstatementsinordertodesignauditproceduresthatareappropriateinthe circumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthe «´º¯º¿ȟ¹internalcontrol.Accordingly,weexpressnosuchopinion.Anauditalsoincludes 1095 Evergreen Circle | Suite 200 | The Woodlands, TX 77380 | Tel: 281.907.8788 | Fax: 888.875.0587 | www.BrooksCardiel.com evaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificant accountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthe financialstatements. Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovidea basisforourauditopinion. Opinion Inouropinionthefinan cialstatementsreferredtoabovepresentfairly,inallmaterialrespects, therespectivefinancialpositionofthegovernmentalactivities,thebusinesstypeactivities,the discretelypresentedcomponentunits,eachmajorfund,andtheaggregateremainingfund informationoftheTownasofSeptember30,2016andtherespectivechangesinfinancial positionandcashflows,whereapplicable,thereoffortheyearthenendedinconformitywith accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica. EmphasisofMatter "µ¸¸«©º¯µ´µ¬§´$¸¸µ¸ AsdisclosedinNote15.,intheyearendingSeptember30,2016,theTownrestateditsnet positionandPIDNo.1fundbalancesasofSeptember30,2015tocorrectthisfundtobe reportedasagovernmentaltypefundratherthanagencyfund.Ouropinionisnotmodified withrespecttothismatter. OtherMatters 1«·»¯¸«ª2»¶¶²«³«´º§¸¿(´¬µ¸³§º¯µ´ AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethatthe ³§´§«³«´ºȟ¹discussionandanalysis,thebudgetarycomparisoninformation,thescheduleof changesinnetpensionliabilityandrelatedratios,andthescheduleofemployercontributions topensionplanbepresentedtosupplementthebasicfinancialstatements.Suchinformation, cfinancialstatements,isrequiredbytheGovernmental althoughnotapartofthebasi AccountingStandardsBoard,whoconsidersittobeanessentialpartoffinancialreportingfor placingthebasicfinancialstatementsinanappropriateoperational,economic,orhistorical context.Wehaveappliedcertainlimitedprocedurestotherequiredsupplementaryinformation inaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica, whichconsistedofinquiriesofmanagementaboutthemethodsofpreparingtheinformation andcomparingtheinformationforconsistencywith³§´§«³«´ºȟ¹responsestoourinquiries, thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasic financialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformation becausethelimitedproceduresdonotprovideuswithsufficientevidencetoexpressanopinion orprovideanyassurance. .º®«¸(´¬µ¸³§º¯µ´ Ourauditwasconductedforthepurposeofformingopinionsonthefinancialstatementsthat collectivelycomprisetheTownofTrophyClubbasicfinancialstatements.Theintroductory section,combiningandbudgetarycomparisonschedules,andstatisticalsection,arepresented forpurposesofadditionalanalysisandarenotarequiredpartofthebasicfinancialstatements. Thesupplementaryinformationnotedaboveistheresponsibilityofmanagementandwas derivedfromandrelatesdirectlytotheunderlyingaccountingandotherrecordsusedto preparethebasicfinancialstatements.Suchinformationhasbeensubjectedtotheauditing proceduresappliedintheauditofthebasicfinancialstatementsandcertainadditional procedures,includingcomparingandreconcilingsuchinformationdirectlytotheunderlying accountingandotherrecordsusedtopreparethebasicfinancialstatementsortothebasic financialstatementsthemselves,andotheradditionalproceduresinaccordancewithauditing standardsgenerallyacceptedintheUnitedStatesofAmerica.Inouropinion,the supplementaryinformationisfairlystated,inallmaterialrespects,inrelationtothebasic financialstatementsasawhole. tisticalsectionhavenotbeensubjectedtotheauditing Theintroductorysectionandthesta proceduresappliedintheauditofthebasicfinancialstatements,andaccordingly,wedonot expressanopinionorprovideanyassuranceonthem. BrooksCardiel,PLLC CertifiedPublicAccountants TheWoodlands,Texas June8,2017 As management of the Town of Trophy Club, we offer readersof the Town’s financial statements this narrative overview and analysis of the financial activities of the Town of Trophy Club for the fiscal year ended September 30, 2016. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i through v of this report. The assets and deferred outflows of resources of the Town exceeded its liabilities and deferred inflows of resources at the close of the fiscal year ended September 30, 2016, by $34,222,153(net position). Of this amount, $2,167,715(unrestricted net position) may be used to meet the government’s ongoing obligations to its citizens and creditors. The Town’s total net position decreased by $565,227primarily as a result of an increase in net pension liability of $983,826. The Town’s governmental funds reported combined ending fund balances of $17,783,169. The unassigned portion of the General Fund balance at the end of the year was $3,950,290 or 46.9% of total General Fund expenditures. The governmental long-term debt obligations of the Town increased by $13,063,158 during the fiscal year.This increase was comprised of debt issuances totaling $41,800,855offset by debt service principal payments totaling $28,737,697. This discussion and analysis is intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. --The government-wide financial statements are designed to provide readers with a broad overview of the Town of Trophy Club’s finances. This is done ina manner similar to a private-sector business. Two statements, the Statement of Net Positionand the Statement of Activities, are utilized to provide this financial overview. The Statement of Net Positionpresents information on all of the Town’s assets,liabilities and deferred inflows/outflows with the difference reported as net position. Over time, increases or decreases in net positionmay serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The Statement of Activities presents information showing how the Town’s net positionchanged during the most recent fiscal year. All changes in net positionare reported as soon as the underlying event giving rise to the change occurs, regardless of the timingof related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide statements distinguish between governmental activities and business-type activities. Governmental activities primarilyaccount for those activities supported by taxes and intergovernmental revenues. On the other hand, business-type activities are primarily supported by user fees and charges. Most Town services are reported in governmental activities whileProprietary Fundsare reported in the business-type activities. In the above statements, the Town’s operations are presented as Governmental Activities - where most of the Town’s basic activities are reported, including police, emergency medical services, community development, parks and recreation, streets,court, council and administration. Normally, these operations are financed by property taxes, salestaxes, and franchise fees. The 4B Economic Development Corporation and Tax Increment Reinvestment Zone #1 are considered (discretely presented) component units of the Town. Their balances and activities have been combined and reported separately from those of the Town in the above statements. --The Town, like other state and local governments, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. All of the funds of the Town can be divided into threecategories: governmental funds,proprietary funds, and fiduciary funds. Governmental funds-Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financialstatements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures,and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town maintains eleven individual 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, the Debt Service Fund, the Capital Projects Fund,the PID No. 1 Fund,and the Grant Fund, all of which are considered to be major funds. Data from the other sevenfunds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary funds-The Town maintains two proprietary funds: the Trophy Club Park Fund and the Town Storm Drainage Fund. Proprietary funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses proprietary funds to account for operations at Trophy Club Parkand storm water operations. Proprietary fund financial statements provide the same type of information as the government- wide financial statements only inmore detail. Component units - The 4B Economic Development Corporation and Tax Increment Reinvestment Zone #1 are reported as discretely presented component units. Information on these component units is presented in the Statement of Net Position - Component Units and the Statement of Activities – Component Units. The Town adopts annual appropriated budgets for the generalfund, debt service fund and the Trophy Club Park ProprietaryFund. Budgets for capital projects funds are adopted on a project length basis. A budgetary comparison statement is provided for each budgeted governmentalfund to demonstrate compliance with its budget. --The notes provide additional information that is essential to gain a full understanding of the data providedin the government-wide and fund financial statements. The notes to the financial statements can be found on pages. --In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. Required supplementary information can be found after the notes to the financial statements on pages . Atthe end of fiscal year 2016, the Town’s net position(assets exceeding liabilities) totaled $34,222,153. This analysis focuses on the net position(Table 1) and changes in net position (Table 2). --The largest portion of the Town’s net position,$27,620,789or 80.71%, reflects its net investment in capital assets (land, buildings, improvements other than buildings, machinery and equipment, construction in progress), less any related debt used to acquire those assets that is still outstanding. The Town uses these assets to provide services to its citizens; consequently,these assets are not available for future spending. Although the Town reports its capital assets net of related debt, the resources needed to repay this debt must be provided from other sources,since the capital assets themselves cannot be used to liquidate these liabilities. A portion of the Town’s net position,$4,433,649 or12.96% represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position,$2,167,715 or 6.33% may be usedto meet the government’s ongoing obligations to citizens and creditors. Current and other assets$ 19,718,941$ 11,826,843$285,801$532,217$ 20,004,742$ 12,359,060 Capital assets 64,987,55964,431,6711,985,3461,687,33866,972,90566,119,009 84,706,50076,258,5142,271,1472,219,55586,977,64778,478,069 Total deferred outflows of resources5,107,4641,001,5925,107,4641,001,592 - - Long-term liabilities outstanding54,072,55541,009,3971,305,2001,454,61955,377,75542,464,016 Other liabilities2,167,7292,277,770114,04687,9592,281,7752,365,729 56,240,28443,287,1671,419,2461,542,57857,659,53044,829,745 Total deferred inflows of resources203,42837,460203,42837,460 - - Net investment in capital assets26,940,64327,620,857680,146513,93027,620,78928,134,787 Restricted 4,433,6494,035,4284,433,6494,035,428 - - Unrestricted1,995,960$ 2,279,194171,755163,0472,167,7152,442,241 $ 33,370,252$ 33,935,479$851,901$676,977$ 34,222,153$ 34,612,456 --The net positionof the Town decreased by $390,303for the fiscalyear endedSeptember 30,2016. Governmental Activities. Governmental activitiesdecreasedthe Town’s net positionby$565,227from the prior year. This was primarily the result ofan increase in the net pension liability of $983,826. Business-typeActivities. From the prior year, net positionfrom business-type activities increasedby $174,924. This increase is primarily due to a $184,873increasein net positionin the Town Storm Drainage fund despite transfers of $62,206 to other funds. Program revenues: Charges for services$1,213,011$1,454,680$466,934$484,874$1,679,945$ 1,939,554 Operating grants and contributions141,071550,49561,106202,177550,495 - Capital grants and contributions1,254,9971,254,997 - - - - General revenues: Ad valorem taxes9,701,0809,364,7059,701,0809,364,705 - - Sales and mixed beverage taxes1,217,6931,104,2981,217,6931,104,298 - - Franchise taxes953,621762,699953,621762,699 - - Occupancy taxes302,374264,708302,374264,708 - - Investment income65,70911,33191414366,62311,474 Miscellaneous revenues382,521100,202382,521100,202 - - 13,977,08014,868,115528,954485,01714,506,03415,353,132 General government346,129125,199346,129125,199 - - PID activities2,122,9012,736,0002,122,9012,736,000 - - Town storm drainage234,287234,339234,287234,339 - - Emergency medical services1,048,639523,4481,048,639523,448 - - Manager's office851,849816,283851,849816,283 - - Human resources169,99674,861169,99674,861 - - Finance421,925299,044421,925299,044 - - Information systems516,447397,002516,447397,002 - - Legal322,768135,495322,768135,495 - - Police2,404,2871,713,1502,404,2871,713,150 - - Court87,77770,01187,77770,011 - - Recreation599,863487,874599,863487,874 - - Facilities management99,528108,06599,528108,065 - - Parks2,052,5211,766,1082,052,5211,766,108 - - Community development640,404436,090640,404436,090 - - Streets1,878,1191,716,5311,878,1191,716,531 - - Water and sewer319,054319,054319,054319,054 - - Interest on long-term debt496,019469,923496,019469,923 - - Trophy Club Park109,325123,445109,325123,445 - - Storm drainage174,499205,331174,499205,331 - - 14,612,51312,428,477283,824328,77614,896,33712,757,253 (635,433)2,439,638245,130156,241(390,303)2,595,879 70,20635,350(70,206)(35,350) - - (565,227)2,474,988174,924120,891(390,303)2,595,879 33,935,47934,059,037676,977556,08634,612,45634,615,123 (2,598,546)(2,598,546) - - - - $33,370,252$ 33,935,479$851,901$676,977$34,222,153$ 34,612,456 --The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, theunassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Town’s governmental funds reported a combined fund balance of $17,783,169. The General Fund is the main operating fund of the Town. At the end of the current fiscal year, the unassignedfund balance of the General Fund was $3,950,290. The fund balance of the General Fund increased by $502,973during the fiscal year. The increase can be attributed to budgeted transfers out to the capital projects fund not occurring during the fiscal yearand lower than anticipated personnel expenditures due to employee turnover. Revenue categories experiencing significant increases/decreases include: Property tax revenue increased from the previous year - $564,360 Sales tax revenue increased from the previous year - $69,717 Franchise tax revenue increased from the previous year - $142,570 Miscellaneous revenue increased from the previous year - $170,322 Charges for service revenue increased from the previous year - $17,380 Investment revenue increased from the previous year - $25,648 Intergovernmental revenue decreased from the previous year - $126,134 Fines and fees revenue decreased from the previous year - $218,251 Licenses and permits decreasedfrom the previous year - $98,792 The Debt Service Fund experienced an increase of $24,632in fund balance. Funds are restricted for the payment of debt service. The Capital Projects Fund experienced an increase in fund balance of $7,070,390, which is due to proceeds fromdebt issued during the year.The Grants Fund experienced an increase of $14,113 in fund balance. The PID No. 1 Fund experienced a decrease of $359,643. Other governmental funds had a total increase in fund balance of $78,053. This increase was primarily due to increased collectionof hotel occupancy taxesand sales taxes. In the General Fund, the Town originally budgeted for a fund balance increase in the current year of 83,491.Budget amendments throughout the year changed the budgeted ending fund balance to an $86,509 decrease. Due primarily to actual revenues being more than budgeted, expenditures being less than budgeted, and transfers out being less thanbudgeted, the actual budget basis fund balance variance from the final budget was an increase of $589,482 for fiscal year 2016. --The Town’s proprietary funds provide the same type of information found in the government-wide statements, but in more detail. The unrestricted net positionof the Trophy Club Park Fund amounted