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03.09.2026 TC Agenda Packet TOWN OF TROPHY CLUB TOWN COUNCIL WORK SESSION AND REGULAR MEETING AGENDA March 9, 2026 6:00 PM Council Chambers 1 Trophy Wood Drive Trophy Club, Texas 76262 CALL WORK SESSION TO ORDER AND ANNOUNCE A QUORUM WORK SESSION ITEM 1. Presention and discussion of updates to the rental registration ordinance and process. (Tamara Smith, Assistant Town Manager) ADJOURN WORK SESSION CALL REGULAR MEETING TO ORDER (immediately following Work Session or 7:00 p.m., whichever is later) INVOCATION led by Rev. Bill Eason, Fellowship United Methodist Church PLEDGES led by Council Member Pledge of Allegiance to the American Flag Pledge of Allegiance to the Texas Flag PUBLIC COMMENT(S) This is an opportunity for citizens to address the Council on any matter pursuant to Texas Government Code 551.007. The Council is not permitted to discuss or take action on any presentations made concerning matters that are not listed on the agenda. Presentations are limited to matters over which the Council has authority. Speakers have up to three (3) minutes or the time limit determined by the Presiding Officer. Each speaker is requested to complete the Speaker’s Form prior to speaking or may email mayorandcouncil@trophyclub.org COMMUNITY SPOTLIGHT 2. Proclamation - Volunteerism in the Town of Trophy Club 3. Working for You... Trophy Club a) Update from Town Council Members b) Update from Town Manager (Brandon Wright, Town Manager) Page 1 of 212 c) Quick Civic Tip (Dean Roggia, Town Attorney) CONSENT AGENDA This part of the agenda consists of non-controversial, or "housekeeping" items required by law. Items may be removed from Consent by any council member by making such request prior to a motion and vote. 4. Consider approval of the February 23, 2026, Town Council work session and regular meeting minutes. (Tammy Dixon, Town Secretary) INDIVIDUAL ITEMS 5. Consider accepting the Annual Comprehensive Financial Report for the Town of Trophy Club Fiscal Year 2025. (April Duvall, Director of Finance) 6. Consider an ordinance amending Section 12.04.003 "Prohibited Parking Generally" of the Trophy Club Code of Ordinances in its entirety to amend the parking restriction on Indian Creek Drive to apply to the section between Trophy Club Drive and Hogans Drive, to indicate parking restrictions at marked or unmarked crosswalks, and to renumber the remaining sections. (Brandon Wright, Town Manager) EXECUTIVE SESSION Pursuant to the following designated sections of the Texas Government Code, Annotated, Chapter 551 (Texas Open Meetings Act), the Town Council will recess into executive session to discuss the following: 7. Section 551.072 Deliberation regarding the purchase, exchange, lease, or value of real property owned by the Town and related to the Town’s elevated storage tank and the Town’s water and wastewater infrastructure located in the Public Improvement District. 8. Section 551.071 Consultation with the Town Attorney to seek legal advice regarding pending or contemplated litigation with SHRI Siddhi Vinayak LLC, a/k/a Shri Siddhi Vinayakm LLC, dba Holiday Inn & Suites, and Raj Patel, owner(s) of Holiday Inn Trophy Club, to pursue recovery of delinquent taxes and associated collection costs. RECONVENE INTO REGULAR SESSION 9. Consider authorizing the Town Manager and Town Attorney to file legal action against SHRI Siddhi Vinayak LLC, a/k/a Shri Siddhi Vinayakm LLC, dba Holiday Inn & Suites, and Raj Patel, owner(s) of Holiday Inn Trophy Club, to pursue recovery of delinquent taxes and associated collection costs. (April Duvall, Director of Finance) ADJOURN The Town Council may convene into executive session to discuss posted items as allowed by Texas Government Code Sections 551.071 through 551.076 and Section 551.087. I do hereby certify that the notice of meeting was posted on the bulletin board at the Town Hall for the Town of Trophy Club, Texas, in a place convenient and readily accessible to the general public at all times on the following date and time: March 3, 2026, at 3:35 p.m., and said Notice of Meeting was also posted concurrently on the Town’s website in accordance with Texas Government Code Ch. 551. Tammy Dixon, Town Secretary • In accordance with section 551.127 of the Texas Government Code (Open Meeting Act) this meeting will be an in-person meeting with either a member of Town Council, staff, or consultant, participating by video conference. The public meeting location will be Trophy Club Town Hall, 1 Trophy Wood Drive, Texas. The Mayor, as presiding officer of Town Council, and a quorum of the Town Council will be physically present at this location. The location where the Mayor is physically present shall be open to the public during the open portions of the meeting. Page 2 of 212 • BUDGET STATEMENT: Pursuant to Section 551.043, Government Code, the following taxpayer impact statement must be on the Town Council meeting agenda at which the Town Council will discuss or adopt a budget for the Town of Trophy Club: For an average-valued homestead property ($714,324.00), the Town’s portion of the property tax bill in dollars for the current fiscal year (FY2025) is $2,967.79, the Town’s portion of the property tax bill for the upcoming fiscal year (FY2026) for the same property if the proposed budget is adopted is estimated to be $2,949.19, and the Town’s portion of the property tax bill in dollars for the upcoming fiscal year (FY2026) for the same property if a budget funded at the no-new-revenue rate under Chapter 26, Tax Code, is adopted is estimated to be $2,809.82. • If you plan to attend this public meeting and have a disability that requires special needs, please contact the Town Secretary’s Office at 6822372900, 48 hours in advance, and reasonable accommodations will be made to assist you. Page 3 of 212 TOWN COUNCIL COMMUNICATION MEETING DATE: March 9, 2026 FROM: Tamara Smith, MSL, Assistant Town Manager AGENDA ITEM: Presention and discussion of updates to the rental registration ordinance and process. (Tamara Smith, Assistant Town Manager) BACKGROUND/SUMMARY: The Town of Trophy Club’s Strategic Plan focus area, "Upholding Housing Standards", includes an initiative for FY 2026 to analyze the long-term rental registration program and recommend potential improvements. During the January 2026 Council Retreat, the Town Council revised the corresponding short-term rental initiative to address new state law changes and mitigate legal risk. Together, these two initiatives play complementary roles in supporting the Town’s overall housing standards and regulatory framework. Staff reviewed Chapter 3, Building Regulations, Article 3.11 (Single-Family Residence Licensing). The current ordinance does not fully align with the operational expectations of the program and requires revisions to modernize standards, improve clarity, and strengthen enforcement mechanisms. The work shop presentation and discussion will review staff recommendations, as presented below, for updates to the ordinance. Key Proposed Updates: Expanded Applicability: The ordinance is recommended to be broadened to apply to all residential rental properties, including single-family homes, multi-family units, and multi-family dwelling complexes. Staff is also proposing a title change for the Article from Single-Family Residence Licensing to Single-Family and Multi-Family Residential Rental Housing. Licensing Requirements Modified: Additional language can be added specifying that no rental unit may be advertised, leased, or operated without a license. New Provisions Added: Staff recommends that the following provisions be added to the ordinance. • Establishing a one-year license term with required renewals within 30 days of expiration • Requiring a late fee for renewals filed more than 30 days after expiration • Requiring that the landlord must be current on town fees, taxes, and assessments before issuance/renewal Page 4 of 212 Tennant Responsibilities:The draft ordinance clearly outlines tenant responsibilities, including: • Maintaining interior and exterior areas under their control in sanitary condition • Avoiding violations of adopted construction and maintenance codes • Complying with all Town ordinances Code References and Compliance: Additional specificity is recommended to be included regarding compliance with applicable building, electrical, plumbing, health, and zoning codes. The intent of the new language is to remain flexible to prevent frequent amendments when related codes are updated. Inspections: Staff's recommendation includes provisions allowing for inspections to support code compliance and program enforcement. Inspections would be able to occur: • Upon application or renewal • Upon change in tenancy • For reinspection after failed inspection • Upon tenant request • Upon complaint, report, or observation of a critical or life-safety violation New Definitions Added: • Critical violation • Life safety violation • Mult-family rental unit • Rental unit • Occupant • Administrator • Department Enforcement Changes: Potential modifications include adding a process and structure for the suspension and revocation of the rental registration license. • Temporary suspension for life safety violations • Suspension for critical violations • Revocation after 3 or more critical/life safety violations in 12 months • One-year prohibition on reapplication after revocation Page 5 of 212 Multi-Family Enforcement Added: Potential modifications include adding enforcement for multi-family complexes. • Licensing requirements for multi-family complexes • Emergency contact requirements • Utility contact requirements • Mortgage lienholder disclosure • Complex-level enforcement and certificate of occupancy revocation Application Requirements Expanded:The single-family application process can be amended to require the following: • Email addresses • Government-issued ID number • Smoke detector & carbon monoxide certification • Tenant contact (if available) • Certification to comply with all federal, state, and local laws Appeal Process Modified: Potential changes include requiring that landlord appeals must be filed within 15 days. Staff recommends that appeals be filed with the Zoning Board of Adjustment to review. Occupancy: Town staff will present and discuss potential rental property occupancy regulations that are likely permissible if not overly restrictive and not in conflict with renters' established rights. Density Regulations: Staff will discuss options related to density regulations for rental properties. Density regulations, particularly for long-term rentals, are difficult to enforce because they are considered a standard residential use. Parking Regulations: Parking restrictions, similar to the structure adopted for assisted living facilities, are likely permissible for rental properties. Nexty Steps: The revised ordinance will require approvals from the Planning & Zoning Commission as well as the Town Council. Below are the consideration dates currently anticipated: • Planning & Zoning Commission: April 2, 2026 Page 6 of 212 • Town Council: April 27, 2026 Overall, updates to the ordinance are designed to strengthen the rental registration program, enhance accountability, and ensure alignment with current legal standards and operational needs. Both long-term and short-term rental matters will be discussed during the work session to obtain direction from Town Council prior to presenting desired ordinance amendments to the Planning & Zoning Commission. BOARD REVIEW/CITIZEN FEEDBACK: N/A FISCAL IMPACT: Below are the current fees associated with the rental registration license process. Staff recommends that the amounts remain the same. Residencial Rental $120 Reinstatement $120 Additional Licenses $25 Reinspection $75 LEGAL REVIEW: Rachel Raggio, TOASE Attorney, has assisted in developing recommendations to the ordinance, which remains in draft form pending further direction from the Council. ATTACHMENTS: 1. Presentation 2. Rental Property Registration License ACTIONS/OPTIONS: This agenda item is being presented for discussion purposes only. No action will be taken by the Town Council during the work shop. Page 7 of 212 Rental Registration Updates Page 8 of 212 Initiative: Analyze the long-term rental registration program and recommend program improvements. Page 9 of 212 Key License Process Updates Page 10 of 212 •Current Name: Home Rental & Lease License Application •Current Processing: Currently available on the Town website and submitted via email or in-person for processing. •Enforcement: No enforcement Current/New Program Changes •New Name: Rental Property Registration License •New Processing: Submitted through an online portal using a new module within the updated permitting software. •New Enforcement: Potential Partnership with the MUD Page 11 of 212 The new Rental Property Registration License includes several additional elements that are not captured on the existing Home Rental License form, including: •Property type classification (Single-Family, Duplex, Multi-Family, Townhomes) •Detailed fee schedule •Tenant name and contact information •Total occupancy count and number of unrelated occupants •Expanded property management company section •“No property manager” checkbox option •Registration tracking fields (Registration Number, Registration Date, and Proration, if applicable) These additions provide more comprehensive property, occupancy, and administrative tracking information than the current Home Rental License form. Application Changes Page 12 of 212 Incorporate a January-December timeline for applications and prorate the remaining year. Application Changes Page 13 of 212 Key Ordinance Updates Page 14 of 212 The ordinance will be broadened to apply to all residential rental properties, including: •single-family homes, •multi-family units, and •multi-family dwelling complexes Article title change from: •Single-Family Residence Licensing To: •Single-Family and Multi-Family Residential Rental Housing. Expanding Applicability Page 15 of 212 No rental unit may be advertised, leased, or operated without a license. No license will be issued if inspection shows noncompliance. Licensing Requirements Modified New Provisions Added: •One-year license term with required renewal within 30 days of expiration •Late fee for renewal filed more than 30 days after expiration •Landlord must be current on town fees, taxes, and assessments before issuance/renewal Page 16 of 212 Additional specificity has been incorporated regarding compliance with applicable building, electrical, plumbing, health, and zoning codes. Language remains flexible to prevent the need for frequent amendments when related codes are updated. Code References and Compliance Page 17 of 212 The draft includes provisions allowing for inspections to support code compliance and program enforcement. Inspections Now inspections may occur: •Upon application or renewal •Upon change in tenancy •For reinspection after failed inspection •Upon tenant request •Upon complaint, report, or observation of a critical or life-safety violation •Reinspections at the discretion of the building inspector if multiple violations are found. Page 18 of 212 •Critical violation •Life safety violation •Mult-family rental unit •Rental unit •Occupant •Administrator •Department New Definitions Added Page 19 of 212 Suspension & Revocation Structure Added Enforcement Changes •Temporary suspension for life safety violations •Suspension for critical violations •Revocation after 3 or more critical/life safety violations in 12 months •One-year prohibition on reapplication after revocation Page 20 of 212 Multi-Family Enforcement •Licensing requirements for multi- family complexes •Emergency contact requirements •Utility contact requirements •Mortgage lienholder disclosure •Complex-level enforcement and certificate of occupancy revocation New Division Page 21 of 212 •Appeal’s will work through ZBA •Appeals must be filed within 15 days Appeal Process Page 22 of 212 •State law allows for 3 adults per bedroom; HUD allows for 2 people per bedroom. •An occupancy limit is likely permissible if it is not overly restrictive. •The key is avoiding unreasonable interference with rental rights. Occupancy Regulations Page 23 of 212 •Density caps are easier to justify for short-term rentals. •Long-term rentals are harder to regulate this way because they are a standard residential use. •Could implement a density limitation with a special exception process allowing the ZBA to approve higher density upon meeting certain criteria. •Limiting application to single-family zoning districts only. •Multi-family housing does not appear permitted in zoning districts per the use table. Density Regulations Page 24 of 212 •A regulation similar to what was adopted for community homes is likely permissible. •Parking restrictions would probably not unreasonably interfere with the ability to rent a home. •Parking regulations appear legally low-risk if structured similarly to existing regulations. Parking Regulations Page 25 of 212 The revised ordinance and new application is anticipated to be presented to: •Planning and Zoning Commission: April 2, 2026 •Town Council: April 27, 2026 Next Steps Page 26 of 212 Questions Page 27 of 212 social media | email | website Page 28 of 212 R E N T A L P R O P E R T Y R E G I S T R A T I O N L I C E N S E PROPERTY TYPE: FEE CHART: RESIDENCIAL RENTAL $120.00 REINSTATEMENT $120.00 ADDITIONAL LICENSES $25.00 TOWNHOMESMULTI-FAMILYDUPLEX PROPERTY OWNER NAME:RENTAL PROPERTY ADDRESS: OFFICE USE ONLY OWNER’S INFORMATION: EMAIL: TOWN OF TROPHY CLUB 1 TROPHY WOOD DRIVE TROPHY CLUB, TEXAS 76262 682-237-2900 PRIMARY PHONE: OWNER’S MAILING ADDRESS: ADDRESS: CITY:STATE:ZIPCODE: SINGLE-FAMILY REINSPECTION $75.00 REGISTRATION NUMBER: REGISTRATION DATE: PRORATION (IF APPLICABLE): ALL LICENSES SHALL EXPIRE TWELVE (12) MONTHS FROM THE DATE OF ISSUANCE. PROPERTY MANAGEMENT COMPANY: IF YOU DO NOT HAVE A PROPERTY MANAGER, PLEASE CHECK HERE. MANAGEMENT COMPANY: CONTACT NAME: PRIMARY PHONE: ALTERNATE PHONE: TENANT NAME:PRIMARY PHONE: READ AND SIGN: I HEREBY CERTIFY BY MY SIGNATURE BELOW THAT: 1) I AGREE TO ABIDE BY ALL LAWS AND ORDINANCES GOVERNING RENTAL PROPERTIES, AND 2)I HAVE READ AND EXAMINED THIS APPLICATION AND AGREE ALL OF THE INFORMATION I PROVIDED IS TRUE AND ACCURATE TO THE BEST OF MY KNOWLEDGE. SIGNATURE DATE NUMBER OF BEDROOMS:1-BEDROOM 2-BEDROOM 3-BEDROOM 4+ BEDROOMS NUMBER OF PEOPLE RESIDING IN THE HOME:HOW MANY UNRELATED? Page 29 of 212 Office of the Mayor Proclamation COMMITMENT TO VOLUNTEERISM IN THE TOWN OF TROPHY CLUB, TEXAS WHEREAS, the Town of Trophy Club firmly believes that the values of compassion, empathy, and community support are the foundation of a united harmonious society and fosters connections; and WHEREAS, the strength and prosperity of our cities, towns, and villages are based in the selflessness of its residents to serve and uplift one another; and WHEREAS, Trophy Club acknowledges the profound impact that can be achieved when residents extend a helping hand to neighbors, especially lifting them up and collectively working to improve lives; and WHEREAS, Trophy Club nurtures a culture of giving within our community, emphasizing that volunteerism is not just a duty but a source of personal fulfillment and community strength; and as we work side by side and learn from each other, mutual understanding and compassion increases and new friendships are built; and WHEREAS, the Town of Trophy Club urges all citizens to care for one another, volunteer, and engage in acts of service and kindness that contribute to our town’s betterment and its inhabitants’ well-being; and WHEREAS, the Town of Trophy Club, Texas has joined a growing list of communities making a commitment to volunteerism; and WHEREAS, the Town of Trophy Club has many volunteer organizations such as JustServe Clubs, the Trophy Club Young Men’s Service League, Trophy Club Rotary, Trophy Club Women’s Club, Trophy Club Emergency Volunteer Association, Trophy Club Stars and Stripes, Metroport Veterans Association, Trophy Club Active Adults, Keep Trophy Club Wild and several church organizations along with many other groups that provide thousands of volunteer hours every year; NOW, THEREFORE, I, Jeannette Tiffany, Mayor of the Town of Trophy Club, Texas, and on behalf of the Trophy Club Town Council do hereby commend all those who volunteer and recognize JustServe.org as a valuable tool to identify service needs in the Trophy Club community and match those needs with Trophy Club volunteers to make it easier for residents to find and engage in volunteer opportunities and do hereby desire to regularly acknowledge and celebrate the contributions of Trophy Club volunteers. PROCLAIMED AND SIGNED on this the 9th day of March 2026. ________________________________________ Jeannette Tiffany, MAYOR Page 30 of 212 TOWN COUNCIL COMMUNICATION MEETING DATE: March 9, 2026 FROM: Tammy Dixon, Town Secretary AGENDA ITEM: Consider approval of the February 23, 2026, Town Council work session and regular meeting minutes. (Tammy Dixon, Town Secretary) BACKGROUND/SUMMARY: The Town Council held a work session and regular meeting on February 23, 2026. BOARD REVIEW/CITIZEN FEEDBACK: N/A FISCAL IMPACT: N/A LEGAL REVIEW: N/A ATTACHMENTS: 1. 02.23.2026 TC Meeting Minutes draft ACTIONS/OPTIONS: Move to approve the February 23, 2026,Town Council work session and regular meeting minutes. Page 31 of 212 Town of Trophy Club Town Council Work Session and Regular Meeting Meeting Minutes – February 23, 2026, 6:00 p.m. 1 Trophy Wood Drive, Trophy Club, Texas 76262 CALL WORK SESSION TO ORDER Mayor Tiffany called the work session to order at 6:00 p.m. COUNCIL MEMBERS PRESENT Jeannette Tiffany, Mayor Rhylan Rowe, Mayor Pro Tem Stacey Bauer, Council Member Place 1 Jeff Beach, Council Member Place 2 Dennis Sheridan, Council Member Place 3 Garry Ash, Council Member Place 5 COUNCIL MEMBERS ABSENT Steve Flynn, Council Member Place 6 STAFF MEMBERS PRESENT Brandon Wright, Town Manager Tammy Dixon, Town Secretary Dean Roggia, Town Attorney Jill Lind, Director of Communications April Duvall, Director of Finance Chase Ellis, Director of Parks and Recreation Patrick Arata, Chief of Police Jason Wise, Fire Chief Matt Cox, Director of Community Development WORK SESSION ITEM 1. Discussion regarding Section 12.04.003 Prohibited Parking Generally of the Trophy Club Code of Ordinances and the existing parking restrictions on Indian Creek Drive and Trophy Club Drive. (Dennis Sheridan, Council Member) Councilmember Sheridan provided historical context, noting that the ordinance was originally adopted in 1986 and has been amended multiple times; however, the Indian Creek provisions have remained largely unchanged. He expressed concern that approximately 16–17 residences are currently unable to park in front of their homes under the existing language. He proposed the following changes: Page 32 of 212 Town Council Meeting Minutes – February 23, 2026 Page 2 Section 12.04.030(1): Modify the restriction to apply only between Trophy Club Drive and Hogan’s Drive (the four-lane divided section), thereby removing restrictions east of Hogan’s Drive. Section 12.04.030(2): Eliminate this subsection in its entirety, removing additional no-parking areas along Indian Creek. Section 12.04.030(3) (Trophy Club Drive): Leave unchanged. The consensus of the Council supported the recommended changes. Council also discussed the possibility of implementing traffic calming lanes along Trophy Club Drive (from Bobcat Boulevard southward), citing safety concerns and increased use by children on scooters and e-bikes. Staff indicated they could gather data for future consideration. ADJOURN WORK SESSION Mayor Tiffany adjourned the work session at 6:20 p.m. CALL REGULAR MEETING TO ORDER Mayor Tiffany called the regular meeting to order at 7:00 p.m. INVOCATION Rev. Bill Eason, Fellowship United Methodist Church led the invocation. PLEDGES Mayor Pro Tem Rowe led the Pledge of Allegiance to the American and Texas Flags. PUBLIC COMMENTS Patricia Keefer submitted public comment via email regarding the construction project on Forest Hill. Denise Gant, 226 Fresh Meadow Drive requested a smoother finish on Forest Hill. Brandon Blake, 2 Palmetto Court complimented the water line project in front of his house. Patti Stolte, 104 Forest Hill, also requested smooth finish on Forest Hill and spoke about not being able to get out of her driveway. Page 33 of 212 Town Council Meeting Minutes – February 23, 2026 Page 3 COMMUNITY SPOTLIGHT 1. Working for You... Trophy Club a) Update from Town Council Members Council Member Sheridan stated that he had received several emails regarding the road finish on the Forest Hill project and, in his opinion, the concern is cosmetic in nature and related to the appearance of the road surface. He noted that some roads were constructed more than 45 years ago prior to municipal supervision, including Forest Hill, which contains a 9.8% slope that exceeds what current engineering standards would recommend. He stated that the Town has used broom finishes on its roads since the la te 1980s, which is both a regional and nationwide standard, and that this finish is safe for pedestrians, bicyclists, strollers, skateboards, and vehicles. He expressed support for staff’s recommendation to use a broom finish. Mayor Tiffany announced that the NISD Te chno Expo will be held on Thursday, February 26. In partnership with Lakeview Elementary fourth graders, the Mayor and Town Secretary Tammy Dixon will participate in a council meeting simulation demonstrating how local government passes a law. The simulation will in clude student participants serving in public comment and council member roles and will involve consideration of a mock ordinance regarding helmet requirements. b) Update from Town Manager (Brandon Wright, Town Manager) Town Manager Wright provided an update on upcoming community events , projects and meetings: • March 6 - Movie Night at Harmony Park featuring How to Train Your Dragon, with activities beginning at 6:00 p.m. and the movie starting at 6:45 p.m. • March 28 – EGGstravagana at Harmony Park, 9:00 – 11:00 a.m. • Upcoming Board and Commission Meetings: o February 25 – Economic Development Corporation Meeting, 6:00 p.m. o March 12 - Planning and Zoning Commission Meeting, 6:00 p.m. o March 16 - Parks and Recreation Board, 6:00 p.m. • Upcoming Town Council Meetings: o March 9 - Town Council Regular Meeting o March 23 – Town Council Special Meeting, 6:00 p.m. o April 13 – Town Council Regular Meeting c) Quick Civic Tip (Dean Roggia, Town Attorney) Town Attorney Dean Roggia provided an overview of Section 9.05.033 of the Town Code establishing the Chief of Police as the Town’s chief law enforcement officer and outlined recent state law updates, including changes to the Texas Code of Criminal Procedure, Article 2B. He explained that new reporting requirements adopted in 2023 and Page 34 of 212 Town Council Meeting Minutes – February 23, 2026 Page 4 effective in 2025 are reflected in items presented on the agenda by the Police Department. CONSENT AGENDA 3. Consider approval of the January 22, 2026, Town Council Retreat Minutes, the January 23, 2026, Town Council Retreat Minutes, and the February 9, 2026, Town Council Regular Meeting Minutes. (Tammy Dixon, Town Secretary) 4. Consider authorizing the Town Manager to negotiate and execute a professional consulting services agreement with Tradition Energy for professional consulting services related to the solicitation of electric provider services for the Town of Trophy Club. (April Duvall, Director of Finance) 5. Consider authorizing the Town Manager to negotiate and execute an engineering and construction contract with Freedom Construction in the amount of $240,902.12 for the construction of covered parking structures in the gated police department parking lot. (Patrick Arata, Police Chief) 6. Consider a resolution authorizing the Town Manager to negotiate and execute a special warranty deed for the purchase of 1.09 acres of land owned by Northwest Independent School District for property located in the remainder of Lot 2, Block 2, NISD High School No. 2 Addition, generally located at the northwest corner of Bobcat Boulevard and Marshall Creek Road. (Brandon Wright, Town Manager) The caption of the resolution reads as follows: RESOLUTION NO. 2026-04 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF TROPHY CLUB, TEXAS, AUTHORIZING THE TOWN MANAGER TO NEGOTIATE AND EXECUTE A SPECIAL WARRANTY DEED FOR THE PURCHASE OF 1.09 ACRES OF LAND OWNED BY NORTHWEST INDEPENDENT SCHOOL DISTRICT FOR PROPERTY LOCATED IN THE REMAINDER OF LOT 2, BLOCK 2, NISD HIGH SCHOOL NO. 2 ADDITION, GENERALLY LOCATED AT THE NORTHWEST CORNER OF BOBCAT BOULEVARD AND MARSHALL CREEK ROAD; AND PROVIDING AN EFFECTIVE DATE. 7. Consider a resolution authorizing the Town Manager to negotiate and execute a public right of way easement for the purchase of a 0.193 acre easement on property owned by Northwest Independent School District located in the remainder of Lot 1, Block 2, NISD High School No. 2 Addition, and the purchase of a 0.071 acre easement in two parts on property owned by Northwest Independent School District located in Lot 1, Block 1, NISD High School No. 2 Addition, generally located at the southeast corner of Bobcat Boulevard and Marshall Creek Road, and across from Marshall Creek Drive on the north side of Bobcat Boulevard, and on the north side of Bobcat Boulevard at High School Entrance No. 4. (Brandon Wright, Town Manager) The caption of the resolution reads as follows: Page 35 of 212 Town Council Meeting Minutes – February 23, 2026 Page 5 RESOLUTION NO. 2026-05 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF TROPHY CLUB, TEXAS, AUTHORIZING THE TOWN MANAGER TO NEGOTIATE AND EXECUTE A PUBLIC RIGHT-OF-WAY EASEMENT FOR THE PURCHASE OF A 0.193 ACRE EASEMENT ON PROPERTY OWNED BY NORTHWEST INDEPENDENT SCHOOL DISTRICT LOCATED IN THE REMAINDER OF LOT 1, BLOCK 2, NISD HIGH SCHOOL NO. 2 ADDITION, AND A 0.071 EASEMENT IN TWO PARTS ON PROPERTY OWNED BY NORTHWEST INDEPENDENT SCHOOL DISTRICT LOCATED IN LOT 1, BLOCK 1, NISD HIGH SCHOOL NO. 2 ADDITION, GENERALLY LOCATED AT THE SOUTHEAST CORNER OF BOBCAT BOULEVARD AND MARSHALL CREEK ROAD, AND ACROSS FROM MARSHALL CREEK DRIVE ON THE NORTH SIDE OF BOBCAT BOULEVARD AND ON THE NORTH SIDE OF BOBCAT BOULEVARD AT HIGH SCHOOL ENTRANCE NO. 4; AND PROVIDING AN EFFECTIVE DATE. Mayor Pro Tem Rowe moved to approve the Consent Agenda Items 3 - 7. Council Member Beach seconded the motion. