d2y1pz2y630308.cloudfront.net€¦ · TRAVIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 18 Annual Financial Report . For the Year Ended September 30, 2017 . TABLE OF CONTENTS Page . FINANCIAL

TRAVIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 18

FINANCIAL STATEMENTS, SUPPLEMENTAL INFORMATION

AND INDEPENDENT AUDITOR’S REPORT

FOR THE YEAR ENDED

SEPTEMBER 30, 2017

WEST, DAVIS & COMPANY, LLP Certified Public Accountants

Austin, Texas

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TRAVIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 18 Annual Financial Report

For the Year Ended September 30, 2017

TABLE OF CONTENTS

Page

FINANCIAL SECTION

Independent Auditor’s Report on Financial Statements ………………………………....... 1 Management’s Discussion & Analysis (Required Supplementary Information) …………. 4

Basic Financial Statements

Government-wide Financial Statements:

Statement of Net Assets and Reconciliation to Governmental Funds Balance Sheet …………………………………... 12 Statement of Activities and Reconciliation to Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds …………………………………………..………. 13

Notes to the Financial Statements …………………..…………………………….. 14

REQUIRED SUPPLEMENTARY INFORMATION

Budgetary Comparison Schedule – General Fund ……………………………...…. 27 TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

SUPPLEMENTARY INFORMATION

Index of Supplemental Schedules Required by the Texas Commission on Environmental Quality ……………………………………....... 28 Supplemental Schedules Required by the Texas Commission on Environmental Quality…………………………………………. 29

OTHER INFORMATION Principal Taxpayers………………………………………………………………………… 43 Assessed Value by Classification…………………………………………………………... 43

FINANCIAL SECTION

WEST, DAVIS & COMPANY A LIMITED LIABILITY PARTNERSHIP

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Independent Auditor’s Report

Board of Directors Travis County Municipal Utility District No. 18 Austin, Texas We have audited the accompanying financial statements of the governmental activities and each major fund of Travis County Municipal Utility District No. 18 (the District) as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluation the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

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Opinion In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of the District at September 30, 2017, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the budgetary comparison information identified as Required Supplementary Information in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Texas Commission on Environmental Quality Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District’s basic financial statements. The supplemental schedules required by the Texas Commission on Environmental Quality are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental schedules required by the Texas Commission on Environmental Quality are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules required by the Texas Commission on Environmental Quality are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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Other Information The other information listed in the table of contents has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Austin, Texas December 31, 2017


Management Discussion and Analysis For the Year Ended September 30, 2017

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In accordance with Governmental Accounting Standards Board Statement 34 (“GASB 34”), the management of Travis County Municipal Utility District No. 18 (the “District”) offers the following discussion and analysis to provide an overview of the District’s financial activities for the year ended September 30, 2017. Since this information is designed to focus on current year’s activities, resulting changes, and currently known facts, it should be read in conjunction with the District’s financial statements that follow. FINANCIAL HIGHLIGHTS

• General Fund: The unassigned fund balance at the end of the year was approximately $743 thousand which was an increase of $396 thousand from the end of the previous year end. Revenue increased from $710 thousand in the previous fiscal year to $1,169 thousand in the current fiscal year primarily due to increased service account revenue as the result of growth within the District.

• Debt Service Fund: The fund balance restricted for debt service increased from $428 thousand at the end of the previous fiscal year to $733 thousand at the end of the current fiscal year. Revenue increased from $197 thousand to $403 thousand primarily due to growth in the property tax base. The District made $125 thousand in bond principal payments and bond interest payments of $358 thousand during the fiscal year.

• Capital Projects Fund: The fund balance increased from a negative $1.7 million to $600 thousand due to the receipt of bond proceeds in excess of capital expenditures.

• Governmental Activities: On a Government-wide basis for governmental activities, the District had expenses in excess of income of approximately $462 thousand. Net assets decreased from a negative $725 thousand to a negative $1,187 thousand. This decrease is primarily due to bond issuance costs of $540 thousand incurred during the year.

OVERVIEW OF THE DISTRICT The District, a political subdivision of the State of Texas, was created by the Texas Commission on Environmental Quality on June 20, 2012 pursuant to the provisions of Chapters 49 and 54 of the Texas Water Code. The District was created and organized for the purpose of constructing water, sewer, and drainage facilities and providing water and sewer services to residential and commercial establishments within the District and solid waste collection services. The District is also authorized to provide road facilities. The District is located entirely within Travis County.



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USING THIS ANNUAL REPORT The District’s reporting is comprised of five parts:

• Management’s Discussion and Analysis (this section) • Basic Financial Statements

Statement of Net Assets and Reconciliation to Governmental Funds Balance Sheet Statement of Activities and Reconciliation to Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Funds • Notes to the Financial Statements • Required Supplementary Information • Texas Supplementary Information (required by the Texas Commission on Environmental

Quality) The Government-wide statements are reported using the flow of economic resources measurement focus and the full accrual basis of accounting. The Governmental Fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. For purposes of GASB 34, the District is considered a special purpose government. This allows the District to present the newly required fund and government-wide statements in a single schedule. The requirement for fund financial statements that are prepared on the modified accrual basis of accounting is met with the “Governmental Funds Total” column. An adjustment column includes those entries needed to convert to the full accrual basis government-wide statements. Government-wide statements are comprised of the Statement of Net Assets and the Statement of Activities. OVERVIEW OF THE BASIC FINANCIAL STATEMENTS The Statement of Net Assets and Governmental Funds Balance Sheet includes a column (titled “Governmental Funds Total”) that represents a balance sheet prepared using the modified accrual basis of accounting. The adjustments column converts those balances to a balance sheet that more closely reflects a private-sector business. Over time, increases or decreases in the District’s net assets will indicate financial health. The Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances includes a column (titled “Governmental Funds Total”) that derives the change in fund balances resulting from current year revenues, expenditures, and other financing sources or uses. These amounts are prepared using the modified accrual basis of accounting. The adjustments column converts those activities to full accrual, a basis that more closely represents the income statement of a private-sector business.



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The Notes to the Financial Statements provide additional information that is essential to a full understanding of the information presented in the Statement of Net Assets and Governmental Funds Balance Sheet and the Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances. The Required Supplementary Information presents a comparison statement between the District’s adopted budget and its actual results. FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

Summary Statement of Net Assets Governmental Activities (in thousands) September September Increase 2017 2016 (Decrease) Current and Other Assets $ 2,381 $ 1,182 $ 1,199 Capital and Non-Current Assets 14,812 11,713 3,099 Total Assets 17,193 12,895 4,298 Current Liabilities 623 2,203 (1,580) Long-Term Liabilities 17,757 11,417 6,340 Total Liabilities 18,380 13,620 4,760 Net Investment in Capital Assets (2,663) (1,501) (1,162) Nonspendable - - - Restricted 733 347 386 Unassigned 743 429 314 Total Net Assets $ (1,187) $ (725) $ (462)

The District’s total assets were approximately $17.2 million as of September 30, 2017. Of this amount, approximately $2.1 million is accounted for by cash and short-term investments. The District had outstanding liabilities of approximately $18.4 million. The District’s unassigned net assets, which can be used to finance day to day operations, totaled $743 thousand.