to ($81,947) at year end while the unrestricted net position of the Town Storm Drainage Fund amounted to $253,702. Other factors concerning the finances of these two funds have already been addressed in the discussion of the Town’s business-type activities. Significant variances between budgeted and actual revenues included: ad valorem taxes were ($39,247) underbudget; franchise taxes were ($18,635) under budget; revenues from sales and mixed beverage taxes were $28,102over budget; revenues from charges for services were $25,428 overbudget; and miscellaneous revenue was ($29,557) under budget. Overall, in the general fund, actual revenues exceeded final budgeted amounts by $10,868. Overall expenditures were below the budgeted amount by $305,606in fiscal year 2016. The Police Department came in $104,412under budget primarily due personnel expenditure savings. The Parks Department came in $13,326under budget primarily due to personnel expendituresavings. The Manager’s Office came in $25,967under budget due to services and suppliesexpenditure savings. The Recreation Department had a budget savings of $16,010primarilydue to personnel expenditure savings. The Streets and Department had budget savings of $23,648 andprimarily due to personnel expenditure savings. The Community Development Department had budget savings of $36,218 due to services and supplies expenditure savings. The Information Services Department had budget savings of $32,896 due to capital outlay savings. The Town’s investment in capital assets for its governmental and business-type activities as of September 30, 2016, amounts to $66,972,905(net of accumulated depreciation). The investment in capital assets includes land, buildings, improvements other than buildings, utility system, machinery and equipment, and construction in progress. The total increase in the Town’s investment in capital assets for the current year was 1.3%. Major capital asset events during the current fiscal year included the following: Construction in progress: Lakeview Soccer Fields o Town Hall o Veteran’s Memorial and Parking Lot o HarmonyPark Parking Lot o Harmony Park Masonry Shed o Completion of street reconstruction of Pebble Beach Drive, Timberline Court, and Pin Oak Court and drainage improvementsat Cypress Court and Pebble Beach Drive Illuminated street signs at Trophy Club Drive and State Highway 114 Software upgrades for the school zone flashers Stryker Power Cot for an ambulance Fully equipped police patrol vehicle and administration sedan Digital portable radios for police Improvements to the Town’s Aquatic Facility Bigfoot Speakersfor Recreation Surveillance equipment for police Land$10,446,722$10,446,722$-$-$ 10,446,722$ 10,446,722 Construction in progress2,700,529635,78278,4782,700,529714,260 - Buildings1,207,6791,258,309-1,207,6791,258,309 - Improvements other than buildings35,508,78536,324,17835,508,78536,324,178 - - Machinery and equipment931,029959,97019,89322,303950,922982,273 Vehicles242,601301,412242,601301,412 - - Water system4,433,1684,608,9354,433,1684,608,935 - - Infrastructure9,517,0469,896,3631,965,4531,586,55711,482,49911,482,920 $ 64,987,559$ 64,431,671$1,985,346$1,687,338$ 66,972,905$ 66,119,009 Additionalinformation onthe Town’s capital assets canbe found in Note4 on pagesofthis report. At the end of the current fiscal year, the Town of Trophy Club had total ebt principal outstanding of $46,046,479. Of this amount,$12,375,000comprises bonded debt backed by the full faith andcredit of the Town,$7,961,000representscontractual obligations, and the remaining amount relates to special assessment bonds for the Town’s Public Improvement District. The Town maintains fair ratings frombond rating agencies as follows: Standard Bond Ratings: & Poor’sMoody’s General obligation bonds AA+ Aa3 Contractual obligations AA+ Aa3 The Town’s General obligation, contractual obligations, compensated absence obligations, pension obligations, and OPEB obligationsare as follows: General obligation bonds$12,375,000$8,305,000$-$-$12,375,000$8,305,000 Special assessment bonds$25,710,47926,481,00026,481,000 - - - Contractual obligations7,961,0003,954,0001,275,0001,420,0009,236,0005,374,000 Issuance premium4,916,763115,12630,20034,6194,946,963149,745 Net Pension Liability2,835,2871,851,4612,835,2871,851,461 - - OPEB Liability88,40072,81688,40072,816 - - Compensated absences185,626229,994185,626229,994 - - Totals$54,072,555$41,009,3971,305,200$$1,454,619$55,377,755$42,464,016 Additionalinformation on the Town’s long-term debt can befoundin the Note6 on pagesof this report. The Town continues to experience high residential growth as well ascommercial and retail development.The Town issued 118residential construction permits in FY 2016, a decrease of 36from the previous year.The permits are averaging approximately $500,727. The Town budgeted for 60residential building permits for FY17. Residential development is expected to decrease significantly beginning in FY 2017as the Town approaches substantial build out. In addition to the strong residential growth, the Town is experiencingcommercial development as well. One hoteland one destination restaurant are set to openin FY 17as well as construction anticipated to begin on several new commercial properties in FY17. In fiscal year 2017, General Fund revenues are budgeted to increase 3.3% over FY 2016 estimated revenues while expenditures are budgeted to increase by 12.0%over FY 2016 estimated expenditures.Forfiscal year 2017,Tarrant County andDenton County certified net freezetaxable property values of $1,524,526,898 whichreflected an increase of 10.4% over the previous fiscal year 2016net freeze taxableproperty values of $1,380,460,699.The fiscal year 2017 budget decreased the ad valorem tax rate to $0.473per hundred dollars of assessed value, down from $0.484in fiscal year 2016. This financial report is designed to provide a general overview of the Town’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Town of Trophy Club Assistant Town Manager, 100 Municipal Drive, Trophy Club, Texas, 76262. This information can also be accessed on the Town of Trophy Club’s website at www.trophyclub.org. Current assets: Cash and cash equivalents $ 18,236,776 $ 291,535 $ 18,528,311 $ 517,123 Sales taxes receivable231,353 -231,35376,883 Ad valorem taxes receivable61,273 -61,273- Franchise fees receivable83,169 -83,169- Accounts receivable, net883,449 70,603 954,052- Due from other governments89,853 -89,853- Internal balances78,671 (78,671)- - Prepaid items54,397 2,334 56,731- Inventory- - - 2,538,765 19,718,941 285,801 20,004,742 3,132,771 Noncurrent assets: Unamortized bond insurance- - -10,742 Capital Assets: Land 10,446,722 -10,446,722- Construction in progress 2,700,529 -2,700,529- Buildings 1,993,440 -1,993,440- Improvements other than buildings 55,949,137 -55,949,137- Machinery and equipment 2,065,632 24,112 2,089,744 - Vehicles 1,178,846 -1,178,846- Water System 5,362,005 -5,362,005- Infrastructure 14,332,062 2,039,766 16,371,828- Accumulated depreciation (29,040,814)(78,532) (29,119,346)- Total noncurrent assets 64,987,559 1,985,346 66,972,905 10,742 84,706,500 2,271,147 86,977,647 3,143,513 Deferred charge on refunding 3,581,091 -3,581,091- Pension contributions after measurement date439,528 -439,528- Changes in actuarial assumptions used276,440 -276,440- Difference in projected and actual earnings on pension assets 810,405 -810,405- 5,107,464 -5,107,464- Current liabilities: Accounts payable 1,040,875 111,247 1,152,122 400,000 Accrued liabilities461,261 -461,261- Interest payable416,374 2,799 419,1731,707 Unearned revenue, franchise fees249,219 -249,219- 2,167,729 114,046 2,281,775 401,707 Noncurrent liabilities: Debt due within one year 1,576,895 149,419 1,726,314 98,667 Debt due in more than one year 49,660,373 1,155,781 50,816,154 2,461,127 Net pension liability 2,835,287 -2,835,287- Total noncurrent liabilities 54,072,555 1,305,200 55,377,755 2,559,794 56,240,284 1,419,246 57,659,530 2,961,501 Difference in expected and actual pension experience203,428 -203,428- 203,428 -203,428- Net investment in capital assets 26,940,643 680,146 27,620,789 - Restricted for: PID Activities 3,567,989 -3,567,989- Court39,668 -39,668- Public Safety210,189 -210,189- Debt Service49,171 -49,171- Recreation programs2,269 -2,269- Tourism564,363 -564,363- Unrestricted 1,995,960 171,755 2,167,715182,012 $ 33,370,252 $ 851,901 $ 34,222,153 $ 182,012 Governmental activities: General Government $ 346,129 $15,448 $-$- PID Activities 2,122,901 - - - Emergency medical services 1,048,639 209,064 4,290 - Manager's office851,849 - - - Human resources169,996 - - - Finance421,925 25,276 - - Information Services516,447 - - - Legal322,768 - - - Court87,777 139,029 - - Police 2,404,287 3,786 110,543 - Recreation599,863 214,850 - - Facilities management99,528 - - - Parks 2,052,521 - - - Community Development640,404 605,558 - - Streets 1,878,119 -26,238 Water and sewer319,054 - - - Interest on long-term debt496,019 - - - Town Storm Drainage234,287 - - - 14,612,513 1,213,011 141,071 - Business-type activities: Storm Drainage Utility174,499 420,664 - - Trophy Club Park109,325 46,270 61,106 - Total business-type activities283,824 466,934 61,106 - $ 14,896,337 $ 1,679,945 $ 202,177 $- Economic Development Corporation $ 247,188 $-$-$- TIRZ #1400,000 - -- $ 647,188 $-$-$- General revenues and transfers: Ad valorem taxes Sales and mixed beverage taxes Franchise taxes Occupancy taxes Investment income Miscellaneous revenues Transfers Change in net position Net position - beginning Net position - ending $ (330,681) $-$ (330,681) $- (2,122,901) (2,122,901) (835,285)-(835,285)- (851,849)-(851,849)- (169,996)-(169,996)- (396,649)-(396,649)- (516,447)-(516,447)- (322,768)-(322,768)- 51,252 -51,252- (2,289,958)-(2,289,958)- (385,013)-(385,013)- (99,528)-(99,528)- (2,052,521)-(2,052,521)- (34,846)-(34,846)- (1,851,881)-(1,851,881)- (319,054)-(319,054)- (496,019)-(496,019)- (234,287)-(234,287)- (13,258,431)-(13,258,431)- - 246,165 246,165 - - (1,949)(1,949)- - 244,216 244,216 - (13,258,431)244,216 (13,014,215)- $-$-$-$ (247,188) - --(400,000) $-$-$-(647,188) 9,701,080 -9,701,08010,492 1,217,693 -1,217,693400,621 953,621 -953,621- 302,374 -302,374- 65,709 914 66,6231,289 382,521 -382,521- 70,206 (70,206)- - 12,693,204 (69,292) 12,623,912 412,402 (565,227)174,924 (390,303)(234,786) 33,935,479 676,977 34,612,456 416,798 $ 33,370,252 $851,901 $ 34,222,153 $ 182,012 Cash and cash equivalents $ 4,105,471 $ 150,531 Ad Valorem taxes receivable 47,696 13,577 Sales taxes receivable 155,039 - Franchise taxes receivable 83,169 - Accounts, net 834,489 - Due from other governments 89,853 - Due from other Funds 120,826 - Prepaids 54,397 - $ 5,490,940 $ 164,108 Accounts Payable $ 421,094 $ - Accrued liabilities 453,478 - Due to other funds 1,722 - Unearned revenue 249,219 - Accrued Interest - 7,782 1,125,513 7,782 Unavailable revenue-ad valorem taxes 46,250 13,152 Unavailable revenue-court fines 1,790 - Unavailable revenue-emergency medical services 112,620 - Unavailable revenue-property liens 10,605 - 171,265 13,152 Nonspendable for: Prepaids 54,397 - Restricted for: PID Activities Debt Service - 143,174 Capital projects - - Tourism - - Public Safety - - Court - - Committed for: Police 189,475 - Recreation programs - - Unassigned 3,950,290 - 4,194,162 143,174 $ 5,490,940 $ 164,108 $ 9,350,184 $ 7,786 $ 3,869,425 $ 753,379 $ 18,236,776 - - - - 61,273 - - - 76,313 231,352 - - - - 83,169 11,531 - - 37,429 883,449 - - - - 89,853 - - - 1,722 122,548 - - - - 54,397 $ 9,361,715 $ 7,786 $ 3,869,425 $ 868,843 $ 19,762,817 $ 596,779 $ -$-$ 23,002 $ 1,040,875 - --- 453,478 - -- 42,155 43,877 - -- 249,219 - --- 7,782 596,779 - - 65,157 1,795,231 - - - - 59,402 - - - - 1,790 - - - - 112,620 - - - - 10,605 - - - - 184,417 - - - - 54,397 3,869,425 3,869,425 - - - - 143,174 8,764,936 - - - 8,764,936 - - - 564,363 564,363 - 7,786 - 202,403 210,189 - - - 39,668 39,668 - - - 189,475 - - - 2,269 2,269 - - - (5,017) 3,945,273 8,764,936 7,786 3,869,425 803,686 17,783,169 $ 9,361,715 $ 7,786 $ 3,869,425 $ 868,843 $ 19,762,817 Total fund balances of governmental funds$17,783,169 Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds balance sheet. 64,987,559 Long term liabilities are not due and payable in the current period and, therefore are not reported in the governmental fund financial statements. This amount is the net effect of: General Obligation Bonds (12,375,000) Special Assessment Bonds (25,710,479) Contractual Obligations (7,961,000) Issuance premiums (4,916,763) Net Pension liability (2,835,287) OPEB liability (88,400) Compensated absences (185,626)(54,072,555) Deferred outflows (inflows) of resources not reported in the governmental funds: Deferred charge on refunding3,581,091 Pension contributions after measurement date439,528 Changes in actuarial assumptions used276,440 Difference in projected and actual earnings on pension assets810,405 Difference in expected and actual pension experience(203,428) 4,904,036 Interest payable on long-term debt does not require the use of current financial resources; therefore, interest payable is not reported as liability in the governmental funds balance sheet. (416,374) Revenues earned but not available within sixty days of year-end are not recognized as revenue in the fund financial statements. 184,417 Net position of governmental activities $33,370,252 $0 Ad valorem taxes $ 5,769,797 $ 1,697,654 $ - Sales and mixed beverage taxes 821,227 - - Franchise taxes 953,622 - - Occupancy taxes - - - Licenses and permits 598,586 - - Intergovernmental - - 26,237 Charges for service 300,337 - - Fines and Fees 356,307 - - Investment income 33,477 3,032 28,335 Miscellaneous 259,315 - - Grant revenue - - - 9,092,668 1,700,686 54,572 Current: General Government - - 13,602 Emergency medical services 907,161 - - Manager's office 826,562 - - Human resources 159,216 - - Finance 400,642 - - Information Services 469,364 - - Legal 307,245 - - Court 75,421 - - Police 2,168,115 - - Recreation 569,445 - - Facilities management 99,528 - - Parks 1,308,277 - - PID Activities - - - Community Development 576,508 - - Streets 356,472 - - Debt service: Bond Issuance Cost - - 198,650 Interest and Fiscal Charges - 404,555 - Principal retirement-1,378,000 - Capital outlay: General Government - - 1,882,254 Emergency medical services 16,086 - - Information Services 9,002 - - Police 55,344 - - Parks 32,191 - 308,084 Recreation 89,074 - - Streets - - 820,526 8,425,653 1,782,555 3,223,116 667,015 (81,869) (3,168,544) Issuance of long-term debt - - 9,455,000 Issue premium - - 537,946 Debt refunding - payment ot escrow agent - - - Transfers in 111,702 106,501 265,283 Transfers out (275,744) - (19,295) (164,042) 106,501 10,238,934 502,973 24,632 7,070,390 3,691,189 118,542 1,694,546 $ 4,194,162 $ 143,174 $ 8,764,936 $ -2,243,309 $ -$ 9,710,760 -- 396,467 1,217,694 -- - 953,622 -- 302,374 302,374 -- - 598,586 -- - 26,237 -- 10,398 310,735 -- 6,102 362,409 -- 864 65,708 - 144,769 3,334 407,418 7,942 - - 7,942 7,942 2,388,078 719,539 13,963,485 - - 72,961 86,563 4,290 - - 911,451 - - - 826,562 - - - 159,216 - - - 400,642 - - - 469,364 - - - 307,245 - - 6,856 82,277 - - 25,221 2,193,336 - - 14,343 583,788 - - - 99,528 - - - 1,308,277 - 81,793 - 81,793 - - - 576,508 - - 210,455 566,927 - - 1,142,136 -1,340,786 -1,651,139-2,055,694 - 775,974-2,153,974 - - - 44,871 1,927,125 - - - 16,086 - - - 9,002 - - 102,869 158,213 - - - 340,275 - - - 89,074 - - 35,208 855,734 4,290 3,651,042 512,784 17,599,440 3,652 (1,262,964) 206,755 (3,635,955) -26,154,979-35,609,979 -4,482,842-5,020,788 -(29,734,500)-(29,734,500) 10,461 - - 493,947 - - (128,702) (423,741) 10,461 903,321 (128,702) 10,966,473 14,113 (359,643) 78,053 7,330,518 (6,327) 4,229,068 725,633 10,452,651 $ 7,786 $ 3,869,425 $ 803,686 $ 17,783,169 Net change in fund balances - total governmental funds $ 7,330,518 Amounts reported for governmental activities in the statement of net position are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays and developer infrastructure contributions exceeded depreciation expense in the current period. Capital outlays 3,395,509 Asset retirements/disposals (25,794) Depreciation expense (2,813,826)555,889 The issuance of long term debt provides current financial resources to governmental funds, while the repayment of principal consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. 