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 INDIVIDUAL ITEMS 8. Conduct a public hearing and consider an ordinance amending Chapter 1, Division 1, Article 1.08 "Parks and Recreation", of the Trophy Club Code of Ordinances by amending Section 108.001(b) "Adoption" by adopting updated standards of care for youth programs. (Chase Ellis, Director of Parks & Recreation) Conduct Public Hearing Mayor Tiffany opened the public hearing at 7:18 p.m. Chase Ellis, Director of Parks and Recreation, presented the item. No one spoke in favor or opposition. Mayor Tiffany closed the public hearing at 7:20 p.m. Consider Ordinance Approval Mayor Pro Tem Rowe moved to approve Ordinance No. 2026-06 amending Chapter 1, Division 1, Article 1.08 "Parks and Recreation", of the Trophy Club Code of Ordinances by amending Section 108.001(b) "Adoption" by adopting updated standards of care for youth programs. Council Member Sheridan seconded the motion. The caption of the ordinance reads as follows: Page 36 of 212 Town Council Meeting Minutes – February 23, 2026 Page 6 ORDINANCE NO. 2026-06 AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, AMENDING CHAPTER 1, DIVISION 1, ARTICLE 1.08 “PARKS AND RECREATION”, OF THE CODE OF ORDINANCES, TOWN OF TROPHY CLUB, TEXAS, BY AMENDING SECTION 1.08.001(b) “ADOPTION” BY ADOPTING UPDATED STANDARDS OF CARE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 9. CASE PD-AMD-26-001, PD-27 Amendment (The Trails) Conduct a public hearing and consider an ordinance amending Planned Development District 27 (PD -27), to revise the Concept Plan and Development Standards for "The Trails" development, an 18-lot single-family residential subdivision on approximately 7.603 acres generally located north of Macquarie Street and Milson's Point Drive, situated in the Thomas J. Allen Survey, Abstract No. 7, and JS Kenley Survey, Abstract No. 1641, Town of Trophy Club, Denton County, Texas. (Matt Cox, Director of Community Development) Conduct Public Hearing Mayor Tiffany opened the public hearing at 7:24 p.m. Matt Cox, Director of Community Development, presented the item. No one spoke in favor or opposition. Mayor Tiffany closed the public hearing at 7:27 p.m. Consider Ordinance Approval Council Member Sheridan moved to approve Ordinance No. 2026-07 amending Planned Development District 27 (PD-27), to revise the Concept Plan and Development Standards for "The Trails" development, an 18-lot single-family residential subdivision on approximately 7.603 acres generally located north of Macquarie Street and Milson's Point Drive, situated in the Thomas J. Allen Survey, Abstract No. 7, and JS Kenley Survey, Abstract No. 1641, Town of Trophy Club, Denton County, Texas. Mayor Pro Tem Rowe seconded the motion. The caption of the ordinance reads as follows: Page 37 of 212 Town Council Meeting Minutes – February 23, 2026 Page 7 ORDINANCE NO. 2026-07 AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, AMENDING ORDINANCE NO. 2025-36 P&Z, THE SAME BEING AN ORDINANCE AMENDING P&Z ORDINANCE NUMBERS 2010-16; 2010-13; 2010-12; 2010-01; 2009-30; 2009-01; 2008-39; 2007-30; 2007-15; AND 2006-11; KNOWN AS PD PLANNED DEVELOPMENT DISTRICT NO. 27 (“PD-27”); TO AMEND THE DEVELOPMENT STANDARDS AND PROVIDE FOR A NEW CONCEPT PLAN FOR DEVELOPMENT OF “THE TRAILS”, AN 18-LOT SINGLE-FAMILY RESIDENTIAL SUBDIVISION; AMENDING ORDINANCE NO. 2000-06 THE COMPREHENSIVE ZONING ORDINANCE AND THE OFFICIAL ZONING MAP; PROVIDING A SAVINGS AND REPEALER CLAUSE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A PENALTY NOT TO EXCEED THE SUM OF TWO THOUSAND DOLLARS ($2,000.00) FOR EACH OFFENSE AND A SEPARATE OFFENSE SHALL BE DEEMED COMMITTED EACH DAY DURING OR ON WHICH A VIOLATION OCCURS OR CONTINUES; PROVIDING FOR PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 10. CASE PD-AMD-26-002, PD-37 Amendment (Bobcat Village Phase I & Phase II) Conduct a public hearing and consider an ordinance amending Planned Development District 37 (PD-37) to revise the Concept Plan and Development Standards for Bobcat Village Phase I & Ph ase II, a townhome residential district on approximately 4.9 acres located on Bobcat Boulevard, situated in the Thomas H. Callaway Survey, Abstract No. 272, Thomas Kelly Survey, Abstract No. 704, Town of Trophy Club, Denton County, Texas. (Matt Cox, Direct or of Community Development) Conduct Public Hearing Mayor Tiffany opened the public hearing at 7:29 p.m. Matt Cox, Director of Community Development, presented the item. No one spoke in favor or opposition. Mayor Tiffany closed the public hearing at 7:33 p.m. Consider Ordinance Approval Mayor Pro Tem Rowe moved to approve Ordinance No. 2026-08 amending Planned Development District 37 (PD-37) to revise the Concept Plan and Development Standards for Bobcat Village Phase I & Phase II, a townhome residential district on Page 38 of 212 Town Council Meeting Minutes – February 23, 2026 Page 8 approximately 4.9 acres located on Bobcat Boulevard, situated in the Thomas H. Callaway Survey, Abstract No. 272, Thomas Kelly Survey, Abstract No. 704, Town of Trophy Club, Denton County, Texas. Council Member Beach seconded the motion. The caption of the ordinance reads as follows: ORDINANCE NO. 2026-08 AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, AMENDING ORDINANCE NO. 2021-28 P&Z; KNOWN AS PD PLANNED DEVELOPMENT DISTRICT NO. 37 (“PD-37”); TO PROVIDE FOR A NEW CONCEPT PLAN FOR THE DEVELOPMENT OF A 35-UNIT TOWNHOME/TOWNHOUSE SUBDIVISION; AMENDING ORDINANCE NO. 2000-06 THE COMPREHENSIVE ZONING ORDINANCE AND THE OFFICIAL ZONING MAP; PROVIDING A SAVINGS AND REPEALER CLAUSE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A PENALTY NOT TO EXCEED THE SUM OF TWO THOUSAND DOLLARS ($2,000.00) FOR EACH OFFENSE AND A SEPARATE OFFENSE SHALL BE DEEMED COMMITTED EACH DAY DURING OR ON WHICH A VIOLATION OCCURS OR CONTINUES; PROVIDING FOR PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 11. CASE PP-26-002 Bobcat Village Phase I, formerly Well Site 1H (Preliminary Plat) Consider a preliminary plat request for Bobcat Village Phase I, formerly well site 1H, a townhome residential development on approximately 2.788 acres located on Bobcat Boulevard, within the Thomas H. Callaway Survey, Abstract No. 272, and the Thomas Kelly Survey, Abstract No. 704, Town of Trophy Club, Denton County, Texas. (Matt Cox, Director of Community Development) Matt Cox, Director of Community Development, presented the item and answered questions from the Council. Mayor Pro Tem Rowe moved to approve a preliminary plat request for Bobcat Village Phase I, formerly well site 1H, a townhome residential development on approximately 2.788 acres located on Bobcat Boulevard, within the Thomas H. Callaway Survey, Abstract No. 272, and the Thomas Kelly Survey, Abstract No. 704, Town of Trophy Club, Denton County, Texas as modified to add the capped well head. Council Member Beach seconded the motion. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 Page 39 of 212 Town Council Meeting Minutes – February 23, 2026 Page 9 12. CASE PP-26-003 Bobcat Village Phase II, formerly Well Site 1HB (Preliminary Plat) Consider a preliminary plat request for Bobcat Village Phase II, formerly well site 1HB, a townhome residential development on approximately 2.106 acres located on Bobcat Boulevard, within the Thomas H. Callaway Survey, Abstract No. 272, Town of Trophy Club, Denton County, Texas. (Matt Cox, Director of Community Development) Matt Cox, Director of Community Development, presented the item and answered questions from the Council. Council Member Beach moved to approve a preliminary plat request for Bobcat Village Phase II, formerly well site 1HB, a townhome residential development on approximately 2.106 acres located on Bobcat Boulevard, within the Thomas H. Callaway Survey, Abstract No. 272, Town of Trophy Club, Denton County, Texas. Council Member Ash seconded the motion. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 13. Consider accepting the 2026 Parks and Recreation Comprehensive Master Plan. (Chase Ellis, Director of Parks & Recreation) Chase Ellis, Director of Parks and Recreation, provided an update to Chapter 8 of the Parks and Recreation Master Plan following discussion at the recent Council retreat. Revisions include expanding the Freedom Dog Park concept to consider a full park redesign, adding project priority rankings (low/medium/high) with projected timeframes, refining accessibility and ADA language, updating population projections using Texas Water District data, and distinguishing between new projects and maintenance of existing facilities. Mayor Pro Tem Rowe moved to accept the 2026 Parks and Recreation Comprehensive Master Plan, as modified. Council Member Bauer seconded the motion. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 14. Consider an ordinance of the Town of Trophy Club, Texas, amending Chapter 12 "Traffic and Vehicles" Section 2, Article 12.07 " Motorized Carts" and Article 12.06 Microbility Devices. (Patrick Arata, Police Chief) Page 40 of 212 Town Council Meeting Minutes – February 23, 2026 Page 10 Chief Arata presented the item and responded to questions from the Council. He noted the department’s focus will be on education and voluntary compliance, with officers exercising discretion. Educational handouts will be distributed throughout the communit y, including through schools and School Resource Officers, and information will be posted online. Council discussion included questions regarding enforcement, parent notification, and community outreach efforts. Council Member Beach moved to approve Ordinance No. 2026-09 of the Town of Trophy Club, Texas, amending Chapter 12 "Traffic and Vehicles" Section 2, Article 12.07 " Motorized Carts" and Article 12.06 Microbility Devices. Council Member Bauer seconded the motion. The caption of the ordinance reads as follows: ORDINANCE NO. 2026-09 AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, AMENDING CHAPTER 12, “TRAFFIC AND VEHICLES”, ARTICLE 12.07, “MOTORIZED CARTS”, SECTION 12.07.003, “OPERATIONAL REGULATIONS”, OF THE CODE OF ORDINANCES, TOWN OF TROPHY CLUB, TEXAS, TO ADD THE REQUIREMENT TO WEAR A HELMET; AND REPEALING AND REPLACING ARTICLE 12.06, “MOTOR-ASSISTED SCOOTERS, MINI-MOTORBIKES AND POCKET BIKES” WITH A NEW ARTICLE 12.06 “MICROMOBILITY DEVICES”; PROVIDING THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A PENALTY NOT TO EXCEED THE SUM OF TWO HUNDRED DOLLARS ($200.00) FOR EACH OFFENSE AND A SEPARATE OFFENSE SHALL BE DEEMED COMMITTED EACH DAY DURING OR ON WHICH A VIOLATION OCCURS OR CONTINUES; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 15. Consider accepting the Trophy Club Police Department's 2025 Racial Profiling Report. (Patrick Arata, Police Chief) Chief Arata presented the item and responded to questions from the Council Council Member Beach moved to accept the Trophy Club Police Department's 2025 Racial Profiling Report. Council Member Bauer seconded the motion. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 Page 41 of 212 Town Council Meeting Minutes – February 23, 2026 Page 11 16. Presentation of the following Trophy Club Police Department policies and reports: (Patrick Arata, Police Chief) 1. Annual Use of Force Report 2. Annual Police Pursuit Report 3. Taser Energy Weapon Policy 4. Drone Policy Chief Arata presented the above reports and policies and responded to questions from the Town Council. This item was for presentation only; no action was taken. EXECUTIVE SESSION/OPEN SESSION Pursuant to the Open Meetings Act, Chapter 551, the Town Council convened into a Closed Executive Session at 8:19 p.m. and reconvened into Open Session at 8:53 p.m. in accordance with the Texas Government Code regarding items 4 and 5 as follows: 4. Section 551.071 (2) Consultation with the Town Attorney: a) Trophy Club Municipal Utility District No. 1 notice of termination effective July 21, 2026, to the Amended and Restated Contract for Wholesale Water Supply and Wastewater Treatment Services and Water and Wastewater Operational Services, and the First Amendment thereto. 5. Section 551.072 Deliberation regarding the purchase, exchange, lease, or value of real property owned by the Town and related to the Town's Elevated Storage Tank and the Town's water and wastewater infrastructure located in the Public Improvement District. Mayor Pro Tem Rowe stated that the Town has delivered the proper legal instruments to convey the Town’s water and wastewater assets to the Municipal Utility District (MUD) and that the Town is awaiting execution of those documents by the MUD. He noted that the documents recognize existing deed restrictions on the properties where the assets are located and that the existing interlocal agreement between the Town and the MUD is sufficient to continue cooperation in providing water and wastewater services to Trophy Club residents for a 99-year period. Mayor Pro Tem Rowe moved to direct staff to offer the Town’s original conveyance documents to the MUD for transfer of the Town’s water and wastewater assets and to discontinue further discussions with the MUD that do not result in execution of the documents as presented by the Town Council. Council Member Sheridan seconded the motion. VOTE ON MOTION AYES: Bauer, Beach, Rowe, Tiffany, Sheridan, Ash NAYES: None ABSENT: Flynn VOTE: 6-0-1 Page 42 of 212 Town Council Meeting Minutes – February 23, 2026 Page 12 Mayor Tiffany adjourned the regular meeting at 8:55 p.m. ____________________________ Jeannette Tiffany, Mayor Attest: _______________________________ Tammy Dixon, Town Secretary Page 43 of 212 TOWN COUNCIL COMMUNICATION MEETING DATE: March 9, 2026 FROM: April Duvall, Director of Finance AGENDA ITEM: Consider accepting the Annual Comprehensive Financial Report for the Town of Trophy Club Fiscal Year 2025. (April Duvall, Director of Finance) BACKGROUND/SUMMARY: The Town of Trophy Club's financial records have been prepared and audited by FORVIS, LLP, Certified Public Accountants, as required by the Town Charter. The Town's financial performance for FY 2025 is presented in the attached Annual Financial Report based on the audited records. The goal of the independent audit is 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, 2025. 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. Below are highlights from the FY 2025 Annual Comprehensive Financial Report: 1. The Town's auditor, FORVIS, LLP, has issued an unmodified opinion on the Town's financial records, indicating that the Town's financial records are fairly represented in all material aspects for the fiscal year ending September 30, 2025. 2. The Town meets and surpasses all minimum reserve levels required by the Financial Reserves Policy approved in April 2024. 3. General Unassigned Fund Balance (the most important measure of the Town’s financial health and safety net) increased by $46,433 to $12,423,004 in FY 2025 compared to FY 2024. This amount represents 78% of General Fund expenditures. The Town’s Financial Reserves Policy sets a range for unassigned fund balance between 30% and 50% of operating expenditures, with a target rate of 45%. Reserves at the end of FY 2025 are approximately $4.5 million higher than the top end of that range. Consistent with the Town’s Financial Reserves Policy, staff will develop a list of one-time uses for Council consideration to reduce excess reserves. 4. Fund balances across all Governmental Funds decreased by $529,850 during the fiscal year. While the General Fund, Hotel Occupancy Tax Fund, Park Land Dedication Fund, and Tax Increment Reinvestment Zone (TIRZ) No. 1 Fund experienced increases, these gains were more than offset by the planned reduction in the PID No. 1 Fund related to the refunding and early repayment of special assessment bonds, as well as capital project expenditures. 5. The Town’s Financial Reserves Policy requires that current assets in Governmental Funds exceed current liabilities. At the end of FY 2025, the Town surpasses this Page 44 of 212 requirement with current assets at $46.8 million against current liabilities of $1.8 million. 6. The Town’s Financial Reserves Policy requires unrestricted cash and short-term investments of at least 100% of current liabilities in Governmental Funds. The FY 2025 Annual Comprehensive Financial Report surpasses this requirement with $30.9 million in cash and cash equivalents against current liabilities of $1.8 million (1,716%). 7. The Town’s Financial Reserves Policy requires current assets of at least 75% of current liabilities for Business-Type Funds (Storm Drainage & Trophy Club Park). At the end of FY 2025, the Town surpasses this requirement with current assets at $2.7 million against current liabilities of $41,335 (6,531%). 8. The Town’s Financial Reserves Policy requires unrestricted cash and short-term investments of at least 50% of current liabilities in Business-Type Funds. The FY 2025 Annual Comprehensive Financial Report surpasses this requirement with $2.68 million in cash and cash equivalents against current liabilities of $41,335 (6,503%). 9. Overall cash and cash equivalents in Business-Type Funds increased from $2,284,095 to $2,692,066. The Town of Trophy Club's financial position remains strong with additional financial improvement achieved during FY 2025. BOARD REVIEW/CITIZEN FEEDBACK: N/A FISCAL IMPACT: The independent auditor concluded, based upon the audit, that there was a reasonable basis to issue an unmodified (unqualified) opinion on the Town’s financial statements for the fiscal year ended September 30, 2025. An unmodified opinion represents the highest level of assurance an auditor can provide and is commonly referred to as a clean audit. It signifies that the Town’s financial statements are fairly presented, in all material respects, in accordance with Generally Accepted Accounting Principles (GAAP), and that no material misstatements or significant financial reporting deficiencies were identified. LEGAL REVIEW: N/A ATTACHMENTS: 1. Draft Annual Comprehensive Financial Report ACTIONS/OPTIONS: Staff recommends that the Town Council move to accept the Annual Comprehensive Financial Report for the Town of Trophy Club Fiscal Year 2025. Page 45 of 212 DRAFT - 3.3.26 Page 46 of 212 DRAFT - 3.3.26 Page 47 of 212 DRAFT - 3.3.26 Page 48 of 212 Town of Trophy Club, Texas Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2025 Prepared by Town of Trophy Club Finance Department DRAFT - 3.3.26 Page 49 of 212 DRAFT - 3.3.26 Page 50 of 212 Town of Trophy Club, Texas September 30, 2025 Contents Introductory Section (Unaudited) Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . i-v Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . vii Elected Officials and Administrative Officers . . . . . . . . . . . . . . . . . . . ix GFOA Certificate of Achievement. . . . . . . . . . . . . . . . . . . . . . . xi Financial Section Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . 1 Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . 4 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . 13 Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . 15 Fund Financial Statements Balance Sheet – Governmental Funds . . . . . . . . . . . . . . . . . . . 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position. . 19 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds . 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities . . . . . . . . . 22 Statement of Net Position – Proprietary Funds . . . . . . . . . . . . . . . . 23 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds . . . . 24 Statement of Cash Flows – Proprietary Funds . . . . . . . . . . . . . . . . 25 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . 28 DRAFT - 3.3.26 Page 51 of 212 Town of Trophy Club, Texas September 30, 2025 Required Supplementary Information (Unaudited) Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – PID No. 1 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Schedule of Changes in the Town’s Net Pension Liability/(Asset) and Related Ratios - Texas Municipal Retirement System . . . . . . . . . . . . . . . . . . . . . 70 Schedule of Employer Contributions –Texas Municipal Retirement System . . . . . . . . . 72 Schedule of Changes in the Town’s Total OPEB Liability and Related Ratios – Texas Municipal Retirement System – Supplemental Death Benefits Fund . . . . . . . . . 74 Schedule of Changes in the Town’s Total OPEB Liability and Related Ratios – Retiree Health Care Plan . . . . . . . . . . . . . . . . . . . . . . . . 75 Combining and Individual Fund Financial Statements and Schedules (Unaudited) Nonmajor Governmental Funds Combining Balance Sheet – Nonmajor Governmental Funds . . . . . . . . . . . . . 80 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds. . . . . . . . . . . . . . . . . . . . . . . . . 82 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Hotel Occupancy Tax . . . . . . . . . . . . . . . . . . . . . . . . 84 Street Maintenance Sales Tax . . . . . . . . . . . . . . . . . . . . . 85 Court Technology . . . . . . . . . . . . . . . . . . . . . . . . . 86 Court Security . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Recreation Programs . . . . . . . . . . . . . . . . . . . . . . . . 88 Park Land Dedication . . . . . . . . . . . . . . . . . . . . . . . . 89 Tax Increment Reinvestment Zone No. 1 . . . . . . . . . . . . . . . . . . 90 Crime Control and Prevention District . . . . . . . . . . . . . . . . . . . 91 DRAFT - 3.3.26 Page 52 of 212 Town of Trophy Club, Texas September 30, 2025 Discretely Presented Component Unit Balance Sheet – Trophy Club Economic Development Corporation . . . . . . . . . . . 94 Reconciliation of the Balance Sheet Fund to the Statement of Net Position – Trophy Club Economic Development Corporation . . . . . . . . . . . . . . . . . . . . . . . 95 Statement of Revenues, Expenditures, and Changes in Fund Balance – Trophy Club Economic Development Corporation . . . . . . . . . . . . . . . . . . . . . . . 96 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the Governmental Fund to the Statement of Activities – Trophy Club Economic Development Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Statistical Section (Unaudited) Financial Trends Net Position by Component . . . . . . . . . . . . . . . . . . . . . . . . 102 Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . 104 Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . 108 Changes in Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . 110 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property . . . . . . . . . . . . 112 Direct and Overlapping Property Tax Rates . . . . . . . . . . . . . . . . . . . 113 Principal Property Taxpayers . . . . . . . . . . . . . . . . . . . . . . . 115 Property Tax Levies and Collections . . . . . . . . . . . . . . . . . . . . . 116 Debt Capacity Ratios of Outstanding Debt by Type . . . . . . . . . . . . . . . . . . . . . 117 Ratios of Net General Bonded Debt Outstanding . . . . . . . . . . . . . . . . . 118 Direct and Overlapping Governmental Activities Debt . . . . . . . . . . . . . . . . 119 Pledged-Revenue Coverage . . . . . . . . . . . . . . . . . . . . . . . 120 Demographic and Economic Information Demographic and Economic Statistics . . . . . . . . . . . . . . . . . . . . 121 Principal Employers . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Operating Information Full-Time Equivalent Town Government Employees by Function/Program . . . . . . . . . 124 Operating Indicators by Function/Program . . . . . . . . . . . . . . . . . . . 125 DRAFT - 3.3.26 Page 53 of 212 DRAFT - 3.3.26 Page 54 of 212 Introductory Section (Unaudited) DRAFT - 3.3.26 Page 55 of 212 DRAFT - 3.3.26 Page 56 of 212 January 28, 2026 To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Trophy Club, Texas The Finance Department of the Town of Trophy Club has prepared the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended September 30, 2025, in accordance with Generally Accepted Accounting Principles (GAAP). The financial statements have been audited by an independent firm of certified public accountants in accordance with Generally Accepted Auditing Standards (GAAS). We are pleased to present this report for your review. This report reflects management’s representations concerning the Town’s financial position and results of operations. Management assumes full responsibility for the accuracy, completeness, and integrity of the information presented. To fulfill this responsibility, the Town maintains a comprehensive framework of internal controls designed to safeguard assets, ensure compliance with applicable laws and regulations, and provide reasonable assurance that financial records are reliable and financial statements are fairly presented in conformity with GAAP. Because the cost of internal controls should not exceed their anticipated benefits, the Town’s internal control system is designed to provide reasonable—not absolute—assurance that the financial statements are free from material misstatement. Based on our evaluation, management believes the Town’s internal control structure is adequate to meet these objectives. In accordance with the Town Charter, the Town’s financial statements have been audited by FORVIS, LLP, Certified Public Accountants. The purpose of the independent audit is to provide reasonable assurance that the Town’s financial statements are presented fairly, in all material respects, in conformity with GAAP. The audit included examining evidence supporting the amounts and disclosures in the financial statements, assessing accounting principles used, evaluating significant estimates made by management, and reviewing overall financial statement presentation. The independent auditor has issued an unmodified opinion on the Town’s financial statements for the fiscal year ended September 30, 2025. The auditor’s report is included in the Financial Section of this ACFR. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is intended to complement the MD&A and should be read in conjunction with it. The MD&A immediately follows the independent auditor’s report. DRAFT - 3.3.26 Page 57 of 212 Profile of the Town Founded in 1985 as Texas’ first master-planned community, the Town of Trophy Club encompasses approximately four square miles in North Central Texas. The Town serves an estimated population of approximately 13,800 residents and continues to maintain a strong residential tax base and high quality of life. Trophy Club has operated as a Home Rule municipality under the council-manager form of government since 2004. The Town Council, consisting of the Mayor and six Council Members elected at-large by place, serves as the legislative and policy-making body. Council Members serve three-year staggered terms and are limited to six consecutive years in full elected terms. The Town Manager is appointed by the Council and is responsible for administering daily operations and implementing Council policies. The Town provides a full range of municipal services, including public safety, street maintenance, parks and recreation, planning and zoning, code enforcement, general government services, and drainage utility operations. Water and wastewater services are provided by Trophy Club Municipal Utility District No 1. Local Economy Strategically located between DFW International Airport and Alliance Airport along the Highway 114 corridor, Trophy Club continues to benefit from strong regional economic activity and direct access to major employment centers. The Town has taken deliberate and strategic steps to position itself for a prosperous future within the dynamic DFW and Alliance corridor. Over the past decade, more than 452 building permits have been issued for high-end residential homes, reflecting measured growth and sustained demand for quality development. In fiscal year 2025 alone, the Town approved 38 new residential building permits with a total valuation of $36,126,883.84. Additionally, 13 commercial projects were approved with a combined valuation of $82,811,669.95 (new high school stadium and major high school remodel/addition), along with 19 residential remodel and improvement projects totaling $1,953,077.05. These investments underscore continued reinvestment in the community and confidence in the local market. The Town’s taxable assessed valuation remained robust in FY 2025, exceeding $3 billion in net taxable value, reflecting sustained property values and carefully managed residential growth. Continued commercial activity along the Highway 114 corridor further strengthens the Town’s sales tax base and reinforces long-term financial stability. Trophy Club benefits not only from businesses expanding and establishing operations within the community, but also from professionals choosing to relocate to the area, enhancing the local workforce and contributing to a vibrant and resilient economy. North Texas remains economically diverse, supported by the logistics, professional services, manufacturing, healthcare, and technology sectors. The region’s comparatively low unemployment rate further contributes to the Town’s stable and resilient financial environment. DRAFT - 3.3.26 Page 58 of 212 Long-Term Financial Planning The Town remains committed to prudent financial management and strategic long-term planning. The adopted Debt Financing Plan and Tax Rate Goal Policy continue to guide capital financing decisions through FY 2040, while maintaining a maximum debt service tax rate goal of $0.105 per $100 of taxable valuation. In 2025, the Town proactively refunded the Public Improvement District (PID) debt, resulting in average annual debt service savings of approximately $276,283 for PID residents over the remaining life of the bonds and shortening the bond term by one year. This action reflects the Town’s continued focus on reducing long-term costs and maximizing value for taxpayers. Additionally, during the fiscal year, the Town issued $7,880,000 in Certificates of Obligation to support critical infrastructure investments. Proceeds will fund street improvements, including pavement reconstruction, curbs, gutters, and associated drainage enhancements; sidewalk improvements to enhance pedestrian connectivity and safety; and the remodel of the Parks and Streets Shop to improve operational efficiency and working conditions for Town staff. The Town’s Capital Improvement Plan (CIP) continues to serve as a multi-year planning tool to prioritize infrastructure investments, including streets, parks, drainage, and public safety facilities. Ongoing evaluation of capital needs, debt service requirements, fund balance levels, and long-term maintenance obligations ensures infrastructure is maintained in alignment with community expectations and the Town’s financial capacity, supporting sustainable service delivery. Budgeting Process The Town utilizes a program-based budgeting approach designed to align financial resources with strategic priorities. Revenue projections are developed collaboratively between departments and the Finance Department and are refined throughout the budget process based on updated economic data and trend analysis. Requests for new programs or expenditures beyond baseline service levels are required to be submitted as separate supplemental requests for formal evaluation. This approach ensures transparency and allows leadership to assess each proposal based on strategic alignment, operational impact, and available funding capacity. Capital expenditures are prioritized using a comprehensive replacement schedule, condition assessments, identified service needs, and available resources to ensure the Town’s assets are maintained and enhanced in a fiscally sustainable manner. Revenue Projections Revenue forecasting for the upcoming fiscal year begins early in the current fiscal year. Departments responsible for generating revenue work collaboratively with the Finance Department to develop projections based on historical trends, economic indicators, consultations with state and local agencies, and insight from staff directly involved in revenue collection and administration. While initial projections are prepared early in the budget cycle, estimates are continuously evaluated and refined throughout the process as updated data and economic conditions become available. DRAFT - 3.3.26 Page 59 of 212 Proposed Budget Analysis and Compilation The Finance Department prepares a preliminary departmental budget for review by the Budget Team, consisting of the Town Manager and Director of Finance. Department Directors participate in detailed budget discussions and are required to justify operational needs, staffing levels, and supplemental requests. Using revenue projections and baseline funding requirements as guiding parameters, adjustments are made based on operational necessity and strategic priority. Recommended funding levels are aligned with available financial resources to ensure a structurally balanced budget and efficient service delivery. Proposed Budget Development The Town Manager prepares and submits the proposed annual budget to the Town Secretary for the upcoming fiscal year. The proposed budget is developed to ensure that, within each fund, operating revenues and available resources meet or exceed projected expenditures. The Town Manager’s budget message outlines major funding drivers, program changes, capital investments, and policy considerations, providing strategic context for Council deliberation. Town Council Budget Review From May through budget adoption, the Town Council conducts comprehensive reviews of each fund, including supporting schedules, capital replacement plans, and the five-year Capital Improvement Program (CIP). This process allows Council Members to evaluate priorities, provide policy direction, and ensure alignment with community goals prior to formal budget consideration. Capital Improvement Program Pursuant to Section 9.08 of the Town Charter, the Town Manager annually submits a five-year Capital Improvement Plan to the Council no later than August 1. The CIP is reviewed, updated, and extended each year to reflect current infrastructure needs, ongoing projects, and future capital investments. This rolling five-year plan supports long-term infrastructure planning and ensures capital projects are aligned with the Town’s strategic objectives and financial capacity. Public Hearing and Budget Adoption Public hearings on the proposed budget and tax rate, if applicable, are conducted in August and September to provide citizens with the opportunity for formal input. Residents may also attend Town Council budget work sessions held throughout the review process. Following deliberation and public comment, the Town Council adopts the annual budget and establishes the tax rate by September. In accordance with the Town Charter, if a new budget is not adopted prior to September 30, the prior fiscal year’s budget remains in effect on a month-to-month basis until adoption occurs. Budget Implementation and Monitoring Following adoption, the final budget document is compiled and published early in the new fiscal year. Ledger accounts are established prior to October 1 to ensure accurate financial tracking. Budget oversight is an ongoing process conducted jointly by departments and the Finance Department. Monthly expenditure reviews are performed to maintain spending controls and monitor performance against adopted appropriations. Departments provide updated revenue and expenditure estimates during the fiscal year to support proactive financial management. Program goals, objectives, and performance measures are continuously evaluated during implementation to assess effectiveness and inform funding decisions in future budget cycles. This disciplined approach ensures accountability, operational efficiency, and long-term financial sustainability. DRAFT - 3.3.26 Page 60 of 212 Relevant Financial Policies The Town maintains a comprehensive Investment Policy in full compliance with the Public Funds Investment Act (Chapter 2256, Texas Government Code). The policy is reviewed and approved annually by the Town Council to ensure continued compliance with state law and alignment with current market conditions and best practices. It guides the Town’s investment activities with a primary emphasis on safety of principal, adequate liquidity to meet operational needs, and optimization of yield within statutory constraints. The Financial Reserves Policy establishes fund balance targets, including a minimum unassigned General Fund balance of 30 percent of annual operating expenditures, strengthening the Town’s long-term financial stability. The Town’s target General Fund balance unassigned reserves for budgetary and planning purposes is set as 45 percent of annual operating expenditures. The Town’s purchasing, travel, and financial management policies are periodically reviewed and updated to ensure alignment with best practices, regulatory requirements, and evolving operational needs. In 2025, the Travel and Training Policy was revised to enhance clarity, strengthen oversight, and reinforce fiscal accountability. The Purchasing Policy is currently under comprehensive review, with updates anticipated to be finalized and implemented in 2026. Major Initiatives The Town Council continues to implement the 2025–2030 Strategic Plan, aligning departmental work plans and budget decisions with long-term priorities. Key focus areas include infrastructure investment, financial sustainability, economic vitality, and service excellence. Economic development efforts, in partnership with the Economic Development Corporation (EDC), continue to support local business growth and corridor development. Long-range land use planning initiatives, including ongoing implementation of the 114 Corridor Small Area Plan, provide a framework for thoughtful and sustainable commercial development. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded the Town of Trophy Club the Certificate of Achievement for Excellence in Financial Reporting for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended September 30, 2024. This distinction represents the Town’s 15th consecutive year receiving this prestigious award. We believe the fiscal year 2025 ACFR continues to meet the program’s rigorous standards and will be submitted to the GFOA for consideration. Preparation of this report reflects the professionalism and dedication of the Finance Department staff. We extend our sincere appreciation to Forvis Mazars, LLP for their audit services and professional guidance. Finally, we thank the Mayor and Town Council members for their steadfast commitment to excellence in financial stewardship. Their policy direction and support are instrumental in maintaining the Town's strong financial position. Repectively submitted, Brandon Wright April Duvall Town Manager Director of Finance DRAFT - 3.3.26 Page 61 of 212 DRAFT - 3.3.26 Page 62 of 212 xviii DRAFT - 3.3.26 Page 63 of 212 DRAFT - 3.3.26 Page 64 of 212 xx DRAFT - 3.3.26 Page 65 of 212 DRAFT - 3.3.26 Page 66 of 212 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Trophy Club Texas For its Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2024 Executive Director/CEO DRAFT - 3.3.26 Page 67 of 212 DRAFT - 3.3.26 Page 68 of 212 Financial Section DRAFT - 3.3.26 Page 69 of 212 DRAFT - 3.3.26 Page 70 of 212 Forvis Mazars, LLP is an independent member of Forvis Mazars Global Limited Independent Auditor’s Report The Honorable Mayor and Members of the Town Council Town of Trophy Club, Texas Trophy Club, Texas Opinions We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Town of Trophy Club, Texas (Town), as of and for the year ended September 30, 2025, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Town as of September 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report. We are required to be independent of the Town, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for 12 months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a DRAFT - 3.3.26 Page 71 of 212 The Honorable Mayor and Members of the Town Council Town of Trophy Club, Texas 2 substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit 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 Town’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparisons, pension, and other postemployment benefit information be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 GAAS, 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. DRAFT - 3.3.26 Page 72 of 212 The Honorable Mayor and Members of the Town Council Town of Trophy Club, Texas 3 Other Information Management is responsible for the other information included in the annual comprehensive financial report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Dallas, Texas March 9, 2026 DRAFT - 3.3.26 Page 73 of 212 DRAFT - 3.3.26 Page 74 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 4 As management of the Town of Trophy Club, Texas (Town), we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended September 30, 2025. 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-v of this report. Financial Highlights The assets and deferred outflows of resources of the Town exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $76,027,088 (net position). The unrestricted net position, which represents the amounts available to meet the Town’s ongoing obligations to citizens and creditors, was $23,708,644.The Town’s total net position increased $6,666,531 primarily because of increases in property tax valuations and increased investment earnings.At the close of the current fiscal year, the Town’s governmental funds reported combined fund balances of $32,350,073, a decrease of $529,850 in comparison with the prior year. Of this amount, $12,423,004, or 38%, is available for spending at the government’s discretion (unassigned fund balance). The decrease in combined fund balance is primarily due to increased capital project expenditures, which were partially offset by an increase in property tax valuations and sales tax revenues. At the end of the current fiscal year, unrestricted fund balance for the general fund was $12,423,004, or approximately 78% of total general fund expenditures.At the close of the current fiscal year, the Town’s enterprise funds reported combined net position balances of $5,359,399, an increase of $1,276,534 in comparison with the prior year. The increase is due primarily to operations and capital contributions from the Town's governmental activities. Overview of the Financial Statements The discussion and analysis provided here are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) the notes to financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. Government-Wide Statements The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business. Two statements, the Statement of Net Position and the Statement of Activities, are utilized to provide this financial overview. The statement of net position presents information on all of the Town’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources. The difference between the four is reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. Other non-financial factors, such as the Town’s property tax base and the condition of the Town’s infrastructure, need to be considered in order to assess the overall health of the Town. DRAFT - 3.3.26 Page 75 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 5 The statement of activities presents information showing how the Town’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported 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 financial statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Town include general government, police, emergency medical services, community development, parks and recreation, streets, court, council, and administration. Normally, these operations are financed by property taxes, sales taxes, and franchise fees. The business-type activities of the Town include Trophy Club Park and Storm Drainage Utility operations. The government-wide financial statements include not only the Town itself (known as the primary government), but also the legally separate component unit, Economic Development Corporation, which the Town is financially accountable. Financial information for the component unit is reported separately from the financial information presented for the primary government itself. Fund Financial Statements 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. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into two categories: governmental funds and proprietary 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 financial statements 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 assessing 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 fund balance sheet and the governmental fund 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 thirteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the debt service fund, the capital projects fund, and the PID No. 1, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in a separate section of the report. The Town adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. DRAFT - 3.3.26 Page 76 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 6 Proprietary Funds The Town’s proprietary funds are all enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses an enterprise fund to account for its Trophy Club Park and Storm Drainage Utility operations. All activities associated with providing such services are accounted for in these funds, including salaries and benefits, supplies and materials, repairs and maintenance, utilities, and other operating expenses. The Town’s intent is that costs of providing the services to the general public on a continuing basis is financed through user charges in a manner similar to a private enterprise. Proprietary financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for Trophy Club Park and Storm Drainage Utility. The Storm Drainage Utility is considered to be a major fund of the Town. Component Unit The Town maintains the accounting and financial statements for one discretely presented component unit, the Economic Development Corporation, which is displayed separately on the government-wide financial statements. Notes to Financial Statements The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements. Other Information In addition to the basic financial statements, MD&A, and accompanying notes, this report also presents certain Required Supplementary Information (RSI). The required RSI includes a budgetary comparison schedule for the general fund and Public Improvement District No. 1 fund. In addition, it includes information concerning the Town’s progress in funding its obligations to provide pension and OPEB benefits to its employees. Required supplementary information can be found immediately after the notes to the financial statements. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information on pensions and OPEB. Government-wide Overall Financial Analysis As noted earlier, net position over time may serve as a useful indicator of a government’s financial position. In the case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $76,027,088, at the close of the most recent fiscal year. DRAFT - 3.3.26 Page 77 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 7 Statement of Net Position: The following table reflects the condensed Statement of Net Position. Governmental Activities Business-type Activities Totals FY2025 FY2024 FY2025 FY2024 FY2025 FY2024 Current and other assets $ 46,861,814 $ 52,606,227 $ 2,758,998 $ 2,324,511 $ 49,620,812 $ 54,930,738 Capital and lease assets, net 61,218,867 61,110,085 2,641,736 1,781,537 63,860,603 62,891,622 Total assets 108,080,681 113,716,312 5,400,734 4,106,048 113,481,415 117,822,360 Deferred outflows of resources 2,549,542 3,424,636 - - 2,549,542 3,424,636 Other liabilities 1,833,212 4,665,060 41,335 23,183 1,874,547 4,688,243 Long-term liabilities 37,556,098 46,812,277 - - 37,556,098 46,812,277 Total liabilities 39,389,310 51,477,337 41,335 23,183 39,430,645 51,500,520 Deferred inflows of resources 573,224 385,919 - - 573,224 385,919 Net investment in capital assets 43,093,591 30,100,766 2,671,236 1,781,537 45,764,827 31,882,303 Restricted 6,553,617 9,320,172 - - 6,553,617 9,320,172 Unrestricted 21,020,481 25,856,754 2,688,163 2,301,328 23,708,644 28,158,082 Total net position $ 70,667,689 $ 65,277,692 $ 5,359,399 $ 4,082,865 $ 76,027,088 $ 69,360,557 Current and other assets decreased by $5.3 million from the prior year due primarily to decreased cash and investment balances as the Town funded several capital projects during the fiscal year. Long-term liabilities, which consist of bonds, compensated absences, net pension liability, and other postemployment benefit obligations, decreased by $9.3 million from the previous year for governmental and business-type activities combined. The decrease is primarily due to the refunding of special assessment bonds and the continued scheduled debt service payments. A portion of the Town’s net position, $45,764,827, reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, vehicles, lease assets, and infrastructure), net of accumulated depreciation and amortization and less any related outstanding debt that was used to acquire those assets. The Town uses these capital and lease assets to provide a variety of services to its citizens. Accordingly, these assets are not available for future spending. Although the Town’s investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital and lease assets themselves cannot be used to liquidate these liabilities. An additional portion of the Town’s net position, $6,553,617 represents resources that are subject to external restrictions on how they may be used. As of the end of the current year, the Town’s unrestricted net position was a balance of $23,708,644. The Town’s overall net position increased $6,666,531, from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business-type activities. DRAFT - 3.3.26 Page 78 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 8 Statement of Activities: The following table provides a summary of the Town’s changes in net position. Governmental Activities Business-type Activities Totals FY2025 FY2024 FY2025 FY2024 FY2025 FY2024 Revenues: Program revenues: Charges for services $ 7,844,713 $ 4,255,088 $ 639,767 $ 614,423 $ 8,484,480 $ 4,869,511 Operating grants and contributions 18,547 159,362 - - 18,547 159,362 Capital grants and contributions - - 999,245 - 999,245 - Total program revenues 7,863,260 4,414,450 1,639,012 614,423 9,502,272 5,028,873 General revenues: Property taxes 10,310,401 11,858,764 - - 10,310,401 11,858,764 Sales and mixed beverage taxes 2,912,477 2,630,932 - - 2,912,477 2,630,932 Franchise and local taxes 1,092,187 1,029,212 - - 1,092,187 1,029,212 Occupancy tax 955,491 885,378 - - 955,491 885,378 Grants not restricted to specific programs 3,073,457 - - - 3,073,457 - Other revenues 109,483 721,499 - 150 109,483 721,649 Investment Income 1,776,159 2,095,412 88,339 85,289 1,864,498 2,180,701 Total general revenues 20,229,655 19,221,197 88,339 85,439 20,317,994 19,306,636 Total revenues 28,092,915 23,635,647 1,727,351 699,862 29,820,266 24,335,509 Expenses: General government 799,614 632,029 - - 799,614 632,029 Manager's office 637,629 486,130 - - 637,629 486,130 Town secretary 359,901 212,947 - - 359,901 212,947 Mayor & council 19,339 7,662 - - 19,339 7,662 Human resources 420,595 357,993 - - 420,595 357,993 Finance 709,384 617,969 - - 709,384 617,969 Information services 612,904 598,600 - - 612,904 598,600 Legal 164,976 138,548 - - 164,976 138,548 Municipal court 140,206 250,929 - - 140,206 250,929 Police 4,656,049 4,316,645 - - 4,656,049 4,316,645 Fire 1,884,542 1,901,264 - - 1,884,542 1,901,264 Emergency medical services 1,882,754 1,769,995 - - 1,882,754 1,769,995 Facilities management 1,612,171 1,501,274 - - 1,612,171 1,501,274 Parks and recreation 4,434,569 3,132,835 - - 4,434,569 3,132,835 Community development 647,771 606,080 - - 647,771 606,080 Tourism 514,784 382,094 - - 514,784 382,094 Public works 2,754,408 2,762,037 - - 2,754,408 2,762,037 Interest and fiscal charges on long-term debt 500,376 1,406,043 - - 500,376 1,406,043 Storm Drainage Utility - - 299,683 284,437 299,683 284,437 Trophy Club Park - - 102,080 135,419 102,080 135,419 Total expenses 22,751,972 21,081,074 401,763 419,856 23,153,735 21,500,930 Increase in net position before transfers 5,340,943 2,554,573 1,325,588 280,006 6,666,531 2,834,579 Transfers 49,054 (142,625)(49,054) 142,625 - - Change in net position 5,389,997 2,411,948 1,276,534 422,631 6,666,531 2,834,579 Net Position, Beginning 65,277,692 62,865,744 4,082,865 3,660,234 69,360,557 66,525,978 Net Position, Ending $ 70,667,689 $ 65,277,692 $ 5,359,399 $ 4,082,865 $ 76,027,088 $ 69,360,557 DRAFT - 3.3.26 Page 79 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 9 Governmental Activities For the year ended September 30, 2025, revenues from governmental activities totaled $28.1 million. Property tax, grants and contributions, special assessments and sales tax are the Town’s largest general revenue sources. Overall revenue increased $4.5 million or 19% from the prior year. Property taxes remain the largest source of revenue at $10.3 million in the current fiscal year. The rate charged to property tax owners has remained consistent, however, the assessed valuation has risen from approximately $3.1 billion in 2024 to $3.2 billion in the current year. Investment income decreased by $319 thousand or 15% due to the impact of the market and less non-negotiable certificate of deposit balances held throughout the year. Licenses and permits revenues increased by $806 thousand or 226% due to increased development activity and capital projects. Intergovernmental revenue increased by $3.2 million due to recognition of coronavirus state and local fiscal recovery fund revenues. All other revenue sources remained relatively stable when compared to the previous year. For the year ended September 30, 2025, expenses for governmental activities totaled $22.8 million. This represents an increase of $1.7 million or 7.9% from the prior year. The Town’s largest expense category is public safety (police, fire, and emergency medical services), which totaled $8.4 million at year-end and increased $435 thousand from prior year due primarily to workers compensation adjustments, salary increases, and overtime. General Government increased by $168 thousand primarily due to increased salary expenses and professionals services. Capital outlay expenditures increased $3.8 million primarily related to the Town's drainage improvement, pickleball courts, and street improvement projects. All other expenses remained relatively consistent when compared to the previous year. Business-type Activities Business-type activities are shown comparing operating costs to revenues generated by related services. For the year ended September 30, 2025, charges for services by business-type activities totaled $640 thousand and represents an increase of $25 thousand from prior year. This is mostly due to increased rates. Total business-type activity expenses remained relatively consistent when compared to the previous year. The Storm Drainage Utility increased expenses by $15 thousand for various small equipment purchases and salary increases. The Trophy Club Park decreased their expenses by $33 thousand primarily due to salary savings. Financial Analysis of the Town’s Funds As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal requirements. Governmental Funds – The focus of the Town’s governmental funds is to provide information of near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Town’s net resources available for discretionary use as it represents the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the Town itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the Town’s Council. DRAFT - 3.3.26 Page 80 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 10 At September 30, 2025, the Town’s governmental funds reported combined fund balances of $32.4 million, a decrease of $529.9 thousand, in comparison with the prior year. Approximately 38% of this amount, $12.4 million, constitutes unassigned fund balance, which is available for spending at the Town’s discretion. The remainder of the fund balance is either nonspendable, restricted, or committed to indicate that it is: 1) not in spendable form $571 thousand; 2) restricted for particular purposes $19.3 million; or 3) committed for a particular purpose $45 thousand. Analysis of Individual Funds The general fund is the chief operating fund of the Town. At the end of the current fiscal year, unassigned fund balance of the general fund was approximately $12.4 million, while total fund balance increased to $13.0 million. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. Unassigned fund balance represents 78% of total general fund expenditures, while total fund balance represents 82% of that same amount. The fund balance of the Town’s general fund increased by $175 thousand during the current fiscal year. This increase is due to higher property valuations, the impact of the market and realization of higher interest rates and sales tax revenue coming in higher than anticipated, which was partially offset by an increase in salary costs. The debt service fund had an ending fund balance of $379 thousand at September 30, 2025, an increase of $127 thousand when compared to the previous year. This increase is due to higher property valuations, the impact of the market and realization of higher interest rates. During the year, the fund recorded total principal and interest payments of $2.9 million and property tax revenue of $3.0 million. The capital projects fund had an ending fund balance of $12.5 million. The capital projects fund increased by $1.8 million when compared to the previous year. The increase was primarily due to recognition of grant income and transfers from the general fund to subsidize ongoing capital projects. The PID No. 1 fund reflected an ending fund balance of $319 thousand. The fund balance decreased $3.9 million, which is a result of the refunding and early payment of special assessment bonds, which exceeded special assessments revenue and investment income. Proprietary Funds – The Town’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net position in the Town’s major proprietary fund, the Storm Drainage Utility fund, totaled $4.7 million, an increase of $1,223 thousand from prior year. Unrestricted net position at the close of the fiscal year for the Town’s storm drainage utility fund amounted to $2.2 million. Total net investment in capital assets was $2.5 million. DRAFT - 3.3.26 Page 81 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 11 General Fund Budgetary Highlights Total budgeted revenues of $17,884,407 were less than actual revenues of $18,981,141 resulting in a revenue variance of $1,096,734. The variance was primarily the result of greater than estimated revenues from property tax, sales tax, license and permits, and intergovernmental revenues. Property tax was over budget due to continued increases in assessed valuations. Sales tax was over budget as the Town experiences continued development. License and permit revenue increased primarily due to the overall increase in development and related capital projects during the fiscal year. Intergovernmental revenue increased $667,214, primarily due increases in both the fire assessments related to the Public Improvement District and transfers from the Municipal Utility District. Total budgeted expenditures of $17,616,767 were more than actual expenditures of $15,920,195, resulting in a expenditure variance of $1,696,572. The variance in total expenditures primarily related to police, emergency medical services, community development, and pools departments, which budgeted for capital projects that ultimately did not occur in the current fiscal year. Capital and Lease Assets As of the end of the year, the Town’s governmental activities funds had invested $61,218,867 in a variety of capital and lease assets and infrastructure, net of accumulated depreciation and amortization. The Town’s business-type activities funds had invested $2,641,736 in a variety of capital assets and infrastructure, net of accumulated depreciation. This investment in capital assets includes land, buildings, vehicles, machinery and equipment, storm drainage system, and infrastructure. Governmental Activities Business-type Activities Totals FY2025 FY2024 FY2025 FY2024 FY2025 FY2024 Land $ 10,487,119 $ 10,487,119 $ - $ - $ 10,487,119 $ 10,487,119 Construction in progress 2,549,865 2,197,624 - - 2,549,865 2,197,624 Buildings 7,307,133 7,693,922 - - 7,307,133 7,693,922 Improvements other than buildings 27,089,888 29,093,899 149,908 161,194 27,239,796 29,255,093 Machinery and equipment 1,221,894 798,046 11,858 63,554 1,233,752 861,600 Vehicles 1,192,522 1,034,858 - - 1,192,522 1,034,858 Water system 2,809,946 2,985,821 - - 2,809,946 2,985,821 Infrastructure 8,537,722 6,758,902 2,479,970 1,556,789 11,017,692 8,315,691 Lease Assets - Equipment 22,778 59,894 - - 22,778 59,894 Totals $ 61,218,867 $ 61,110,085 $ 2,641,736 $ 1,781,537 $ 63,860,603 $ 62,891,622 Major capital asset events during the current year include the following: Purchase of new vehicles for police and emergency medical services.Improvements related to the Inverness Drive drainage system Improvements related to the pickleball courts projectImprovements related to various streetsprojects Improvements related to the community pool projectPurchase of new equipment for various departments across the Town More detailed information about the Town’s capital and lease assets is presented in the Note 4 to the financial statements. DRAFT - 3.3.26 Page 82 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 12 Long-Term Debt The Town’s outstanding general obligation bonds, certificate of obligation bonds, and special assessment bonds, net of all premiums and discounts decreased by $22.8 million for governmental activities. There were no changes from the prior year for long-term debt balances related to the business-type activities. Governmental Activities Business-type Activities Totals FY2025 FY2024 FY2025 FY2024 FY2025 FY2024 General obligation bonds $ 4,425,000 $ 5,165,000 $ - $ - $ 4,425,000 $ 5,165,000 Certificates of obligation 15,255,000 16,800,000 - - 15,255,000 16,800,000 Special assessment bonds 12,905,000 18,227,000 - - 12,905,000 18,227,000 Premiums on bonds 1,212,668 3,093,541 - - 1,212,668 3,093,541 Leases payable 11,995 49,294 - - 11,995 49,294 Totals $ 33,809,663 $ 43,334,835 $ - $ - $ 33,809,663 $ 43,334,835 More detailed information about the Town’s long-term liabilities is presented in Note 5 to the financial statements. Economic Factors and Next Year’s Budget and Rates The Town of Trophy Club’s land use remains predominantly residential, comprising approximately 90% of the area, with a smaller commercial component making up about 10%. Both residential and commercial development within the Town is largely built out. In fiscal year 2025, the Town issued 38 residential construction permits and 2 new commercial permits. Looking ahead, staff estimates future development will be limited, with projections of 50–60 additional residential permits and 1–2 large commercial permits. The Town’s fiscal year 2026 budget reflects an increase in total property tax revenue of $562,699, or 5.26%, compared to the fiscal year 2025 budget. Of this amount, $50,404 is attributed to new property added to the tax roll. Key budgeted capital expenditures for fiscal year 2026 include: Street improvement projects for Oakmont Drive Sidewalk improvements for Skyline Drive and Creekside Drive Street light improvements at Bobcat and Parkview Streets and parks shop remodel Police covered parking for the Town's fleet General Fund revenues for fiscal year 2026 are budgeted to increase by 7.3% over estimated revenues for fiscal year 2025, while expenditures are projected to rise by 8.0% over fiscal year 2025 estimates. Despite these changes, the fiscal year 2026 budget decreased the ad valorem tax rate from $0.415469 to $0.412864 per $100 of assessed value. The revised tax rate will continue to ensure stability for taxpayers while supporting the Town’s strategic initiatives and operational needs. Contacting the Town’s Financial Management 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 Director of Finance, 1 Trophy DRAFT - 3.3.26 Page 83 of 212 Town of Trophy Club, Texas Management’s Discussion and Analysis (Unaudited) Year Ended September 30, 2025 13 Wood Drive, Trophy Club, Texas, 76262. This information can also be accessed on the Town of Trophy Club’s website at www.trophyclub.org. DRAFT - 3.3.26 Page 84 of 212 DRAFT - 3.3.26 Page 85 of 212 Basic Financial Statements DRAFT - 3.3.26 Page 86 of 212 DRAFT - 3.3.26 Page 87 of 212 See Notes to Financial Statements 14 Town of Trophy Club, Texas Statement of Net Position September 30, 2025 Primary Government Component Unit Governmental Activities Business-Type Activities Total Economic Development Corporation Assets and Deferred Outflows of Resources Assets Cash and cash equivalents $30,930,517 $2,692,066 $33,622,583 $2,742,498 Investments 2,067,003 -2,067,003 - Taxes receivable, net 736,823 -736,823 164,133 Special assessments receivable 12,802,418 -12,802,418 - Receivables, net 189,751 36,392 226,143 - Due from other governments 7,505 -7,505 - Due from primary government ---48,773 Notes receivable ---149,250 Prepaid and other assets 1,533 1,040 2,573 - Lease receivable 126,264 -126,264 - Capital assets not being depreciated 13,036,984 29,500 13,066,484 2,538,765 Capital and lease assets, net of accumulated depreciation/amortization 48,181,883 2,641,736 50,823,619 211,949 Total assets 108,080,681 5,400,734 113,481,415 5,855,368 Deferred Outflows of Resources Pension related 1,454,505 -1,454,505 - OPEB related 19,881 -19,881 - Deferred charge on refunding 1,075,156 -1,075,156 - Total deferred outflows of resources 2,549,542 -2,549,542 - Total assets and deferred outflows of resources $110,630,223 $5,400,734 $116,030,957 $5,855,368 DRAFT - 3.3.26 Page 88 of 212 See Notes to Financial Statements 15 Town of Trophy Club, Texas Statement of Net Position September 30, 2025 Primary Government Component Unit Governmental Activities Business-Type Activities Total Economic Development Corporation Liabilities, Deferred Inflows of Resources and Net Position Liabilities Accounts payable $ 1,423,486 $41,335 $ 1,464,821 $- Accrued liabilities 26,053 -26,053 - Unearned revenue 14,775 -14,775 - Due to component unit 48,773 -48,773 - Accrued interest payable - bonds 320,125 -320,125 6,018 Noncurrent liabilities: Due within one year: Bonds payable 2,940,000 -2,940,000 130,000 Leases payable 7,010 -7,010 - Arbitrage payable 30,278 -30,278 - Compensated absences 115,333 -115,333 - Due in more than one year: 30,857,668 - 30,857,668 1,451,789 4,985 -4,985 - 230,553 -230,553 - 368,918 -368,918 - 307,935 -307,935 - Bonds payable Leases payable Arbitrage payable Compensated absences Total OPEB liability Net pension liability 2,693,418 -2,693,418 - Total liabilities 39,389,310 41,335 39,430,645 1,587,807 Deferred Inflows of Resources Pension related 349,870 -349,870 - OPEB related 110,711 -110,711 - Lease related 112,643 -112,643 - Total deferred inflows of resources 573,224 -573,224 - Net Position Net investment in capital assets 43,093,591 2,671,236 45,764,827 1,168,925 Restricted: Municipal court 108,709 -108,709 - Debt service 697,962 -697,962 102,099 Economic development ---2,996,537 Public safety 495,700 -495,700 - Street maintenance 669,176 -669,176 - Tourism 3,925,090 -3,925,090 - Parks 656,980 -656,980 - Unrestricted 21,020,481 2,688,163 23,708,644 - Total net position 70,667,689 5,359,399 76,027,088 4,267,561 Total liabilities, deferred inflows of resources and net position $ 110,630,223 $ 5,400,734 $ 116,030,957 $ 5,855,368 DRAFT - 3.3.26 Page 89 of 212 See Notes to Financial Statements 16 Town of Trophy Club, Texas Statement of Activities Year Ended September 30, 2025 Program Revenues Component Units Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Primary Government Governmental activities: General government $799,614 $3,604,026 $18,547 $- Manager's office 637,629 --- Town secretary 359,901 --- Mayor & council 19,339 --- Human resources 420,595 --- Finance 709,384 --- Information services 612,904 --- Legal 164,976 --- Municipal court 140,206 272,908 -- Police 4,656,049 216,111 -- Fire 1,884,542 2,023,303 -- Emergency medical services 1,882,754 174,444 -- Facilities management 1,612,171 --- Parks and recreation 4,434,569 317,754 -- Community development 647,771 2,860 -- Tourism 514,784 --- Sanitation -1,224,352 -- Public works 2,754,408 8,955 -- Interest and fiscal charges 500,376 --- Total governmental activities 22,751,972 7,844,713 18,547 - Business-type Activities: Storm Drainage Utility 299,683 436,016 -999,245 Trophy Club Park 102,080 203,751 -- Total business-type activities 401,763 639,767 -999,245 Total primary government $23,153,735 $8,484,480 $18,547 $999,245 Component Unit Economic Development Corporation 346,477 --- Total component unit $346,477 $-$-$- General Revenues Taxes: Property taxes Sales and mixed beverage taxes Franchise and local taxes Occupancy taxes Grants not restricted to specific programs Other revenues Investment income Transfers Total general revenues and transfers Change in net position Net position, beginning of year Net position, end of year DRAFT - 3.3.26 Page 90 of 212 See Notes to Financial Statements 17 Net (Expense) Revenue and Changes in Net Position Primary Government Component Unit Governmental Activities Business-type Activities Total Economic Development Corporation $2,822,959 $-$2,822,959 $- (637,629)-(637,629)- (359,901)-(359,901)- (19,339)-(19,339)- (420,595)-(420,595)- (709,384)-(709,384)- (612,904)-(612,904)- (164,976)-(164,976)- 132,702 -132,702 - (4,439,938)-(4,439,938)- 138,761 -138,761 - (1,708,310)-(1,708,310)- (1,612,171)-(1,612,171)- (4,116,815)-(4,116,815)- (644,911)-(644,911)- (514,784)-(514,784)- 1,224,352 -1,224,352 - (2,745,453)-(2,745,453)- (500,376)-(500,376)- (14,888,712)-(14,888,712)- -1,135,578 1,135,578 - -101,671 101,671 - -1,237,249 1,237,249 - $(14,888,712)$1,237,249 $(13,651,463)$- (346,477) $(346,477) 10,310,401 -10,310,401 - 2,912,477 -2,912,477 959,415 1,092,187 -1,092,187 - 955,491 -955,491 - 3,073,457 -3,073,457 - 109,483 -109,483 - 1,776,159 88,339 1,864,498 94,335 49,054 (49,054)-- 20,278,709 39,285 20,317,994 1,053,750 5,389,997 1,276,534 6,666,531 707,273 65,277,692 4,082,865 69,360,557 3,560,288 $70,667,689 $5,359,399 $76,027,088 $4,267,561 DRAFT - 3.3.26 Page 91 of 212 See Notes to Financial Statements 18 Town of Trophy Club, Texas Balance Sheet Governmental Funds September 30, 2025 General Debt Service Capital Projects PID No 1 Assets Cash and cash equivalents $10,663,963 $379,332 $13,035,221 $502,636 Investments 2,067,003 --- Taxes receivable, net 442,240 14,074 -- Special assessment receivable ---12,802,418 Accounts receivable, net 189,751 --- Leases receivable 126,264 --- Due from other governments 7,505 --- Prepaid and other assets 1,533 --- Advances from other funds 569,759 --- Total assets $14,068,018 $393,406 $13,035,221 $13,305,054 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities Accounts payable $834,476 $750 $567,688 $- Accrued liabilities 26,053 --- Unearned revenue 14,775 --- Due to component unit 16,256 --- Advances to other funds ---183,256 Total liabilities 891,560 750 567,688 183,256 Deferred Inflows of Resources Unavailable revenue - property taxes 44,202 14,074 -- Unavailable revenue - special assessments ---12,802,418 Unavailable revenue - property liens 25,317 --- Leases related 112,643 --- Total deferred inflows of resources 182,162 14,074 -12,802,418 Fund Balances Nonspendable: Prepaid items 1,533 --- Long-term interfund advances 569,759 --- Restricted for: Debt service -378,582 -319,380 Capital projects --12,467,533 - Municipal court ---- Public safety ---- Street maintenance ---- Tourism ---- Parks ---- Committed for: Recreation programs ---- Unassigned 12,423,004 --- Total fund balances 12,994,296 378,582 12,467,533 319,380 Total liabilities, deferred inflows of resources and fund balances $14,068,018 $393,406 $13,035,221 $13,305,054 DRAFT - 3.3.26 Page 92 of 212 See Notes to Financial Statements 19 Nonmajor Governmental Funds Total Governmental Funds $6,349,365 $30,930,517 -2,067,003 280,509 736,823 -12,802,418 -189,751 -126,264 -7,505 -1,533 -569,759 $6,629,874 $47,431,573 $20,572 $1,423,486 -26,053 -14,775 32,517 48,773 386,503 569,759 439,592 2,082,846 -58,276 -12,802,418 -25,317 -112,643 -12,998,654 -1,533 -569,759 -697,962 289,714 12,757,247 108,709 108,709 495,700 495,700 669,176 669,176 3,925,090 3,925,090 656,980 656,980 44,913 44,913 -12,423,004 6,190,282 32,350,073 $6,629,874 $47,431,573 DRAFT - 3.3.26 Page 93 of 212 Town of Trophy Club, Texas Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position September 30, 2025 See Notes to Financial Statements 20 Amounts reported for governmental activities in the statement of net position are different because: Total fund balance per balance sheet $ 32,350,073 Capital and lease assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds. 61,218,867 Other long-term assets less related uncollectibles are not available to pay for current period expenditures and therefore are reported as unavailable revenues in the governmental funds. 12,886,011 Accrued interest payable on long-term debt does not require current financial resources and therefore is not reported as a liability in the balance sheet of governmental funds.(320,125) Long-term liabilities, including bonds payable, leases payable, net pension liability, and total OPEB liability (and the related deferred inflows and deferred outflows) are not due and payable in the current period and therefore are not reported as liabilities, deferred outflows or deferred inflows in the governmental funds. Long-term liabilities consist of: General obligation bonds payable $ (4,425,000) Certificate of obligation bonds payable (15,255,000) Special Assessment Bonds (12,905,000) Deferred charge on refunding 1,075,156 Unamortized premiums on bonds (1,212,668) Arbitrage payable (260,831) Leases payable (11,995) Net pension liability (2,693,418) Total other postemployment benefit (OPEB) liability (307,935) Deferred outflows of resources – pension 1,454,505 Deferred outflows of resources – OPEB 19,881 Deferred inflows of resources – pension (349,870) Deferred inflows of resources – OPEB (110,711) Accrued compensated absences (484,251) (35,467,137) Net position of governmental activities $ 70,667,689 DRAFT - 3.3.26 Page 94 of 212 See Notes to Financial Statements 21 Town of Trophy Club, Texas Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended September 30, 2025 General Debt Service Capital Projects PID No 1 Revenues Property tax $9,563,710 $3,023,688 $-$- Sales and mixed beverage taxes 1,980,134 --- Franchise and local taxes 1,092,187 --- Occupancy tax ---- Special assessments ---2,278,454 License and permits 1,162,056 --- Intergovernmental 2,024,011 -3,073,457 - Charges for services 1,685,808 --- Fines and fees 515,507 --- Lease revenue 108,420 --- Interest revenue - leases 10,831 --- Investment income 768,085 45,668 611,172 179,994 Other revenue 70,392 21 -- Total revenues 18,981,141 3,069,377 3,684,629 2,458,448 Expenditures Current: General government 155,826 --134,112 Manager's office 624,567 --- Town secretary 330,004 --- Mayor & council 19,339 --- Human resources 408,262 --- Finance 686,435 --- Information services 579,895 --- Legal 164,976 --- Municipal court 140,206 --- Police 4,158,754 --- Fire 1,780,130 --- Emergency medical services 1,718,024 -2,429 - Facilities management 1,611,412 -759 - Parks and recreation 2,660,035 -20,696 - Community development 611,520 --- Tourism ---- Public works 258,884 --- Debt service: Principal 6,487 2,285,000 -18,227,000 Interest and fiscal charges 1,211 656,941 -724,833 Bond issuance costs ---572,222 Capital Outlay 4,228 -4,521,928 - Total expenditures 15,920,195 2,941,941 4,545,812 19,658,167 Excess (Deficiency) of Revenues Over (Under) Expenditures 3,060,946 127,436 (861,183)(17,199,719) Other Financing Sources (Uses) Transfers in 3,073,457 -5,705,903 - Transfers out (5,963,033)-(3,073,457)- Issuance of special assessment revenue bonds ---12,905,000 Premium on general obligation bonds issued ---411,130 Sale of general capital assets 3,626 --- Total other financing sources (uses)(2,885,950)-2,632,446 13,316,130 Net Change in Fund Balances 174,996 127,436 1,771,263 (3,883,589) Fund Balances, Beginning of Year 12,819,300 251,146 10,696,270 4,202,969 Fund Balances, End of Year $12,994,296 $378,582 $12,467,533 $319,380 DRAFT - 3.3.26 Page 95 of 212 See Notes to Financial Statements 22 Nonmajor Governmental Funds Total Governmental Funds $-$12,587,398 932,343 2,912,477 -1,092,187 955,491 955,491 -2,278,454 -1,162,056 -5,097,468 16,042 1,701,850 62,131 577,638 -108,420 -10,831 171,240 1,776,159 39,070 109,483 2,176,317 30,369,912 -289,938 -624,567 -330,004 -19,339 -408,262 -686,435 -579,895 -164,976 -140,206 97,854 4,256,608 -1,780,130 -1,720,453 -1,612,171 15 2,680,746 -611,520 514,784 514,784 304,267 563,151 30,812 20,549,299 368 1,383,353 -572,222 205,303 4,731,459 1,153,403 44,219,518 1,022,914 (13,849,606) 257,130 9,036,490 -(9,036,490) -12,905,000 -411,130 -3,626 257,130 13,319,756 1,280,044 (529,850) 4,910,238 32,879,923 $6,190,282 $32,350,073 DRAFT - 3.3.26 Page 96 of 212 Town of Trophy Club, Texas Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended September 30, 2025 See Notes to Financial Statements 23 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balance - total governmental funds $ (529,850) 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 and reported as depreciation and amortization expense. This is the amount by which capital outlay exceeds depreciation and amortization in the current period. Capital outlay expenditures $ 4,731,459 Depreciation and amortization expense (3,636,808) 1,094,651 The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net position. Loss on sale of assets (985,869) Certain revenues in the government-wide statement of activities that do/(do not) provide current financial resources and (are)/are not reported as revenues in the governmental funds. This amount is the net change in deferred inflows of resources.(2,276,997) The issuance of long-term debt (e.g. bond proceeds) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also 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. This amount is the net effect of these differences in the treatment of long-term debt and related items. Issuance of special assessment refunding bonds (12,905,000) Premiums on issuance of special assessment refunding bonds (411,130) Refunding of existing special assessment bonds deferred charge on refunding (1,497,457) Deferred charge on current year special assessment refunding bonds 1,254,348 Amortization of deferred charge on refunding (310,981) Refunding of existing special assessment bonds premium 2,013,599 Amortization of bond premium 278,404 Principal amount of debt paid to bondholders and lessors 20,549,299 Net change in arbitrage payable (260,831) Net change in accrued interest payable (21,883) 8,688,368 Some expenditures reported in the statement of revenues, expenditures, and changes in fund balances do/(do not) require the use of current financial resources but (are)/are not reported as expenses in the statement of activities. This adjustment is to reflect the net change in accrued compensated absences.(76,585) Current year OPEB expenditures are reported on the fiscal year basis in the governmental statement of revenues, expenditures and changes in fund balance and as actuarially determined in the government-wide statement of activities. These differences are reflected in total OPEB liability and related deferred outflows and inflows of resources balances. 3,571 Current year pension expenditures are reported on the fiscal year basis in the governmental statement of revenues, expenditures and changes in fund balance and as actuarially determined in the government-wide statement of activities. These differences are reflected in net pension liability and related deferred outflows and inflows of resources balances.(527,292) Change in net position of governmental activities $ 5,389,997 DRAFT - 3.3.26 Page 97 of 212 See Notes to Financial Statements 24 Town of Trophy Club, Texas Statement of Net Position Proprietary Funds September 30, 2025 Nonmajor Fund Storm Drainage Utility Trophy Club Park Total Assets Current assets Cash and cash equivalents $2,181,160 $510,906 $2,692,066 Accounts receivable, net 36,392 -36,392 Prepaid items -1,040 1,040 Total current assets 2,217,552 511,946 2,729,498 Capital assets not being depreciated 29,500 -29,500 Noncurrent assets Capital assets: Net depreciable capital assets 2,479,970 161,766 2,641,736 Total noncurrent assets 2,479,970 161,766 2,641,736 Total assets 4,727,022 673,712 5,400,734 Liabilities Current liabilities Accounts payable 39,568 1,767 41,335 Total liabilities 39,568 1,767 41,335 Net Position Net investment in capital assets 2,509,470 161,766 2,671,236 Unrestricted 2,177,984 510,179 2,688,163 Total net position $4,687,454 $671,945 $5,359,399 DRAFT - 3.3.26 Page 98 of 212 See Notes to Financial Statements 25 Town of Trophy Club, Texas Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended September 30, 2025 Nonmajor Fund Storm Drainage Utility Trophy Club Park Total Operating Revenues Charges for services $436,016 $203,751 $639,767 Total operating revenues 436,016 203,751 639,767 Operating Expenses Salaries and benefits 102,482 26,125 128,607 Supplies and materials -1,985 1,985 Repairs and maintenance 5,344 5,220 10,564 Utilities 3,135 5,974 9,109 Contractual services 112,268 48,848 161,116 Depreciation 76,064 13,928 89,992 Total operating expenses 299,293 102,080 401,373 Operating Income 136,723 101,671 238,394 Nonoperating Revenues (Expenses) Capital contributions 999,245 -999,245 Capital contribution expense -(49,054)(49,054) Investment income 87,037 1,302 88,339 Interest expense (390)-(390) Total nonoperating revenues (expenses)1,085,892 (47,752)1,038,140 Change in Net Position 1,222,615 53,919 1,276,534 Net Position, Beginning of Year 3,464,839 618,026 4,082,865 Net Position, End of Year $4,687,454 $671,945 $5,359,399 DRAFT - 3.3.26 Page 99 of 212 Town of Trophy Club, Texas Statement of Cash Flows Proprietary Funds Year Ended September 30, 2025 See Notes to Financial Statements 26 Business-type Activities Nonmajor Fund Storm Drainage Trophy Utility Club Park Total Cash Flows from Operating Activities Receipts from customers and users $ 438,160 $ 203,751 $ 641,911 Payments to suppliers and service providers (102,059)(60,412)(162,471) Payments to employees for salaries and benefits (104,145)(26,163)(130,308) Net cash provided by operating activities 231,956 117,176 349,132 Cash Flows from Capital and Related Financing Activities Acquisition and construction of capital assets (29,500) - (29,500) Net cash provided by capital and related financing activities (29,500) - (29,500) Cash Flows from Investing Activities Interest on investments 87,037 1,302 88,339 Net cash provided by investing activities 87,037 1,302 88,339 Net Increase in Cash and Cash Equivalents 289,493 118,478 407,971 Cash and Cash Equivalents, Beginning 1,891,667 392,428 2,284,095 Cash and Cash Equivalents, Ending $ 2,181,160 $ 510,906 $ 2,692,066 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating income $ 136,723 $ 101,671 $ 238,394 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 76,064 13,928 89,992 Changes in operating assets and liabilities: (Increase) Decrease in: Accounts receivable 2,144 - 2,144 Prepaid items - 840 840 Increase (Decrease) in: Accounts payable 18,688 775 19,463 Accrued liabilities (1,663)(38)(1,701) Net cash provided by operating activities $ 231,956 $ 117,176 $ 349,132 Noncash transactions Capital contributions to governmental activities $ - $ 49,054 $ 49,054 Capital contributions from governmental activities 999,245 - - DRAFT - 3.3.26 Page 100 of 212 Notes to Financial Statements DRAFT - 3.3.26 Page 101 of 212 DRAFT - 3.3.26 Page 102 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 26 Note 1. Summary of Significant Accounting Policies The Town of Trophy Club (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: public safety (police and emergency medical services), parks, public works (public improvements, streets, planning, and zoning), and general administrative services. The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to government units (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Town’s significant accounting policies are described below. Description of Government-Wide Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. The Town currently has no fiduciary activities. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external customers for support. Likewise, the primary government is reported separately from a legally separate component unit for which the primary government is financially accountable. Financial Reporting Entity 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. Thus, blended component units are appropriately presented as funds of the primary government. The discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is both legally and substantively separate from the primary government. Public Improvement District (PID) No. 1 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 PID 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. As further discussed in Note 5, the PID issued refunding bonds in May 2025, with the approval of Town Council. The Town Council must review and update the service plan annually for the purpose of determining the annual budget for the PID No. 1. In addition, the PID No. 1 exclusively or almost exclusively benefits the primary government. The PID No. 1 is reported as a major special revenue fund and does not issue separate financial statements. DRAFT - 3.3.26 Page 103 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 27 Tax Increment Reinvestment Zone No. 1 (TIRZ No. 1) The Tax Increment Reinvestment Zone No. 1 is governed by a board appointed by the Town’s Council. The Town can impose its will on the TIRZ No. 1 and affect the day-to-day operations of the TIRZ No. 1 by removing appointed board members at will. The TIRZ No. 1 is funded by revenues generated through tax increment financing. Total debt outstanding is to be paid entirely with resources of the Town. Therefore, per GASB 14 paragraph 32, the primary government has an obligation to provide support to the TIRZ No. 1 (a financial burden). The TIRZ No. 1 is reported as a nonmajor special revenue fund and does not issue separate financial statements. Crime Control and Prevention District 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. The CCPD provides services entirely, or almost entirely to the primary government. The CCPD is reported as a nonmajor special revenue fund and does not issue separate financial statements. Discretely Presented Component Unit Economic Development Corporation The Economic Development Corporation (EDC) 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 EDC and affect the day-to-day operations of the EDC by removing appointed board members at will. The scope of public service of the EDC benefits the Town and its citizens and is operated within the geographic boundaries of the Town. Since the EDC’s governing body is not substantively the same as the governing body of the primary government, does not provide services entirely, or almost entirely to the primary government, nor does it maintain debt of any type that are repaid using Town resources, it has been reported as a discretely presented component unit. Separate financial statements for the EDC component unit are not prepared. Basis of Presentation – Government-Wide Financial Statements While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates data from governmental funds, while business-type activities incorporate data from the Town’s enterprise funds. Separate financial statements are provided for governmental funds and proprietary funds. As discussed earlier, the Town has one discretely presented component unit. It is shown in a separate column in the government-wide financial statements. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided, and other charges between various other functions of the Town. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. DRAFT - 3.3.26 Page 104 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 28 Basis of Presentation – Fund Financial Statements The fund financial statements provide information about the Town’s funds, including its blended component units. Separate statements for each fund category—governmental and proprietary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. The Town reports the following major governmental funds: General Fund – 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 funds are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. Debt Service Fund – The Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest and related costs on long-term debt paid 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. Capital Projects Fund – The Capital Projects Fund is used to account for funds received and expended for acquisition and construction of infrastructure and other capital assets. Public Improvement District (PID) No. 1 – This fund accounts for bond proceeds, assessments and related debt associated with the issuance of bonds issued by the Town for the Public Improvement District. The Town reports the following major enterprise fund: Storm Drainage Utility Fund – The storm drainage utility fund accounts for the storm drainage utility fee designated for the maintenance of the Town’s storm drainage system. During the course of operations, the Town has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. Further, certain activity occurs during the year involving transfers of resources between funds reported at gross amounts as transfers in/out. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities (i.e., the governmental funds) are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as transfers in the business-type activities column. DRAFT - 3.3.26 Page 105 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 29 Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of recognition in the financial statements of various kinds of transactions or events. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. 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. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they have been earned and they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service principal and interest expenditures on general long-term debt, including lease liabilities, as well as expenditures related to compensated absences, and claims and judgments, and postemployment benefits are recognized later based on specific accounting rules applicable to each, generally when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and financing through leases are reported as other financing sources. Property taxes, sales taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 1 year of year-end). All other revenue items are considered to be measurable and available only when cash is received by the Town. Budgetary Information Budgetary Basis of Accounting Annual budgets are adopted on a basis consistent with Generally Accepted Accounting Principles (GAAP) for the general, PID No. 1, hotel occupancy tax, street maintenance sales tax, court technology, court security, recreation programs, park land dedication, crime control and prevention district, and TIRZ No. 1 funds. The capital projects fund is appropriated on a project-length basis. The grants fund does not have appropriated budgets since other means control the use of these resources (e.g., grant awards) and sometimes span a period of more than one fiscal year. The original budget is adopted by the Town Council prior to the beginning of the year. The legal level of control as defined by the Town Charter is the fund level. No funds can be transferred or added which affect the total fund expenditures without Town Council approval. DRAFT - 3.3.26 Page 106 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 30 Appropriations in all budgeted funds lapse at the end of the fiscal year even if they have related encumbrances. Encumbrances are commitments related to unperformed (executory) contracts for goods or services (i.e., purchase orders, contracts, and commitments). Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. While all appropriations and encumbrances technically lapse at year end, valid outstanding encumbrances (those for which performance under the executory contract is expected in the next year) are reappropriated and become part of the subsequent year’s budget pursuant to state regulations, and the encumbrances are automatically reestablished in the next year. Deposits and Investments 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 and Texas Class, 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 this state that are: (A) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor; or, (B) secured by obligations that are described by (1) – (4); or, (6) fully collateralized direct repurchase agreements having a defined termination date, secured by obligations described by (1), pledged with third party selected or approved by the 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 or amortized cost. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties. Receivables and Interfund Transactions Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds” in the fund financial statements. If the transactions are between the primary government and its component unit, these receivables and payables are classified as “due to/from component unit/primary government.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds are offset by a nonspendable fund balance account in the applicable governmental fund to indicate they are not available for appropriation and are not expendable available financial resources. All trade receivables are shown net of any allowance for uncollectible amounts. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. DRAFT - 3.3.26 Page 107 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 31 Capital and Lease Assets Capital and lease assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital and lease assets are defined by the Town as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. As the Town constructs or acquires capital assets each period, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs, which are amounts spent in relation to capital assets that do not increase the asset’s capacity or efficiency or increase its estimated useful life. Donated capital assets are recorded at acquisition value at the date of donation. Acquisition value is the price that would be paid to acquire an asset with equivalent service potential on the date of the donation. Land and construction in progress are not depreciated. The other property, plant, equipment, and infrastructure of the Town are depreciated/amortized using the straight-line method over the following estimated useful lives or lease term, whichever is shorter: Buildings 30 Years Improvements other than buildings 10-30 Years Improvements other than buildings (streets)30 Years Machinery and equipment 7-15 Years Leased equipment 1 - 5 Years Vehicles 5-10 Years Water system 25 Years Infrastructure (storm drainage system)40 Years Lease Receivable The Town is a lessor of its multiple water towers and recognizes a related lease receivable and a deferred inflow of resources. At the commencement of a lease, the Town initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. The Town monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. DRAFT - 3.3.26 Page 108 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 32 Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets 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 three items that qualify for reporting in this category. The three items are the deferred charge on refunding reported in the government-wide statement of net position, and deferred amounts related to pension and OPEB. The deferred charge on refunding resulted from the difference between 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. The deferred amounts related to pension and OPEB relate to contributions after the measurement date, changes in actuarial assumptions, the difference in expected and actual economic experience, and difference between projected and actual investment earnings. In addition to liabilities, the statement of financial position includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets 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 four items that qualify for reporting in this category. Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from: property taxes, special assessments, and property liens. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. In the government-wide financial statements the Town reports deferred amounts related to pension relating to the changes in actuarial assumptions and difference in expected and actual economic experience. In both the government-wide financial statements and governmental funds financial statements, the Town reports deferred amounts related to leases which is comprised of the initial value of the lease receivable systematically reduced and recognized as lease revenue over the term of the lease. Unearned Revenue Governmental funds report a liability, unearned revenue, in connection with resources that have been received, but not yet earned, which consists primarily of grant dollars received in advance of incurring eligible expenditures. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements until due. The debt proceeds are reported as other financing sources, net of the applicable premium or discount and payments of principal and interest reported as expenditures. In the governmental fund types, issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. Long-term debt and other obligations, financed by proprietary funds, are reported as liabilities in the appropriate funds. For proprietary fund types, bond premiums and discounts are deferred and amortized over the life of the bonds, if material. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs are expensed when incurred. DRAFT - 3.3.26 Page 109 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 33 Lease Liability The Town is a lessee for noncancellable leases. The Town recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the financial statements. The Town recognizes lease liabilities with an initial, individual value of $5,000 or more. At the commencement of a lease, the Town initially measures the lease liability at the present value of payments expected to be made during the lease term. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life or the lease term, whichever is shorter. The Town monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. Pensions For purposes of measuring the net pension liability, deferred outflows of 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. Other Postemployment Benefits (OPEB) The Town has two single-employer defined benefit other postemployment benefit (OPEB) plans (Plans). For purposes of measuring the total OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB and OPEB expense have been determined on the same basis as they are reported by the Plans. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Net Position For government-wide reporting as well as in proprietary funds, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called net position. Net position is comprised of three components: net investment in capital assets, restricted, and unrestricted. Net investment in capital assets consists of capital and lease assets, net of accumulated depreciation and amortization and reduced by outstanding balances of bonds, notes, leases, and other debt that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are included in this component of net position.Restricted net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets are reported as restricted when constraints are placed on asset use either by external parties or by law through constitutional provision or enabling legislation. Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that does not meet the definition of the two preceding categories. DRAFT - 3.3.26 Page 110 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 34 Sometimes the Town 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 Town’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. Fund Balance In governmental fund types, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called “fund balance.” The Town’s governmental funds report the following categories of fund balance, based on the nature of any limitations requiring the use of resources for specific purposes. Nonspendable fund balance represents amounts that are either not in a spendable form or are legally or contractually required to remain intact. Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers such as grantors or enabling federal, state, or local legislation. Restrictions may be changed or lifted only with the consent of the resource providers.Committed fund balance represents amounts that can be used only for the specific purposes determined by of the adoption of an ordinance committing fund balance for a specified purpose by the Town’s Council prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until the resources have been spent for the specified purpose or the Council adopts another ordinance to remove or revise the limitation. Assigned fund balance represents amounts that are intended to be used by the Town for specific purposes but do not meet the criteria to be classified as committed. The Council has by resolution authorized the finance director and town manager to assign fund balance. The Council may also assign fund balance, as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. Unassigned fund balance represents the residual amount for the general fund that is not contained in the other classifications. The general fund is the only fund that reports a positive unassigned fund balance. Additionally, any deficit fund balance within the other governmental fund types is reported as unassigned. As previously mentioned, sometimes the Town 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 Town’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. Minimum Fund Balance Policy The Council has adopted a financial policy to maintain a level of unassigned fund balance in the general fund. The target level is set at six months of general fund annual expenditures (approximately 45%). This amount is intended to provide a fiscal stability when economic downturns and other unexpected events occur. If fund balance falls below the minimum target level because it has been used, essentially as a "revenue" source, as dictated by current circumstances, the policy provides for actions to replenish the amount to the minimum target level. DRAFT - 3.3.26 Page 111 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 35 Program Revenues Amounts reported as program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions (including special assessments) that are restricted to meeting the operational or capital requirements of a particular function or segment. All taxes, including those dedicated for specific purposes, and other internally dedicated resources are reported as general revenues rather than as program revenues. Property Taxes Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. Under state law, property taxes levied on real property constitute a lien on the real property which cannot be forgiven without specific approval of the State Legislature. The lien expires at the end of twenty years. Taxes levied on personal property can be deemed uncollectible by the Town. Property taxes at the fund level are recorded as receivables and unavailable revenues at the time the taxes are assessed. Revenues are recognized 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 in accordance with Generally Accepted Accounting Principles have been recognized as revenue. Accumulated Vacation, Compensated Time, and Sick Leave It is the Town’s policy to permit employees to accumulate earned, but unused vacation pay benefits. Vacation leave is accrued to the extent that the leave meets all of the following criteria: 1) the Town's obligation is attributable to employees' services already rendered; 2) the leave accumulates; and 3) it is more likely than not that the Town will compensate the employee for the benefits through leave time or other means, such as cash payments. The measurement of the liability for compensated absences was determined by applying the last-in-first-out (LIFO) method for vacation time accumulated. No liability is reported for unpaid accumulated sick leave as those balances are not payable upon separation. All vacation pay is accrued when incurred in the government-wide financial statements. Proprietary Funds Operating and Nonoperating Revenues and Expenses Proprietary funds distinguish operating revenues and expenses from nonoperating 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 storm drainage utility fund is charges to customers for sales and services. The principal operating revenues of the trophy club park fund is charges to customers for access to the park. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. DRAFT - 3.3.26 Page 112 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 36 Excess of Expenditures over Appropriations For the year ended September 30, 2025, the Public Improvement District No. 1 exceeded appropriations by $84,881 due to higher administrative expense than originally estimated. New Accounting Pronoucements GASB Statement No. 101, Compensated Absences, supersedes Statement 16, Accounting for Compensated Absences, issued in 1992. This standard updates the recognition and measurement guidance for compensated absences by aligning the guidance under a unified model. This will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation and can be applied consistently to any type of leave. The Town has implemented this Statement in fiscal year 2025, which had no impact on beginnning of year net position. GASB Statement No. 102, Certain Risk Disclosures, supersedes the Statement by the National Council of Governmental Accounting (NCGA) Interpretation 6, Notes to the Financial Statements Disclosure, paragraph 5. This Standard establishes financial reporting requirements for risks relasted to vulnerabilities due to certain concentrations or constraints. For concentrations and constraints meeting the definitions in the Standard, governments will disclose the concentrations or constraints, related events that could have a substantial impact, and action taken to mitigate the risk. The Town has implemented this Statement in fiscal year 2025, which had no impact on beginning of year net position. New Accounting Pronoucements GASB Statement No. 103, Financial Reporting Model Improvements. The objective of this Statement is to improve the financial reporting model by standardizing the presentation for various matters within governmental financial statements. The purpose is to eliminate diversity practice and improve comparability. The requirements of this Statement will take effect for the Town's fiscal year 2026. Management has not yet determined the impact of this Statement on its financial statements. GASB Statement No. 104, Disclosure of Certain Capital Assets. The objective of this Statement is to improve disclosures related to certain types of capital assets. The purpose is to provide users of government financial statements with essential information about certain types of capital assets. The requirements of this Statement will take effect for the Town's fiscal year 2026. Management has not yet determined the impact of this Statement on its financial statements. GASB Statement No. 105, Subsequent Events. The objective of this Statement is to improve the financial reporting requirements for subsequent events, thereby enhancing consistency in the application and better meeting the information needs of financial statement users. The requirements of this Statement will take effect for the Town's fiscal year 2027. Management has not yet determined the impact of this Statement on its financial statements. DRAFT - 3.3.26 Page 113 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 12 Note 2. Cash and Investments The Town utilizes a pooled cash and investment concept for all its funds, to maximize its investment program. Investment income from this internal pooling is allocated to the respective funds based upon the sources of funds invested. Deposits At September 30, 2025, the carrying amount of the Town’s demand deposits, including its component unit, totaled $20,472,443 and the bank balance was $21,774,391. Cash on hand for the Town was $400 and the carrying amount and bank balance of cash for the Public Improvement District No. 1 was $502,636. Custodial Credit Risk In the case of deposits, this is the risk that, in the event of a bank’s failure, the Town’s deposits may not be returned to it. Pursuant to provisions of both the Texas Public Funds Investment Act and the Public Funds Investment Policy of the Town, deposits of the Town that exceed the federal depository insurance coverage levels are materially collateralized with securities held by a third party custodian in the Town’s name. Investments, other than investments that are obligations of the U.S. government, its agencies, and instrumentalities, are insured or registered in the Town’s name and held by a third party custodian. Investments The Town’s investment policies are governed by state statutes. The Town’s investment policies further limit state statutes such that eligible investments include the following: 1. Obligations, including letters of credit, of the United States, its agencies, and instrumentalities, including the Federal Home Loan Banks. 2. Direct obligations of the State of Texas, its agencies and instrumentalities or obligations of agencies, counties, cities, and other political subdivisions of this State rated as to investment quality by a nationally recognized investment rating firm of not less than "A" or its equivalent. 3. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States. 4. Certificates of Deposit and other forms of deposit issued by a depository institution that has its main office or a branch office in Texas. The certificate of deposit must be guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor or secured by obligations in a manner and amount as provided by law. In addition, deposits obtained through a depository institution that has its main office or a branch office in Texas and that contractually agrees to place the funds in federally insured depository institutions in accordance with the conditions prescribed in Section 2256. 01 0(b) of the Public Funds Investment Act are authorized investments. Additionally, funds invested by the Town through a broker that has a main office or branch office in Texas and is selected from a list approved by the Town as required by section 2656.025 of the Public Funds Investment Act or a depository institution that has a main office or branch office in Texas and is selected by the Town are authorized investments if the following conditions are met: a. the broker or depository institution selected by the Town as specified above arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the Town; DRAFT - 3.3.26 Page 114 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 13 b. the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; and c. the Town appoints a depository bank, or a clearing broker registered with the Securities and Exchange Commission Rule 15c-3 (17CFR, Section 240 15c3-3) as custodian for the Town with respect to the certificates of deposit issued for account to the Town. 5. Fully collateralized direct repurchase agreements with a defined termination date secured by obligations of the United States or its agencies and instrumentalities. These shall be pledged to the Town of Trophy Club, held in an account in the Town of Trophy Club’s name, and deposited at the time the investment is made with the Town of Trophy Club or with a third-party selected and approved by the Town of Trophy Club. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in Texas. A Master Repurchase Agreement, or similar agreement, must be signed by the bank/dealer prior to investment in a repurchase agreement. All repurchase agreement transactions will be on a delivery versus payment basis. Securities received for repurchase agreements must have a market value greater than or equal to 102 percent at the time funds are disbursed. (This section pertains to Sweep Accounts and/or Bond Proceeds) 6. No-Load Money Market Mutual funds that: 1) are registered and regulated by the Securities and Exchange Commission and provide a prospectus and other information required by the Securities and Exchange Act of 1934 (15 U.S.C. Section 78a) or the Investment Company Act of 1940 (15 U.S.C. Section 80a-1), and 2) seek to maintain a stable net asset value of $1.0000 per share. 7. Local government investment pools, which: 1) meet the requirements of Chapter 2256.016 of the Public Funds Investment Act, 2) are rated no lower than AAA or an equivalent rating by at least one nationally recognized rating service, and 3) are authorized by resolution or ordinance by the Town Council. In addition, a local government investment pool created to function as a money market mutual fund must mark its portfolio to the market daily and, to the extent reasonably possible, stabilize at a $1.0000 net asset value. Investment Pools TexPool was established as a trust company with the Treasurer of the State of Texas as trustee, segregated from all other trustees, investments, and activities of the trust company. The State Comptroller of Public Accounts exercises oversight responsibility over TexPool. Oversight includes the ability to significantly influence operations, designation of management, and accountability for fiscal matters. Additionally, the State Comptroller has established an advisory board composed of both participants in TexPool and other persons who do not have a business relationship with TexPool. The advisory board members review the investment policy and management fee structure. Finally, Standard & Poor’s rate TexPool AAAm. As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor’s, as well as to the office of the Comptroller of Public Accounts for review. At September 30, 2025, the fair value of the position in TexPool approximates fair value of the shares. There were no limitations or restrictions on withdrawals. Texas CLASS is a local government investment pool emphasizing safety, liquidity, convenience, and competitive yield. Since 1996, Texas CLASS has provided Texas 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 is rated ‘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. At September 30, 2025, the fair value of the position in Texas CLASS approximates fair value of the shares. There were no limitations or restrictions on withdrawals. DRAFT - 3.3.26 Page 115 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 14 Interest Rate Risk Interest rate risk is the risk that changes in the market interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Town manages its exposure to declines in fair values by limiting the maximum maturity length of investments to three years. As of September 30, 2025, the Town had the following investments: Investment Investment Maturities Maturities (in Years) (in Years) Less Than 1 More Than 1 Investment Type Fair Value Year Year Texas CLASS $ 4,619,831 $ 4,619,831 $ - TexPool 9,609,052 9,609,052 - Non-negotiable CDs 2,067,003 - 2,067,003 Total $ 16,295,886 $ 14,228,883 $ 2,067,003 Credit Risk The Town’s investment policy limits investments to obligations of the United States, State of Texas, or their agencies and instrumentalities with an investment quality rating of not less than “A” or its equivalent, by a nationally recognized investment rating firm. Other obligations must be unconditionally guaranteed (either express or implied) by the full faith and credit of the United States Government or the issuing U.S. agency and investment pools with an investment quality not less than AAA or AAAm, or equivalent, by at least one nationally recognized rating service. Concentration of Credit Risk The concentration of credit risk is the risk of loss that may be caused by the Town’s investment in a single issuer. The Town’s investment policy states that the investment portfolio shall be diversified so that potential losses on individual issuers will be minimized. At September 30, 2025, the Town’s investments are 87% in investment pools and 13% in non-negotiable CDs . Fair Value of Investments The Town measures and records its investments using, as appropriately, fair value measurement guidelines established by generally accepted accounting principles (GAAP). These guidelines recognize a three-tiered fair value hierarchy as follows: Level 1 Quoted prices for identical investments in active markets; Level 2 Observable inputs other than those in Level 1; and Level 3 Unobservable inputs. DRAFT - 3.3.26 Page 116 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 15 Debt and equity securities classified as Level 1 are valued using prices quoted in active markets for those securities. Debt and equity securities classified in Level 2 are valued using the following approaches: debt securities are normally valued based on price data obtained from observed transactions and market price quotations from broker dealers and/or pricing vendors; equity securities are valued using fair value per share for each fund. Certificates of deposit classified in level 2 are valued using broker quotes that utilize observable market inputs. Securities classified as Level 3 have limited trade information, these securities are priced or using the last trade price or estimated using recent trade prices. At September 30, 2025, the Town had no investments in the fair value hierarchy. Certain investments that are measured using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts included below approximate net asset value for the applicable external investment pool balances. Additionally, the Town has investments in governmental pools and nonnegotiable CDs as listed below, which are recorded at amortized cost, and excluded from the fair value hierarchy. At September 30, 2025, the Town had the following investments: Investments measured at net asset value Texas CLASS $ 4,619,831 Investments measured at amortized cost Non-negotiable CDs 2,067,003 TexPool 9,609,052 Total investments $ 16,295,886 DRAFT - 3.3.26 Page 117 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 16 Note 3. Receivables Below is the detail of receivables for the Town’s major and nonmajor funds, including the applicable allowances for doubtful accounts: Storm Debt PID Nonmajor Drainage General Service No. 1 Governmental Utility Total Receivables Property taxes $ 44,202 $ 14,074 $ - $ - $ - $ 58,276 Sales Tax 322,606 - - 159,525 - 482,131 Franchise taxes 75,432 - - - - 75,432 Hotel occupancy - - - 131,484 - 131,484 Special