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Summary Statement of Activities Governmental Activities (in thousands) Increase 2017 2016 (Decrease) Property Taxes $ 567 $ 271 $ 296 Water/Wastewater/Basic Service 750 399 351 Tap and Inspection Fees 248 235 13 Other 10 2 8 Total Revenues 1,575 907 668 Water/Wastewater/Solid Waste 445 286 159 Operating Expenses 123 94 29 Administrative Expenses 180 152 28 Debt Service 377 199 178 Amortization and Depreciation 372 285 87 Total Expenses 1,497 1,016 481 Other Financing Sources (Uses) (540) (498) (42) Change In Net Assets (462) (607) 145 Prior Period Adjustment - 759 (759) Beginning Net Assets (725) (877) 152 Ending Net Assets $ (1,187) $ (725) $ (462)

Revenues were approximately $1,575 thousand for the year ended September 30, 2017. Expenses and Other Financing Uses were approximately $2.0 million for the year ended September 30, 2017. Net assets decreased about $462 thousand primarily due to bond issuance costs. The following charts summarize the sources of revenue and areas of expenses.



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Property Taxes36%

Water/Wastewater/Basic Service

47%

Tap and Inspection Fees16%

Other1%

Revenues-Fiscal Year 2017

Property Taxes Water/Wastewater/Basic Service Tap and Inspection Fees Other

Water/Wastewater/Solid Waste30%

Operating Expenses8%

Administrative Expenses

12%

Debt Service25%

Amortization and Depreciation

25%

Expenses - Fiscal Year 2017

Water/Wastewater/Solid Waste Operating Expenses Administrative Expenses

Debt Service Amortization and Depreciation



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FINANCIAL ANALYSIS OF THE DISTRICT’S FUND LEVEL STATEMENTS In comparison to the Government-wide statements, the Fund-level statements focus on the key funds of the District. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District reports the following types of Governmental funds: General Fund, Debt Service Fund and Capital Projects Fund. The focus of the District’s Governmental funds is to provide information on near-term inflows, outflows, and available resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available at the end of the fiscal year.

Summary Balance Sheet Governmental Activities (in thousands) September September Increase 2017 2016 (Decrease) Cash and Investments $ 2,105 $ 1,028 $ 1,077 Accounts Receivable 273 150 123 Prepaid Expenses 4 4 - Total Assets 2,382 1,182 1,200

Accounts Payable 242 198 44 Customer Deposits 60 38 22 Note Payable - 1,825 (1,825) Total Liabilities 302 2,061 (1,759) Nonspendable - - - Restricted For Debt Service 733 428 305 Restricted For Capital Projects 604 (1,654) 2,258 Unassigned 743 347 396 Total Fund Balances 2,080 (879) 2,959 Total Liabilities and Fund Balances $ 2,382 $ 1,182 $ 1,200

The General Operating Fund, which pays for daily operating expenses, has a balance of $743 thousand at the end of the current fiscal year. This is an increase of $396 thousand over the prior fiscal year.



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The Debt Service Fund increased by $305 thousand during the current fiscal year. This fund remitted $125 thousand in bond principal and bond interest of $358 thousand during the year. The Capital Projects Fund increased by $2.258 million during the year and has an ending balance of $604 thousand. BUDGETARY HIGHLIGHTS The Board of Directors adopted the fiscal year 2017 annual budget for the General Fund on September 30, 2016. The budget included revenues of $852 thousand and expenditures of $738 thousand. Actual revenue amounted to $1,169 thousand and actual expenditures amounted to $772 thousand. More detailed information about the District’s budgetary comparison is presented in the Required Supplementary Information section. CAPITAL ASSETS The District has invested $9.7 million in land and infrastructure using bond proceeds and has been conveyed $6.0 million in land and infrastructure by the developer. A summary of these assets is listed below:

Summary of Capital Assets Governmental Activities (in thousands) September September Increase 2017 2016 (Decrease) Land $ 826 $ 826 $ - Water and Wastewater System 5,799 5,774 25 Accumulated Depreciation (506) (361) (145) Service Rights 9,084 5,639 3,445 Accumulated Amortization (392) (165) (227) Total Capital Assets (Net) $ 14,811 $ 11,713 $ 3,098

LONG TERM DEBT The District issued $6.625 million in new bonds during the year. Bonded indebtedness and other long-term debt of the District at year end was $18 million. More detailed information about the District’s long-term debt is presented in the Notes to the Basic Financial Statements.



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ECONOMIC FACTORS The taxable assessed value of property within the District as of January 1, 2017 has been fixed by the Travis County Appraisal District at $113 million. The tax rates adopted by the District on August 18, 2017 for the coming fiscal year are $0.11 for maintenance and operations and $0.64 for debt service. The District expects this to produce $840 thousand in total property tax revenue for next year. The adopted budget for fiscal year 2018 projects a small increase to the operating fund balance. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the District’s finances and to demonstrate the District’s accountability for the funds it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the District in care of McLean & Howard, LLP, 901 South MoPac, Suite 225, Austin, Texas 78746.

BASIC FINANCIAL STATEMENTS


STATEMENT OF NET ASSETSAND GOVERNMENTAL FUNDS BALANCE SHEET

STATEMENTDEBT CAPITAL OF NET

GENERAL SERVICE PROJECTS TOTAL ADJUSTMENTS ASSETSASSETS Cash 391,411$ -$ 1$ 391,412$ -$ 391,412$ Investments 371,333 731,183 611,536 1,714,052 - 1,714,052 Accounts Receivable, net of allowance 264,214 - - 264,214 - 264,214 Property Taxes Receivable - - - - - - Other Accounts Receivable 6,721 963 - 7,684 - 7,684 Due From Other Funds - 643 - 643 (643) - Unrealized Expenses 3,825 - - 3,825 3,825 Intangible Assets (Net of Amortization) Service Rights - - - - 8,692,375 8,692,375 Capital Assets (Net of Depreciation) Land and EasementsService Rights - - - - 825,876 825,876 Infrastructure - - - - 5,293,568 5,293,568

Total Assets 1,037,504$ 732,789$ 611,537$ 2,381,830$ 14,811,176$ 17,193,006$ LIABILITIES AND FUND EQUITYLiabilities: Accounts Payable 233,724$ -$ 7,527$ 241,251$ 37,077 278,328$ Customer Deposits 59,544 - - 59,544 - 59,544 Deferred Inflow of Resources-Taxes - - - - - - Due To Other Funds 643 - - 643 (643) - Long Term Payable-Developer - - - - 6,041,789 6,041,789 Bonds Payable in less than one year - - - - 285,000 285,000 Bonds Payable in more than one year - - - - 11,715,000 11,715,000 Total Liabilities 293,911 - 7,527 301,438 18,078,223 18,379,661 Fund Equity: Nonspendable - - - - - Restricted For Debt Service 732,789 732,789 (732,789) - Restricted For Capital Projects 604,010 604,010 (604,010) - Unassigned 743,593 743,593 (743,593) - Total Fund Equity 743,593 732,789 604,010 2,080,392 (2,080,392) -

Total Liabilities & Fund Equity 1,037,504$ 732,789$ 611,537$ 2,381,830$

Net Position: Net Investment in Capital Assets (2,663,037) (2,663,037) Nonspendable - - Unassigned 743,593 743,593 Restricted for Debt Service 732,789 732,789 Total Net Position (1,186,655)$ (1,186,655)$

The notes to financial statements are an integral part of this statement.