2016 General obligation bond proceeds (5,245,000) 2016 Certificates of obligation proceeds (4,210,000) 2016 Special assessment proceeds (26,154,979) Payment to escow agent 29,734,500 Premium of debt issuances (5,020,788) Debt principal paid 2,153,974(8,742,293) Governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Amortization of premium 219,152 Amortization of deferred loss on refunding (189,413)29,739 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Ad valorem taxes (9,680) Emergency medical services 36,163 Property liens 7,615 Court fines 1,08435,181 Certain expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences 44,367 Pension costs, net (434,008) Accrued interest 630,964 OPEB (15,584)225,739 $ (565,227) Change in net position of governmental activities Current assets: Cash and cash equivalents $100 $ 291,435 $ 291,535 Accounts, net-70,60370,603 Prepaids2,334 -2,334 2,434 362,038 364,472 Noncurrent assets: Infrastructure-2,039,766 2,039,766 Machinery and Equipment24,112 -24,112 Accumulated Depreciation(4,220)(74,312)(78,532) Total noncurrent assets19,892 1,965,454 1,985,346 22,326 2,327,492 2,349,818 Current liabilities: Accounts Payable7,487 103,760 111,247 Due to other funds76,894 1,777 78,671 Accrued Interest-2,7992,799 84,381 108,336 192,717 Noncurrent liabilities: Debt due within one year-149,419149,419 Debt due in more than one year-1,155,781 1,155,781 Total noncurrent liabilities-1,305,200 1,305,200 84,381 1,413,536 1,497,917 Net investment in capital assets 19,892 660,254 680,146 Unrestricted (81,947)253,702 171,755 $ (62,055) $ 913,956 $ 851,901 Charges for service $46,270 $ 420,664 $ 466,934 Grant Revenue61,106 -61,106 107,376 420,664 528,040 Salaries and benefits48,681 29,436 78,117 Supplies and materials21,996 36,685 58,681 Repairs and maintenance5,794 8,459 14,253 Utilities9,065 -9,065 Other operating expenses21,378 30,919 52,297 Depreciation2,411 43,460 45,871 109,325 148,959 258,284 Operating income (loss)(1,949)271,705 269,756 Interest and fiscal charges-(25,540)(25,540) Investment income-914914 Total nonoperating revenues (expenses)-(24,626)(24,626) Income (loss) before transfers(1,949)247,079 245,130 Transfers out(8,000)(62,206)(70,206) Change in net position (9,949)184,873 174,924 (52,106)729,083 676,977 $ (62,055) $ 913,956 $ 851,901 Cash received from customers $ 57,996 $ 665,895 $ 723,891 Grant receipts 61,106 -61,106 Payments to employees (48,681) (29,436)(78,117) Payments to suppliers (62,421) (44,279) (106,700) 8,000 592,180 600,180 Transfers to other funds (8,000) (62,206) (70,206) (8,000) (62,206) (70,206) Acquisition of capital assets-(343,880) (343,880) Interest and fiscal charges paid on debt-(29,045) (29,045) Principal paid on debt-(145,000) (145,000) -(517,925) (517,925) Net increase (decrease) in cash and cash equivalents-12,049 12,049 Balances - beginning of year 100 279,386 279,486 Balances - end of the year $ 100 $ 291,435 $ 291,535 Operating Income (loss) $ (1,949) $ 271,705 $ 269,756 Adjustments to reconcile operating income to net cash provided: Depreciation 2,411 43,460 45,871 Changes in assets and liabilities: Increase (Decrease) in: Accounts Receivable 1,026 (37,135) (36,109) Prepaid 1,509 -1,509 Deferred Outflows of Resources Increase (Decrease) in: Accounts Payable and accrued liabilities (5,697) 31,784 26,087 Repayments of amounts from other funds 10,700 282,366 293,066 Net pension liability - - - $ 8,000 $ 592,180 $ 600,180 Current assets: Cash and cash equivalents $ 496,358 $20,765 $ 517,123 Sales taxes receivable76,883 -76,883 Inventory 2,538,765 -2,538,765 Total current assets 3,112,006 20,765 3,132,771 Noncurrent assets: Unamortized bond insurance10,742 -10,742 Total noncurrent assets10,742 -10,742 Total assets 3,122,748 20,765 3,143,513 Current liabilities: Accounts payable-400,000400,000 Interest payable1,707 -1,707 Total current liabilities1,707 400,000 401,707 Noncurrent liabilities: Debt due within one year98,667 -98,667 Debt due in more than one year 2,461,127 -2,461,127 Total noncurrent liabilities 2,559,794 -2,559,794 Total liabilities 2,561,501 400,000 2,961,501 Unrestricted561,247 (379,235)182,012 Total net position $ 561,247 $ (379,235) $ 182,012 - Economic Development Corporation 4B Economic Development Corp. $ 247,188 $-$ (247,188) $-$ (247,188) Total Economic Development 247,188 -(247,188)- Corporation Tax Increment Investment Zone #1 400,000 - -(400,000)(400,000) Total Tax Increment Reinvestment 400,000 - -(400,000)(400,000) Zone #1 $ 647,188 $-$ (247,188) $ (400,000) $ (647,188) General revenues: Ad valorem -10,49210,492 Sales and mixed beverage taxes 400,621 -400,621 Investment income 1,289 -1,289 Total general revenues 401,910 10,492 412,402 Change in net position 154,722 (389,508)(234,786) Net position - beginning 406,525 10,273 416,798 Net position - ending $ 561,247 $ (379,235) $ 182,012 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Town of Trophy Club(the “Town”) is a “home rule town” incorporated in 1985. The Town operates under a Council-Manager form of government and provides the following services as authorized by its charter: council, public safety (police and emergency medical services), parks, public works (public improvements, streets, planning and zoning), and general administrative services. The accounting and reporting policies of the Town relating to the funds included in the accompanying basic financial statements conform to accounting principles generally accepted in the United States of America applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB). The more significant accounting policies of the Town are described below. The Town of Trophy Club is a municipal corporation governed by an elected mayor and a six- member council. The accompanying financial statements present the government and its component units, entities for which the government is considered financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations. Discretely presented component units are reported in separate columns in the government-wide financial statements to emphasize that they are legally separate from the government. As required by accounting principles generally accepted in the United States of America, these financial statements include the primary government and organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government 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 rates or charges, or issue bonded debt without approval by the primary government. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The following entities were found to be discretely presented component units of the Town and are included in the financial statements: The 4B Economic Development Corporation (4B) serves all citizens of the Town and is governed by a board appointed by the Town’s elected council. The Town can impose its will on the 4B and affect the day-to-day operations of the 4B by removing appointed board members at will. The scope of public service of the 4B benefits the Town and its citizens and is operatedwithin the geographic boundaries of the Town. The Tax Increment Investment Zone #1 (TIRZ #1) serves all citizens of the Town andis governed by a board appointed by the Town’s elected council. The Town can impose its will on the TIRZ #1 and affect the day-to-day operations of the TIRZ #1 by removing appointed board members at will. The scope of public service of the TIRZ #1 benefits the Town andits citizens and is operated within the geographic boundaries of the Town. Separate financial statements for the individual component units are not prepared. The Crime Control and Prevention District (CCPD) was formed under Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act. The CCPD is organized exclusively to act on behalf of the Town to finance crime control within the Town. The CCPD is governed by a seven member board appointed by the Town Council. The annual budget and issuance of debt must be approved by the Town Council. Since the CCPD provides services entirely to the Town, it has been reported as a blended component unit. The government-wide financial statements (the statement of net positionand the statement of activities) report information on all of the non-fiduciary activities of the Town. As a general rule, the effect of interfund activity has been removed from these statements. However, interfund services provided and used are not eliminated in the consolidation process. 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. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given program areoffset 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. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Town segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Separate statements are presented for governmental, proprietary and fiduciary activities. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.A separate financial statement is provided for the agency fund even though it is excluded from the government-wide statements. 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 Town has presented the following : The General Fund is the main operating fund of the Town. 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 improvementcosts that are not paid through other funds are paid from the General Fund. The Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest and related costs on long-term debtpaid primarily from taxes levied by the Town. The fund balance of the Debt Service Fund is restricted to signify the amounts that are restricted exclusively for debt service expenditures. The Capital Projects Fund isused to account for funds received and expended for acquisition and construction of infrastructure and other capital assets. This fund is used to account for grant monies received by and expended by the Town. This fund accounts forbond proceeds, assessmentsand related debt associated with the issuance of bonds issued bythe Town as an agent for thePublic Improvement District. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS In addition, the Town reports the following : This fund is used to account for local hotel and motel occupancy tax receipts, as well as expenses (events). Accounts for sales taxes specifically restricted for street improvements. th Accounts for contributions restrictedfor the Town’s 25anniversary celebration. Accounts for court feesspecifically restricted for court technology expenses. Accounts for court feesspecifically restricted for court security expenses. Accounts forsales taxes specifically restricted for crime control and prevention. Accounts forrevenues and expenditures associated with recreational programs. Proprietary Funds are accounted for using an economic resources measurement focus. The accounting objectives are a determination of net income, financial position, and changes in cash flows. All assets and liabilities associated with a proprietary fund's activities are included on its statement of net position. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Trophy Club Parkenterprise fund and the Town Storm Drainageenterprise fund are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and service, administrative expenses, and repairs and maintenance. All revenues and expenses not meeting the above definitions are reported as non-operating revenues and expenses.When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources as they are needed. The Town has presented the following major Proprietaryfunds: This fund is utilized to accountfor funds received and expended for the maintenance of park land. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Accounts for the storm drainageutility fee designated for the maintenance of the Town's storm drainage system. 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 governmental, government-wide, and proprietary fund financial statements follow the accounting set forth by the Government Accounting Standards Board. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. The fiduciary fund financial statements are reported using the accrual basis of accounting, but have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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 Town 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 property taxes, franchise taxes, licenses, charges for service, interest income and intergovernmental revenues. Sales taxes collected and held by the state at year end on behalf of the government are also recognized as revenue. All other governmental fund revenues are recognized when received. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Town’s cash and cash equivalents includes cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Because the Town, at its option, can withdraw funds within a twenty-four hour period from TexPool, these investments are considered to be cash equivalents. State statutes authorize the Town to invest 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 thisstate 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 terminationdate, secured by obligations described by (1), pledged with third party selected or approved by the Town, and placed through a primary government securities dealer. The Town’s investments are governed by the same state statutes. 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. The Town has applied Governmental Accounting Standards Board (“GASB”) Statement No. 72, Fair Value Measurement and Application. GASB Statement No. 72 provides guidance for determining a fair value measurement for reporting purposes and applying fair value to certain investments and disclosures related to all fair value measurements. Prepaid items represent costs such as postage deferred to subsequent periods. Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the governmental and business-type activities columns in the government-wide financial statementsas well as in the proprietary fund 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 in the amount of $5,139was capitalized during the current fiscal year. Assets capitalized, not including infrastructure assets, 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: TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Buildings30 Years Improvements other than buildings10-30 Years Improvements other than buildings (streets)30 Years Machinery and equipment7-15 Years Vehicles5-10Years Water system25 Years Infrastructure (storm drainage system)40 Years It is the Town’s policy to permit employees to accumulate earned but unused vacation pay benefits. No liability is reported for unpaid accumulated sick leave. All vacation pay is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they are expected to be liquidated with expendable available financial resources, for example, as a result of employee resignations and retirements. In the government-wide financial statementsand fund financial statements for proprietary funds, long-term debt and other long-term obligations are reported as liabilities in the applicable governmentalactivities or business-type activities statement of net position. Bond premiums and discounts, as well as any deferred loss on the refunding of bonds are amortized over the life of the bonds using the effective interestmethod. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums and discounts received on debt issuances are reported as other financing sources or uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. The Town has adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Government Fund Type Definitions.The objective of the statement is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing government fund type definitions. The statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe the constraints imposed upon the use of the resources reported in governmental funds. Fund balance classifications under GASB 54 are Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable fund balance represents fund balance that is (a) not in a spendable form such as prepaid items or (b) legally or contractually required to be maintained intactsuch as an endowment. Restricted fund balance consists of amounts that can be spent only on the specific purposes stipulated by law or by the external providers of those resources. Committed fund balances are self-imposed limitations set in place prior to the end of the fiscal period. These amounts can be used only for the specific purposes determined and approved by TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS formal action of the Town Council, which is the highest level of decision-making authority for the Town. The same level of formal action is required to remove the constraint. Assigned fund balance consists of amounts that are subject to a purpose constraint that represents an intended use established by the Town Council or by their designated body or the Assistant Town Manager/CFO.The intention of use must be provided, in writing, by the Town Council or their designated body to the Assistant Town Manager/CFO, or by the Assistant Town Manager/CFO to the Town Council or theirdesignated body. Unassigned fund balance represents the residual classification of fund balance and includes all spendable amounts not contained within the other classifications. When multiple categories of fund balance are available for expenditure,the Town will start with the most restricted category and spend those funds first before moving down to the next category with available funds. Additionally, the implementation of GASB No. 54 required the Town to evaluate the classification of Special Revenue Funds. In accordance with GASB No. 54 Special Revenue Funds are used only to account for specific revenue sources that are externally restricted or committed by the government’s highest level of decision making authority for specific purposes other than debt service or capital projects. In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferredoutflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The Town has fouritems that qualifyfor reporting in this category. Theyinclude the deferred charge on refunding reported in the government-wide statement of net position, pension plan contributions st made after December 31, 2015reported in the government-wide statement of net position, changes in actuarial assumptions usedreported in the government-wide statement of net position,the difference inprojected and actual earnings on pension assetsreported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.Pension st plan contributions made after the pension plan’s measurement period of December 31, 2015are recorded as a deferred outflow. Investment experience is the difference in projected and actual earnings on pension plan investments and is reported as a deferred outflow. The difference in liabilities from one year to another due to the changeactuarial assumptions used is reported as a deferred outflow. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statementelement, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Town has twotypes of this item, one which arises only under a modified accrual basis of accountingthat qualifies for reportingin this category and one that arises under a full accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only inthe governmental funds balance sheet. The governmental funds report unavailable revenues from fivesources: property taxes, court fines, emergency medical services,franchise taxesandproperty liens. These amounts are deferred and recognized asan inflowof resources in the period that the amounts become available.Deferred inflows are recognized on the statement of net position in relation to pension plan actuarial gains or losses associated with the difference in expected and actual experience. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied. Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. In the government-wide financial statements, net positionrepresents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net investmentin capital assets 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 isreported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the Town or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. For purposes of measuring the net pension liability, deferred outflowsof resources and deferred inflows of resources related to pensions, and pension expense, information about the Fiduciary Net Position of the Texas Municipal Retirement System (TMRS) and additions to/deductions from TMRS’s Fiduciary Net Position have been determined on the same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. AtSeptember 30, 2016,the carrying amount of the Town's deposits (cash, certificates of deposit, and interest-bearingsavings accounts included in temporary investments) was $6,807,184and the respective bank balances were $6,867,817. The Town’s cash on hand totaled $1,701. The Town's cash deposits atSeptember 30, 2016and during the year ended September 30, 2016 wereentirely covered by FDIC insurance or by pledged collateral held by the Town's agent bank in the Town's name. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Public Funds Investment Act (Government CodeChapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the Town 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, and (8) investmentstaff quality and capabilities. Statutes and the Town’s investment policy authorizethe Town to invest in the following investments assummarized in thetable below: Maximum Maximum Authorized MaximumPercentageInvestment Investment TypeMaturityof PortfolioIn One Issuer U.S. Treasury Obligations2 years85%NA U.S. Agencies Securities2 years85%NA State of Texas Securities2 years85%NA Certificates of Deposits2 years85%NA Municipal Securities2 years85%NA Money Market 2 years50%NA Mutual Funds2 years50%NA Investment pools2 years100%NA The Act also requires the Town to have independent auditors perform test procedures related to investment practices as provided by the Act. The Town is in substantial compliance with the requirements of the Act and with local policies. Cash and investments as ofSeptember 30, 2016are classified in the accompanying financial statements as follows: TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Statement of Net Position Primary Government: Cash and cash equivalents$14,658,886 Fiduciary Fund: Cash and cash equivalents3,869,425 Component Unit: Cash and cash equivalents517,123 Total cash and cash equivalents$19,045,434 Cash on hand$1,701 Deposits with financial institutions6,807,184 Investments12,236,549 Total cash and investments$19,045,434 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 Town manages its exposure to interest rate risk is by investing mainly in investment pools which purchase a combination of shorter term investments withan average maturity of less than 60 days, thus reducing the interest rate risk. TheTown monitors the interest rate risk inherent in its portfolio by measuring the weighted average maturity of its portfolio. The Town has no specific limitations with respect to this metric. As ofSeptember 30, 2016, the Town had the following investments: Weighted Average InvestmentsAmountMaturity Lone Star$ 48,740 54 days LOGIC1,159,046 45 days Texas CLASS10,061,866 55 days TexPool966,897 45 days Certificates of Deposit2,212,191 311days Total Investments$ 14,448,740 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Weighted Average InvestmentsAmountMaturity $ Lone Star48,740 54 days LOGIC1,159,046 45 days Texas CLASS10,061,866 55 days TexPool966,897 45 days Certificates of Deposit2,212,191 311 days $ Total Investments14,448,740 As ofSeptember 30, 2016, the Town did not invest in any securities which are highly sensitive to interest rate fluctuations. Weighted Average InvestmentsAmountMaturity $ Lone Star48,740 54 days LOGIC1,159,046 45 days Texas CLASS10,061,866 55 days TexPool966,897 45 days Certificates of Deposit2,212,191 311 days $ Total Investments14,448,740 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 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 Town’s investment policy, or debt agreements, and the actual rating asof year-end for each investment type. Local Government Minimum Legal Investment PoolRatingRating as of Year End Lone Star AAAmAAAm LOGIC AAAmAAAm TexPoolAAAmAAAm Texas CLASSAAAmAAAm The investment policy of the Town contains no limitations on the amount that can be invested in any one issuer. As ofSeptember 30, 2016, other than external investment pools, the Town did not have 5% or more of its investment with one issuer. 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 Town’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The Public Funds Investment Act requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least the bank balance less FDIC insurance at all times. As of September 30, 2016,the Town deposits with financial institutions in excess of federal depository insurance limits were fully collateralized. The Town is a voluntary participant in TexPool, LOGIC, Lone Star, and Texas CLASSinvestment pools. The Texas Local Government Investment Pools(TexPool) have been organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. These two acts provide for the creation of public funds investment pools and permit eligible governmental entities to jointly invest their funds in authorized investments. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company, which is authorized to operate the TexPool Portfolios. Pursuant to the TexPool Participation Agreement, administrative and investment services to the TexPool Portfolios are provided by Federated Investors, Inc., under an agreement with the Comptroller, acting on behalf of the Trust Company. The TexPool Portfolios are comprised of two investment alternatives: TexPool and TexPool Prime. This Information Statement relates only to TexPool. TexPool may invest in obligations of the United States Government or its agencies and instrumentalities, and repurchase agreements. The Comptroller maintains oversight of the services provided to the TexPool Portfolios by Federated. In addition, the TexPool Advisory Board advises on the Investment Policies for the TexPool Portfolios and approves any fee increases. As required by the Public Funds Investment Act, the Advisory Board is composed equally of participants in the TexPool Portfolios and other persons who do not have a business relationship with the TexPool Portfolios who are qualified to advise the TexPool Portfolios. Local Government Investment Cooperative (LOGIC)was organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and operates under the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. The Public Funds Investment Act allows eligible local governments, state agencies, and nonprofit corporations of the State of Texas to jointly invest their funds in permitted investments. LOGIC’s governing body is a five-member Board of Directorscomprised of employees, officers or elected officials of participant Government Entities or individuals who do not have a business relationship with the Cooperative and are qualified to advise it. A maximum of two advisory board members represent the Co-Administrators of the Cooperative. The Lone Star Investment Pool is a public funds investment pool created pursuant to the Interlocal Cooperation Act, Texas Government Code, Chapter 791, and the Public Funds Investment Act, Texas Government Code, Chapter 2256. The objective of the Pool is to maintain the safety of principal, while providing participating government entities with the highest possible rate of return for invested funds. Participants in the Pool own pro rata interests in the underlying assets of the fund in which they participate. A Participant’s sole source of payment from its investment in the Pool is the market value of such assets; although the Pool seeks to preserve the value of a Participant’s investment, it is possible to lose money by investing in the Pool. Texas CLASS is a local government investment pool emphasizing safety, liquidity, convenience and competitive yield. Since 1996, Texas CLASS has providedTexas public entities a safe and competitive investment alternative. Texas CLASS invests only in securities allowed by the Texas Public Funds Investment Act. The pool is governed by a board of trustees, elected annually by its participants. Texas CLASS israted ‘AAAm’ by Standard and Poor’s Ratings Services.The ‘AAAm’ principal stability fund rating is the highest assigned to principal stability government investment pools and is a direct reflection of Texas CLASS’s outstanding credit quality and management. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Year-end receivable balances for the government’s individual major funds,nonmajor governmental funds in the aggregate,individual business-type activities, and individual component units, including the applicable allowances for uncollectible accounts, are as follows: Nonmajor Total Governmental Funds Capital Governmental Governmental Debt ServiceProjects FundFundsActivities General Receivables Property taxes$47,696$13,577$-$-$61,273 Franchise taxes83,16983,169 - - - Sales taxes155,03976,313231,352 - - Hotel occupancy taxes37,42937,429 - - - Accounts1,135,46111,5311,146,992 - - Gross receivables1,421,36513,57711,531113,7421,560,215 Less: allowance(300,972)(300,972) - - - Net total receivables$1,120,393$13,577$11,531$113,742$1,259,243 The September 30, 2016Due from Other Governments of governmental activities balance is comprised of $1,665due from the PID administrator for purchases made by the Town and $88,188 due from Trophy Club Municipal Utility District No. 1 for permitting services rendered and Fire payroll reimbursements. Business-Type Activities Storm Drainage Trophy Club Total Business- UtilityParkType Activities Receivables Accounts$70,603$-$70,603 Gross receivables70,60370,603 - Less: allowance- - - Net total receivables$70,603$-$70,603 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Component Units Economic Tax Increment Development Reinvestment Total Corporation Zone #1 Component (EDC 4B)(TIRZ #1)Units Receivables Sales taxes$76,883$-$76,883 Gross receivables76,88376,883 - Less: allowance - - - Net total receivables$76,883$-$76,883 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Capital asset activity for theyear endedSeptember 30,2016, was asfollows: Beginning Retirements/Ending BalanceAdditionsTransfersBalance Governmental Activities: Capital assets not depreciated: Land$10,446,722$-$-$10,446,722 Construction in progress635,7823,059,239(994,492)2,700,529 Total capital assets not depreciated11,082,5043,059,239(994,492)13,147,251 Capital assets being depreciated: Buildings 1,993,440- 1,993,440 - Improvements other than buildings54,865,73188,914994,49255,949,137 Machinery and equipment2,012,512178,362(125,242)2,065,632 Vehicles1,154,66668,993(44,814)1,178,845 Water system5,362,005- 5,362,005 - Infrastructure14,332,062- 14,332,062 - Total capital assets being depreciated79,720,416336,269824,43680,881,121 Less accumulated depreciation for: Buildings (735,131)(50,630)- (785,761) Improvements other than buildings(18,541,553)(1,898,799)- (20,440,352) Machinery and equipment(1,052,542)(181,508)99,447(1,134,603) Vehicles(853,254)(127,804)44,814(936,244) Water system(753,070)(175,767)- (928,837) Infrastructure(4,435,699)(379,317)- (4,815,016) Total accumulated depreciation(26,371,249)(2,813,825)144,261(29,040,813) Total capital assets being depreciated, net53,349,167(2,477,556)968,69751,840,308 Governmental activities capital assets, net$64,431,671$581,683$(25,795)$64,987,559 Depreciation expense was charged as direct expense to programs of the primary government as follows: $ 41,123 General government 45,377 Emergency medical services 32,868 Information systems 127,579 Police 690,560 Parks and recreation 29,291 Community development 1,527,973 Streets and drainage 319,054 Water and sewer Total depreciation expense$2,813,825 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Beginning Retirements/Ending BalanceAdditionsTransfersBalance Business-Type Activities: Capital assets not depreciated: Construction in progress$78,478$180,033$(258,511)$- Total capital assets not depreciated78,478180,033(258,511) - Capital assets being depreciated: Machinery and equipment24,112- 24,112 - Infrastructure1,617,408163,847258,5112,039,766 Total capital assets being depreciated1,641,520163,847258,5112,063,878 Less accumulated depreciation for: Machinery and equipment(1,808)(2,411)- (4,219) Infrastructure(30,852)(43,461)- (74,313) Total accumulated depreciation(32,660)(45,872)- (78,532) Total capital assets being depreciated, net1,608,860117,975258,5111,985,346 Business-type activities capital assets, net$1,687,338$298,008$-$1,985,346 A summary of interfund receivables and payables balances at September 30, 2016is as follows: Receivable FundPayable FundAmountPurpose General FundTrophy Club Park Fund76,894Flooding at park has created negative net position General FundStorm Drainage Fund1,777Reimbursable expenditures moved to General Fund General FundNonmajor Governmental Funds42,155Reimbursable expenditures moved to General Fund Nonmajor Governmental General Fund1,722Reimbursable expenditures moved to Street Maintenance Funds Total$122,548 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Transfers between funds during the year are as follows: Transfer InTransfer OutAmountPurpose Debt Service Debt Service Fund Storm Drainage Fund$62,206 Debt Service FundNon-major Governmental Funds25,000Debt Service Debt Service FundCapital Projects Fund19,295Debt Issuance Grants FundGeneral Fund10,461Clear Prior Year Balances Capital Projects FundGeneral Fund265,283Capital Projects Funded by Operations Administrative Support General FundTrophy Club Park Fund8,000 Administrative/Operational Support General FundNon-major Governmental Funds103,702 Total$493,947 The Town periodically issues generalobligation bonds and contractual obligations to provide funds for general government purposes. The Town also periodically utilizes notes and capital leases to provide financing for general government purposes. AtSeptember 30, 2016, the Town’s long-term debt consisted of the following: Governmental Activities: Year InterestofFinalOriginalBalance DescriptionRateIssueMaturityAmount9/30/2016 General Obligation Bonds: Improvements4.00-5.00%200720183,260,000$$320,000 Improvements3.00-4.13%201020305,000,0003,970,000 Refunding2.00-4.00%201020222,790,0001,160,000 Refunding2.18%%201520252,030,0001,680,000 Improvements2.00-3.00%201620365,245,0005,245,000 $12,375,000 Contractual Obligations: Combination Tax and Revenue-Series 20043.50-4.75%20042024$650,000$266,000 Certificates of Obligation Series 20132.50-3.25%201320281,300,0001,160,000 Certificates of Obligation Series 20142.00-3.75%201420342,500,0002,325,000 Certificates of Obligation Series 20162.00-4.00%201620364,210,0004,210,000 Special Assessment Revenue Refunding Bonds Series 20152.00-3.25%2015203326,154,97925,710,479 $33,671,479 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Business-type Activities: Year InterestofFinalOriginalBalance DescriptionRateIssueMaturityAmount9/30/2016 Contractual Obligations: Certificates of Obligation Series 20132.50-3.00%201320241,700,000$$1,275,000 $1,275,000 Component Units: Year InterestofFinalOriginalBalance DescriptionRateIssueMaturityAmount9/30/2016 Contractual Obligations: Certificates of Obligation Series 20151.00-4.75%201520352,690,000$$2,585,000 $2,585,000 In May, 2016 the Town issued $5,245,000 in General Obligation Bonds for the purpose of constructing a new Town Hall and $4,210,000 in Certificates of Obligation, of which $2,260,000 isfor the purpose of partially funding a the policeportion of a new Town Hall (reimbursed by the Crime Control and Prevention District) and $1,950,000 for street reconstruction projects. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The following isa summary of long-term debt transactions of the Town for the year ended September 30, 2016: BeginningEndingDue Within BalanceAdditionsReductionsBalanceOne Year Governmental Activities: General Obligation Bonds $ 8,305,000 $5,245,000 $ (1,175,000) $ 12,375,000 $ 925,000 Contractual Obligations 3,954,000 4,210,000(203,000) 7,961,000 338,000 Special Assessment Bond 26,481,000 26,154,979(26,925,500) 25,710,479 237,004 Issuance Premium 115,126 5,020,788(219,151) 4,916,763 39,459 Net Pension Liability 1,851,461 983,826- 2,835,287 - OPEB Liability 72,816 15,584- 88,400- Compensated Absences 229,994 170,678(215,046)185,626 37,432 Total Governmental Activities Long-term Liabilities $41,009,397 $ 41,800,855 $(28,737,697) $ 54,072,555 $ 1,576,895 BeginningEndingDue Within BalanceAdditionsReductionsBalanceOne Year Business-type Activities: Contractual Obligations $ 1,420,000 $-$(145,000) $ 1,275,000 $ 145,000 Issuance Premium 34,619 - (4,419) 30,200 4,419 Total Business-type Activities Long-term Liabilities $1,454,619$-$(149,419)$1,305,200$149,419 BeginningEndingDue Within BalanceAdditionsReductionsBalanceOne Year Component Units: Contractual Obligations $ 2,690,000 $-$(105,000) $ 2,585,000 $ 100,000 Issuance Discount (26,539)- 1,333 (25,206) (1,333) Total Component Unit Long-term Liabilities$2,663,461$-$(103,667)$2,559,794$98,667 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The annual requirements to amortize long-term debtoutstanding of governmental activities as of September 30, 2016, are as follows: 2017925,000422,8641,347,864 2018810,000351,9331,161,933 2019835,000326,3111,161,311 2020870,000302,9831,172,983 2021890,000276,2871,166,287 2022-20263,785,000970,7764,755,776 2027-20312,740,000442,6813,182,681 Total$12,375,000$3,219,099$15,594,099 2017338,000273,815611,815 2018378,000226,153604,153 2019388,000215,601603,601 2020403,000203,208606,208 2021408,000190,272598,272 2022-20262,211,000743,3542,954,354 2027-20312,075,000429,3312,504,331 2032-20361,760,000148,6001,908,600 Total$$1 $ 2017237,0041,869,7772,106,781 201877,8982,058,8842,136,782 201925,5772,141,2042,166,781 20201,282,000911,7812,193,781 20211,346,000886,0812,232,081 2022-20267,810,0003,845,13011,655,130 2027-203110,060,0002,444,51212,504,512 2032-20334,872,000370,2505,242,250 Total$ 25,710,479$ 14,527,619$40,238,098 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The annual requirements to amortize long-term debtoutstanding of business-type activities as of September 30, 2016, are as follows: 2017145,00031,775176,775 2018150,00028,088178,088 2019155,00024,275179,275 2020155,00020,400175,400 2021160,00016,462176,462 2022-2024510,00022,407532,407 Total$1,275,000$143,407$1,418,407 The annual requirements to amortize long-term debtoutstanding of component units as ofSeptember 30, 2016, are as follows: 2017100,000102,423202,423 2018100,000100,823200,823 2019105,00099,023204,023 2020105,00096,555201,555 2021110,00093,668203,668 2022-2026600,000408,7131,008,713 2027-2031740,000273,3001,013,300 2032-2035725,00088,113813,113 Total$2,585,000$1,262,615$3,847,615 The general fund has been used to liquidate compensated absencesand capital lease liabilities. A deferred charge resulting from the issuance of the 2010 and 2015 general obligation refunding bondsand 2015 special assessment refunding bondshavebeen recorded as a deferred outflow of resources and is being amortized to interest expense over the term of the refunded debt. The net balance outstanding as of September 30, 2016 was $3,581,091. Current year amortization expense totaled $189,413. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS On December 10, 2015, PID No. 1issued $26,154,979in special assessmentrefunding bonds with an interest rate of 2% to 3.25%. The proceeds were used to advance refund $26,155,000of outstanding 2007 special assessment bonds which had an interest rate of 7.75%.The total proceeds generated with the refunding was $30,637,821, which included the $26,154,979 in bond principal and a premium on issuance of $4,482,842. The net proceeds received were $29,495,685(after payment of $179,005 in underwritingdiscountand $963,131 in other issuance costs) were deposited in an irrevocable trust with an escrow agent to provide funds for the future debt service payment on the refunded bonds.The PID also contributed $238,815 as a part of the refunding.The 2007 bondobligations are considered defeased and the liability for those bonds has been removed from the statement of net position. The reacquisition price exceeded the net carrying amount of the old debt by $3,579,500. This amount is being amortized over the remaining life of the refunding debt. This advance refunding reduced its total debt service payments by 4 years and by $16,439,662,and resulted in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $11,681,290. Property tax is levied each October 1 on the assessed value listed as of the prior January 1 for all residential and commercialproperty located in the Town. Taxable assessed value represents the appraisal value less applicable exemptions authorized by the Town Council. Taxes are due on October 1, the levy date, and are delinquent if unpaid by the following January 31; after which time the Town has an enforceable lien with respect to both real and personal property. Under state law, property taxes levied on real property constitute a perpetual lien which cannot be forgiven without specific approval of the State Legislature. Penalties and interest are included for any payment received after January 31. Property tax revenue isrecognized as the related ad valorem taxes are collected. Additional amounts estimated to be collectible in time to be a resource for payment of obligations incurred during the fiscal year and therefore susceptible to accrual have been recognized as revenue. Property taxes are recorded net ofthe allowance for uncollectible taxes. Uncollectible personal property taxes can be written off upon expiration of the five year statute of limitations. The Town of Trophy Club provides pension benefits for all of its full-time employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-employer public employee retirement system. TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the town, within the options available in the state statutes governing TMRS. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the town-financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest. Benefits depend upon the sum of the employee’s contributions to the plan, with interest, and Town-financed monetary credits, with interest. Monetary credits for service since the plan began are a percentage (200%) of the employee’s accumulated contributions. In addition, the Town can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee’s accumulated contributions and the monetary credits for service since theplan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and the Town matching percent had always been in existence and if the employee’s salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee’s accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. The plan provisions are adopted by the governing body of the Town, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the Town were as follows: Employee deposit rate7% Matching ratio (Town to Employee)2 to 1 Years required for vesting5 Service retirement eligibility 20 years at any age, 5 years at age 60 and above Updated Service Credit 100% Repeating, Transfers Annuity Increase (to retirees)30% of CPI Repeating The Town also participates in Social Security. At the December 31, 2015valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits28 Inactive employees entitled but not yet receiving benefits81 Active employees71 Total180 Under the state law governing TMRS, the contribution rate for each townis determined annually by the actuary, using the Entry Age Normal (EAN)actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS of an active member’s projected benefit allocated annually; the priorservice contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that town. Both the normal cost and prior service contribution rates include recognition of the projectedimpact of annually repeating benefits, such as Updated Service Credits and Annuity Increases.Both the employees and the Townmake contributions monthly. Since the Town needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect (i.e. December 31, 2014valuation is effective for rates beginning January 2016). The Town’s Net Pension Liability (NPL) was measured as of December 31, 2015, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The Total Pension Liability in the December 31, 2015actuarial valuation was determined using the following actuarial assumptions: Inflation2.5% per year Overall payroll growth3.0% per year Investment Rate of Return6.75% net of pension plan investment expense, including inflation Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table, with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with slight adjustments. Actuarial assumptionsused in the December 31, 2015,valuation were based on the results of actuarial experience studies. This experience study was for theperiod December 31, 2010 through December 31, 2015, first used in the December 31, 2015valuation. Healthy post- retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No additional changes were made for the 2015valuation. The long-term expected rate of return on pension plan investments is 6.75%. The pension plan’s policy in regard to the allocation of invested assets is establishedand may be amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS by weighting theexpected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-Term Expected Real Rate of Return Target Asset ClassAllocation(Arithmetic) Domestic Equity17.50%4.80% International Equity17.50%6.05% Core Fixed Income30.00%1.50% Non-Core Fixed Income10.00%3.50% Real Return5.00%1.75% Real Estate10.00%5.25% Absolute Return5.00%4.25% Private Equity5.00%8.50% Total100.00% The discount rate used to measure theTotal Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee contributions will remain at the current 7.0% and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit paymentsof current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Changes in Net Pension Liability Increase (Decrease) LiabilityNet PositionLiability Balance at 12/31/2014(a)(b)(a)- (b) Changes for the year:$14,967,739$13,116,278$1,851,461 Service Cost804,453804,453 - Interest1,053,7451,053,745 - Difference between expected and actual experience(237,279)(237,279) - Changes in assumptions368,895368,895 - Contributions - employer658,543(658,543) - Contributions - employee340,458(340,458) - Net Investment Income 19,357(19,357) - Benefit payments, including refunds of employee contributions(632,921)(632,921) - Administrative expense(11,788)11,788 - Other Changes(582)582 Net Changes1,356,893373,067983,826 Balance at 12/31/2015$16,324,632$13,489,345$2,835,287 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The following presents the net pension liability of the Town, calculated using the discount rate of 6.75%, as well as what the Town’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or 1-percentage-pointhigher (7.75%) than the current rate: 1% Decrease in Current1% Increase in Discount Rate Town's net pension liabilityDiscount RateDiscount Rate $5,484,790$2,835,287$696,836 Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions: For the year ended September 30, 2016, the Townrecognized an increaseinpension expense of $1,061,428. This amount is included as part ofexpenses within the functional program activities. At September 30, 2016, the Townreported deferred outflows and inflows of resources related to pensions from the following sources: Deferred OutflowsDeferred Inflows of Resourcesof Resources Contributions subsequent to the measurement date$439,528$- Difference between projected and actual investment earnings810,405 - Difference between actuarial assumptions and actual experience203,428 - Changes in actuarial assumptions used276,440 - Total$1,526,373$203,428 Deferredoutflows of resources related to pensions resulting from contributions subsequent to the measurement date of $439,528will be recognized as a reduction of the net pension liability for the measurement year ending December 31, 2016(i.e. recognized in the Town’s financial statements September 30, 2017). Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Measurement Year Ended Dec 31 2016$231,360 2017231,360 2018240,939 2019179,758 Total$883,417 TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS Pursuant to TMRS policy of conducting experience studies every four years, the TMRS Board at their July 31, 2015 meeting determined that they would be changing certain actuarial assumptions including reducing the long term expected rate of return from the current 7% to 6.75% and changing the inflation assumption from 3% to 2.5%. Reduction of expected investment return and related discount rateincreasedprojected pension liabilities. Reducing the inflation assumption reduces liabilities as future annuity levels and future cost of living adjustments are not projected to be aslargeas originally projected. TheTownhas experiencedsome upward pressure on its total pension liability and upward pressure on its 2017 actuarially determined contribution (ADC) due to this change. The Town provides post-employment medical, dental, and vision benefits (OPEB) for eligible retirees, their spouses and dependents through TML Intergovernmental Employee Benefits Pool, which covers both active and retired members. As of September 30, 2016, membership consisted of: Retirees and beneficiaries receiving benefits- Active employees69 Total69 The three optional benefit levels, TML Plan P85-50-20, TML Plan P85-100-25 and TML Plan P85- 200-43.5, are the same for retirees asthose afforded to active employees. Regular full-time employees retiring from the Town have the option to continue medical insurance coverage until the retiree becomes eligible for Medicare or is eligible to be covered under another medical plan. The benefit levels and contribution rates are approved annually by the Town management and the Town Council as part of the budget process. By the Town not contributing anything toward this plan in advance, the Town employs a pay-as-you-go method through ensuring the annual retiree contributions are equal to the benefits that are paid on behalf of the retirees. The monthly Retiree health coverage contribution rates for offered benefit levels are as follows: TML PlanTML PlanTML Plan P85-50-20P85-100-25P85-200-43.5 Single Coverage$932$891$661 Single + Spouse$2,595$2,383$1,765 Single + Children$1,821$1,689$1,252 Single + Family$3,288$3,003$2,225 An irrevocable trust has not been established; therefore, the plan is not accounted for as a trust fund. The plan does not issue a separate financial report. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Town’s annual OPEB cost is calculated based on the annual required contribution of the Town (ARC), an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the Town’s annual OPEB cost for the year, the amount contributed to the plan, and changes in the Town’s net OPEB obligation. Annual required contribution$15,320 Interest on net OPEB obligation3,277 Adjustment to annual required contribution(3,013) Annual OPEB cost15,584 Contributions made- Change in OPEB obligation15,584 Net OPEB obligation (asset) - beginning of year72,816 Net OPEB obligation (asset) - end of year$88,400 The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2014, 2015, and 2016were as follows: Percentage of Net FiscalAnnualAnnual OPEBOPEB YearOPEB CostsCost ContributedObligation 2014$15,1410.00%$57,136 2015$15,6800.00%$72,816 2016$15,5840.00%$88,400 As of October, 2015the most recent actuarial valuation date, the actuarial accrued liability for benefits was $90,490,all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) for fiscal year 2016 was $4,822,763, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 1.88%. Projections of benefits are based on substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the Townand the plan members at that point. The actuarial methods and assumptions usedinclude techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS In the October,2015actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 4.5% investment rate of return (net of administrative expenses) and an annual healthcare cost trend rate of 8.0% initially, reduced by decrements to an ultimate rate of 4.5% after 7 years. The rate of inflation is assumed to be 3%. The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town has purchased commercial insurance to protect against these various risks of loss. There was nosignificant reduction in insurance coverage from the previous year. Settled claims for risks have not exceeded insurance coverage for the past three years. On May 7, 2007, the Trophy Club Town Council approved Resolution 2007-08 authorizing and providing for the creation of a Public Improvement District. Trophy Club Public Improvement District No.1 consists of approximately 609.68 acres within the corporate limits of the Town of Trophy Club. This District was created in accordance with Chapter 372 of the Texas Local Government Code. On December 13, 2007 the Trophy Club Town Council approved the issuance and sale of $27,500,000 in bonds, known as Trophy Club Public Improvement No. 1 Special Assessment Revenue Bonds, Series 2007. These bonds were authorized in order to finance the authorized improvements found in the Service and Assessment Plan. An Assessment on each property located in the District will repay the bonds. The Town is acting only as an agent and has no obligation to support payment of the bonds, directly or indirectly. The Service and Assessment Plan included the following projects: Thoroughfare Improvements, Water Distribution System Improvements, Wastewater Collection System Improvements, Trails and Open Space, Elevated Water Storage, Thoroughfare Landscaping and Irrigation, Screening Walls and Entry Features, Public Parks, Drainage Improvements, and Construction Administration. In December, 2015 the Town refunded the Public Improvement District No. 1 bonds. Total interest savings for the over 1,400 residences in the Public Improvement District exceeded $16.4M, with a net present value savings of over 33% of the refunded amount. The GASB has issued the following statements which will become effective in future years. Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions” – This statement changes the focus of accounting of postemployment benefits other than pensions fromwhether they are responsiblyfunding the benefits over time to a point-in time liability that is reflected on the employer’s financial statements for any actuarially unfunded portion of benefits earned to date. This statement will become effective for the Townin fiscal year 2018. Statement No. 77, “Tax Abatement Disclosures” – This statement requires governments that enter into tax abatement agreements to provide certain disclosures regarding these commitments. This statement will become effective for the Townin fiscal year 2017. Management has notyetdetermined the effect of these statementson the financial statements. TOWN OF TROPHY CLUB, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS The Townrestated its beginning net position within government activitiesand governmental fund balance for the PID No. 1 to properly reflect the financial results as a governmental type fund rather than agency fund.The results of this change are noted below. () The Town has evaluated all events and transactions that have occurred from October 1, 2017up until June 8, 2017, the date the financial statements were issued, and determined that there are no transactions requiring additional recognition or disclosure. MeasurementMeasurement Year 2015Year 2014 Total pension liability: Service cost$ 804,453$ 809,057 Interest1,053,745 970,682 Changes in benefit terms-(1,544,038) Difference between expected and actual experience (237,279) (49,303) Changes in assumptions368,895 - Benefit payments, including refunds of employment contributions (632,921)(450,100) Net change in total pension liability1,356,893(263,702) Total pension liability - beginning14,967,73915,231,441 Total pension liability - ending (a)16,324,63214,967,739 Plan fiduciary net position: Contributions - employer658,543 660,364 Contributions - employee340,458 316,613 Net investment income19,357 681,774 Benefit payments, including refunds of employment contributions (632,921)(450,100) Administrative expense(11,788)(7,117) Other(582)(585) Net change in fiduciary net position373,0671,200,949 Plan fiduciary net position - beginning13,116,27811,915,329 Plan fiduciary net position - ending (b)13,489,34513,116,278 Net pension liability - ending (a) - (b)$ 2,835,287$ 1,851,461 Plan fiduciary net position as a percentage of total pension liability82.63%87.63% Covered employee payroll$ 4,863,685$ 4,523,041 Net pension liability as a percentage of covered employee payroll58.30%40.93% As of December 31 (5) Actuarially (2)determined(6) Contribution in (3)contributions as aContributions (1)relation to theContribution(4)percentage ofas a percentage ActuariallyactuariallyexcessCovered covered employee of covered determined determined (deficiency)employeepayrollemployee payroll contributioncontribution(2)- (1) Fiscal Yearpayroll(1)/ (4)(2)/ (4) 2012$ 664,248$ 664,248 $ -4,778,595$ 13.90%13.90% 2013 632,149632,149-4,498,52414.05%14.05% 2014 662,072 662,072 -4,346,56615.23%15.23% 2015 642,631642,631-4,617,65213.92%13.92% 2016 627,419627,419-4,822,76313.01%13.01% Valuation Date: st Actuarial determined contribution rates are calculated as of December 31 each year and become effective in January, 12 months and a day later. Methods and Assumptions Used to Determine Contribution Rate for 2016: Actuarial Cost MethodEntry Age Normal Amortization PeriodLevel Percent of Payroll, Closed Remaining Amortization Period30 years Asset Valuation Method10 Year smoothed market; 15% soft corridor Inflation2.50% Salary Increases3.50% to 10.5% including inflation Investment Rate of Return6.75% Retirement AgeExperience-basedtableofratesthatarespecificto theTown'splanofbenefits.Lastupdatedforthe 2010valuationpursuanttoanexperiencestudyofthe period 2010-2014. MortalityRP2000CombinedMortalityTablewithBlueCollar Adjustmentwithmaleratesmultipliedby109%and femaleratesmultipliedby103%andprojectedona fully generational basis with scale BB. 201620152014 Annual required contribution$ 15,320$ 15,491$ 15,002 Interest on prior year Net OPEB obligation3,2771,890 2 ,571 Adjustment to annual required contribution(1,751) (3,013) (2,382) Annual OPEB cost 15,58415,68015,141 Contributions made- - - Increase in net OPEB obligation 15,58415,68015,141 Net Obligation - beginning of year 72,81657,13641,995 Net Obligation - end of year$ 88,400$ 72,816$ 57,136 Percentage of OPEB costs contributed0.00%0.00%0.00% Actuarial accrued liability$ 90,490$ 90,490$ 88,691 Actuarial value of plan assets- - - Unfunded actuarial accrued liability$ 90,490$ 90,490$ 88,691 Funded ratio0.0%0.0%0.0% Covered payroll4,822,763 4,617,6524,346,566 Unfunded actuarial accrued liability as a percentage of covered payroll1.88%1.96%2.04% Ad valorem taxes $ 5,801,544 $ 5,809,044 $ 5,769,797 $ (39,247) Sales and mixed beverage taxes753,125 793,125 821,227 28,102 Franchise taxes947,257 972,257 953,622 (18,635) Licenses and permits558,606 598,606 598,586 (20) Charges for service274,909 274,909 300,337 25,428 Fines and Fees420,359 347,859 356,307 8,448 Investment income18,000 26,000 33,477 7,477 Miscellaneous240,000 260,000 259,315 (685) 9,013,800 9,081,800 9,092,668 10,868 Current: Emergency medical services898,059 915,059 907,161 7,898 Manager's office843,529 852,529 826,562 25,967 Human resources123,872 168,872 159,216 9,656 Finance410,419 410,419 400,642 9,777 Information Services481,799 461,799 469,364 (7,565) Legal196,972 311,972 307,245 4,727 Court87,077 82,077 75,421 6,656 Police 2,307,071 2,282,071 2,168,115 113,956 Recreation610,528 594,528 569,444 25,084 Facilities management112,079 112,079 99,528 12,551 Parks 1,366,195 1,331,195 1,308,278 22,917 Community Development582,726 612,726 576,508 36,218 Streets420,120 380,120 356,472 23,648 Total current 8,440,446 8,515,446 8,223,956 291,490 Capital outlay: Emergency medical services18,000 18,000 16,086 1,914 Information Services49,463 49,463 9,002 40,461 Police45,800 45,800 55,344 (9,544) Parks22,600 22,600 32,191 (9,591) Recreation80,000 80,000 89,074 (9,074) Total capital outlay215,863 215,863 201,697 14,166 8,656,309 8,731,309 8,425,653 305,656 357,491 350,491 667,015 316,524 Transfers in111,000 111,000 111,702 702 Transfers out(385,000)(548,000)(275,744)272,256 (274,000)(437,000)(164,042)272,958 Net change in fund balances83,491 (86,509)502,973 589,482 3,691,189 3,691,189 3,691,189 - $ 3,774,680 $ 3,604,680 $ 4,194,162 $ 589,482 The Town follows these procedures in establishing the budgetary data reflected in the financial statements: 1.The Town Manager submits to the Town Council a proposed operating budget for the fiscal year commencing the following October 1 in accordance with state law. The operating budget includes proposed expenditures and the means of financing them. 2.Public hearing(s) are conducted to obtain taxpayer comments. 3.The budget is legally enacted through passage of an ordinance. 4.The Town Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the Town Council. 5.Formal budgetary integration is employed as a management control device during the year for the General Fund. Annual appropriated budgets are consistent with U.S. generally accepted accounting principles and are legally adopted for the general fund. All appropriations lapse on September 30 of the fiscal year. Ad valorem taxes $ 1,704,718 $ 1,704,718 $ 1,697,654 $ (7,064) Investment income 2502503,032 2,782 1,704,968 1,704,968 1,700,686 (4,282) Debt service: Interest and Fiscal Charges 387,567 407,067 404,554 2,513 Principal retirement 1,339,500 1,379,500 1,378,000 1,500 Total debt service 1,727,067 1,786,567 1,782,554 4,013 1,727,067 1,786,567 1,782,554 4,013 (22,099) (81,599) (81,868)(269) Transfers in 87,206 87,206 106,502 19,296 87,206 87,206 106,502 19,296 65,107 5,607 24,634 19,027 118,542 118,542 118,542 - $ 183,649 $ 124,149 $ 143,176 $ 19,027 Accounts for occupancy taxes charged to hotels. Accounts for sales taxes specifically restricted for street improvements. Accounts for contributions designated for the Town’s anniversary celebrations. Accounts for court fees specifically restricted for court technology expenditures. Accounts for court fees specifically restricted for court security expenditures. Accounts for sales taxes specifically restricted for crime control and prevention. Accounts for recreation fees and associated recreation programs. Cash and cash equivalents $543,214 $-$- Sales taxes receivable - 38,441 - Accounts receivable, net 37,429 - - Due from other Funds - 1,722 - Total assets 580,643 40,163 - Accounts payable 16,280 3,025 - Due to other funds - 42,155 Total liabilities 16,280 45,180 - Restricted for: Tourism 564,363 - - Crime control and prevention - - - Court - - - Committed for: Recreation programs - - - Unassigned - (5,017)- Total fund balances 564,363 (5,017)- Total liabilities and fund balances $580,643 $40,163 $- $19,097 $20,571 $164,531 $5,966 $753,379 - - 37,872 - 76,313 - - - - 37,429 - - - - 1,722 19,097 20,571 202,403 5,966 868,843 - - - 3,697 23,002 42,155 - - - 3,697 65,157 - - - - 564,363 - - 202,403 - 202,403 19,097 20,571 - - 39,668 - - - 2,269 2,269 - - - - (5,017) 19,097 20,571 202,403 2,269 803,686 $19,097 $20,571 $202,403 $5,966 $868,843 Sales and mixed beverage taxes $-$200,310 $- Occupancy taxes 302,374 - - Charges for service - - - Fines - - - Investment income 763 30- Miscellaneous 3,310 -24 306,447 200,340 24 Current: General government 72,961 - - Court - - - Police - - - Recreation - - 2,819 Streets -210,455 - Debt service: Capital outlay: General government 44,871 - - Police - - - Streets -35,208 - 117,832 245,663 2,819 188,615 (45,323)(2,795) Transfers out (100,000)(25,000)(702) (100,000)(25,000)(702) Net change in fund balances 88,615 (70,323)(3,497) Fund balances - beginning 475,748 65,306 3,497 Fund balances - ending $564,363 $(5,017) $- $-$-$196,157 $-$396,467 - - - - 302,374 - - -10,398 10,398 3,482 2,620 - - 6,102 - - 71-864 - - - - 3,334 3,482 2,620 196,228 10,398 719,539 - - - - 72,961 5,904 952 - - 6,856 - - 25,221 -25,221 - - -11,524 14,343 - - - - 210,455 - - - - 44,871 - - 102,869 -102,869 - - - - 35,208 5,904 952 128,090 11,524 512,784 (2,422)1,668 68,138 (1,126)206,755 -(3,000)- - (128,702) -(3,000)- - (128,702) (2,422)(1,332)68,138 (1,126)78,053 21,519 21,903 134,265 3,395 725,633 $19,097 $20,571 $202,403 $2,269 $803,686 Accounts for the use of 4B economic development sales tax revenue. Accounts for the use of ad valorem tax revenue and sales tax revenue within the boundaries of the reinvestment zone. Cash and cash equivalents$ 496,358 Sales taxes receivable76,883 Inventory2,538,765 3,112,006 Unassigned3,112,006 $ 3,112,006 Total fund balances of 4B Economic Development Corporation$3,112,006 Longtermliabilitiesarenotdueandpayableinthecurrentperiodand,therefore arenotreportedinthegovernmentalfundfinancialstatements.Thisamountis the net effect of: Contractual Obligations (2,585,000) Issuance Discounts 25,206(2,559,794) Bondinsuranceongovernmentallong-termdebtiscapitalizedandamortized over the life of the debt in the government-wide financial statements. 