assessments - - 12,802,418 - - 12,802,418 Due from other governments 7,505 - - - - 7,505 Municipal court 28,047 - - - - 28,047 EMS 146,826 - - - - 146,826 Storm drainage - - - - 36,392 36,392 Leases 126,264 - - - - 126,264 Other 141,532 - - - - 141,532 Gross receivables 892,414 14,074 12,802,418 291,009 36,392 14,036,307 Less: allowance for doubtful accounts (126,654) - - (10,500) - (137,154) Net receivables $ 765,760 $ 14,074 $ 12,802,418 $ 280,509 $ 36,392 $ 13,899,153 Based on the payment schedule for special assessment receivables, approximately $10,390,316 of the amount reported in the PID No. 1 fund is not expected to be collected within the next year. Leases Receivable The Town leases several water towers to third parties, terms of which expire in various years through 2027. The Town recognized approximately $125,000 in lease revenue and $11,000 in interest revenue during the current fiscal year related to the leases. As of September 30, 2025, the Town’s receivable for lease payments was $126,264. Also, the Town has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. As of September 30, 2025, the balance of the deferred inflow of resources was $112,643. DRAFT - 3.3.26 Page 118 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 17 Note 4. Capital and Lease Assets Capital and lease assets activity for the year ended September 30, 2025, was as follows: Beginning Sales/ Ending Balance Additions Disposals Transfers Balance Governmental Activities Capital assets, not being depreciated: Land $ 10,487,119 $ - $ - $ - $ 10,487,119 Construction in progress 2,197,624 1,351,486 - (999,245.00) 2,549,865 Total capital assets, not being depreciated 12,684,743 1,351,486 - (999,245) 13,036,984 Capital and lease assets, being depreciated/amortized: Buildings 10,659,919 - - - 10,659,919 Improvements other than buildings 66,373,444 143,736 - - 66,517,180 Machinery and equipment 3,125,469 652,819 (140,093) 55,014 3,693,209 Vehicles 2,454,736 441,720 - - 2,896,456 Water system 5,362,005 - - - 5,362,005 Lease asset - equipment 151,007 - - 151,007 Infrastructure 14,472,062 2,141,698 - - 16,613,760 Total capital and lease assets, being depreciated/amortized 102,598,642 3,379,973 (140,093) 55,014 105,893,536 Less accumulated depreciation/amortization for: Buildings 2,965,997 386,789 - - 3,352,786 Improvements other than buildings 37,279,545 2,147,747 - - 39,427,292 Machinery and equipment 2,327,423 242,347 (104,415) 5,960 2,471,315 Vehicles 1,419,878 284,056 - - 1,703,934 Water system 2,376,184 175,875 - - 2,552,059 Lease asset - equipment 91,113 37,116 - 128,229 Infrastructure 7,713,160 362,878 - - 8,076,038 Total accumulated depreciation/amortization 54,173,300 3,636,808 (104,415) 5,960 57,711,653 Total capital and lease assets, being depreciated/amortized 48,425,342 (256,835)(35,678) 49,054 48,181,883 Governmental activities capital and lease assets, net $ 61,110,085 $ 1,094,651 $ (35,678) $ (950,191) $ 61,218,867 DRAFT - 3.3.26 Page 119 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 18 Beginning Sales/ Ending Balance Additions Disposals Transfers Balance Business-Type activities: Capital assets, not being depreciated: Construction in Progress $ - $ 29,500 $ - $ - $ 29,500 Total capital assets, not being depreciated - 29,500 - - 29,500 Capital assets, being depreciated: Improvements other than Buildings $ 158,887 $ - $ - $ - $ 158,887 Machinery and equipment 97,592 - - (55,014) 42,578 Improvements 33,365 - - - 33,365 Infrastructure 2,039,766 - - 999,245 3,039,011 Total capital assets, being depreciated 2,329,610 - - 944,231 3,273,841 Less accumulated depreciation for: Improvements other than Buildings 16,880 7,950 - - 24,830 Machinery and equipment 34,038 2,642 - (5,960) 30,720 Improvements 14,178 3,336 - - 17,514 Infrastructure 482,977 76,064 - - 559,041 Total accumulated depreciation 548,073 89,992 - (5,960) 632,105 Total capital assets, being depreciated, net 1,781,537 (89,992) - 950,191 2,641,736 Business-type activities capital assets, net $ 1,781,537 $ (89,992) $ - $ 950,191 $ 2,641,736 Depreciation and amortization expense was charged to the functions/programs of the primary government as follows: Governmental Activities General government $ 398,177 Emergency medical services 88,389 Information systems 33,009 Police 212,349 Fire 31,202 Parks and recreation 690,795 Community development 20,449 Public works 2,162,438 Total governmental activities depreciation/amortization expense $ 3,636,808 Business-type Activities Trophy Club Park $ 13,928 Storm Drainage Utility 76,064 Total business-type activities $ 89,992 DRAFT - 3.3.26 Page 120 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 19 Note 5. Long-term Liabilities The following is a summary of changes in the Town’s total long-term liabilities for the year ended September 30, 2025. Beginning Ending Due Within Balance Additions Retirements Balance One Year Governmental Activities General Obligation Bonds $ 5,165,000 $ - $ 740,000 $ 4,425,000 $ 505,000 Certificates of Obligation 16,800,000 - 1,545,000 15,255,000 985,000 Special Assessment Bonds 18,227,000 12,905,000 18,227,000 12,905,000 1,450,000 Bond Premiums 3,093,541 411,130 2,292,003 1,212,668 - Total bonds payable 43,285,541 13,316,130 22,804,003 33,797,668 2,940,000 Leases payable 49,294 - 37,299 11,995 7,010 Compensated absences* 407,666 76,585 - 484,251 115,333 Total governmental activities $ 43,742,501 $ 13,392,715 $ 22,841,302 $ 34,293,914 $ 3,062,343 *The change in accrued compensated absences is presented as a new amount, in accordance with GASB 101 The Town intends to retire all of its governmental activities general long-term liabilities, plus accrued interest, from property taxes and other current revenues from the debt service fund as has been done in prior years. The special assessment bonds are expected to be liquidated from the PID No. 1 fund. The general fund has typically been used to liquate the liability for compensated absences for governmental activities. The proprietary fund type long-term debt will be repaid, plus accrued interest, from operating revenues of the respective fund. DRAFT - 3.3.26 Page 121 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 20 General Obligation Bonds The Town issues general obligation bonds and certificates of obligations to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of the Town. General obligation bonds and certificates of obligation outstanding at September 30, 2025, are as follows: Interest Original Outstanding at Governmental Activities Rate (%)Final Maturity Borrowing Year-End General Obligation Bonds: General Obligation Series 2016 2.00-3.00 2036 5,245,000 3,125,000 General Obligation Refunding Series 2020 1.16 2030 3,550,000 1,300,000 $ 4,425,000 Certificate of Obligations: Certificates of Obligation Series 2013 2.50-3.25 2028 1,300,000 370,000 Certificates of Obligation Series 2014 2.00-4.00 2034 2,500,000 1,310,000 Certificates of Obligation Series 2016 2.00-4.00 2036 4,210,000 2,615,000 Certificates of Obligation Series 2017 2.50-3.00 2037 4,445,000 2,510,000 Certificates of Obligation Series 2021 2.00-4.00 2041 4,305,000 2,930,000 Certificates of Obligation Series 2023 4.00-5.00 2043 6,925,000 5,520,000 $ 15,255,000 Special Assessment Bonds In May 2025, the Town issued Special Assessment Revenue Refunding Bonds, Series 2025, in the amount of $12,905,000 with a net premium of $411,130, which refunded the existing Special Assessment Revenue Refunding Bonds, Series 2015. Proceeds of the sale of the Bonds are to be used for (i) refunding the outstanding Trophy Club Public Improvement District No. 1 Special Assessment Revenue Refunding Bonds, Series 2015; (ii) funding a debt service reserve fund for the payment of principal and interest on the Bonds; (iii) funding a Prepayment/Delinquency Fund; and (iv) paying the costs of issuance of the Bonds. As a result of the refunding transaction the Town reduced total debt service payments by $4,312,297. These bonds will be repaid from special assessments levied on the property owners benefiting from this construction. Those amounts, including interest, are 100% pledged to pay the scheduled principal and interest payments on the special assessment bonds. The Town is not obligated to pay the bonds from any funds raised from taxation or from any other revenues available to the Town. Interest Original Outstanding at Governmental Activities Rate (%)Final Maturity Borrowing Year-End Special Assessment: Special Assessment Revenue Refunding-Series 2025 5.00 2032 $ 12,905,000 $ 12,905,000 $ 12,905,000 DRAFT - 3.3.26 Page 122 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 21 The debt service requirements for the Town’s bonds are as follows: Governmental Activities Year Ended Total September 30 Principal Interest Requirements 2026 $ 2,940,000 $ 14,013,456 $ 16,953,456 2027 3,215,000 1,121,418 4,336,418 2028 3,345,000 993,953 4,338,953 2029 3,352,000 863,400 4,215,400 2030 3,484,000 727,863 4,211,863 2031-2035 10,974,000 1,775,950 12,749,950 2036-2040 3,830,000 538,300 4,368,300 2041-2043 1,445,000 77,150 1,522,150 Total $ 32,585,000 $ 20,111,490 $ 52,696,490 Leases Payable The Town has agreements as lessee for equipment and copiers, the terms of which expire in various years through 2027. The following is a schedule by year of payments under the leases as of September 30, 2025: Year Ending September 30,Principal Interest Total 2026 $ 7,010 $ 688 $ 7,698 2027 4,985 147 5,132 Total $ 11,995 $ 835 $ 12,830 Note 6. Interfund Transactions Due to/from component unit The composition of amounts due to/from component unit as of September 30, 2025, is as follows: Receivable Payable Amount Component Unit General Fund $ 16,256 Nonmajor Governmental Fund 32,517 $ 48,773 The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Advances from/to other funds: DRAFT - 3.3.26 Page 123 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 22 Receivable Fund Payable Fund Amount General Fund PID No. 1 $ 183,256 General Fund Nonmajor Governmental Fund 386,503 $ 569,759 DRAFT - 3.3.26 Page 124 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 23 The amount payable to the general fund from the nonmajor governmental fund relates to a working capital loan made to a nonmajor governmental fund. None of the balance is scheduled to be collected in the subsequent year. The amount payable to the general fund from the Public Improvement District No. 1 fund relates to expenditures paid for by the general fund during prior years and balances of existing debt refunded during the year in which the general fund supplied a portion of the cash to the escrow agent. The balance is expected to be paid in future years as the Public Improvement District No. 1 fund increases revenues. Interfund transfers The composition of interfund transfers for the year ended September 30, 2025, is as follows: Capital Nonmajor Projects Governmental Transfer Out:Fund Funds Total General Fund $ 5,705,903 $ 257,130 $ 5,963,033 Total $ 5,705,903 $ 257,130 $ 5,963,033 Transfers were primarily used to support debt service, capital expenditures, and to transfer funds to the general fund for budgeted administrative costs. Note 7. Risk Management The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; business interruption; errors and omissions; injuries to employees; employee health benefits; and other claims of various natures. The Town participates in the Texas Municipal League Intergovernmental Risk Pool (Pool) which provides protection for risks of loss. Premiums are paid to the Pool that retains the risk of loss beyond the Town’s policy deductibles. Any losses reported but unsettled or incurred and not reported, are believed to be insignificant to the Town’s basic financial statements. For the last three years, there have been no significant reductions of insurance coverage or insurance settlements in excess of insurance coverage. Note 8. Contingencies Federal Grant Programs The Town participates in various federal grant programs, the principal of which are subject to program compliance audits pursuant to the Single Audit Act as amended. Accordingly, the Town’s compliance with applicable grant requirements will be established at a future date. The amount of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the Town anticipates such amounts, if any, will be immaterial. DRAFT - 3.3.26 Page 125 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 24 Note 9. Defined Benefit Pension Plan Plan Description The Town participates as one of over 900 plans in the defined benefit cash-balance pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is a statewide public retirement plan created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for employees of Texas participating cities. The TMRS Act places the general administration and management of TMRS with a six-member, Governor-appointed Board of Trustees; however, TMRS is not fiscally dependent on the State of Texas. TMRS issues a publicly available Annual Comprehensive Financial Report (ACFR) that can be obtained at tmrs.com. All eligible employees of the Town are required to participate in TMRS. Benefits Provided 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. At retirement, the Member’s benefit is calculated based on the sum of the Member’s contributions, with interest, and the Town-financed monetary credits with interest. The retiring Member may select one of seven monthly benefit payment options. Members may also choose to receive a portion of their benefit as a lump sum distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the total Member contributions and interest. 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: Member Deposit Rate 7% Town Matching Ratio 2 to 1 Updated Service Credit 100% Transfers Annuity Increases to Retirees 30% CPI-U since retirement date Vesting 5 years Service Retirement Eligibilities 5 years/age 60, 20 years/any age Employees Covered by Benefit Terms At the December 31, 2024, valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 70 Inactive employees entitled to but not yet receiving benefits 111 Active employees 81 262 Contributions Member contribution rates in TMRS are either 5%, 6%, or 7% of the Member’s total compensation, and the Town matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the Town. Under the state law governing TMRS, the contribution rate for each Town is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The Town’s contribution rate is based on the liabilities DRAFT - 3.3.26 Page 126 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 25 created from the benefit plan options selected by the Town and any changes in benefits or actual experience over time. Employees for the Town were required to contribute 7% of their annual compensation during the fiscal year. The contribution rates for the Town were 12.90% and 13.64% in calendar years 2024 and 2025, respectively. The Town’s contributions to TMRS for the year ended September 30, 2025, were $1,051,613 and were equal to the required contributions. Net Pension Liability The Town’s Net Pension Liability was measured as of December 31, 2024, 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, 2024, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% per year Overall payroll growth 2.55% per year, adjusted down for population declines, if any Investment rate of return 6.75% net of pension plan investment expense, including inflation Salary increases are based on a service-related table. Mortality rates for active members are based on the PUB(10) mortality tables with 110% the Public Safety table used for males and 100% of the General Employee table used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender-distinct 2019 Municipal Retirees for Texas mortality tables. Male rates are multiplied by 103% and female rates are multiplied by 105%. The rates for actives, healthy retirees and beneficiaries are projected on a fully generational basis by the most recent Scale MP-2021 to account for future mortality improvements. For disabled annuitants, the same mortality tables for healthy retirees are used with a 4-year set-forward for males a 3-year set-forward for females. In addition a 3.5% and 3.0% minimum mortality rate is applied, for males and females, respectively, to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by the most recent Scale MP-2021 to account for future mortality improvements subject to the 3% floor. The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2018 to December 31, 2022. The assumptions were adopted in 2023 and first used in the December 31, 2023, actuarial valuation. The post-retirement mortality assumption for Annuity Purchase Rates (APRs) is based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income to satisfy the short-term and long-term funding needs of TMRS. DRAFT - 3.3.26 Page 127 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 26 The long-term expected rate of return on pension plan investments was determined by best estimate ranges of expected returns for each major asset class. The long-term expected rate of return is determined by weighting the expected return for each major asset class by the respective target asset allocation percentage. The target allocation and best estimates of the expected return for each major asset class in fiscal year 2025 are summarized in the following table: Long-Term Expected Target Real Rate of Return Asset Class Allocation (Arithmetic) Global Equity 35.00%7.10% Core Fixed Income 6.00%5.00% Non-Core Fixed Income 6.00%6.80% Hedge Funds 5.00%6.40% Private Equity 13.00%8.50% Private Debt 13.00%8.20% Real Estate 12.00%6.70% Infrastructure 6.00%6.00% Other Private Markets 4.00%7.30% Total 100.00% Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that Member 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 payments of current active and inactive 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. DRAFT - 3.3.26 Page 128 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 27 Changes in Net Pension Liability (Asset) Net Pension Total Pension Plan Fiduciary Liability / Liability (a)Net Position (b)(Asset) (a) - (b) Balance, Beginning of Year $ 29,726,783 $ 26,964,278 $ 2,762,505 Changes for the year: Service cost 1,332,689 - 1,332,689 Interest (on the Total Pension Liability) 2,018,365 - 2,018,365 Difference between expected and actual experience 869,035 - 869,035 Changes in assumptions - - - Contributions - member - 528,844 (528,844) Contributions - employer - 974,584 (974,584) Net investment income - 2,804,137 (2,804,137) Benefit payments, including refunds of member contributions (982,853)(982,853) - Administrative expense - (17,968) 17,968 Other - (421) 421 Net Changes 3,237,236 3,306,323 (69,087) Balance, End of Year $ 32,964,019 $ 30,270,601 $ 2,693,418 Sensitivity of the Net Position Liability (Asset) to Changes in the Discount Rate The following presents the net pension liability (asset) of the Town, calculated using the discount rate of 6.75%, as well as what the Town’s net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or 1-percentage-point higher (7.75%) than the current rate: 1% Decrease in 1% Increase in Discount Rate (5.75%)Discount Rate (6.75%)Discount Rate (7.75%) Net pension liability (asset) $ 7,606,115 $ 2,693,418 $(1,310,998) Pension Plan Fiduciary Net Position Detailed information about the pension plan’s Fiduciary Net Position is available in the Schedule of Changes in Fiduciary Net Position, by Participating City/Town. That report may be obtained at tmrs.com. DRAFT - 3.3.26 Page 129 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 28 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions: For the year ended September 30, 2025, the Town recognized pension expense of $1,578,904. At September 30, 2025, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Difference between projected and actual investment earnings $ - $ 329,853 Difference of assumption changes or inputs - 20,017 Difference in expected and actual economic experience 644,872 - Contributions subsequent to the measurement date 809,633 - $ 1,454,505 $ 349,870 $809,633 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability for the year ending 2026. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Net Deferred Outflows of Year Ended September 30,Resources 2026 $ 491,150 2027 428,387 2028 (427,727) 2029 (196,808) $ 295,002 Allocation of Pension Items The Town allocates pension items to the governmental activities on the basis of employee payroll funding. The net pension liability/(asset) is liquidated by the General Fund, Street Maintenance Sales Tax Fund, and Hotel Occupancy Tax Fund. DRAFT - 3.3.26 Page 130 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 29 Note 10. Other Postemployment Benefits (OPEB) A summary of the total OPEB liability, deferred outflows of resources, deferred inflows of resources, and OPEB expense of each plan is shown below. Detailed discussion of each plan will follow in this note. Deferred Deferred Total OPEB Outflows Inflows Liability of Resources of Resources OPEB Expense Governmental Activities Supplemental Death Benefits Plan $ 248,289 $ 17,147 $ 87,477 $ 1,533 Retiree Health Care Plan 59,646 2,734 23,234 1,732 Total governmental activities $ 307,935 $ 19,881 $ 110,711 $ 3,265 Texas Municipal Retirement System Supplemental Death Benefits Fund Plan Description Texas Municipal Retirement System (TMRS) administers an optional death benefit plan, the Supplemental Death Benefits Fund (SDBF), which operates like a group-term life insurance plan. This is a voluntary program in which participating member cities may elect, by ordinance, to provide supplemental death benefits for their active Members with optional coverage for their retirees. The Town has elected to participate in the SDBF for its active members, including retirees. As the SDBF covers both active and retiree participants with no segregation of assets, the SDBF is considered to be an unfunded single-employer OPEB plan (i.e., no assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75). Benefits Provided The death benefit for active Members provides a lump-sum payment approximately equal to the Member’s annual salary (calculated based on the Member’s actual earnings for the 12-month period preceding the month of death). The death benefit for retirees is considered another postemployment benefit (OPEB) and is a fixed amount of $7,500. Employees Covered by Benefit Terms At the December 31, 2024, valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees currently receiving benefits 40 Inactive employees entitled to but not yet receiving benefits 27 Active employees 81 148 DRAFT - 3.3.26 Page 131 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 30 Contributions The Town contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is based on the mortality and service experience of all employees covered by the SDBF and the demographics specific to the workforce of the Town. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year. As such, contributions fund the covered active Member and retiree deaths on a pay-as-you-go basis. Due to the SDBF being considered an unfunded OPEB plan, benefit payments are treated as being equal to the Town’s yearly contributions for retirees. The retiree portion of the contribution rates for the Town to the SDBF were 0.08% and 0.09% for calendar year 2024 and 2025, respectively. The Town’s contributions to the SDBF for the year ended September 30, 2025, were $6,037, and were equal to the required contributions. Total OPEB Liability The Town’s Total OPEB Liability was measured as of December 31, 2024, and the Total OPEB Liability was determined by an actuarial valuation as of that date. Actuarial assumptions: The Total OPEB Liability in the December 31, 2024, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% per year Salary increases 3.60% to 11.85% including inflation Discount rate 4.08% (3.77% in prior year) Retirees' share of benefit- related costs $ 0 All administrative expenses are paid through the Town’s Pension Trust and accounted for under reporting requirements of GASB Statement No. 68. Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based the gender-distinct 2019 Municipal Retirees of Texas mortality tables. Male rates are multiplied by 103% and female rates are multiplied by 105%. The rates are projected on a fully generational basis by the most recent Scale MP-2021 (with immediate convergence). Mortality rates for disabled annuitants were based on the mortality tables for with a 4 year set-forward for males and a 3 year set-forward for females. In addition, a 3.5% and 3% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis by Scale MP-2021 (with immediate convergence) to account for future mortality improvements subject to the floor. The actuarial assumptions used in the December 31, 2024, valuation was based on the results of an actuarial experience study for the period ending December 31, 2022. Because the Supplemental Death Benefits Fund is considered an unfunded trust under GASB Statement No. 75, the relevant discount rate for calculating the Total OPEB Liability is based on the Fidelity’s “20-Year Municipal GO AA Index” rate as of the measurement date. DRAFT - 3.3.26 Page 132 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 31 Changes in the Total OPEB Liability: Total OPEB Liability Balance, Beginning of Year $ 255,612 Changes for the year Service cost 15,847 Interest on Total OPEB Liability 9,821 Differences between expected and actual experience (12,798) Changes of assumptions (14,156) Benefit payments (6,037) Net changes (7,323) Balance, End of Year $ 248,289 Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the Town, calculated using the discount rate of 4.08%, as well as what the Town’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (3.08%) or 1-percentage- point higher (5.08%) than the current rate: 1% Decrease in 1% Increase in Discount Rate (3.08%)Discount Rate (4.08%)Discount Rate (5.08%) Total OPEB liability $ 298,467 $ 248,289 $ 209,480 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended September 30, 2025, the Town recognized OPEB expense of $1,533. At September 30, 2025, the Town reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Difference in expected and actual experience $ 955 $ 24,125 Changes in assumptions 10,850 63,352 Contributions made subsequent to measurement date 5,342 - $ 17,147 $ 87,477 DRAFT - 3.3.26 Page 133 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 32 The Town reported $5,342 as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date that will be recognized as a reduction of the Total OPEB Liability for the year ending September 30, 2026. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Net Deferred Outflows of Year Ended September 30,Resources 2026 $ (33,451) 2027 (34,319) 2028 (5,908) 2029 (1,994) $ (75,672) Retiree Health Care Plan Plan Description The Town offers retired employees and their dependents the option to retain health, dental, and vision insurance coverage under the Town’s insurance carrier until the age 65 through a single employer defined benefit plan. The Town does not make a direct contribution for retiree medical coverage. The retirees participate in the same plan as active employees. This effect on cost is considered to be an implicit rate subsidy. To be eligible for retiree health plan benefits, retired employees must be at least age 55 and have 10 years of service with the Town. The plan does not issue a separate report. Benefit provisions for retirees are not mandated by any form of employment agreement and the continued provision of these benefits is based entirely on the discretion of the Town Council. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75. Benefits Provided Retiree medical coverage levels for retirees are the same plans and benefits for all active employees in accordance with the terms and conditions of the Town’s current health plan. Premiums for the retiree health plans are 100% of the current contribution rate for active employees. The plans themselves are the same as well with regard to benefits and structure with no differentiation. The contributions and coverage continue until the retiree reaches age 65. Employees Covered by Benefit Terms At September 30, 2025, the following employees were covered by the benefit terms: Inactive employees currently receiving benefits - Active employees 68 68 DRAFT - 3.3.26 Page 134 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 33 Total OPEB Liability The Town’s Total OPEB Liability was measured as of September 30, 2025, and the Total OPEB Liability was determined by an actuarial valuation as of September 30, 2025. Actuarial Assumptions: The Total OPEB Liability in the September 30, 2025, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Salary increases 3.50%, including inflation Discount rate 4.06% (4.06% in prior year) Retirees' share of benefit- related costs Retiree pays a 195% of the active employee monthly contribution rate for medical/ dental/vision coverage Health-care cost trend rates Level 4.50% Mortality rates were based on RPH-2014 Total Table with Projection MP-2021. Because the Retiree Health Care Plan is considered an unfunded trust under GASB Statement No. 75, the relevant discount rate for calculating the Total OPEB Liability is based on the S&P Municipal Bond 20-Year High Grade Rate index as of the measurement date. Changes in the Total OPEB Liability: Total OPEB Liability Balance, Beginning of Year $ 51,659 Changes for the year Service cost 5,660 Interest on Total OPEB Liability 2,327 Differences between expected and actual experience - Changes of assumptions - Net changes 7,987 Balance, End of Year $ 59,646 Rate Sensitivity of the Total OPEB Liability The following presents the total OPEB liability of the Town, calculated using the discount rate of 4.06%, as well as what the Town’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (3.06%) or 1-percentage- point higher (5.06%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate (3.06%)(4.06%)(5.06%) Total OPEB liability $ 66,359 $ 59,646 $ 53,633 DRAFT - 3.3.26 Page 135 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 34 The following presents the total OPEB liability of the Town, calculated using the healthcare cost trend rate of 4.5%, as well as what the Town’s total OPEB liability would be if it were calculated using a trend rate that is 1-percentage-point lower (3.5%) or 1-percentage- point higher (5.5%) than the current rate: 1% Decrease in Healthcare 1% Increase in Trend Rate Trend Rate Trend Rate (3.50%)(4.50%)(5.50%) Total OPEB liability $ 51,976 $ 59,646 $ 68,691 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended September 30, 2025, the Town recognized OPEB expense of $1,732. At September 30, 2025, the Town reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Difference in expected and actual experience $ - $ 15,651 Changes in assumptions 2,734 7,583 $ 2,734 $ 23,234 Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Net Deferred Inflows of Year Ended September 30,Resources 2026 $ (6,255) 2027 (6,114) 2028 (5,278) 2029 (1,471) 2030 (1,055) Thereafter (327) $ (20,500) Allocation of OPEB Items The Town allocates OPEB items to the governmental activities on the basis of employee payroll funding. The total OPEB liability is liquidated by the General Fund, Street Maintenance Sales Tax Fund, and Hotel Occupancy Tax Fund. DRAFT - 3.3.26 Page 136 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 35 Note 11. Deferred Compensation Plan The Town has established a single-employer defined contribution, deferred compensation plan (457 Plan) in accordance with Internal Revenue Code, Section 457(b). The 457 Plan is available to all full-time employees of the Town. The 457 Plan is administered by ICMA Retirement Corporation doing business as Mission Square Retirement. Benefit provisions are contained in the plan document and were established and can be amended by action of the Town Council. All 457 Plan assets and income are held in trust for the exclusive benefit of participants and their beneficiaries; therefore, it is not reported in the financial statements of the Town. The 457 Plan permits employees to defer a portion of their salaries until future years. The benefits of the 457 Plan are not available to employees until termination, retirement, or unforeseeable emergency. Benefits are available to employee’s beneficiaries in case of death. The Town contributed a fixed amount annual to the 457 Plan for Director level and above. Note 12. Tax Abatements The Town enters into tax abatement agreements with local businesses under Chapter 380 of the Texas Local Government Code. The Town has the authority under both Article III, Section 52-a of the Texas Constitution and Chapter 380 to make public funds available for the purposes of promoting local economic development and stimulating business and commercial activity with the Town. The Town offers individual incentive packages to attract new business to the Town. Abatements may be granted by Town Council resolution to companies or developers agreeing to relocate to the Town or to establish a new business in the Town. As part of the agreements, the Town agrees to refund a portion of incremental Local Sales and Use Tax, Type B Sales and Use Tax, and/or Property Taxes after confirmation of payment. The agreements entered into by the Town include clawback provisions should the recipient of the tax abatement fail to fully meet its commitments, such as annual sales levels or appraised values of real and personal property located on the project site. As a part of these agreements, the Town may also provide Developers financial assistance for Developer’s expenditures made towards the Project. In addition to tax abatements, the Town occasionally makes additional commitments in its economic development incentive agreements. The following additional commitments have been made: The Town agreed to provide a loan of $200,000 to fund certain permanent improvements to a building related to a qualified project during fiscal year 2021. The loan was to be paid back with interest of 2% calculated annually within four years of the date the Certificate of Occupancy is issued. During fiscal year 2022, the payee closed operations and was in default of the agreement. The Town is currently developing a revised repayment plan with expectations of full collectability of the original outstanding amount. The current loan amount is the note receivable balance in the Economic Development Corporation. For the fiscal year ended September 30, 2025, the Town had no abated taxes. DRAFT - 3.3.26 Page 137 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 36 Note 13. Economic Development Corporation The Economic Development Corporation (EDC) is financed with a voter approved half-cent Town sales tax, to aid, promote and further the economic development within the Town. Cash and Investments Cash and cash equivalents for the EDC as of September 30, 2025, consist of and are classified in the accompanying financial statements as follows: Cash and cash equivalents $ 2,742,498 Total cash and cash equivalents $ 2,742,498 Investments Because the Town provides investment services for the EDC, the Town adheres to its investment policy and all state statutes when investing available cash for the Town. The EDC’s investments balances at September 30, 2025, were $2,747,016 (included in cash and cash equivalents for financial statement purposes) and were held in TexPool. DRAFT - 3.3.26 Page 138 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 37 Note Receivable In connection with an economic development incentive agreement, as noted previously, EDC agreed to provide a loan of $200,000 to fund certain permanent improvements to a building related to a qualified project during fiscal year 2021. The loan was to be paid back with interest of 2% calculated annually within four years of the date the Certificate of Occupancy is issued. During fiscal year 2022, the payee closed operations and was in default of the agreement. The Town is currently developing a revised repayment plan with expectations of full collectability of the original outstanding amount. Scheduled note receivable payments as of year-end are as follows: Future Minimum Note Receivable Year Ended September 30,Amounts 2026 $ 62,500 2027 37,500 2028 49,250 Total $ 149,250 Capital Assets Capital asset activity for the year ended September 30, 2025, is as follows: Beginning Ending Balance Additions Deletions Balance Component Unit Activities Capital assets, not being depreciated: Land $ 2,538,765 $ - $ - $ 2,538,765 Total capital assets, not being depreciated 2,538,765 - - 2,538,765 Capital assets, being depreciated: Infrastructure 367,960 - - 367,960 Total capital assets, being depreciated 367,960 - - 367,960 Less accumulated depreciation for: Infrastructure 131,318 24,693 - 156,011 Total accumulated depreciation 131,318 24,693 - 156,011 Total capital assets, being depreciated, net 236,642 (24,693) - 211,949 Total capital assets $ 2,775,407 $ (24,693) $ - $ 2,750,714 Depreciation expense charged to the EDC component unit was $24,693. DRAFT - 3.3.26 Page 139 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 38 Long-term Debt A summary of long-term debt transactions, including current portion, for the year ended September 30, 2025, is as follows: Beginning Ending Due Within Balance Additions Retirements Balance One Year Component Unit Activities Sales Tax Revenue Bonds $ 1,720,000 $ - $ 125,000 $ 1,595,000 $ 130,000 Bond Discounts (14,544) - (1,333)(13,211) - Total bonds payable 1,705,456 - 123,667 1,581,789 130,000 Total component unit activities $ 1,705,456 $ - $ 123,667 $ 1,581,789 $ 130,000 Sales Tax Revenue Bonds EDC issued sales tax revenue bonds to provide funds for purchasing land within the Town to be used to promote new or expanded business enterprises including for entertainment, convention, tourist, sports and exhibition facilities, amphitheaters, concert halls, parks, open space, restaurants, retail, parking facilities, public safety facilities and related roads, street and water and sewer facilities and improvements. Sales tax revenue bonds outstanding at September 30, 2025, are as follows: Interest Original Outstanding at Component Unit Activities Rate (%)Final Maturity Borrowing Year-End Sales Tax Revenue Bonds, Taxable Series 2015 1.00-4.75 2035 $ 2,690,000 $ 1,595,000 $ 2,690,000 $ 1,595,000 The debt service requirements for the sales tax revenue bonds are as follows: Component Unit Activities Total Year Ended September 30,Principal Interest Requirements 2026 130,000 72,213 $ 202,213 2027 135,000 66,687 201,687 2028 140,000 60,950 200,950 2029 150,000 55,000 205,000 2030 155,000 48,625 203,625 2031-2035 885,000 130,150 1,015,150 Total $ 1,595,000 $ 433,625 $ 2,028,625 DRAFT - 3.3.26 Page 140 of 212 Town of Trophy Club, Texas Notes to the Financial Statements September 30, 2025 39 The following is a summary of pledged revenues of EDC for the year ended September 30, 2025: Percentage Period Current Portion Revenue Year Debt of Pledged Remaining Will Not Be Total Pledged Service Revenue Principal and Available For Revenue Pledged Revenue Requirements Stream Interest Other Purposes .5% sales and use tax $ 959,415 $ 203,644 21.2% $ 2,028,625 Until 2035 DRAFT - 3.3.26 Page 141 of 212 Required Supplementary Information (Unaudited) DRAFT - 3.3.26 Page 142 of 212 DRAFT - 3.3.26 Page 143 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund Year Ended September 30, 2025 42 Original Final Variance with Budget Budget Actual Final Budget Revenues Property taxes $ 9,268,316 $ 9,268,316 $ 9,563,710 $ 295,394 Sales and mixed beverage taxes 1,625,000 1,625,000 1,980,134 355,134 Franchise and local taxes 951,200 961,200 1,092,187 130,987 License and permits 193,000 401,000 1,162,056 761,056 Intergovernmental 1,356,797 1,356,797 2,024,011 667,214 Charges for services 1,986,190 2,286,190 1,685,808 (600,382) Fines and forfeitures 355,608 355,608 515,507 159,899 Lease revenue - - 108,420 108,420 Interest revenue - leases - - 10,831 10,831 Investment income 400,000 400,000 768,085 368,085 Contributions 923,873 923,873 - (923,873) Other revenue 180,500 306,423 70,392 (236,031) Total revenues 17,240,484 17,884,407 18,981,141 1,096,734 Expenditures Current General government - - 155,826 155,826 Manager's office 634,477 630,477 624,567 (5,910) Town secretary 285,693 273,693 330,004 56,311 Mayor & council 34,750 34,750 19,339 (15,411) Human resources 466,086 466,086 408,262 (57,824) Finance 680,622 680,622 686,435 5,813 Information services 736,125 736,125 579,895 (156,230) Legal 225,330 225,330 164,976 (60,354) Municipal court 114,500 114,500 140,206 25,706 Police 4,571,664 4,862,662 4,158,754 (703,908) Fire 1,920,700 1,927,496 1,780,130 (147,366) Emergency medical services 1,950,614 1,972,614 1,718,024 (254,590) Facilities management 1,323,968 1,323,968 1,611,412 287,444 Parks and recreation 2,648,305 2,728,305 2,660,035 (68,270) Community development 590,219 1,042,219 611,520 (430,699) Communications 179,154 179,154 258,884 79,730 Pools 418,766 418,766 - (418,766) Debt service Principal - - 6,487 6,487 Interest - - 1,211 1,211 Capital outlay - - 4,228 4,228 Total expenditures 16,780,973 17,616,767 15,920,195 (1,696,572) Excess of Revenues Over Expenditures 459,511 267,640 3,060,946 2,793,306 Other Financing Sources (Uses) Transfers in 80,752 80,752 3,073,457 (2,992,705) Transfers out - - (5,963,033) 5,963,033 Sale of general capital assets - - 3,626 (3,626) Total other financing sources (uses) 80,752 80,752 (2,885,950) 2,966,702 Net Change in Fund Balances $ 540,263 $ 348,392 174,996 $ 5,760,008 Fund Balances, Beginning 12,819,300 Fund Balances, Ending $ 12,994,296 DRAFT - 3.3.26 Page 144 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Public Improvement District No. 1 Year Ended September 30, 2025 43 Original and Variance with Final Budget Actual Final Budget Revenues Special assessments $ 2,226,926 $ 2,278,454 $ 51,528 Investment income - 179,994 179,994 Issuance of special assessment revenue bonds 12,905,000 12,905,000 - Premium on general obligation bonds issued 411,130 411,130 - Miscellaneous 118,923 - (118,923) Total revenues 15,661,979 15,774,578 112,599 Expenditures General government 49,231 134,112 84,881 Debt Service: Principal 18,227,000 18,227,000 - Interest and fiscal charges 724,833 724,833 - Bond issuance costs 572,222 572,222 - Total expenditures 19,573,286 19,658,167 (84,881) Net Change in Fund Balances $ (3,911,307)(3,883,589) $ 27,718 Fund Balances, Beginning 4,202,969 Fund Balances, Ending $ 319,380 DRAFT - 3.3.26 Page 145 of 212 Town of Trophy Club, Texas Schedule of Changes in the Town's Net Pension Liability / (Asset) and Related Ratios - Texas Municipal Retirement System 44 Measurement Date December 31, 2015 2016 2017 2018 Total Pension Liability Service cost $ 804,453 $ 795,448 $ 789,530 $ 863,553 Interest (on the Total Pension Liability) 1,053,745 1,113,555 1,173,728 1,263,163 Changes of benefit terms - - - - Difference between expected and actual experience (237,279)(471,044)(62,418)(258,925) Change in assumptions 368,895 - - - Benefit payments, including refunds of employee contributions (632,921)(450,496)(636,604)(589,161) Net Change in Total Pension Liability 1,356,893 987,463 1,264,236 1,278,630 Total Pension Liability - Beginning 14,967,739 16,324,632 17,312,095 18,576,331 Total Pension Liability - Ending 16,324,632 17,312,095 18,576,331 19,854,961 Plan Fiduciary Net Position Contributions - employer 658,543 593,840 606,585 633,832 Contributions - employee 340,458 329,281 323,389 347,155 Net investment income 19,357 912,155 2,061,434 (515,889) Benefit payments, including refunds of employee contributions (632,921)(450,496)(636,604)(589,161) Administrative expense (11,788)(10,296)(10,676)(9,961) Other (582)(555)(541)(520) Net Change in Plan Fiduciary Net Position 373,067 1,373,929 2,343,587 (134,544) Plan Fiduciary Net Position - Beginning 13,116,278 13,489,345 14,863,274 17,206,861 Plan Fiduciary Net Position - Ending 13,489,345 14,863,274 17,206,861 17,072,317 Net Pension Liability / (Asset) - Ending $ 2,835,287 $ 2,448,821 $ 1,369,470 $ 2,782,644 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 82.63%85.85%92.63%85.99% Covered Payroll $ 4,863,685 $ 4,704,011 $ 4,619,838 $ 4,954,406 Net Pension Liability / (Asset) as a Percentage of Covered Payroll 58.30%52.06%29.64%56.17% Other Information: For the 2015 valuation, inflation used was 2.5%, investment rate of return and discount rate used was 6.75% and actuarial studies were updated through December 31, 2014. For the 2019 valuation, actuarial studies were updated through December 31, 2018. For the 2023 valuation, actuarial studies were updated through December 31, 2022. DRAFT - 3.3.26 Page 146 of 212 45 2018 2019 2020 2021 2022 2023 2024 $ 863,553 $ 980,663 $ 1,044,859 $ 1,059,781 $ 1,068,025 $ 1,138,934 $ 1,332,689 1,263,163 1,354,175 1,466,317 1,572,070 1,707,812 1,838,912 2,018,365 - - - - - - - (258,925)(3,497)(142,491) 191,092 26,108 637,486 869,035 - (802) - - - (91,511) - (589,161)(566,895)(835,638)(783,233)(848,925)(941,420)(982,853) 1,278,630 1,763,644 1,533,047 2,039,710 1,953,020 2,582,401 3,237,236 18,576,331 19,854,961 21,618,605 23,151,652 25,191,362 27,144,382 29,726,783 19,854,961 21,618,605 23,151,652 25,191,362 27,144,382 29,726,783 32,964,019 633,832 710,975 760,116 808,487 758,653 822,888 974,584 347,155 384,574 406,480 420,786 422,144 454,276 528,844 (515,889) 2,642,216 1,537,272 2,883,176 (1,856,921) 2,766,470 2,804,137 (589,161)(566,895)(835,638)(783,233)(848,925)(941,420)(982,853) (9,961)(14,914)(9,935)(13,322)(16,045)(17,583)(17,968) (520)(448)(388) 91 19,147 (123)(421) (134,544) 3,155,508 1,857,907 3,315,985 (1,521,947) 3,084,508 3,306,323 17,206,861 17,072,317 20,227,825 22,085,732 25,401,717 23,879,770 26,964,278 17,072,317 20,227,825 22,085,732 25,401,717 23,879,770 26,964,278 30,270,601 $ 2,782,644 $ 1,390,780 $ 1,065,920 $ (210,355) $ 3,264,612 $ 2,762,505 $ 2,693,418 85.99%93.57%95.40%100.84%87.97%90.71%91.83% $ 4,954,406 $ 5,493,911 $ 5,722,119 $ 6,011,235 $ 6,030,633 $ 6,489,651 $ 7,546,373 56.17%25.31%18.63%-3.50%54.13%42.57%35.69% DRAFT - 3.3.26 Page 147 of 212 Town of Trophy Club, Texas Schedule of Contributions Texas Municipal Retirement System 46 Fiscal Year Ended September 30, 2016 2017 2018 2019 Actuarially determined contribution $ 627,419 $ 598,176 $ 638,736 $ 736,208 Contribution in relation of the actuarially determined contribution 627,419 598,176 638,736 736,208 Contribution deficiency (excess) $ - $ - $ - $ - Covered payroll $ 4,822,763 $ 4,559,463 $ 4,911,902 $ 5,640,011 Contributions as a percentage of covered payroll 13.01%13.12%13.00%13.05% Notes to Required Supplementary Information - TMRS Notes to Schedule of Contributions Valuation Date: Notes Actuarially determined contribution rates are calculated as of December 31 and become effective in January 13 months later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 21 years (longest amortization ladder) Asset Valuation Method 10 Year smoothed fair value; 12% soft corridor Inflation 2.50% Salary Increases 3.60% to 11.85%, including inflation Investment Rate of Return 6.75% Retirement Age Experience-based table of rates that are specific to the Town's plan of benefits. Last updated for the 2023 valuation pursuant to an experience study of the period ending 2022 Mortality Post-retirement: 2019 Municipal Retirees of Texas Mortality Tables. Male rates are multiplied by 103% and female rates are multiplied by 105% The rates are projected on a fully generational basis by the most recent Scale MP-2021 (with immediate convergence). Pre-retirement: PUB(10) mortality tables, with the 110% of the Public Safety table used for males and the 100% of the General Employee table used for females. The rates are projected on a fully generational basis by the most recent Scale MP-2021 (with immediate convergence). Other Information: Notes There were no benefit changes during the year. DRAFT - 3.3.26 Page 148 of 212 47 2019 2020 2021 2022 2023 2024 2025 $ 736,208 $ 728,124 $ 810,363 $ 793,562 $ 808,561 $ 930,909 $ 1,051,613 736,208 728,124 810,363 793,562 808,561 930,909 1,051,613 $ - $ - $ - $ - $ - $ - $ - $ 5,640,011 $ 5,524,768 $ 5,985,416 $ 6,195,743 $ 6,387,617 $ 7,072,426 $ 7,619,130 13.05%13.18%13.54%12.81%12.66%13.16%13.80% DRAFT - 3.3.26 Page 149 of 212 Town of Trophy Club, Texas Schedule of Changes in the Town's Total OPEB Liability and Related Ratios Texas Municipal Retirement System Supplemental Death Benefits Fund 48 Measurement Date December 31, 2017 2018 2019 2020 Total OPEB Liability Service cost $ 10,164 $ 12,386 $ 15,383 $ 21,744 Interest (on the Total OPEB Liability) 6,033 6,400 7,252 7,204 Difference between expected and actual experience - (887)(4,443)(12,515) Change in assumptions 17,400 (16,237) 46,233 46,896 Benefit payments (924)(991)(1,099)(1,144) Net Change in Total OPEB Liability 32,673 671 63,326 62,185 Total OPEB Liability - Beginning 154,985 187,658 188,329 251,655 Total OPEB Liability - Ending $ 187,658 $ 188,329 $ 251,655 $ 313,840 Covered Employee Payroll $ 4,619,838 $ 4,954,406 $ 5,493,911 $ 5,722,119 Total OPEB Liability as a Percentage of Covered-Employee Payroll 4.06%3.80%4.58%5.48% Notes to Schedule: Changes of Benefit Terms:None Changes of Assumptions:1) Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period: 2016 3.78% 2017 3.00% 2018 4.10% 2019 2.75% 2020 2.00% 2021 1.84% 2022 4.05% 2023 3.77% 2024 4.08% No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75 to pay related benefits. This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the Town will present information for only those years for which information is available. DRAFT - 3.3.26 Page 150 of 212 Town of Trophy Club, Texas Schedule of Changes in the Town's Total OPEB Liability and Related Ratios Texas Municipal Retirement System Supplemental Death Benefits Fund 49 2021 2022 2023 2024 $ 27,652 $ 26,535 $ 12,979 $ 15,847 6,517 6,863 9,683 9,821 4,559 (21,220)(10,491)(12,798) 12,575 (134,894) 13,431 (14,156) (3,607)(3,618)(5,192)(6,037) 47,696 (126,334) 20,410 (7,323) 313,840 361,536 235,202 255,612 $ 361,536 $ 235,202 $ 255,612 $ 248,289 $ 6,011,235 $ 6,030,633 $ 6,489,651 $ 7,546,373 6.01%3.90%3.94%3.29% DRAFT - 3.3.26 Page 151 of 212 Town of Trophy Club, Texas Schedule of Changes in the Town's Total OPEB Liability and Related Ratios Retiree Health Care Plan 50 Measurement Date September 30, 2018 2019 2020 2021 Total OPEB Liability Service cost $ 5,179 $ 5,389 $ 5,389 $ 6,570 Interest (on the Total OPEB Liability) 2,019 2,101 2,624 1,489 Difference between expected and actual experience - - (1,194) - Change in assumptions - - (6,481) - Net Change in Total OPEB Liability 7,198 7,490 338 8,059 Total OPEB Liability - Beginning 44,561 51,759 59,249 59,587 Total OPEB Liability - Ending $ 51,759 $ 59,249 $ 59,587 $ 67,646 Covered Employee Payroll $ 4,911,902 $ 5,493,911 $ 5,524,768 $ 5,985,416 Total OPEB Liability as a Percentage of Covered-Employee Payroll 1.05%1.08%1.08%1.13% Notes to Schedule: Changes of Benefit Terms:None Changes of Assumptions:1) Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period: 2017 4.06% 2018 4.06% 2019 2.25% 2020 2.25% 2021 2.25% 2022 4.77% 2023 4.77% 2024 4.06% 2025 4.06% No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75 to pay related benefits. This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the Town will present information for only those years for which information is available. DRAFT - 3.3.26 Page 152 of 212 Town of Trophy Club, Texas Schedule of Changes in the Town's Total OPEB Liability and Related Ratios Retiree Health Care Plan 51 2022 2023 2024 2025 $ 6,570 $ 4,185 $ 4,185 $ 5,660 1,670 2,389 2,703 2,327 (16,109) - (11,470) - (13,868) - 3,758 - (21,737) 6,574 (824) 7,987 67,646 45,909 52,483 51,659 $ 45,909 $ 52,483 $ 51,659 $ 59,646 $ 6,195,743 $ 6,387,617 $ 5,853,817 $ 7,781,850 0.74%0.82%0.88%0.77% DRAFT - 3.3.26 Page 153 of 212 Combining and Individual Fund Financial Statements and Schedules (Unaudited) DRAFT - 3.3.26 Page 154 of 212 DRAFT - 3.3.26 Page 155 of 212 Nonmajor Governmental Funds Special Revenue Funds Hotel Occupancy Tax Fund – This fund is used to account for local hotel and motel occupancy tax receipts, as well as expenses (events). Street Maintenance Sales Tax Fund – Accounts for sales taxes specifically restricted for street improvements. Court Technology Fund – Accounts for court fees specifically restricted for court technology expenses. Court Security Fund – Accounts for court fees specifically restricted for court security expenses. Recreation Programs Fund – Accounts for revenues and expenditures associated with recreational programs. Park Land Dedication Fund – This fund is used to account for park revenues received by and expended by the Town. Police Seizure Fund - This fund is used to account for funds seized by the Police department and expended by the Town. Grant Fund –This fund is used to account for certain grant monies received by and expended by the Town. Tax Increment Reinvestment Zone No. 1 – Accounts for revenues to be used in the reinvestment zone. Crime Control and Prevention District – Accounts for the funds received from a one-half one percent sales tax, which can be utilized for public safety. Municipal Court Building and Security Technology Fund - This fund is used to account for court fees specifically restricted for court security and technology expenses. DRAFT - 3.3.26 Page 156 of 212 DRAFT - 3.3.26 Page 157 of 212 56 Town of Trophy Club, Texas Combining Balance Sheet Nonmajor Governmental Funds September 30, 2025 Hotel Occupancy Tax Street Maintenance Sales Tax Court Technology Court Security Recreation Programs Assets Cash and cash equivalents $3,808,416 $633,262 $7,595 $94,121 $44,913 Taxes receivable, net 120,984 79,237 --- Total assets $3,929,400 $712,499 $7,595 $94,121 $44,913 Liabilities and Fund Balances Liabilities Accounts payable $4,310 $10,806 $-$-$- Due to component unit -32,517 --- Advances to other funds ----- Total liabilities 4,310 43,323 --- Fund Balances Restricted: Capital projects ----- Municipal court --7,595 94,121 - Public safety ----- Street maintenance -669,176 --- Tourism 3,925,090 ---- Parks ----- Committed: Recreation programs ----44,913 Total fund balances 3,925,090 669,176 7,595 94,121 44,913 Total liabilities and fund balances $3,929,400 $712,499 $7,595 $94,121 $44,913 DRAFT - 3.3.26 Page 158 of 212 57 Park Land Dedication Police Seizure Grant Tax Increment Reinvestment Zone No. 1 Crime Control and Prevention District Municipal Court Building and Security Technology Total Nonmajor Governmental Funds $656,980 $37,499 $9,886 $676,217 $373,483 $6,993 $6,349,365 ----80,288 -280,509 $656,980 $37,499 $9,886 $676,217 $453,771 $6,993 $6,629,874 $-$-$-$-$5,456 $-$20,572 ------32,517 ---386,503 --386,503 ---386,503 5,456 -439,592 ---289,714 --289,714 -----6,993 108,709 -37,499 9,886 -448,315 -495,700 ------669,176 ------3,925,090 656,980 -----656,980 ------44,913 656,980 37,499 9,886 289,714 448,315 6,993 6,190,282 $656,980 $37,499 $9,886 $676,217 $453,771 $6,993 $6,629,874 DRAFT - 3.3.26 Page 159 of 212 58 Town of Trophy Club, Texas Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Year Ended September 30, 2025 Hotel Occupancy Tax Street Maintenance Sales Tax Court Technology Court Security Recreation Programs Revenues Sales and mixed beverage taxes $-$463,166 $-$-$- Occupancy tax 955,491 ---- Charges for services ----16,042 Fines and fees --62 17,577 - Investment income 144,699 1,605 --- Other revenue 21,781 ---- Total revenues 1,121,971 464,771 62 17,577 16,042 Expenditures Current: Police ----- Parks and recreation ----15 Tourism 514,784 ---- Public works -304,267 --- Debt Service: Principal ----- Interest and fiscal charges ----- Capital Outlay ----- Total expenditures 514,784 304,267 --15 Excess (Deficiency) of Revenues Over (Under) Expenditures 607,187 160,504 62 17,577 16,027 Other Financing Sources (Uses) Transfers in ----- Total other financing sources (uses)----- Net Change in Fund Balances 607,187 160,504 62 17,577 16,027 Fund Balances (Deficit), Beginning of Year 3,317,903 508,672 7,533 76,544 28,886 Fund Balances, End of Year $3,925,090 $669,176 $7,595 $94,121 $44,913 DRAFT - 3.3.26 Page 160 of 212 59 Park Land Dedication Police Seizure Grant Tax Increment Reinvestment Zone No. 1 Crime Control and Prevention District Municipal Court Building and Security Technology Total Nonmajor Governmental Funds $-$-$-$-$469,177 $-$932,343 ------955,491 ------16,042 -37,499 ---6,993 62,131 24,146 ---790 -171,240 ---17,289 --39,070 24,146 37,499 -17,289 469,967 6,993 2,176,317 ----97,854 -97,854 ------15 ------514,784 ------304,267 ----30,812 -30,812 ----368 -368 ----205,303 -205,303 ----334,337 -1,153,403 24,146 37,499 -17,289 135,630 6,993 1,022,914 ---257,130 --257,130 ---257,130 --257,130 24,146 37,499 -274,419 135,630 6,993 1,280,044 632,834 -9,886 15,295 312,685 -4,910,238 $656,980 $37,499 $9,886 $289,714 $448,315 $6,993 $6,190,282 DRAFT - 3.3.26 Page 161 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Hotel Occupancy Tax Fund Year Ended September 30, 2025 60 Hotel Original and Occupancy Variance with Final Budget Tax Final Budget Revenues Taxes $ 750,000 $ 955,491 $ 205,491 Investment income 50,000 144,699 94,699 Other revenue 10,000 21,781 11,781 Total revenues 810,000 1,121,971 311,971 Expenditures Tourism 808,301 514,784 (293,517) Capital outlay 20,000 - (20,000) Total expenditures 828,301 514,784 (313,517) Excess of Revenues Over Expenditures (18,301) 607,187 (1,546) Other Financing Sources (Uses) Transfers out - - - Total other financing sources (uses) - - - Net Change in Fund Balance $ (18,301) 607,187 $ (1,546) Fund Balance, Beginning 3,317,903 Fund Balance, Ending $ 3,925,090 DRAFT - 3.3.26 Page 162 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Street Maintenance Tax Fund Year Ended September 30, 2025 61 Street Original and Maintenance Variance with Final Budget Sales Tax Final Budget Revenues Taxes $ 357,000 $ 463,166 $ 106,166 Investment income 1,530 1,605 75 Total revenues 358,530 464,771 106,241 Expenditures Public works 378,225 304,267 (73,958) Capital outlay - - - Total expenditures 378,225 304,267 (73,958) Excess of Revenues Over Expenditures (19,695) 160,504 (180,199) Other Financing Sources (Uses) Transfers out - - - Total other financing sources (uses) - - - Net Change in Fund Balance $ (19,695) 160,504 $ (180,199) Fund Balance, Beginning 508,672 Fund Balance, Ending $ 669,176 DRAFT - 3.3.26 Page 163 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Court Technology Fund Year Ended September 30, 2025 62 Original and Court Variance with Final Budget Technology Final Budget Revenues Fines and Fees $ 100 $ 62 $ (38) Total revenues 100 62 (38) Expenditures Court - - - Total expenditures - - - Net Change in Fund Balance $ 100 62 $ (38) Fund Balance, Beginning 7,533 Fund Balance, Ending $ 7,595 DRAFT - 3.3.26 Page 164 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Court Security Fund Year Ended September 30, 2025 63 Original and Court Variance with Final Budget Security Final Budget Revenues Fines and fees $ 9,000 $ 17,577 $ 8,577 Total revenues 9,000 17,577 8,577 Expenditures Court - - - Total expenditures - - - Excess of Revenues Over Expenditures 9,000 17,577 (8,577) Other Financing Sources (Uses) Transfers out - - - Total other financing sources (uses) - - - Net Change in Fund Balance $ 9,000 17,577 $ 8,577 Fund Balance, Beginning 76,544 Fund Balance, Ending $ 94,121 DRAFT - 3.3.26 Page 165 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Recreation Programs Fund Year Ended September 30, 2025 64 Original and Recreation Variance with Final Budget Programs Final Budget Revenues Charges for services $ 6,000 $ 16,042 $ 10,042 Total revenues 6,000 16,042 10,042 Expenditures Parks and recreation 6,000 15 (5,985) Total expenditures 6,000 15 (5,985) Net Change in Fund Balance $ - 16,027 $ 16,027 Fund Balance, Beginning 28,886 Fund Balance, Ending $ 44,913 DRAFT - 3.3.26 Page 166 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Park Land Dedication Fund Year Ended September 30, 2025 65 Original and Park Land Variance with Final Budget Dedication Final Budget Revenues Investment income $ 1,750 $ 24,146 $ 22,396 Other revenue - - - Total revenues 1,750 24,146 22,396 Expenditures Capital outlay - - - Total expenditures - - - Net Change in Fund Balance $ 1,750 24,146 $ 22,396 Fund Balance, Beginning 632,834 Fund Balance, Ending $ 656,980 DRAFT - 3.3.26 Page 167 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Tax Increment Reinvestment Zone No. 1 Fund Year Ended September 30, 2025 66 Tax Increment Original and Reinvestment Variance with Final Budget Zone No. 1 Final Budget Revenues Taxes $ 145,051 $ - $ (145,051) Other revenue - 17,289 17,289 Total revenues 145,051 17,289 (127,762) Expenditures Community development 62,657 - (62,657) Total expenditures 62,657 - (62,657) Excess (Deficiency) of Revenues Over (Under) Expenditures 82,394 17,289 65,105 Other Financing Sources (Uses) Transfers in - 257,130 257,130 Total other financing sources (uses) - 257,130 257,130 Net Change in Fund Balance $ 82,394 274,419 $ 192,025 Fund Balance/(Deficit), Beginning 15,295 Fund Balance/(Deficit), Ending $ 289,714 DRAFT - 3.3.26 Page 168 of 212 Town of Trophy Club, Texas Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Crime Control and Prevention District Fund Year Ended September 30, 2025 67 Crime Control Original and and Variance with Final Budget Prevention District Final Budget Revenues Taxes $ 360,500 $ 469,177 $ 108,677 Intergovernmental 4,000 - (4,000) Investment income 1,030 790 (240) Total revenues 365,530 469,967 104,437 Expenditures Police 204,854 97,854 (107,000) Debt Service - Principal - 30,812 30,812 Debt Service - Interest and Fiscal Charges - 368 368 Capital outlay 160,000 205,303 45,303 Total expenditures 364,854 334,337 (30,517) Net Change in Fund Balance $ 676 $ 135,630 $ 134,954 Fund Balance, Beginning 312,685 Fund Balance, Ending $ 448,315 DRAFT - 3.3.26 Page 169 of 212 Discretely Presented Component Unit Economic Development Corporation – to aid, promote and further economic development within the Town. DRAFT - 3.3.26 Page 170 of 212 DRAFT - 3.3.26 Page 171 of 212 Town of Trophy Club, Texas Balance Sheet Component Unit September 30, 2025 70 Economic Development Corporation Assets Cash and cash equivalents $ 2,742,498 Taxes receivable, net 164,133 Due from primary government 48,773 Notes receivable 149,250 Total assets 3,104,654 Fund Balance Restricted: Debt service 238,117 Economic development 2,866,537 Total fund balance 3,104,654 DRAFT - 3.3.26 Page 172 of 212 Town of Trophy Club, Texas Reconciliation of the Balance Sheet to the Statement of Net Position Economic Development Corporation September 30, 2025 71 Amounts reported in the statement of net position are different because: Total fund balance $ 3,104,654 Capital assets, net of accumulated depreciation, are not financial resources and, therefore, are not reported in the fund financial statements. 