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GOVERNMENTAL FUNDS

SEPTEMBER 30, 2017


STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS

STATEMENTDEBT CAPITAL OF

REVENUES GENERAL SERVICE PROJECTS TOTAL ADJUSTMENTS ACTIVITIESProperty Tax 169,004$ 398,164 - 567,168$ (7)$ 567,161$ Water Service 228,781 - - 228,781 - 228,781 Wastewater Service 99,964 - - 99,964 - 99,964 Basic Service 421,500 - - 421,500 - 421,500 Tap and Connection Fees 160,020 - - 160,020 - 160,020 Inspection Fees 52,620 - - 52,620 - 52,620 LUE Reservation Fees 34,785 - - 34,785 - 34,785 Interest 1,841 4,886 3,318 10,045 - 10,045 TOTAL REVENUES 1,168,515 403,050 3,318 1,574,883 (7) 1,574,876

EXPENDITURESCurrent: Water Service Fees 169,593 - - 169,593 - 169,593 Wastewater Services 234,923 - - 234,923 - 234,923 Solid Waste Disposal 40,365 - - 40,365 - 40,365 Repairs and Maintenance 38,696 - - 38,696 - 38,696 Inspection Fees 76,574 - - 76,574 - 76,574 Utilities 5,057 - - 5,057 - 5,057 Laboratory Expenses 2,684 - - 2,684 - 2,684 Insurance 3,868 - - 3,868 - 3,868 Tax Assessor -Collector 3,335 - - 3,335 - 3,335 Director Salaries and Taxes 6,620 - - 6,620 - 6,620 Legal Fees 36,038 - - 36,038 - 36,038 Audit Fees 12,000 - - 12,000 - 12,000 Accounting 32,258 - - 32,258 - 32,258 Management and Consulting Fees 66,912 - - 66,912 - 66,912 Engineering Fees 6,700 - - 6,700 - 6,700 Printing and Office Supplies 10,678 - - 10,678 - 10,678 Miscellaneous - 1,015 - 1,015 - 1,015 Debt Service: Interest - 357,420 - 357,420 19,820 377,240 Principal - 125,000 - 125,000 (125,000) - Amortization - - - - 227,109 227,109 Depreciation - - - - 144,986 144,986 Capital Expenditures 25,469 - 3,445,858 3,471,327 (3,471,327) - TOTAL EXPENDITURES 771,770 483,435 3,445,858 4,701,063 (3,204,412) 1,496,651

OTHER FINANCING SOURCES (USES)Transfers From Other Funds - - - - - - Bond Proceeds - 384,662 6,240,338 6,625,000 (6,625,000) - Bond Issuance Costs - - (539,659) (539,659) - (539,659) TOTAL OTHER SOURCES - 384,662 5,700,679 6,085,341 (6,625,000) (539,659)

Excess (Deficit) of Revenues and Other Financing Sources over Expenditures 396,745 304,277 2,258,139 2,959,161 (2,959,161) -

Change in Net Position (461,434) (461,434) Fund Balance/Net Position - Beginning 346,848 428,512 (1,654,129) (878,769) 153,548 (725,221)

Fund Balance/Net Position - Ending 743,593$ 732,789$ 604,010$ 2,080,392$ (3,267,047) (1,186,655)$

The notes to financial statements are an integral part of this statement.

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

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GOVERNMENTAL FUNDS

FOR THE YEAR ENDED SEPTEMBER 30, 2017

TRAVIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 18 Notes to the General Purpose Financial Statements

At and For the Year Ended September 30, 2017

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1. Summary of Significant Accounting Policies

The basic financial statements of Travis County Municipal Utility District No. 18 have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the accounting policies are described below. Travis County Municipal Utility District No. 18 (the District), a political subdivision of the State of Texas, was created on June 20, 2012, by the Texas Commission on Environmental Quality pursuant to the provisions of Chapters 49 and 54 of the Texas Water Code. The District was created and organized for the purpose of constructing water, sewer, and drainage facilities and providing water and sewer services to residential and commercial establishments within the District and solid waste collection services. The District is also authorized to provide road facilities. These financial statements report the financial activity of the District. The reporting entity of the District encompasses those activities and functions over which the District’s elected officials exercise significant oversight or control. The District is governed by a five-member Board of Directors (the Board) that has been elected by District residents. The funds and government-wide financial statements presented in this report are within the oversight responsibility of the Board, in accordance with Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards Part II, Financial Reporting. There are no component units of the District, nor is the District a component unit of any other entity. A. Basis of Presentation, Basis of Accounting

In accordance with GASB Statement No. 34, the District has elected to combine their Government-wide and Governmental Fund Financial Statements into one set of financial statements with a reconciliation of the individual line items in a separate column on the financial statements. Government-wide Financial Statements: The Statement of Net Assets and the Statement of Activities include the financial activities of the overall government. Governmental activities are generally financed through property taxes and utility service revenue. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the District’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function.



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1. Summary of Significant Accounting Policies (continued) Fund Financial Statements: The governmental fund financial statement columns are labeled Governmental Funds Balance Sheet and Governmental Funds Revenue, Expenditures and Changes in Fund Balance. In the fund financial statements, the accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The District reports the following major governmental funds: General Fund: This is the District’s primary operating fund. It accounts for all financial resources of the District except those required to be accounted for in another fund. Debt Service Fund: The Debt Service Fund is used to account for the accumulation of financial resources for, and the payment of, general long-term debt principal and interest. Capital Projects Fund: The Capital Projects Fund is used to account for the acquisition or construction of major capital facilities. Principal sources of revenue are municipal long-term debt proceeds and interest income.

B. Measurement Focus, Basis of Accounting

The Government-wide financial statements are reported using the flow of economic resources measurement focus and the accrual basis of accounting. Revenue is 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 revenue in the year for which they are levied. Governmental Fund Financial Statements: Governmental funds are reported using the current financial resources management focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District does not consider revenues collected after its year end to be available in the current period. Revenues from local sources consist primarily of property taxes. Miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long term debt, which is recognized as an expenditure to the extent that it has matured. General capital asset acquisitions are reported as expenditures in major governmental funds. Proceeds of general long-term debt are reported as other financing sources.



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1. Summary of Significant Accounting Policies (continued)

C. Fund Balances The District has adopted GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions which establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Those fund balance classifications are described below. Nonspendable – Amounts that cannot be spent because they are either not in a spendable form or are legally or contractually required to be maintained intact. Restricted – Amounts that can be spent only for specific purposes because of constraints imposed by external providers, or imposed by constitutional provisions or enabling legislation. Committed – Amounts that can only be used for specific purposes pursuant to approval by formal action by the Board. Assigned – For the General Fund, amounts that are appropriated by the Board or Board designee, if any, that are to be used for specific purposes. For all other governmental funds, any remaining positive amounts not previously classified as nonspendable, restricted or committed. Unassigned – Amounts that are available for any purpose; these amounts can be reported only in the District’s General Fund. Fund balance of the District may be committed for a specific purpose by formal action of the Board, the District’s highest level of decision-making authority. Commitments may be established, modified, or rescinded only through a resolution approved by the Board. The Board has not delegated the authority to assign fund balance.

D. Budget The Board adopted an annual budget for the General Fund on the basis consistent with generally accepted accounting principles. The District’s Board of Directors utilizes the budget as a management tool for planning and cost control purposes. All annual appropriations lapse at fiscal year end.



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E. Pensions

The District has not established a pension plan.

F. Cash and Cash Equivalents These include cash on deposit as well as investments with maturities of three months or less at the time of purchase.