10,742 Interestpayableonlong-termdebtdoesnotrequiretheuseofcurrentfinancial resources; therefore, interest payable, other than that related to a new issuance, is not reported as liability in the governmental funds balance sheet. (1,707) Net position of 4B Economic Development Corporation $561,247 Sales taxes$400,621 Investment income1,289 401,910 Economic Development146,359 Interest and fiscal charges98,945 Principal Retirement105,000 350,304 51,606 51,606 3,060,400 $3,112,006 Net change in fund balances - 4B Economic Development Corporation$51,606 Amounts reported in the statement of net position are different because: Theissuanceoflongtermdebtprovidescurrentfinancialresourcesto governmentalfunds,whiletherepaymentofprincipalconsumesthecurrent financialresourcesofgovernmentalfunds.Neithertransaction,however,has any effect on net position. Debt principal paid 105,000 Governmentalfundsreporttheeffectofpremiums,discountsandsimilar itemswhendebtisfirstissued,whereastheseamountsaredeferredand amortized in the statement of activities. Amortization of bond discount (1,333) Bondinsuranceassociatedwiththeissuanceofgovernmentallong-termdebt isexpensedwhenincurredinthefundfinancialstatementsandcapitalized andamortizedoverthelifeofthedebtinthegovernment-widefinancial statements. This amount is the current year amortization ($568). (568) Certainexpensesreportedinthestatementofactivitiesdonotrequiretheuse ofcurrentfinancialresourcesand,therefore,arenotreportedasexpenditures in the governmental funds. Accrued interest 17 Change in net position of 4B Economic Development Corporation$154,722 Cash and cash equivalents$ 20,765 20,765 Accounts Payable400,000 400,000 Unassigned(379,235) $ (379,235) Total fund balances of Tax Increment Reinvestment Zone #1$(379,235) Net position of Tax Increment Reinvestment Zone #1 $(379,235) Property taxes$ 14,703 14,703 Economic Development400,000 400,000 (385,297) (385,297) 6,062 $ (379,235) Net change in fund balances - Tax Increment Reinvestment Zone #1$(385,297) Amounts reported in the statement of net position are different because: Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancial resources are not reported as revenues in the funds. Ad valorem taxes (4,211) Change in net position of Tax Increment Reinvestment Zone #1 $(389,508) STATISTICAL SECTION ThispartoftheTownofTrophyClub'scomprehensiveannualfinancialreportpresentsdetailedinformationasa contextforunderstandingwhattheinformationinthefinancialstatements,notedisclosures,andrequired supplementary information says about the government's overall financial health. Financial Trends 1-4 Theseschedulescontaintrendinformationtohelpthereaderunderstandhow the government's financial performance and well-being have changed over time. Revenue Capacity 5-8 Theseschedulescontaininformationtohelpthereaderassessthe government's most significant local revenue source, the property tax. Debt Capacity 9-11 Theseschedulespresentinformationtohelpthereaderassesstheaffordability ofthegovernment'scurrentlevelsofoutstandingdebtandthegovernment's ability to issue additional debt in the future. Demographic and Economic Information 12-13 Theseschedulesofferdemographicandeconomicindicatorstohelpthereader understandtheenvironmentwithinwhichthegovernment'sfinancialactivities take place. Operating Information 14-15 Theseschedulescontainserviceandinfrastructuredatatohelpthereader understandhowtheinformationinthegovernment'sfinancialreportrelatesto the services the government provides and the activities it performs. Sources:Unlessotherwisenoted,theinformationintheseschedulesisderivedfromthecomprehensiveannual financial reports for the relevant year. Table 1 TOWN OF TROPHY CLUB, TEXAS NET POSITION BY COMPONENT (Accrual Basis of Accounting) LAST TEN FISCAL YEARS (Unaudited) Table 2 TOWN OF TROPHY CLUB, TEXAS LAST EIGHT FISCAL YEARS CHANGES IN NET POSITION (Accrual Basis of Accounting) (Unaudited) TOWN OF TROPHY CLUB, TEXAS LAST EIGHT FISCAL YEARS CHANGES IN NET POSITION (Accrual Basis of Accounting) (Unaudited) TOWN OF TROPHY CLUB, TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (Modified Accrual Basis of Accounting) (Unaudited) 2007200820092010 General Fund Nonspendable for prepaids$ -$ -$ -$- Assigned for capital expenditures- - - - Commtted for Police- - - - Unassigned - - - - Reserved 71,195 97,35556,968 57,486 Unreserved 1,335,7961,830,233 2,010,869 2,056,334 $ 1,406,991$ 1,927,588 $ 2,067,837 $ 2,113,820 Total general fund All Other Governmental Funds Restricted for: Debt Service$ -$ -$ -$- Capital Projects- - - - PID No. 1- - - - Tourism- - - - Street Maintenance- - - - Town anniversary- - - - Water Services- - - - Court- - - - Public Safety- - - - Committed for: Recreation programs- - - - Unassigned - -- - Reserved for: Debt service 74,060 152,25363,305 83,067 Prepaid items 1,567 - - - Encumbrances 48,000 - - - Capital projects funds 3,750,206 6,709,402 - - Unreserved, reported in: Debt service - - - - Special revenue funds (1,531) 18,6078,231 151,970 Capital projects funds 3,065,681 10,193,492 - - $ 3,138,210$ 10,364,352 $ 3,821,742 $ 6,994,006 Total all other governmental funds Town audited financial records Source: (1)The Town implemented the GASB 54 during fiscal year ended September 30, 2011. Table 3 201120122013201420152016 $2,620 $ 796$ 796$ 796$ 1,816$ 54,397 228,138 228,138 228,138 228,138 228,138 - 200,000189,475 - - - - 2,412,034 2,902,168 2,398,330 2,816,087 3,261,235 3,950,290 - - - - - - - - $ 2,642,792$ 3,131,102$ 2,627,264$ 3,045,021$ 3,691,189$ 4,194,162 $85,388 $ 94,267$ 119,722$ 118,092$ 118,542$ 143,174 1,599,988 996,425 2,065,759 4,505,273 1,694,546 8,764,936 4,229,068 3,869,425 - - - 1,890 1,321 87,225 283,481 475,748 564,363 34,750 75,999 46,700 39,915 65,306 - 2,114 2,114 2,114 2,114 3,497 - 12,788 - - - - - 49,962 60,92746,253 43,42239,668 - 23,00793,746 134,265210,189 - - 2,812 3,3952,269 - - - (26,477) (257,350) (11,517) (6,333) (6,327) (5,017) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 1,710,441 $ 962,738$ 2,393,937$ 5,085,353$ 6,761,462 $ 13,589,007 TOWN OF TROPHY CLUB, TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (Modified Accrual Basis of Accounting) (Unaudited) 2007200820092010 Revenues Taxes Ad valorem taxes$ 2,903,193$ 3,219,061$ 3,623,124$ 3,890,927 Sales and mixed beverage taxes 605,776 608,218 588,362 674,131 Franchise taxes 447,956 481,459 546,271 519,959 Occupancy 25,705 17,069 17,685 - Licenses, permits & fees 215,251 376,628 631,895 719,333 Intergovernmental 1,104,134 1,232,346 235,715 237,756 Charges for services 570,063 776,088 794,185 868,571 Fines & Fees 99,541 106,092 140,553 120,151 Contributions 27,415,006 3,736,920 709,251 - Investment Income 176,939 465,064 85,800 17,634 Grant revenue 361,504 50,191 171,698 - Miscellaneous 207,719 659,254 178,594 126,949 Total revenues 6,330,572 35,726,425 10,628,679 8,074,045 Expenditures Current: General government1,091,3051,458,4741,523,6041,722,229 PID activities - - - - Public safety2,360,6693,082,7971,944,6432,169,477 Highways & streets593,444791,304 568,619 - Community development871,553317,973265,162344,278 Water and sewer - - - - Culture & recreation 1,229,661 1,296,752 1,230,193 1,393,751 Debt Service: Principal 305,000 447,000 515,000 540,000 Interest 291,924 460,741 389,921 371,721 Other charges 2,078,496 82,245 - - Capital Outlay 629,681 14,078,557 10,394,523 3,223,478 Total expenditures 6,779,793 23,814,234 17,054,350 10,415,798 Excess of revenues over (under) expenditures (449,221) 11,912,191 (6,425,671) (2,341,753) OTHER FINANCING SOURCES (USES) Proceeds from capital lease obligation 119,461 256,836 23,310 - Proceeds from contractual obligations 474,000 5,560,000 - - Proceeds of bank loan - - - - Proceeds from bonds 3,260,000 - - - Premium on bonds - - - - Payment to refunded bond escrow agent - - - - Transfer from other funds 60,002 123,280 104,700 276,317 Transfer to other funds (60,002) (4,545,568) (104,700) (276,317) 3,853,461 (4,165,452) 23,310 5,560,000 Total other financing sources (uses) $ 3,404,240$ 7,746,739$ (6,402,361)$ 3,218,247 NET CHANGE IN FUND BALANCES Debt service as a percentage of non-capital9.71%9.32%13.59%12.68% expenditures Source: Town audited financial records Table 4 201120122013201420152016 $ 4,457,829$ 4,916,886$ 5,330,778 $ 5,908,764$ 9,387,548$ 9,710,760 631,561 754,105 781,054 965,969 1,104,298 1,217,694 608,806 693,722 718,952 772,621 811,052 953,622 22,644 20,543 108,170 235,796 264,708 302,374 798,520 1,128,234 968,285 904,251 697,378 598,586 375,749 342,894 888,896 133,004 326,195 26,237 1,140,556 670,186 592,146 611,781 293,011 310,735 167,461 157,143 171,579 126,111 580,648 362,409 265,426 322,5361,472 - - - 15,162 7,9837,193 4,974 11,330 65,708 318,954 1,400,252 490,850 61,383 147,691 7,942 335,796 82,057 388,894 485,380 100,202 407,418 9,138,464 10,496,541 10,448,269 10,210,034 13,724,061 13,963,485 1,763,048 1,968,287 1,844,939 1,947,650 2,273,447 2,349,120 314,344 81,793 - - - - 2,237,263 2,408,103 2,905,923 2,918,484 2,896,632 3,187,064 811,854 2,017,548 1,067,962 517,964 516,035 566,927 189,425 481,473 576,306 587,760 479,477 576,508 617,001 92 - - - - 1,523,133 1,659,656 1,491,496 1,853,811 1,799,204 1,892,065 803,000 885,000 2,294,000 998,000 1,438,000 2,153,974 551,955 475,266 456,417 398,872 2,504,235 2,055,694 74,324 21,20029,367 75,100 42,736 1,340,786 5,390,630 1,403,691 237,936 885,436 3,466,307 3,395,509 13,961,633 11,320,316 10,904,346 10,183,077 15,730,417 17,599,440 (4,823,169) (823,775) (456,077) 26,957 (2,006,356) (3,635,955) - - - - - - 2,500,000 4,210,000 - - - - - - - - - - 2,790,000 500,000 1,300,000 600,000 2,030,000 31,399,979 118,90433,794 50,329 5,020,788 - (2,825,503) (2,026,710) (29,734,500) - - - 185,835 191,878 876,553 55,741 63,350 493,947 (110,016) (127,496) (826,909) (27,134) (28,000) (423,741) 159,220 564,382 1,383,438 3,178,936 38,640 10,966,473 $ (4,663,949)$ (259,393)$ 927,361 $ 3,205,893$ (1,967,716)$ 7,330,518 15.81%13.72%25.79%15.02%32.14%29.64% TOWN OF TROPHY CLUB, TEXASTable 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (Unaudited) Estimated Market ValueLess:Total TaxableTotal Direct FiscalReal Non RealTax ExemptAssessedTax YearPropertyPropertyPropertyValueRate 2007 669,790,841 15,603,238 18,941,759 666,452,320 0.43051 2008 728,292,523 31,439,675 30,732,229 728,999,969 0.43051 2009* 802,085,464 30,781,322 43,426,286 789,440,500 0.45551 2010 861,983,993 28,133,834 49,316,322 840,801,505 0.47000 2011 901,333,893 24,792,616 52,794,045 873,332,464 0.51500 2012 971,822,347 23,862,338 54,212,507 941,472,178 0.53000 2013 1,068,605,127 24,460,719 59,911,204 1,033,154,642 0.51854 2014 1,248,215,265 25,845,178 60,160,746 1,213,899,697 0.49930 2015 1,426,754,517 20,304,259 64,382,412 1,382,676,364 0.49000 2016 1,618,577,881 28,301,916 68,622,814 1,578,256,983 0.48400 Source:Denton & Tarrant County Central Appraisal District Certified Roll Note: Total Taxable Assessed Value is not adjusted for tax ceilings. *Tarrant County inlcuded beginning in FY 2009 (Tax year 2008) TOWN OF TROPHY CLUB, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES (per $100 of assessed value) LAST TEN FISCAL YEARS (Unaudited) Town of Trophy Club Operating Debt ServiceTotal FiscalNorthwestTrophy ClubTrophy ClubDenton MileageMileageMileage YearISDMUD #1MUD #2County 2007 0.367230 0.063280 0.430510 1 .665000 0.250000 0 .299000 0.231920 2008 0.351040 0.079470 0.430510 1 .335050 0.230000 0 .279230 0.235890 2009 0.374310 0.081200 0.455510 1 .335000 0.225000 0 .264230 0.235770 2010 0.388380 0.081620 0.470000 1 .355000 0.205000 0 .205000 0.249800 2011 0.397220 0.117780 0.515000 1 .375000 0.195000 - 0.273900 2012 0.415013 0.114987 0.530000 1 .375000 0.175000 - 0.277357 2013 0.403543 0.115000 0.518543 1 .375000 0.133390 - 0.282867 2014 0.384300 0.115000 0.499300 1 .452500 0.133390 - 0.284914 2015 0.380000 0.110000 0.490000 1 .452500 0.133390 - 0.272200 2016 0.374000 0.110000 0.484000 1 .452500 0.131140 - 0.262000 Source: Denton & Tarrant County Appraisal Districts (1) The implemented the GASB 34 model of reporting fiscal year ending September 30, 2004. Table 6 Overlapping RatesTotal TarrantTarrantTotalTotalDirect & Trophy ClubTarrantCountyCountyMUD #1MUD #2Overlapping PID #1 ESDCountyCollegeHospitalMileageMileageRates $ 2.640710$ 2.626430$ 2.876430 - - - - $ 2.310920$ 2.280680$ 2.510680 - - - - 0.264000 0.137960 0.227897$ 2.734440$ 2.920367$ 3.145367 - 0.109140 0.264000 0.137670 0.227897$ 2.872230$ 3.018507$ 3.223507 0.109250 0.264000 0.137640 0.227897$ 2.987570N/A$ 3.097687 0.109250 0.264000 0.148970 0.227897$ 2.994564N/A$ 3.107474 0.104000 0.264000 0.149500 0.227897$ 2.942300N/A$ 3.055197 0.087380 0.264000 0.149500 0.227897$ 2.985984N/A$ 3.098881 0.077270 0.264000 0.149500 0.227897$ 2.948860N/A$ 3.066757 0.072220 0.264000 0.149500 0.227897$ 2.925360N/A$ 3.043257 Table 7 Percentage of Total Taxable (2) Assessed Value 1.85%1.43%1.19%1.13%1.10%0.70%0.67%0.61%0.60%0.60%9.86% 2007 Rank 10 123456789 9,500,0007,940,0447,533,9777,355,2654,660,3084,454,9894,075,4813,982,3293,976,960 12,314,21065,793,563 Assessed Taxable Value $ Percentage of Total Taxable (1) Assessed Value 1.14%0.92%0.68%0.64%0.43%0.41%0.40%0.37%0.35%0.34%5.67% (1) Total taxable value including real and personal property for tax year 2015 (fiscal year 2016) is $1,382,002,785 (2) Total taxable value including real and personal property for tax year 2006 (fiscal year 2007) is $563,187,476 2016Rank 10 123456789 18,000,00014,500,00010,759,32610,090,0006,792,9376,547,6806,250,0005,854,6605,474,1935,393,41389,662,209 Assessed Taxable Value Source: Denton County Appraisal District and Tarrant County Apprisal District $ 4663 OKEECHOBEE BLVD & PALM BEACH HOLDINGS(2002) CURRENT FISCAL YEAR AND TEN YEARS AGO CNL RETIREMENT CRSI TROPHY CLUB TX LP Lennar Homes of Texas Land & Construction LTD 4663 Okeechobee Blvd. and Palm Beach Holdings BECK PROPERTIES TROPHY CLUB LP PRINCIPAL PROPERTY TAXPAYERS TROPHY CLUB MEDICAL CENTER TROPHY CLUB MOB PARTNERS LP TOWN OF TROPHY CLUB, TEXAS Oncor Electric Delivery Company HIGHWAY 114 PROSPECT LTD CLUBCORP GOLF TEX LP P/S Trophy Club Medical Center LP TXU ELECTRIC DELIVERY CO HCP CRSI Trophy Club TX LP TC PLANTATIONS LTD P/S Trophy Club Equities LLC Armore Trophy Club LLC REGENCY CENTERS LP First Texas Homes INC Trophy Club 12 LLC Hydra Hotels LLC (Unaudited) Taxpayer Totals Percentage of levy Table 8 Total Collections to Date 100.02% 99.97%99.97%99.95%99.85%99.87%99.86%99.85%99.83%99.72% 3,197,6793,649,9013,561,9703,861,9624,440,4224,851,8055,252,4415,895,6526,653,799 Amount 2 4 5 , 6 5 4 , 7 Collections in Subsequent - 442433262 Years 522921474 957377762 ,,,,,,,,, 586553751 32322121 Percentage of levy 98.90%99.19%98.93%99.29%99.27%99.59%99.71%99.41%99.66%99.72% Fiscal Year of the Levy Collected within the 3,161,7253,621,3763,525,2483,836,5684,414,6994,838,0925,244,6995,869,9766,642,5587,456,542 Amount PROPERTY TAX LEVIES AND COLLECTIONS Source: Denton County Tax Assessor Collector TOWN OF TROPHY CLUB, TEXAS 3,196,8913,650,9493,563,2023,864,0144,446,9604,858,1365,259,7195,904,5916,665,4337,477,394 