G. Service Accounts Receivable

The District provides for uncollectible accounts receivable using the allowance method of accounting for bad debts. Under this method of accounting, a provision for uncollectible accounts is charged to earnings. The allowance account is increased or decreased based on past collection history and management’s evaluation of accounts receivable. All amount consider4ed uncollectible are charged against the allowance account, and recoveries of previously charged off accounts are added to the allowance. As of September 30, 2016, the allowance for uncollectible accounts was $0.

H. Capital and Intangible Assets Capital assets, which include Land, Easements, Water Distribution System, Wastewater Collection System, Water Quality Ponds and Organizational Costs are reported in the Government-wide column in the Statement of Net Assets. Capital assets are defined by the District as assets with an initial, individual cost of at least $1,000. Public domain (“infrastructure”) capital assets including water, wastewater and drainage systems, are capitalized as acquired. Items purchased or acquired are reported at historical cost or estimated historical cost. Contributed fixed assets are recorded as capital assets at estimated fair value at the time received. Capital assets are depreciated using the straight-line method over their estimated useful lives of 40 years. Intangible assets, which consist of the right to receive water and wastewater service, are reported in the governmental activities columns in the government-wide financial statements. Intangible assets are defined by GASB Statement No. 51 as assets which lack physical substance, are nonfinancial in nature, and have an initial useful life extending beyond a single reporting period. Such assets are recorded at historical cost if purchased or estimated fair value at the date of donation if donated. Intangible assets are amortized using the straight-line method over the estimated life of the assets, which in this case is estimated to be 40 years based on the initial term of the Wholesale Water and Wastewater Services Agreements entered into between the District and West Travis County Public Utility Agency (the “PUA”).



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I. Interfund Transactions Transfers from one fund to another fund are reported as interfund receivable and payables if there is intent to repay that amount and if the debtor fund has the ability to repay the advance on a timely basis. Operating transfers represent legally authorized transfers from the fund receiving resources to the fund through which the resources are to be expended.

J. Long-Term Debt Unlimited Tax & Revenue Bonds, which have been issued to acquire capital assets, are to be repaid from tax revenues of the District. In the Government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance costs are expensed as incurred. In the fund financial statement, 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 on debt issuances are reported as other financing sources and uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures.

K. Deferred Outflows and Inflows of Resources

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides guidance for reporting the financial statement elements of deferred outflows of resources, which represent the consumption of the District’s net position that is applicable to a future reporting period, and deferred inflows of resources, which represent the District’s acquisition of net position applicable to a future reporting period. GASB Statement No. 63 became effective for fiscal years beginning after December 15, 2011 and has been implemented in the financial statements. GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. GASB Statement No. 65 is effective for fiscal years beginning after December 15, 2012 and has been implemented in these financial statements.



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2. Cash and Investments The investment policies of the District are governed by State statute and an adopted District Investment Policy that includes depository contract provisions and custodial contract provisions. Major provisions of the District’s Investment Policy include: depositories must be FDIC-insured Texas banking institutions; depositories must fully insure or collateralize all demand and time deposits; securities collateralizing time deposits are held by independent third-party trustees.

Cash – At year end, deposits were held by the District’s depository bank in accounts that were secured at the balance sheet date by Federal Deposit Insurance Corporation (FDIC) coverage or by pledged collateral held by the District’s agent bank in the District’s name. Investments - The District is required by Government Code Chapter 2256, The Public Funds Investment Act, to adopt, implement, and publicize an investment policy. That policy must be written; primarily emphasize safety of principal and liquidity; address investment diversification, yield, and maturity and the quality and capability of investment management; and include a list of the types of authorized investments in which the investing entity’s funds may be invested; and the maximum allowable stated maturity of any individual investment owned by the entity. The Public Funds Investment Act (”Act”) requires an annual audit of investment practices. Audit procedures in this area conducted as part of the audit of the general purpose financial statements disclosed that in the areas of investment practices, management reports and establishment of appropriate policies, the District adhered to the requirement of the Act. Additionally, investment practices of the District were in accordance with local policies. The Act determines the types of investments which are allowable for the District. These include, with certain restriction, (1) obligations of the US Treasury, certain US Agencies, and the State of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) banker’s acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts, and (10) commercial paper The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Not all assets meeting the definition of an investment are required to be reported at fair value. Including among excepted investments are certain investments held by 2a7-like external investments pools. As detailed below the District has invested funds in specific 2a7-like external investment pools that are valued at amortized cost and not subject to the fair value hierarchy levels.



20

2. Cash and Investments (continued) The District’s investments at year end are shown below. Fair Value Investment Level Rating Maturity Fair Value TexPool N/A AAAm 1 Days Average $ 814,052 CDs 2 AAA 120 Days Average $ 900,000 Analysis of Specific Cash and Investment Risks – GASB Statement No. 40 requires a determination as to whether the District was exposed to the following specific investment risks at year end and, if so, the reporting of certain related disclosures.

Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The ratings of securities by nationally recognized rating agencies are designed to give an indication of credit risk. At year end, the District was not significantly exposed to credit risk. At year end, the District’s investments, other than those which are obligations of or guaranteed by the US Government, are rated as to credit quality as detailed above. Custodial Credit Risk – Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution’s trust department or agent but not in the District’s name. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the government, and are held by either the counterpart or the counterparty’s trust department or agent but not in the District’s name. At year end, the District was not exposed to custodial credit risk. Concentration of Credit Risk – This risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. At year end, the District was not exposed to concentration of credit risk. Interest Rate Risk – This is the risk that changes in interest rates will adversely affect the fair value of an investment. At year end, the District was not exposed to interest rate risk. Foreign Currency Risk – This is the risk that exchange rates will adversely affect the fair value of an investment. At year end, the District was not exposed to foreign currency risk.



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2. Cash and Investments (continued) Investment Accounting Policy – The District’s general policy is to report money market investments and short-term participating interest-earning investment contracts at amortized cost and to report nonparticipating interest-earning investment contracts using a cost-based measure. However, if the fair value of an investment is significantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. The term “short-term” refers to investments which have a remaining term of one year or less at time of purchase. The term “nonparticipating” means that the investment’s value does not vary with market interest rate changes. Nonnegotiable certificates of deposit are examples of nonparticipating interest-earning investment contracts. Public Funds Investment Pools – Public funds investment pools in Texas (“Pools”) are established under the authority of the Interlocal Cooperation Act, Chapter 79 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act (the “Act”), Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the Pool and other person who do not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a continuous rating of no lower than AAA or AAA-m or an equivalent rating by at least on nationally recognized rating service; and 3) maintain the market value of its underlying investment portfolio with one half of one percent of the value of its shares. The District’s investments in Pools are reported at an amount determined by the fair value per share of the Pool’s underling portfolio, unless the Pool is 2a7-like, in which case they are reported at share value. A 2a7-like Pool is one which is not registered with the Securities and Exchange Commission (“SEC”) as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. TexPool – The District invests in the Texas Local Government Investment Pool (TexPool), which is a local government investment pool that was established 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 State Comptroller of Public Accounts oversees TexPool. Federated Investors, Inc. is the administrator and investment manager of TexPool under a contract with the State Comptroller. In accordance with the Public Funds Investment Act, the State Comptroller has appointed the TexPool Investment Advisory Board to advise with respect to TexPool. The board is composed equally of participants in TexPool Portfolios and other persons who do not have a business relationship with TexPool Portfolios and are qualified to advise in respect to TexPool Portfolios. The Advisory Board members review the investment policy and management fee structure. TexPool is rated AAAm by Standard & Poor’s and operates in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. All investments are stated at amortized cost, which usually approximates the market value of the securities. The stated objective of TexPool is to maintain a stable average $1.00 per unit net asset value; however, the $1.00 net asset value is not guaranteed or insured. The financial statements can be obtained from the Texas Trust Safekeeping Trust Company website at www.ttstc.org.