Fiscal Year Total Tax Levy for LAST TEN FISCAL YEARS (Unaudited) Fiscal Year 2007200820092010201120122013201420152016 Table 9 1,1751,1521,0741,6181,5311,3481,1991,2931,1491,789 Capita Per of Personal (2) 3.62%3.40%3.28%4.92%3.69%3.03%2.86%3.07%2.61%3.98% Percentage Income Government 9,124,0008,677,0008,162,00013,274,24012,573,32012,139,149 Primary 1757 Total 5343 9775 ,,,, 5689 0926 9882 ,,,, 2432 1112 - - - - - - - - - - Capital Leases Business-Type Activities - - - - - 1,743,4561,599,0381,454,6191,305,200 Certificates Obligation - of Obligation General Bonds ---------- - - - - - - - - 92,24030,570 (1) Personal Income and Population found on Table 15 of the statistical section Capital Leases Governmental Activities Certificates Obligation 0000009218 0000001334 RATIOS OF OUTSTANDING DEBT BY TYPE 0000004144 ,,,,,,,,,, of 9222948293 8258039129 9987766202 ,,,, 14 4 8 TOWN OF TROPHY CLUB, TEXAS 8,135,0007,755,0007,310,00012,400,00011,833,75011,505,1499,464,0769,085,5678,344,69512,670,889 LAST TEN FISCAL YEARS Obligation General Bonds (Unaudited) Fiscal Year 2007200820092010201120122013201420152016 TOWN OF TROPHY CLUB, TEXASTable 10 RATIO OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (Unaudited) Percentage of Actual Taxable Value of General Certificates of ab Fiscal YearObligation BondsObligationPropertyPer Capita 20071.37% 8,135,000 989,000 1,175 20081.19% 7,755,000 922,000 1,152 20091.03% 7,310,000 852,000 1,074 20101.57% 12,400,000 782,000 1,607 20111.44% 11,833,750 709,000 1,528 20121.29% 11,505,149 634,000 1,348 20131.08% 9,464,076 1,698,419 1,037 20141.10% 9,085,567 4,212,132 1,154 20150.89% 8,344,695 4,029,431 1,028 20161.33% 12,670,889 8,293,448 1,684 a Property values are from table 5. b Populations are from table 12. Table 11 10,672,67988,972,90712,993,663112,895,63424,196,000137,091,634 Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Town of Trophy Club. This residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therfore responsible for Overlapping Estimated 41 Share of 62 Debt 21 ,, process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the 88 22 2 $ $ $ Applicable Percentage Estimated 100.00% 12.08%67.75% 1.75%0.07%0.07% 608,965,000736,394,556344,185,00019,180,0001,751,209,55624,196,0001,775,405,556 Debt Principal Outstanding 0 0 0 , 5 8 4 , Source: Most recent Texas Municipal Reports ("TMR") published by the Municipal Advisory Council of Texas. $ 2 4 $ $ DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT repaying the debt, of each overlapping government. Total Direct and Overlapping Debt Principal Northwest Independent School District TOWN OF TROPHY CLUB, TEXAS Tarrant County Hospital District Town of Trophy Club, direct debt Debt repaid with property taxes: AS OF SEPTEMBER 30, 2016 Subtotal, overlapping debt Trophy Club MUD #1 Governmental Unit Tarrant County Denton County (Unaudited) Note: TOWN OF TROPHY CLUB, TEXASTable 12 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (Unaudited) Median Estimated Household Total Personal aab YearPopulationTotal HouseholdsIncomeIncome 20077,763 263,602,200 2,8509 2,492 20087,531 211,714,188 2,2899 2,492 20097,600 255,555,396 2,7639 2,492 20108,204 271,001,560 2,9309 2,492 20118,210 340,629,850 3,1791 07,150 20129,005 400,732,505 3,3791 18,595 201310,760 450,943,520 3,6801 22,539 201411,525 484,791,363 3,8911 24,593 201512,040 529,054,823 4,1531 27,391 201612,446 559,032,500 4,3421 28,750 Sources:aEstimated population using residential water connections bUnited States Census Bureau Table 13 30.90%12.50%10.00%9.00%8.80%4.50%3.90%3.00%2.50%2.30%87.40% Percentage of Employment Total Employees 30912510090884539302523874 Town of Trophy Club & Trophy Club MUD #1 2011 Northwest Independent School District Baylor Medical Center at Trophy Club Fellowship United Methodist Church Cristina's Mexican Restaurant Employer Trophy Club Country Club Church at Trophy Lake Bank of America Tom Thumb Walgreen's 31.47%14.33%14.87%12.07%5.00%3.67%3.00%2.87%2.00%1.67%90.93% Percentage of Employment Total Employees 4722232151817555454330251,364 (3) Staff estimated total Town employment of 1000 for fiscal year 2011 (2) Staff estimated total Town employment of 1,500 for fiscal year 2016 PRINCIPAL 2016 Northwest Independent School District Baylor Medical Center at Trophy Club (4) Includes Full Time, Part Time, and Seasonal Fellowship United Methodist Church(1) Employment data is not available for 2007. TOWN OF TROPHY CLUB, TEXAS Premier Academy - Trophy Club Cristina's Mexican Restaurant Employer Trophy Club Country Club 4 Trophy Lake Academy Town of Trophy Club Merryhill Preschool EMPLOYERS (Unaudited) Tom Thumb Total Table 14 13.5033.453.5016.586.0073.03 2016 13.0032.403.5017.085.7571.73 2015 14.0031.405.0016.887.0074.28 2014 12.0027.605.0016.006.0066.60 2013 12.8023.104.9016.304.5061.60 2012 4.903.00 12.0022.3011.0053.20 2011 Fiscal Year 10.0021.804.9011.002.5050.20 2010 9.006.002.50 21.8711.0050.37 2009 GOVERNMENT EMPLOYEES BY 9.0029.0057.00 2008 000 000 ... 504 1 6.00 10.0025.0013.2854.28 LAST TEN FISCAL YEARS 2007 TOWN OF TROPHY CLUB, TEXAS - Community Development General Government and Source: Departmental records Parks and Recreation Adminstration FULL-TIME Public Safety (Unaudited) FUNCTION Function Streets Total TOWN OF TROPHY CLUB, TEXAS OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS (Unaudited) Function2007200820092010 Public Safety Police Number of stations1 1 1 1 Number of police personnel15 15 15 16 Number of arrests81 152 121 125 Number of traffic stops 2,346 2,696 2 ,9393 ,608 Fire Number of stations1 1 1 1 Number of fire personnel14 14 14 14 Number of calls answered608 597 689 651 Developmental a Miles of streets 31 34 36 39 Cultural/Recreational Changes Parks5 8 8 8 Park acreage907 1,037 1 ,0371 ,037 Source: Departmental records Table 15 201120122013201420152016 1 1 1 1 1 1 17 15 18 23 25 25 128 102 101 82 125 145 2,004 2,912 3,635 2 ,8212 ,602 2,443 1 1 1 1 1 1 14 14 14 15 15 16 741 845 945 907 868 898 42 43 43 43 43 43 7 6 6 6 6 6 1,039 1,039 1,039 1,039 1 ,0371 ,039 Supplemental Item June 13, 2017 AGENDA ITEM NO. 8 Receive the Mayor's State of the Town Address; discussion of same (Mayor Sanders). 2017 State of the Town Address It is an Honor for me to have served you as Mayor for the past 3 years. I sincerely appreciate your confidence and support. At our Council Meeting on May 23rd, the council appointed Council Member Rhylan Rowe Mayor Pro Tem. I believe I speak for the entire council when I express my gratitude to Council Member Greg Lamont who serviced as Mayor Pro Tem for the past 3 years. We also thank Garrett Reed and Jim Parrow for their service the past 3 years and congratulate Alicia Fleury and Eric Jensen on their The last 12 months since my last Mayor’s Report has been a year of constant improvements in many aspects of Trophy Club. Town Hall construction is progressing nicely with our expected building dedication in October. The decision of the Council to hire Thomas Class as our Town Manager has been a rewarding time. The professionalism, ethics, and leadership skills we saw in Tom made it an easy choice and he continues to lead and require professionalism from Staff. The completion of the Veteran’s Memorial and adjacent parking lot provided not only relief for street parking along Parkview, but is a wonderful tribute to our men and women who have served and currently serve our country in one of the military branches. We express our gratitude to former Council Member Jim Parrow for his leadership 2017 State of the Town Address and dedication as related to making the improved Veteran’s Memorial a reality. For me one of the most important accomplishments in the past year of the completion of an agreement with Trophy Club MUD for the management and operation of the Fire Department to be directly under the Town and the hiring of a new Fire Chief, Wade Carroll. The 2016 Popular Annual Financial Reporting (PAFR) is being submitted now that our Audit is complete. And for the eight years in a row, the Finance Department also won the Distinguished Budget Presentation Award and the Certificate of Achievement for Excellence in Financial Reporting. Our Town has grown and we are ALL working to engage our new residents to interface with the Town and become involved so that they will soon come to learn that Trophy Club is indeed “A Great Place to Call Home” and not just a slogan. We all want the quality of life here to be exemplary. One characteristic of Community is diversity and that attribute is certainly evident here and we reap the synergistic effect of the different people, ages, thoughts, education, religions, and so on. We are the beneficiaries of this diversity and life-blood. Building Community is not the sole job of elected officials, however, it is shared by all of us. I appreciate your phone calls, your e-mails and your input. Page | 2 2017 State of the Town Address Residential growth has been in the forefront of everything the town has been doing for 8 years. We currently have about 21 homes under construction with 12 more plans being reviewed. We have a total of 90 vacant lots available in the Town. Our average Home appraised value in 2016 was $352,731 with a total taxable value of all property of of $1,386,727,745 with final % increase of 13.11% with 6% of this from new homes. Our preliminary data for the 2017 FYE has an average Home appraised value of $386,361 with taxable value of $1,588,405,402 which represents a 12.55% increase at week 14 of the appraisal process. – We expect the total increase to be between 10 and 12% by the end of the appraisal cycle. We received our FY 2016 Audit Report and in FY 2016 and we once again received what is called an unmodified opinion with no significant deficiencies. The unassigned fund balance for the general fund ended at $3,950,290 which is 46.9 % of the total general fund expenditures We recently issued 4.6 M CO bond for Streets and Drainage Projects, and because of our outstanding financial condition received a great interest rate of 2.612 percent and a AA+ Bond rating. These funds will be used for projects going through 2019-2020. Page | 3 2017 State of the Town Address We did celebrate the opening of Homewood Suites Hotel with Breadwinners Café and Quarter Bar and Meat U Anywhere restaurants adding to our quality of life. And maybe next year at this time we will be enjoying HG Sply’s new concept. Last year at this time I thought we should see initial development of Planned Development 30, which is the 26 acres located at Highway 114 and Trophy Club Drive. The plan still allows for Apartments, a Hotel and commercial pad sites. However the processing of getting the land plated has slowed because of requirements that the developer has not met. In addition, the construction of the Holiday Inn has moved slow and continues to experience issues related to meeting all our code requirements. There has been additional retail office space added including a Medical Office Building added to the area across from the High School and Middle School. A certificate of Occupancy was recently issued for Wonderland Montessori Academy and The Ship Shop. Planned Capitol Improvements for Street Reconstruction and Drainage projects required us to issue 4.6 M CO bond for these Projects, and because of our outstanding financial condition we received a great interest rate of 2.61 percent and a AAA Bond rating. These funds will be used for projects going through 2019-2020. Page | 4 2017 State of the Town Address In addition, reserve funds were used to improve the land by Lakeview Elementary so we could have more soccer fields. This work has been completed. The additional parking at Harmony Park has also been completed. Throughout the last year we have continued to place pressure to get Hwy 114 widened along the Westlake / Trophy Club boundary. For the most part this project is nearing completion and construction on the sound wall should begin in the next month or so. Denton County Commissioner Andy Eads has worked with TxDot, COG, and other governments in getting the engineering started on the completion of Hwy 114 main lanes from Trophy Club to IH35W. The Town continues to receive recognition for the services we provide along with our choice of lifestyle. We recently received the recognition as the safest town in Texas. It is our long and deep history of volunteerism that we as a Town find a community where we experience quality of life and appreciation of those aspects. We recently announced the youth and adult citizens of the year. The youth recognized was Trevor Smith and the adult was Tiffany Nimphius. Throughout the Spring the State of Texas along with several private businesses sponsored the Community Challenge for Health and Fitness. This was our first year to participate in this event Page | 5 2017 State of the Town Address and our organizers of Mindi Bone, Tiffany Nimphius, Kelly Castoway and our staff person of Sheri Lewis provided our citizens with a fun and nd place in the state for rewarding experience allowing us to come in 2 Small Towns. I would be amiss if I did not express the appreciation of the Council toward our Town Staff. Since hiring Tom Class as our Town Manager, we have been striving together to help build a management nd team that is 2 to none. The professional staff of Amber Karkauskas , John Zagurski and April Ezell provide accurate and timely financial data under the watchful eye of CM Shoffner who spent many hours researching. Lisa Reich, Community Development Director and Ron Powell, along with code enforcement (Thad Johnson) and building inspections (Tommy Uzee) have provided excellence in everything they do while either having to learn processes in Trophy Club or step in as we have been shorthanded. And Ed Helton, our Streets Superintendent maybe has the hardest job in town given all the road construction we have been doing over the past few years along with keeping a watchful eye on Tow Hall. Having extremely skilled and experienced people in this area has proven over and over again to ensure quality development in town. Police Chief Patrick Arata has surly raised the bar for making sure our Police force is well trained and able to ensure our Safety. His knowledge of the law, management skills and ability to relate to our Page | 6 2017 State of the Town Address citizens is exceptional. Chief Arata was willing to be acting Town Manger while we went through the process of recruiting and hearing Tom and on behalf of Council wish to thank him for a job well done. Now looking to the future. Before the end of the year we should be settled in our new Town Hall and Police Facility. Three years ago when I was re-elected as Mayor after serving 2 terms as Mayor in 2005-2009 and 3 years on the MUD Board, I was very optimistic about the relationship between the MUD and the Town. I had been instrumental in negotiating a 99 year Agreement between the MUD and Town for Water and Waste Water Service and it seemed like the stage was set to improve relations between the two governmental entities. Although it took over a year, today we have an agreement with the MUD where the Town operates the Fire Department. This agreement took the willingness of both Council and MUD Board to complete and I want to express my gratitude to all involved. Our Mission as Council is: TO MAINTAIN TROPHY CLUB’S STANDING AS A PREMIER RESIDENTIAL COMMUNITY AND A “GREAT PLACE TO CALL HOME” BY PROTECTING AND PROMOTING THE INTERESTS OF ITS RESIDENTS, BUSINESSES, AND PROPERTY OWNERS. Page | 7 2017 State of the Town Address Each council member has their unique gifts and talents and bring their view points to our meetings to help us make the best decision as a Council. Even though we may disagree at times on a subject, we enjoy making fun of each other and of our unique characteristics as a Council. To each of you, I say thank you for your dedication and willingness to serve the Citizens of Trophy Club. Sincerely, Mayor Nick Sanders Page | 8 Supplemental Item June 13, 2017 AGENDA ITEM NO. 9 Receive an update from Town Staff regarding the upcoming July 4th Celebration; discussion of same (Staff).