22

3. Property Taxes

Property taxes are considered available when collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The District levies its taxes in conformity with Subtitle E, Texas Property Tax Code. Taxes are due upon receipt of the tax bill and are past due and subject to interest if not paid by February 1 of the year following the levy date. Taxes are due if not paid by June 30. Delinquent taxes are subject to both penalty and interest charges plus 15% delinquent collection fees for attorney costs. Property taxes were levied by the District for the 2016-17 fiscal year at the rate of $0.75 per hundred assessed value ($0.20 for maintenance and $0.55 for debt service). Uncollected property taxes amounted to $-0- at the end of the year.

4. Capital and Intangible Assets

During the year, the District invested $3,471,326 in new facilities and service rights using bond funds. The Water, Wastewater and Drainage Facilities are being depreciated over their estimated useful life of 40 years. Depreciation in the amount of $144,986 and amortization of $227,109 has been charged to system operations for the year. A summary of changes in capital and intangible assets follows:

Balance Balance Capital Assets: 10/1/2016 Additions Deletions 9/30/2017

Land $ 825,876 - - $ 825,876

Water and Wastewater System

5,773,958 25,468

-

5,799,426

Service Rights 5,638,506 3,445,858 - 9,084,364

Total 12,238,340 3,471,326 - 15,709,666

Accumulated Amortization and Depreciation:

Land - -

- -

Water and Wastewater System

(360,872)

(144,986)

-

(505,858)

Service Rights (164,880) (227,109) - (391,989)

Total

(525,752)

(372,095)

-

(897,847)

Total Capital Assets (Net) $ 11,712,588 3,099,231

- $ 14,811,819



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4. Capital and Intangible Assets (continued) Pursuant to the terms and conditions of the Utility Conveyance Agreement in April 2014 and in July 2015, the District conveyed certain water and wastewater facilities that were previously conveyed to the District by developers of the District. As a result, the value related to these water and wastewater facilities is reflected as an intangible asset for the right to receive water and wastewater service from the PUA. This intangible asset is amortized over its estimated useful life (40 years) from the date of conveyance pursuant to the terms of the Wholesale Water and Wastewater Service Agreements with the PUA. Pursuant to the terms and conditions of the Utility Conveyance Agreement in February 2017, the District reimbursed the costs of construction of certain road facilities that were previously conveyed by developers of the District to Travis County, Texas. As a result, the value related to these road facilities is reflected as an intangible asset for the right to use of these facilities from the County. This intangible asset is amortized over its estimated useful life (40 years) from the date of conveyance.

5. Bonds At an election held within the District on November 6, 2012, voters authorized a total of $42,365,000 of unlimited tax bonds for the purpose of purchasing, constructing, acquiring, owning, improving, extending, maintaining, repairing, or operating a waterworks system, a sanitary sewer system, and a drainage and storm water system for the District. At the same election, the voters of the District authorized the issuance of a total of $7,085,000 of unlimited tax bonds for the purpose of constructing road facilities.

The District issued $5,500,000 in Series 2015 unlimited tax bonds in October 2015 to finance the acquisition of the water, wastewater and drainage infrastructure from developers. In May 2016 the District issued $1,825,000 in a bond anticipation note and used the proceeds to acquire additional facilities from the developers. In December 2016 the District issued $2,545,000 in Series 2016 unlimited tax bonds and used the proceeds to pay off the bond anticipation note. In February 2017 the District issued $4,080,000 in Series 2017 unlimited road tax bonds and used the proceeds to acquire certain road facilities within the District. The District’s outstanding bonds are described as follows:

Original Installments Issue Issue Amount (In Thousands) Final Maturity Interest Rates Outstanding Series 2015 $5,500,000 $125 to 380 2040 3.00 – 4.10% $5,375,000 Series 2016 $2,545,000 $ 55 to 650 2041 3.00 – 4.25% $2,545,000 Series 2017 $4,080,000 $100 to 700 2041 2.00 – 4.125% $4,080,000



24

5. Bonds (continued)

Redemption

Series 2015 Bonds maturing on or after September 1, 2023, are subject to redemption at the option of the District prior to their maturity dates in whole, or from time to time, in part, on September 1, 2022, or on any date thereafter at a price of par value plus unpaid accrued interest from the most recent interest payment date to the date fixed for redemption. Additionally, term bonds maturing on September 1 in the years 2031, 2034, 2038 and 2040 are subject to mandatory sinking fund redemption.

Series 2016 Bonds maturing on or after September 1, 2024, are subject to redemption

at the option of the District prior to their maturity dates in whole, or from time to time, in part, on September 1, 2023, or on any date thereafter at a price of par value plus unpaid accrued interest from the most recent interest payment date to the date fixed for redemption. Additionally, term bonds maturing on September 1 in the years 2033, 2035, 2037 and 2041 are subject to mandatory sinking fund redemption.

Series 2017 Bonds maturing on or after September 1, 2024, are subject to redemption

at the option of the District prior to their maturity dates in whole, or from time to time, in part, on September 1, 2023, or on any date thereafter at a price of par value plus unpaid accrued interest from the most recent interest payment date to the date fixed for redemption. Additionally, term bonds maturing on September 1 in the years 2036, 2038 and 2041 are subject to mandatory sinking fund redemption.

Debt Service Requirements-Bonds Debt service requirements on long-term bond debt as of the end of the year are as follows:

Ending September 30, Principal Interest Totals 2018 $ 285,000 $ 444,924 $ 729,924 2019 325,000 437,374 762,374 2020 385,000 428,924 813,924 2021 390,000 417,374 807,374 2022 405,000 405,674 810,674 2023-2027 2,195,000 1,835,397 4,030,397 2028-2032 2,560,000 1,419,105 3,979,105 2033-2037 3,020,000 879,786 3,899,786 2038-2042 2,435,000 233,137 2,668,137 Totals $ 12,000,000 $ 6,501,695 $ 18,501,695



25

6. Risk Management

The District is exposed to various risks of loss related to torts, theft, damage or destruction of assets, errors and omissions, injuries to employees, and natural disasters. During the year, the District obtained liability coverage.

7. Contingencies

The District has an obligation to reimburse developers of property in the District costs expended on behalf of the District for the construction of water, sewer, drainage and road systems designed to serve the District. Since the construction of these facilities is not yet complete, the ultimate amount of the future reimbursements cannot be determined at this time.

8. Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

9. Subsequent Events The District has evaluated subsequent events as of December 31, 2017, the date the financial statements were available to be issued.

10. Reconciliation of Government-wide and Fund Financial Statements

Adjustments to convert the Governmental Funds Balance Sheet to the Statement of Net Assets are as follows:

Governmental Funds Total Fund Balances $ 2,080,392 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 14,811,819 Long-term liabilities (developer conveyances) are not due and payable in the current period and, therefore, are not reported in the funds (6,041,789) Long-term liabilities (bonds payable) are not due and payable in the current period and, therefore, are not reported in the funds (12,000,000) Interest is accrued on outstanding debt in the government-wide statements, whereas in the governmental funds, an interest expenditure is reported when made and not accrued in the funds (37,077) Deferred tax revenue is not available to pay for current period expenditures and, therefore, is deferred in the funds - Total Net Assets $ (1,186,655)



26

10. Reconciliation of Government-wide and Fund Financial Statements (continued) Adjustments to convert the Governmental Funds, Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities are as follows:

Governmental Funds Excess of Revenues over Expenditures $ 2,959,161 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds Change in Deferred Tax Revenue (7) Governmental funds report capital outlays as expenditures however, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense Capital Outlay 3,471,327 Amortization and Depreciation Expense (372,095) Governmental funds report principal payments as expenditures however, in the Statement of Activities, these payments are not reported as operating expenses Bond Principal 125,000 Governmental funds do not report the change in accrued interest as an expenditure, however, in the Statement of Activities, this change in the amount accrued is reported as an expense Accrued Interest (19,820) Bond Proceeds are reported as other financing sources in the governmental funds and thus contribute to the change in fund balance. In the Statement of Net Assets, however, issuing debt increases long-term liabilities and does not affect the Statement of Net Assets Bond Proceeds (6,625,000) Change in Net Assets $ (461,434)

REQUIRED SUPPLEMENTARY INFORMATION


COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUNDBALANCES - GENERAL FUND

BUDGET AND ACTUALFOR THE YEAR ENDED SEPTEMBER 30, 2017

FAVORABLEBUDGET ACTUAL (UNFAVORABLE)

REVENUESProperty Tax 137,042$ 169,004$ 31,962$ Water Service 95,000 228,781 133,781 Wastewater Service 65,000 99,964 34,964 Basic Service 292,750 421,500 128,750 Tap and Connection Fees 172,000 160,020 (11,980) Inspection Fees 55,000 52,620 (2,380) LUE Reservation Fees 35,000 34,785 (215) Interest 125 1,841 1,716 TOTAL REVENUES 851,917 1,168,515 316,598

EXPENDITURESCurrent: Water Service Fees 135,000 169,593 (34,593) Wastewater Services 260,000 234,923 25,077 Solid Waste Disposal 25,500 40,365 (14,865) Repairs and Maintenance 59,000 38,696 20,304 Inspection Fees 60,000 76,574 (16,574) Utilities 5,000 5,057 (57) Laboratory Expenses 2,000 2,684 (684) Insurance 4,000 3,868 132 Tax Assessor -Collector 2,000 3,335 (1,335) Director Salaries and Taxes 9,000 6,620 2,380 Legal Fees 50,000 36,038 13,962 Audit Fees 12,000 12,000 - Accounting 33,000 32,258 742 Management and Consulting Fees 38,000 66,912 (28,912) Engineering Fees 35,000 6,700 28,300 Printing and Office Supplies 8,600 10,678 (2,078) Capital Expenditures - 25,469 (25,469) TOTAL EXPENDITURES 738,100 771,770 (33,670)

OTHER FINANCING SOURCES (USES)Transfers From Other Funds - - - TOTAL OTHER SOURCES - - -

Excess (Deficit) of Revenues over Expenditures 113,817 396,745 282,928

Fund Balance - Beginning of Year 346,848 346,848 - Fund Balance - End of Year 460,665$ 743,593$ 282,928$

The notes to financial statements are an integral part of this statement.27

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

SUPPLEMENTARY INFORMATION


28

INDEX OF SUPPLEMENTAL SCHEDULES REQUIRED

BY THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY FOR THE YEAR ENDED SEPTEMBER 30, 2017

(Schedules included are checked; explanatory notes are provided for omitted schedules).

[√ ] Schedule of Services and Rates

[√ ] Schedule of General Fund Expenditures

[√ ] Temporary Investments

[√ ] Analysis of Taxes Levied and Receivable

[√ ] General Long Term Debt Service Requirements by Years

[√ ] Analysis of Changes in General Long Term Debt

[√ ] Comparative Schedule of Revenues and Expenditures - General Fund

[√ ] Board Members, Key Personnel, and Consultants

[√ ] Principal Taxpayers


29

SERVICES AND RATES

SEPTEMBER 30, 2017 1. Services Provided by the District:

Retail Water Drainage Retail Wastewater Parks

Solid Waste Roads 2. Retail Rates Based on 5/8” Meter

Flat Rate per first Rate per add’l Minimum Minimum Rate 1000 Gallons 1000 Gallons Charge Usage Y/N Over Minimum Over Minimum Water: $ 55.10 -0-gallons N $ 4.75 $6.00-$12.24 Wastewater: $ 65.00 -0-gallons N $ 7.66 $7.66-$ 7.66 Surcharge: -0-

The District employs winter averaging for wastewater usage calculation.

Total water and wastewater charges per 10,000 gallons usage: $ 181.08 3. Retail Service Provided: Number of retail water and/or wastewater connections.

Inactive Active Active Connections Connections EFSC (EFSC) Single Family & Total Water 398 398 -0- Wastewater 398 398 -0-

4. Total Water Consumption (in thousands) During the Year: Gallons pumped into system: 45,009 Gallons billed to customers: 40,024

5. Standby Fees: The District does not assess standby fees. 6. Anticipated sources of funds to be used for debt service payments: Ad Valorem taxes

7. Location of District: The District is located entirely within Travis County. No part of the District is overlapped by the City limits of Bee Cave, Texas. The District is located entirely within the City of Bee Cave, Texas ETJ. The general membership of the Board is not appointed by an office outside the District.

Current:Purchased Services for Resale

Water 169,593$ Wastewater 234,923

404,516 Professional Fees

Audit 12,000 Engineering 6,700 Legal 36,038

54,738 Contracted Services

Accounting 32,258 Management 66,912 Repairs and Maintenance 38,696 Inspection Fees 76,574 Tax Appraisal/Collection 3,335

217,775 Utilities

Electricity 5,057 Laboratory 2,684 Solid Waste Disposal 40,365

48,106 Administrative

Director Salaries and Payroll Taxes 6,620 Insurance 3,868 Printing and Office Supplies 10,678

21,166

Capital Expenditures 25,469

TOTAL EXPENDITURES 771,770$

Number of persons employed by the District: -0-


SCHEDULE OF GENERAL FUND EXPENDITURESFOR THE YEAR ENDED SEPTEMBER 30, 2017

30

AccruedInterest

Identification Balance Receivableor Certificate Interest Maturity at End at End

Number Rate Date of Year of Year

GENERAL FUNDCertificate of Deposit-Allegiance Bank 1002980795 0.8000% 1/18/2018 50,000$ 115$ Certificate of Deposit-Frontier Bank 11817 0.6500% 12/11/2017 50,000 123 Certificate of Deposit-Green Bank 9009004124 0.5000% 10/16/2017 50,000 92 Certificate of Deposit-Green Bank 9009004204 0.9500% 2/19/2018 50,000 89 Certificate of Deposit-Pioneer Bank 80000532 0.6500% 11/11/2017 50,000 123 Certificate of Deposit-Texas Capital Bank 3216000153 0.9000% 3/19/2018 50,000 49 State Investment Pool 7939300004 0.9900% N/A 71,333 -

Total 371,333 591

DEBT SERVICE FUNDCertificate of Deposit-Green Bank 9009004094 0.9500% 2/14/2018 180,000$ 201$ Certificate of Deposit-Pioneer Bank 80000474 0.6500% 2/15/2018 180,000 519 Certificate of Deposit-Texas Capital Bank 3216000152 0.9000% 2/16/2018 240,000 243 State Investment Pool 7939300001 0.9900% N/A - - State Investment Pool 7939300003 0.9900% N/A 108,490 - State Investment Pool 7939300008 0.9900% N/A 22,693 -

Total 731,183 963

CAPITAL PROJECTS FUNDState Investment Pool 7939300002 0.9900% N/A 172,057 - State Investment Pool 7939300005 0.9900% N/A 202,965 - State Investment Pool 7939300007 0.9900% N/A 236,514 -

Total 611,536 -

TOTALS - ALL FUNDS 1,714,052$ 1,554$

31

TEMPORARY INVESTMENTS


SEPTEMBER 30, 2017

Funds

DEBTMAINTENANCE SERVICE

TAXES TAXES

Taxes Receivable, Beginning of Period 2$ 4$

2016 Original Levy 142,500 391,875 Adjustments 21,447 4,074 Add: Penalty & Interest 5,055 2,211

Total to be accounted for 169,004 398,164 Tax collections: Current year 169,002 398,160 Prior years 2 4 Total Collections 169,004 398,164

Taxes Receivable, End of Period 0$ 0$

2016 2015 2014 2013 2012Property Valuations:

Land & Improvements 71,250,043 36,012,268 5,586,938 1,400,324 -

Tax Rates Per $100 Valuation:Debt Service tax rates 0.5500$ 0.5400$ -$ -$ -$ Maintenance tax rates 0.2000$ 0.2100$ 0.7500$ 0.7500$ -$ Totals 0.7500$ 0.7500$ 0.7500$ 0.7500$ -$

Original Tax Levy 534,375$ 270,092$ 41,902$ 10,502$ -$


ANALYSIS OF TAXES LEVIED AND RECEIVABLEFOR THE YEAR ENDED SEPTEMBER 30, 2017

32

DUE TOTAL TOTAL TOTALDURING FISCAL PRINCIPAL INTEREST PRINCIPAL ANDYEARS ENDING DUE DUE INTEREST DUE

2018 130,000 203,330 333,330 2019 135,000 199,430 334,430 2020 145,000 195,380 340,380 2021 150,000 191,030 341,030 2022 160,000 186,530 346,530 2023 165,000 181,730 346,730 2024 175,000 176,780 351,780 2025 185,000 171,355 356,355 2026 190,000 165,250 355,250 2027 200,000 158,600 358,600 2028 210,000 151,200 361,200 2029 220,000 143,220 363,220 2030 235,000 134,420 369,420 2031 245,000 125,020 370,020 2032 255,000 115,220 370,220 2033 270,000 105,020 375,020 2034 285,000 94,220 379,220 2035 295,000 82,820 377,820 2036 310,000 70,725 380,725 2037 330,000 58,015 388,015 2038 345,000 44,485 389,485 2039 360,000 30,340 390,340 2040 380,000 15,580 395,580 2041 - - -

5,375,000$ 2,999,700$ 8,374,700$


GENERAL LONG TERM DEBT SERVICE REQUIREMENTS-BY YEARS


SERIES 2015

33


2018 55,000 98,525 153,525 2019 60,000 96,875 156,875 2020 65,000 95,075 160,075 2021 65,000 93,125 158,125 2022 70,000 91,175 161,175 2023 75,000 89,075 164,075 2024 75,000 86,825 161,825 2025 80,000 84,575 164,575 2026 85,000 81,975 166,975 2027 90,000 78,575 168,575 2028 95,000 74,975 169,975 2029 100,000 71,175 171,175 2030 100,000 67,175 167,175 2031 110,000 63,175 173,175 2032 115,000 58,775 173,775 2033 120,000 54,175 174,175 2034 125,000 49,375 174,375 2035 130,000 44,375 174,375 2036 135,000 39,175 174,175 2037 145,000 33,606 178,606 2038 150,000 27,625 177,625 2039 160,000 21,250 181,250 2040 165,000 14,450 179,450 2041 175,000 7,438 182,438

2,545,000$ 1,522,544$ 4,067,544$




SERIES 2016

34


2018 100,000 143,069 243,069 2019 130,000 141,069 271,069 2020 175,000 138,469 313,469 2021 175,000 133,219 308,219 2022 175,000 127,969 302,969 2023 175,000 122,719 297,719 2024 175,000 117,469 292,469 2025 175,000 112,219 287,219 2026 175,000 106,969 281,969 2027 175,000 101,281 276,281 2028 175,000 95,375 270,375 2029 175,000 89,250 264,250 2030 175,000 83,125 258,125 2031 175,000 76,781 251,781 2032 175,000 70,219 245,219 2033 175,000 63,656 238,656 2034 175,000 56,656 231,656 2035 175,000 49,656 224,656 2036 175,000 42,656 217,656 2037 175,000 35,656 210,656 2038 175,000 28,656 203,656 2039 175,000 21,656 196,656 2040 175,000 14,438 189,438 2041 175,000 7,219 182,219

4,080,000$ 1,979,451$ 6,059,451$




SERIES 2017

35


2018 285,000 444,924 729,924 2019 325,000 437,374 762,374 2020 385,000 428,924 813,924 2021 390,000 417,374 807,374 2022 405,000 405,674 810,674 2023 415,000 393,524 808,524 2024 425,000 381,074 806,074 2025 440,000 368,149 808,149 2026 450,000 354,194 804,194 2027 465,000 338,456 803,456 2028 480,000 321,550 801,550 2029 495,000 303,645 798,645 2030 510,000 284,720 794,720 2031 530,000 264,976 794,976 2032 545,000 244,214 789,214 2033 565,000 222,851 787,851 2034 585,000 200,251 785,251 2035 600,000 176,851 776,851 2036 620,000 152,556 772,556 2037 650,000 127,277 777,277 2038 670,000 100,766 770,766 2039 695,000 73,246 768,246 2040 720,000 44,468 764,468

350,000 14,657 364,657 12,000,000$ 6,501,695$ 18,501,695$

36




ALL SERIES

SERIES SERIES SERIES TOTALS2015 2016 2017

Interest Rate 3.00 - 4.10% 3.00 - 4.25% 2.00 - 4.125%

Dates Interest Payable 3/1 : 9/1 3/1 : 9/1 3/1 : 9/1

Maturity Dates 2017-40 2017-41 2017-41

Bonds-Beginning of Year 5,500,000$ -$ -$ 5,500,000$ Bonds Sold During the Year - 2,545,000 4,080,000 6,625,000 Bonds Defeased During the Year - - - - Retirements During the Year (125,000) - - (125,000)

Bonds-End of Year 5,375,000$ 2,545,000$ 4,080,000$ 12,000,000$

Interest Paid During the Year 207,080$ 70,062$ 80,278$ 357,420$ Accrued Interest-Beginning - - - - Accrued Interest-Ending (313) 8,210 11,923 19,820

Interest on Financial Statements 206,767$ 78,272$ 92,201$ 377,240$

Paying Agent: BOKF BOKF BOKF

Tax RoadBonds Bonds

Bond Authority: Amount Authorized By Voters 42,365,000$ 7,085,000$ Amount Issued 8,045,000$ 4,080,000$ Remaining To Be Issued 34,320,000$ 3,005,000$

Debt Service Fund Cash and Temporary Investments balances as of September 30, 2017 731,183$

Average annual debt service payment (principal & interest) for remaining term of all bond debt 770,904$


ANALYSIS OF CHANGES IN GENERAL LONG TERM DEBT


37

9/30/2017 9/30/2016 9/30/2015 9/30/2014 9/30/2013REVENUESProperty Tax 169,004$ 75,844$ 48,217$ 10,502$ -$ Water Service 228,781 150,515 265,654 70,729 - Wastewater Service 99,964 35,013 - - - Basic Service 421,500 213,303 - - - Tap and Connection Fees 160,020 141,820 71,556 73,929 - Inspection Fees 52,620 47,255 23,230 23,595 - LUE Reservation Fees 34,785 45,765 - - - Interest 1,841 231 948 7 - TOTAL REVENUES 1,168,515 709,746 409,605 178,762 -

EXPENDITURESCurrent: Water Service Fees 169,593 135,602 136,720 51,499 18,815 Wastewater Services 234,923 130,198 - - - Solid Waste Disposal 40,365 19,737 - - - Repairs and Maintenance 38,696 18,952 26,892 15,559 - Inspection Fees 76,574 66,091 30,443 30,025 - Utilities 5,057 6,341 - - - Laboratory Expenses 2,684 2,189 - - - Insurance 3,868 3,812 3,812 3,812 3,812 Tax Assessor -Collector 3,335 1,671 251 60 - Director Salaries and Taxes 6,620 7,589 8,074 6,782 5,632 Legal Fees 36,038 47,409 32,955 77,216 91,042 Audit Fees 12,000 12,000 14,000 - - Accounting 32,258 32,860 28,123 22,615 14,180 Management and Consulting Fees 66,912 29,081 20,560 6,811 - Engineering Fees 6,700 10,800 111,795 57,710 54,238 Printing and Office Supplies 10,678 6,626 2,417 3,396 5,075 Other - - 13,677 7,969 2,188 Capital Expenditures 25,469 - - 205,364 2,648 TOTAL EXPENDITURES 771,770 530,958 429,719 488,818 197,630

OTHER FINANCING SOURCESDeveloper Advances - - 125,290 441,344 160,776 Bond Issuance Costs - - (55,074) - - Transfers (To) From Other Funds - 46,052 - - - TOTAL OTHER SOURCES - 46,052 70,216 441,344 160,776

Excess (Deficit) of Revenues & Other Sources over Expenditures 396,745$ 224,840$ 50,102$ 131,288$ (36,854)$

TOTAL WATER CONNECTIONS 398 245 101 53 - TOTAL WW CONNECTIONS 398 245 96 51 -

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AMOUNTS


COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES - GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017

9/30/2017 9/30/2016 9/30/2015 9/30/2014 9/30/2013

14% 11% 12% 6% n/a20% 21% 65% 40% n/a9% 5% 0% 0% n/a36% 30% 0% 0% n/a14% 20% 17% 41% n/a5% 7% 6% 13% n/a3% 6% 0% 0% n/a0% 0% 0% 0% n/a

100% 100% 100% 100% 0%

15% 19% 33% 29% n/a20% 18% 0% 0% n/a3% 3% 0% 0% n/a3% 3% 7% 9% n/a7% 9% 7% 17% n/a0% 1% 0% 0% n/a0% 0% 0% 0% n/a0% 1% 1% 2% n/a0% 0% 0% 0% n/a1% 1% 2% 4% n/a3% 7% 8% 43% n/a1% 2% 3% 0% n/a3% 5% 7% 13% n/a6% 4% 5% 4% n/a1% 2% 27% 32% n/a1% 1% 1% 2% n/a0% 0% 3% 4% n/a2% 0% 0% 115% n/a66% 75% 105% 273% 0%

0% 0% 31% 247% n/a0% 0% -13% 0% n/a0% 6% 0% 0% n/a0% 6% 17% 247% 0%

34% 32% 12% 73% 0%

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PERCENT OF REVENUES

9/30/2017 9/30/2016 9/30/2015 9/30/2014 9/30/2013REVENUESProperty Tax 398,164$ 195,026$ -$ -$ -$ Interest 4,886 1,496 - - -

TOTAL REVENUES 403,050 196,522 - - -

EXPENDITURESDebt Service: Interest 357,420 181,770 - - - Principal 125,000 - - - - Fiscal Agent Fees 1,015 400 - - -

TOTAL EXPENDITURES 483,435 182,170 - - -

Bond Proceeds & Transfers 384,662 414,160 - - -

Excess (Deficit) of Revenues and Transfers Over Expenditures 304,277$ 428,512$ -$ -$ -$

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AMOUNTS


COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES - DEBT SERVICE FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017

9/30/2017 9/30/2016 9/30/2015 9/30/2014 9/30/2013

99% 99% n/a n/a n/a1% 1% n/a n/a n/a

100% 100% 0% 0% 0%

89% 92% n/a n/a n/a31% 0% n/a n/a n/a0% 0% n/a n/a n/a

120% 93% n/a n/a n/a

95% 211% n/a n/a n/a

75% 218% n/a n/a n/a

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PERCENT OF REVENUES

DISTRICT MAILING ADDRESS: c/o McLean & Howard, LLP, 901 S MoPac, Suite 225, Austin, TX 78746DISTRICT BUSINESS TELEPHONE NUMBER: (512) 328-2008

LIMITS ON FEES OF OFFICETHAT A DIRECTOR MAY RECEIVE DURING A FISCAL YEAR: $7,200TERM OF SALARY REIMBURSEMENTS TITLE AT

NAMES AND ADDRESSES OFFICE FYE 9/30/17 FYE 9/30/17 YEAR ENDDIRECTORSCasey Kopecky Elected 11/12-5/18 1,200$ -$ President

Chris Schedler Elected 5/16-5/20 1,050 - Vice President

Perry Horton Elected 5/16-5/20 1,050 - Secretary

Mark Cater Joseph Appointed 2/14-5/18 1,350 - Treasurer

John Graham Elected 5/16-5/20 1,500 - Asst Sec

Payments to Past Directors - - 6,150$ -$

CONSULTANTSFreeman & Corbett 25,316$ -$ Attorneys-Former

McLean & Howard, LLP 10,722$ -$ Attorneys

West, Davis & Company 12,000$ -$ Auditor

Municipal Accounts & Consulting 32,258$ -$ Accountants

Crossroads Utility Services 66,912$ -$ Operator

Randall Jones & Associates 6,700$ -$ Engineers


BOARD MEMBERS, KEY PERSONNEL, AND CONSULTANTSFOR THE YEAR ENDED SEPTEMBER 30, 2017

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OTHER INFORMATION

% of 2017Taxable Certified TaxableAssessed Assessed

Taxpayer Value Value

Meritage Homes of Texas, LLC 11,700,834$ 10.35%22.52 Bella Colinas JV 6,749,126 5.97%Gehan Homes, Ltd 2,468,577 2.18%Colinas LM, Ltd 2,324,164 2.06%BC 71 Partners, LP 1,552,075 1.37%Terra Colinas, LLC 1,545,338 1.37%M/I Homes of Austin, LLC 1,511,889 1.34%Grand Haven Homes, LP 1,319,842 1.17%Weekley Homes, LLC 1,092,500 0.97%Navem, LLC 1,075,343 0.95% Total 31,339,688$ 27.72%

2017TaxableAssessed

Type of Property Value

Land and Improvements 113,053,981$ Personal Property - Total Assessed Valuation 113,053,981 Exemptions - Total Taxable Appraised Valuation 113,053,981$

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PRINCIPAL TAXPAYERSSEPTEMBER 30, 2017

ASSESSED VALUE BY CLASSIFICATIONSEPTEMBER 30, 2017

Documents

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