2,750,714 Interest payable on long-term debt does not require current financial resources, therefore interest payable is not reported as a liability in the fund financial statements.(6,018) Long-term liabilities, including bonds payable and related discount, are not due and payable in the current period and, therefore are not reported in the fund financial statements.(1,581,789) Total Net Position $ 4,267,561 DRAFT - 3.3.26 Page 173 of 212 Town of Trophy Club, Texas Statement of Revenues, Expenditures and Changes in Fund Balance Component Unit Year Ended September 30, 2025 72 Economic Development Corporation Revenues Sales and mixed beverage taxes $ 959,415 Investment income 94,335 Total revenues 1,053,750 Expenditures Current: Economic Development 242,091 Debt Service: Principal 125,000 Interest and fiscal charges 78,042 Total expenditures 445,133 Change in Fund Balance 608,617 Fund Balance, Beginning of Year 2,496,037 Fund Balance, End of Year $ 3,104,654 DRAFT - 3.3.26 Page 174 of 212 Town of Trophy Club, Texas Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Activities Economic Development Corporation Year Ended September 30, 2025 73 Amounts reported in the statement of activities are different because: Net change in fund balances $ 608,617 The fund reports capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of deprecation expense recorded in the current period. (24,693) The repayment of the principal of long-term debt consumes the current financial resources of the fund, but has no effect on net position. 125,000 Some expenses reported in the statement of activities do/(do not) require the use of current financial resources and, therefore, (are)/are not reported as expenditures in the fund. Amortization of bond discount (1,333) Current year changes in accrued interest on long-term debt (318) Change in net position of governmental activities $ 707,273 DRAFT - 3.3.26 Page 175 of 212 Statistical Section DRAFT - 3.3.26 Page 176 of 212 DRAFT - 3.3.26 Page 177 of 212 Statistical Section (Unaudited) This part of the Town’s annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health. Contents Pages Financial Trends . . . . . . . . . . . . . . . . . . . . . . . . . . 102-111 These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. Revenue Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 112-116 These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. Debt Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . 117-120 These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Demographic and Economic Information . . . . . . . . . . . . . . . . . . 121-123 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. Operating Information . . . . . . . . . . . . . . . . . . . . . . . . 124-125 These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. DRAFT - 3.3.26 Page 178 of 212 DRAFT - 3.3.26 Page 179 of 212 Town of Trophy Club, Texas Net Position by Component Last Ten Fiscal Years (Unaudited) (accrual basis of accounting) 78 Fiscal Year 2016 2017 2018* 2019 Governmental Activities Net investment in capital assets $ 26,940,643 $ 27,125,337 $ 51,825,867 $ 52,718,444 Restricted 4,433,649 4,676,837 5,478,991 6,112,682 Unrestricted 1,995,960 3,414,190 3,594,662 4,107,003 Total governmental activities $ 33,370,252 $ 35,216,364 $ 60,899,520 $ 62,938,129 Business-type Activities Net investment in capital assets $ 680,146 $ 776,097 $ 877,048 $ 982,997 Unrestricted 171,755 350,752 633,294 741,325 Total business-type activities $ 851,901 $ 1,126,849 $ 1,510,342 $ 1,724,322 Primary Government Net investment in capital assets $ 27,620,789 $ 27,901,434 $ 52,702,915 $ 53,701,441 Restricted 4,433,649 4,676,837 5,478,991 6,112,682 Unrestricted 2,167,715 3,764,942 4,227,956 4,848,328 Total primary government $ 34,222,153 $ 36,343,213 $ 62,409,862 $ 64,662,451 * The Town implemented GASB Statement No. 75 for the year ended September 30, 2018. DRAFT - 3.3.26 Page 180 of 212 Table 1 79 2020 2021 2022 2023 2024 2025 $ 51,061,357 $ 27,008,067 $ 28,391,158 $ 28,947,808 $ 30,100,766 $ 43,093,591 6,821,486 29,052,071 27,278,448 8,185,798 9,320,172 6,553,617 5,321,576 5,265,710 6,394,425 25,732,138 25,856,754 21,020,481 $ 63,204,419 $ 61,325,848 $ 62,064,031 $ 62,865,744 $ 65,277,692 $ 70,667,689 $ 1,121,475 $ 1,240,768 $ 1,497,757 $ 1,678,173 $ 1,781,537 $ 2,671,236 706,200 1,077,789 1,507,834 1,982,061 2,301,328 2,688,163 $ 1,827,675 $ 2,318,557 $ 3,005,591 $ 3,660,234 $ 4,082,865 $ 5,359,399 $ 52,182,832 $ 28,248,835 $ 29,888,915 $ 30,625,981 $ 31,882,303 $ 45,764,827 6,821,486 29,052,071 27,278,448 8,185,798 9,320,172 6,553,617 6,027,776 6,343,499 7,902,259 27,714,199 28,158,082 23,708,644 $ 65,032,094 $ 63,644,405 $ 65,069,622 $ 66,525,978 $ 69,360,557 $ 76,027,088 DRAFT - 3.3.26 Page 181 of 212 Town of Trophy Club, Texas Changes in Net Position Last Ten Fiscal Years (Unaudited) (accrual basis of accounting) 80 Fiscal Year 2016 2017 2018* 2019 Expenses Governmental activities General government $ 2,728,642 $ 2,533,298 $ 3,398,500 $ 3,650,893 Manager's office - - - - Town secretary - - - - Mayor & council - - - - Human resources - - - - Finance - - - - Information services - - - - Legal - - - - Court - - - - Public safety 3,540,703 4,607,380 4,429,744 5,109,461 Facilities management - - - - Streets - - - - Sanitation - - - - PID activities 2,122,901 48,520 2,850 26,875 Parks and recreation 2,652,384 2,761,053 2,644,329 2,871,283 Pools - - - - Community development 640,404 738,659 695,637 717,215 Public works (Streets and infrastructure) 1,878,119 1,728,809 1,671,692 2,371,290 Water and sewer 319,054 - - - Storm drainage 234,287 - - - Interest on long-term debt 496,019 2,365,059 2,771,762 2,663,286 Total governmental activities expenses 14,612,513 14,782,778 15,614,514 17,410,303 Business-type activities Storm Drainage 174,499 120,295 129,722 131,370 Trophy Club Park 109,325 116,477 93,677 122,186 Total business-type activities expenses 283,824 236,772 223,399 253,556 Total primary government expenses $ 14,896,337 $ 15,019,550 $ 15,837,913 $ 17,663,859 Program Revenues Governmental activities Charges for services General government $ - $ - $ - $ - Court - - - - Police - - - - Fire - - - - Emergency medical services - - - - Parks and recreation - - - - Community Development 605,558 - - - Sanitation - - - - Public works - - - - Other 2,593,969 3,705,774 3,982,406 3,266,108 Operating grants and contributions 141,071 581,633 443,752 1,392,787 Capital grants and contributions - - - 2,127,040 Total governmental activities program revenues 3,340,598 4,287,407 4,426,158 6,785,935 Business-type activities Charges for services Storm Drainage 466,934 596,520 592,322 539,295 Trophy Club Park - - - - Operating grants and contributions 61,106 - 94,521 - Capital grants and contributions - - - 3,360 Total business-type activities program revenues 528,040 596,520 686,843 542,655 Total primary government program revenues $ 3,868,638 $ 4,883,927 $ 5,113,001 $ 7,328,590 * The Town Implemented GASB Statement No. 75 for the year ended September 30, 2018. DRAFT - 3.3.26 Page 182 of 212 Table 2 81 2020 2021 2022 2023 2024 2025 $ 3,561,521 $ 1,381,483 $ 663,394 $ 899,894 $ 632,029 $ 799,614 - 936,032 567,704 782,210 486,130 637,629 - - - - 212,947 359,901 - - - - 7,662 19,339 - 280,147 205,246 278,174 357,993 420,595 - 512,144 549,792 518,064 617,969 709,384 - 647,888 543,189 673,596 598,600 612,904 - 118,756 189,141 159,807 138,548 164,976 - 49,837 258,489 92,313 250,929 140,206 5,139,151 5,616,921 6,008,021 7,076,418 7,987,904 8,423,345 - 448,538 1,455,292 1,425,387 1,501,274 1,612,171 - 317,005 396,974 653,518 382,094 514,784 - 1,057,653 - - - - 50,152 - - - - - 2,593,588 2,674,646 2,864,327 3,093,727 3,132,835 4,434,569 - - - - - - 563,312 639,321 471,539 552,382 606,080 647,771 2,052,018 2,308,861 2,315,082 2,358,623 2,762,037 2,754,408 - - - - - - - - - - - - 1,639,671 1,535,312 1,278,873 1,371,710 1,406,043 500,376 15,599,413 18,524,544 17,767,063 19,935,823 21,081,074 22,751,972 93,912 126,163 144,131 176,590 284,437 299,683 229,670 125,692 169,456 127,025 135,419 102,080 323,582 251,855 313,587 303,615 419,856 401,763 $ 15,922,995 $ 18,776,399 $ 18,080,650 $ 20,239,438 $ 21,500,930 $ 23,153,735 $ - $ 286,695 $ 321,725 $ 269,132 $ 321,820 $ 3,604,026 - 110,550 380,427 219,645 349,697 272,908 - 123,942 101,556 142,470 161,706 216,111 - 1,344,545 1,444,477 1,492,123 1,747,461 2,023,303 - 95,775 130,805 193,982 162,587 174,444 - 301,668 342,996 397,773 355,367 317,754 - 1,775 6,340 5,805 10,250 2,860 - 1,058,213 1,059,841 1,091,668 1,141,025 1,224,352 - 9,670 7,485 8,675 5,175 8,955 1,797,916 - - - - - 2,056,622 37,851 173,599 92,029 159,362 18,547 - 150,000 - - - - 3,854,538 3,520,684 3,969,251 3,913,302 4,414,450 7,863,260 430,303 435,798 435,559 437,219 432,307 436,016 188,708 185,981 289,336 268,703 182,116 203,751 - 4,170 125,468 31,750 - - 68,146 - - - - - 687,157 625,949 850,363 737,672 614,423 639,767 $ 4,541,695 $ 4,146,633 $ 4,819,614 $ 4,650,974 $ 5,028,873 $ 8,503,027 DRAFT - 3.3.26 Page 183 of 212 Town of Trophy Club, Texas Changes in Net Position (Continued) Last Ten Fiscal Years (Unaudited) (accrual basis of accounting) 82 Fiscal Year 2016 2017 2018* 2019 Net (Expense) Revenue Governmental activities $ (11,271,915) $ (10,495,371) $ (11,188,356) $ (10,624,368) Business-type activities 244,216 359,748 463,444 289,099 Total primary government net (expense) revenue $ (11,027,699) $ (10,135,623) $ (10,724,912) $ (10,335,269) General Revenues And Other Changes In Net Position Governmental activities Taxes Property taxes $ 7,714,564 $ 8,269,141 $ 8,412,231 $ 8,974,426 Sales and mixed beverage taxes 1,217,693 1,306,243 1,150,073 1,271,864 Other taxes 1,255,995 1,376,352 1,486,952 1,581,721 Grants not restricted to specific programs - - - - Investment income 65,709 146,015 259,220 512,922 Miscellaneous revenues 382,521 908,540 197,567 235,107 Special items - - - - Gain on disposal of assets - - - - Transfers 70,206 86,887 87,209 86,937 Total governmental activities 10,706,688 12,093,178 11,593,252 12,662,977 Business-type activities Investment income 914 2,087 7,258 11,818 Special items - - - - Transfers 70,206 86,887 87,209 86,937 Total business-type activities 71,120 88,974 94,467 98,755 Total primary government $ 10,777,808 $ 12,182,152 $ 11,687,719 $ 12,761,732 Change In Net Position Governmental activities $ (565,227) $ 1,597,807 $ 404,896 $ 2,038,609 Business-type activities 315,336 448,722 557,911 387,854 Total primary government change in net position $ (249,891) $ 2,046,529 $ 962,807 $ 2,426,463 *The Town implemented GASB Statement No. 75 for the year ended September 30, 2018. DRAFT - 3.3.26 Page 184 of 212 Table 2 83 2020 2021 2022 2023 2024 2025 $ (11,744,875) $ (15,003,860) $ (13,797,812) $ (16,022,521) $ (16,666,624) $ (14,888,712) 363,575 374,094 536,776 434,057 194,567 238,004 $ (11,381,300) $ (14,629,766) $ (13,261,036) $ (15,588,464) $ (16,472,057) $ (14,650,708) $ 9,347,776 $ 9,940,633 $ 10,255,223 $ 11,180,838 $ 11,858,764 $ 10,310,401 1,445,994 2,035,404 2,290,748 2,358,255 2,630,932 2,912,477 1,238,302 1,261,872 1,689,864 1,838,706 1,914,590 2,047,678 - - - - - 3,073,457 183,858 72,940 244,451 1,289,627 2,095,412 1,776,159 414,384 62,904 197,903 313,150 721,499 109,483 882,082 - - - - - - - - - - - 262,933 (116,463)(142,194)(156,342)(142,625) 49,054 13,775,329 13,257,290 14,535,995 16,824,234 19,078,572 20,278,709 2,711 325 8,264 64,244 85,289 88,339 - - - - 150 - 262,933 116,463 142,194 156,342 142,625 (49,054) 265,644 116,788 150,458 220,586 228,064 39,285 $ 14,040,973 $ 13,374,078 $ 14,686,453 $ 17,044,820 $ 19,306,636 $ 20,317,994 $ 2,030,454 $ (1,746,570) $ 738,183 $ 801,713 $ 2,411,948 $ 5,389,997 629,219 490,882 687,234 654,643 422,631 277,289 $ 2,659,673 $ (1,255,688) $ 1,425,417 $ 1,456,356 $ 2,834,579 $ 5,667,286 DRAFT - 3.3.26 Page 185 of 212 Town of Trophy Club, Texas Fund Balances of Governmental Funds Last Ten Fiscal Years (Unaudited) (modified accrual basis of accounting) 84 Fiscal Year 2016 2017 2018 2019 General Fund Nonspendable $ 54,397 $ 91,278 $ 430,977 $ 389,687 Committed - - - - Assigned 189,475 183,858 182,718 177,130 Unassigned 3,950,290 4,335,983 4,826,823 5,256,436 Total general fund $ 4,194,162 $ 4,611,119 $ 5,440,518 $ 5,823,253 All Other Governmental Funds Restricted: Debt Service $ 143,174 $ 309,043 $ 262,277 $ 473,670 Capital Projects 8,764,936 6,285,515 5,764,419 3,568,072 Municipal court 39,668 37,819 37,155 30,036 Public Safety 210,189 71,259 9,886 9,886 Street Maintenance - 92,856 29,337 92,457 Tourism 564,363 399,883 790,686 1,313,981 Parks - - 467,425 220,464 PID No. 1 3,869,425 3,832,851 3,882,225 3,972,188 Town Anniversary - - - - Committed: Recreation programs 2,269 7,307 3,655 3,028 Unassigned 5,017 - - - Total all other governmental funds $ 13,599,041 $ 11,036,533 $ 11,247,065 $ 9,683,782 DRAFT - 3.3.26 Page 186 of 212 Table 3 85 2020 2021 2022 2023 2024 2025 $ 389,112 $ 727,449 $ 427,772 $ 435,113 $ 442,729 $ 571,292 - - - - - - 169,592 - - - - - 6,988,719 6,876,307 7,916,625 9,981,221 12,376,571 12,423,004 $ 7,547,423 $ 7,603,756 $ 8,344,397 $ 10,416,334 $ 12,819,300 $ 12,994,296 $ 706,640 $ 4,357,220 $ 4,078,885 $ 4,289,334 $ 4,454,115 $ 697,962 1,984,646 6,199,646 4,952,458 10,606,605 10,711,565 12,757,247 32,838 36,824 44,638 61,194 84,077 108,709 9,886 284,013 290,366 267,457 322,571 495,700 184,556 302,901 436,702 426,989 508,672 669,176 1,530,643 1,726,744 2,275,553 2,722,338 3,317,903 3,925,090 385,727 536,001 350,554 407,935 632,834 656,980 3,971,196 - - - - - - - - - - - 5,062 7,710 21,550 21,175 28,886 44,913 - (327,716)(226,168)(192,359) - - $ 8,811,194 $ 13,123,343 $ 12,224,538 $ 18,610,668 $ 20,060,623 $ 19,355,777 DRAFT - 3.3.26 Page 187 of 212 Town of Trophy Club, Texas Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Unaudited) (modified accrual basis of accounting) 86 Fiscal Year 2016 2017 2018 2019 Revenues Taxes Ad valorem taxes $ 7,724,244 $ 8,132,670 $ 8,600,999 $ 8,967,795 Sales and mixed beverage taxes 1,217,694 1,306,243 1,150,073 1,271,864 Franchise taxes 953,622 888,863 867,446 911,738 Occupancy 302,374 487,489 619,506 669,983 Special assessments 1,986,516 2,129,321 2,166,167 2,176,400 Licenses, permits & fees 598,586 333,780 614,931 499,302 Intergovernmental 26,237 581,633 608,910 724,333 Charges for services 310,735 820,530 767,237 769,962 Fines & Fees 362,409 355,504 497,078 312,267 Lease revenue - - - - Interest revenue - leases - - - - Investment Income 65,708 146,015 259,213 512,922 Grant revenue 7,942 - - - Miscellaneous 407,418 158,540 715,535 402,894 Total revenues 13,963,485 15,340,588 16,867,095 17,219,460 Expenditures Current General government 2,349,120 2,191,140 2,404,704 3,164,364 Manager's office - - - - Town secretary - - - - Mayor & council - - - - Human resources - - - - Finance - - - - Information services - - - - Legal - - - - Court - - - - PID activities 81,793 44,984 2,850 26,875 Public safety 3,187,064 4,117,992 4,441,873 4,872,242 Facilities management - - - - Streets - - - - Sanitation - - - - Public works 566,927 179,448 340,910 414,938 Community development 576,508 582,259 449,178 568,239 Culture & recreation 1,892,065 1,991,571 2,708,827 2,250,599 Debt service Principal 2,153,974 1,567,004 1,675,350 1,723,652 Interest and fiscal changes 3,396,480 2,630,171 2,796,835 2,811,664 Bond issuance costs - - - - Capital outlay 3,395,509 9,146,919 1,239,065 2,860,040 Total expenditures 17,599,440 22,451,488 16,059,592 18,692,613 Excess (Deficiency) of Revenues Over Expenditures (3,635,955)(7,110,900) 807,503 (1,473,153) Other Financing Sources (Uses) Proceeds from lease obligation - - 264,732 - Proceeds from contractual obligations 4,210,000 - - - Sale of general capital assets - - - - Insurance recoveries - - - - Proceeds from bonds 31,399,979 4,445,000 - - Premium on bonds 5,020,788 128,317 - - Payment to refunded bond escrow agent 29,734,500 - - - Lease financing - - - - Transfers in 493,947 993,250 298,457 89,937 Transfers out 423,741 906,363 63,817 3,000 Total other financing sources (uses) 71,282,955 6,472,930 627,006 92,937 Net Change in Fund Balances $ 67,647,000 $ (637,970) $ 1,434,509 $ (1,380,216) Debt Service as a Percentage of Noncapital Expenditures 39.08%31.55%30.18%28.65% DRAFT - 3.3.26 Page 188 of 212 Table 4 87 2020 2021 2022 2023 2024 2025 $ 9,359,847 $ 9,941,321 $ 10,262,914 $ 11,207,851 $ 11,851,078 $ 12,587,398 1,445,994 2,035,404 2,290,748 2,358,255 2,630,932 2,912,477 850,543 869,212 908,033 1,016,222 1,029,212 1,092,187 387,759 392,660 781,831 822,484 885,378 955,491 2,187,165 2,195,144 2,263,090 2,267,110 2,275,465 2,278,454 479,513 284,500 280,222 253,027 356,502 1,162,056 2,056,622 1,365,324 1,601,656 1,567,063 1,890,204 5,097,468 296,947 1,431,343 1,484,550 1,524,037 1,661,781 1,701,850 132,877 337,123 618,956 432,505 505,963 577,638 - - 83,834 107,834 105,010 108,420 - - 24,288 20,188 15,712 10,831 183,858 72,940 244,451 1,289,627 2,095,412 1,776,159 - - - - - - 386,615 212,904 66,440 216,732 603,864 109,483 17,767,740 19,137,875 20,911,013 23,082,935 25,906,513 30,369,912 2,584,454 973,869 270,272 383,218 234,849 289,938 - 973,427 620,172 758,661 473,438 624,567 - - - - 208,835 330,004 - - - - 7,662 19,339 - 287,521 216,058 268,107 351,267 408,262 - 528,002 583,304 504,727 608,058 686,435 - 595,432 492,761 641,317 572,452 579,895 - 118,756 189,141 159,807 138,548 164,976 - 51,347 258,489 92,313 250,929 140,206 50,152 - - - - - 4,977,216 5,616,394 6,162,615 6,547,801 7,531,929 7,757,191 - 450,853 1,460,399 1,425,314 1,501,274 1,612,171 - 319,943 402,212 644,687 376,841 514,784 - 1,057,653 - - - - 388,419 204,633 207,684 231,437 617,296 563,151 491,941 654,107 490,655 524,674 578,444 611,520 2,380,448 1,922,721 2,138,251 2,308,047 2,421,914 2,680,746 3,081,206 3,408,000 3,582,199 3,397,255 3,550,451 20,549,299 1,614,385 1,452,214 1,396,045 1,479,107 1,518,583 1,383,353 - - - - - 572,222 1,735,016 508,748 2,647,445 2,325,253 976,471 4,731,459 17,303,237 19,123,620 21,117,702 21,691,725 21,919,241 44,219,518 464,503 14,255 (206,689) 1,391,210 3,987,272 (13,849,606) - - - - - - - - - - - - 32,213 - 60,142 54,208 8,274 3,626 27,769 - - - - - 3,550,000 4,305,000 - 6,925,000 - 12,905,000 - 297,691 - 257,608 - 411,130 3,485,838 - - - - - - - 90,577 26,383 - - 264,433 686,235 266,609 246,754 406,987 9,036,490 1,500 (802,698)(408,803)(403,096)(549,612) (9,036,490) 7,361,753 4,486,228 8,525 7,106,857 (134,351) 13,319,756 $ 7,826,256 $ 4,500,483 $ (198,164) $ 8,498,067 $ 3,852,921 $ (529,850) 30.16%26.11%26.95%25.18%24.20%55.54% DRAFT - 3.3.26 Page 189 of 212 Town of Trophy Club, Texas Table 5 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (Unaudited) 88 Estimated Market Value Less:Total Taxable Total Direct Fiscal Real Non Real Tax Exempt Assessed Tax Year Property Property Property Value Rate 2016 $ 1,618,577,881 $ 28,301,916 $ 68,622,814 $ 1,578,256,983 $ 0.48400 2017 1,816,191,857 29,805,970 73,301,474 1,772,696,353 0.47300 2018 1,986,456,291 32,335,529 83,492,349 1,935,299,471 0.45144 2019 2,146,374,412 34,488,137 79,947,523 2,100,915,026 0.44644 2020 2,245,060,094 34,337,805 173,637,626 2,105,760,273 0.44644 2021 2,571,479,079 41,659,656 210,421,213 2,402,717,522 0.44644 2022 2,732,597,188 30,337,600 213,411,764 2,549,523,024 0.44500 2023 3,069,209,272 29,159,280 220,375,646 2,877,992,906 0.41547 2024 3,275,722,564 32,074,104 230,181,814 3,077,614,854 0.41547 2025 3,872,852,947 36,289,255 269,441,217 3,639,700,985 0.41547 Source: Denton & Tarrant County Central Appraisal District Certified Roll Note: Total Taxable Assessed Value is not adjusted for tax ceilings. DRAFT - 3.3.26 Page 190 of 212 Town of Trophy Club, Texas Direct and Overlapping Property Tax Rates (Per $100 of Assessed Value) Last Ten Fiscal Years (Unaudited) 89 Town of Trophy Club Overlapping Rates Debt Trophy Trophy Fiscal Operating Service Total Town Northwest Club Club Denton Year Mileage Mileage Mileage ISD MUD #1 MUD #2 County 2016 $ 0.374000 $ 0.110000 $ 0.484000 $ 1.452500 $ 0.131140 $ - $ 0.262000 2017 0.363000 0.110000 0.473000 1.452500 0.127220 - 0.248409 2018 0.341442 0.110000 0.451442 1.490000 0.120210 - 0.237181 2019 0.336442 0.110000 0.446442 1.490000 0.116180 - 0.225574 2020 0.336442 0.110000 0.446442 1.420000 0.112730 - 0.225278 2021 0.336442 0.110000 0.446442 1.420000 0.105880 - 0.224985 2022 0.335000 0.099799 0.434799 1.292000 0.091340 - 0.233086 2023 0.315670 0.099799 0.415469 1.274600 0.063810 - 0.189485 2024 0.315670 0.099799 0.415469 1.087900 0.062500 - 0.187869 2025 0.309764 0.103100 0.412864 1.084100 0.068140 - 0.185938 Source: Denton & Tarrant County Appraisal Districts DRAFT - 3.3.26 Page 191 of 212 Table 6 90 Overlapping Rates Total Trophy Tarrant Tarrant Total Total Total Direct & Club Tarrant County County MUD #1 MUD #2 PID #1 ESD Overlapping PID #1 ESD County College Hospital Mileage Mileage Mileage Rates $ 0.072220 $ 0.264000 $ 0.149500 $ 0.227897 $ 2.925360 N/A $ 2.380720 $ 3.043257 0.074450 0.254000 0.144730 0.227897 2.884309 N/A 2.358359 3.002206 0.068700 0.244000 0.140060 0.224429 2.861593 N/A 2.357323 2.976022 0.067190 0.234000 0.136070 0.224429 2.825456 N/A 2.339206 2.939885 0.067380 0.234000 0.130170 0.224429 2.204450 N/A 2.269100 2.860429 0.064760 0.229000 0.130170 0.224429 2.197307 N/A 2.266187 2.845666 0.064180 0.224000 0.130170 0.229000 2.051225 N/A 2.123864 2.698575 0.056250 0.194500 0.112170 0.194500 1.943364 N/A 2.035603 2.500784 0.051360 0.187500 0.112280 0.182500 1.753738 N/A 1.842397 2.287378 - 0.186200 0.112280 0.165000 1.751042 N/A 1.786002 2.214522 DRAFT - 3.3.26 Page 192 of 212 Town of Trophy Club, Texas Principal Property Taxpayers Current Year and Ten Years Ago (Unaudited) Table 7 91 2025 2016 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value NAP Trophy Club LP $ 66,484,096 1 2.31% $ - n/a -% Armore Trophy Club LLC 29,078,216 2 1.01% 10,090,000 4 0.83% KAGR Trophy Club 2800 LLC 19,700,000 3 0.68% - n/a -% TC Town Center 1 LP 19,000,000 4 0.66% - n/a -% Trophy Club 18 LLC 18,391,053 5 0.64% - n/a -% Quasar Hotels LLC 11,561,751 6 0.40% - n/a -% Trophy Club Medical Center LP 10,510,915 7 0.37% 5,854,660 8 0.48% 4663 Okeechobee Blvd. & Palm Beach Holdings 8,855,500 8 0.31% 5,393,413 10 0.44% Armore II - Quorum LLC 8,600,000 9 0.30% - n/a -% Onctor Electric Delivery Co 8,534,080 10 0.30% 6,547,680 6 0.54% Hydra Hotels LLC - n/a -% 6,250,000 7 0.51% Trophy Club 12 LLC - n/a -% 14,500,000 2 1.19% First Texas Homes INC - n/a -% 6,792,937 5 0.56% Lennar Homes of Texas Land & Construction LTD - n/a -% 5,474,193 9 0.45% Trophy Club Equities - n/a -% 10,759,326 3 0.89% HCP CRSI Trophy Club TX LP - n/a -% 18,000,000 1 1.48% Totals $ 200,715,611 6.98% $ 89,662,209 7.37% Source: Denton and Tarrant County Central Appraisal District DRAFT - 3.3.26 Page 193 of 212 Town of Trophy Club, Texas Property Tax Levies and Collections Last Ten Fiscal Years (Unaudited) Table 8 92 Collected within the Collections Total Tax Fiscal Year of the Levy in Total Collections to Date Fiscal Levy for Percentage Subsequent Percentage Year Fiscal Year Amount of Levy Years Amount of Levy 2016 $ 7,477,394 $ 7,456,542 99.72% $ 13,166 $ 7,469,708 99.90% 2017 8,188,616 8,153,915 99.58% 10,781 8,164,696 99.71% 2018 8,627,946 8,614,737 99.85% 2,176 8,616,913 99.87% 2019 9,027,118 8,992,174 99.61% 34,943 9,027,117 100.00% 2020 9,504,473 9,400,652 98.91% 21,969 9,422,621 99.14% 2021 9,835,286 9,785,993 99.50% 24,299 9,810,292 99.75% 2022 10,263,591 10,247,041 99.84%(11,060) 10,235,981 99.73% 2023 11,139,198 11,121,834 99.84% 28,534 11,150,368 100.10% 2024 11,879,516 11,863,572 99.87%(21,151) 11,842,421 99.69% 2025 12,612,775 12,587,610 99.80%(36,114) 12,551,496 99.51% Source: Denton County Tax Assessor Collector DRAFT - 3.3.26 Page 194 of 212 Town of Trophy Club, Texas Ratios of Outstanding Debt by Type Last Ten Fiscal Years (Unaudited) Table 9 93 Governmental Activities Business-Type Activities General Certificates Special Certificates Total Percentage Fiscal Obligation of Assessment of Primary of Personal Per Year Bonds Obligation Bonds Premium Leases Obligation Premium Government Income (1)Capita 2016 $ 12,375,000 $ 7,961,000 $ 25,710,479 $ 4,916,763 $ - $ 1,275,000 $ 30,200 $ 52,268,442 9.35% $ 4,200 2017 11,450,000 12,068,000 25,406,475 4,754,458 - 1,130,000 25,779 54,834,712 9.26% 4,234 2018 10,640,000 11,415,000 25,285,577 4,457,420 173,280 980,000 21,358 52,972,635 8.06% 3,828 2019 9,805,000 10,637,000 25,260,000 4,160,382 88,205 825,000 16,939 50,792,526 7.94% 4,106 2020 9,005,000 9,789,000 23,985,000 3,872,927 - 670,000 12,522 47,334,449 6.98% 3,802 2021 7,500,000 13,206,000 22,800,000 3,798,808 - - 8,504 47,313,312 7.04% 3,557 2022 6,595,000 12,298,000 21,245,000 3,482,143 99,617 345,000 4,486 44,069,246 6.10% 3,206 2023 5,890,000 18,040,000 19,776,000 3,423,086 85,745 175,000 468 47,390,299 5.60% 3,423 2024 5,165,000 16,800,000 18,227,000 3,093,541 49,294 - - 43,334,835 4.62% 2,941 2025 4,425,000 15,255,000 12,905,000 1,212,668 11,995 - - 33,809,663 3.44% 2,467 (1) Personal Income and population found on Table 15 of the Statistical Section DRAFT - 3.3.26 Page 195 of 212 Town of Trophy Club, Texas Table 10 Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (Unaudited) 94 Percentage of General Special Actual Taxable Fiscal Obligation Certificates of Assessment Unamortized Value of Per Year Bonds Obligation Bonds Premiums Property (1)Capita (2) 2016 $ 12,375,000 $ 7,961,000 $ 25,710,479 4,916,763 1.29% $ 1,634 2017 11,450,000 12,068,000 25,406,475 4,754,458 1.33% 1,890 2018 10,640,000 11,415,000 25,285,577 4,457,420 1.14% 1,594 2019 9,805,000 10,637,000 25,260,000 4,160,382 0.97% 1,653 2020 9,005,000 9,789,000 23,985,000 3,872,927 0.89% 1,509 2021 7,500,000 13,206,000 22,800,000 3,798,808 0.86% 1,557 2022 6,595,000 12,298,000 21,245,000 3,482,143 0.74% 1,375 2023 5,890,000 18,040,000 19,776,000 3,423,086 0.83% 1,729 2024 5,165,000 16,800,000 18,227,000 3,093,541 0.71% 1,607 2025 4,425,000 15,255,000 12,905,000 1,212,668 0.57% 1,436 (1) Property values are from Table 5 . (2) Populations are from Table 12. DRAFT - 3.3.26 Page 196 of 212 Town of Trophy Club, Texas Direct and Overlapping Governmental Activities Debt As of September 30, 2025 (Unaudited) Table 11 95 Estimated Estimated Share of Debt Principal Percentage Overlapping Governmental Unit Outstanding Applicable Debt Debt repaid with property taxes: Denton County $ 758,115,000 1.59% $ 12,020,175 Northwest Independent School District 2,938,458,729 7.78% 228,756,882 Tarrant County 314,050,000 0.06% 180,065 Tarrant County College District 547,535,000 0.07% 383,275 Tarrant County Hospital District 431,255,000 0.06% 247,266 Trophy Club MUD #1 3,875,000 0.82% 31,684 Subtotal, overlapping debt 4,993,288,729 241,619,347 Town of Trophy Club, direct debt 33,809,663 100.00% 33,809,663 Total direct and overlapping debt principal $ 5,027,098,392 $ 275,429,010 Note: 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 process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Source: Most recent Texas Municipal Reports (TMR) published by the Municipal Advisory Council of Texas. DRAFT - 3.3.26 Page 197 of 212 Town of Trophy Club, Texas Pledged Revenue Coverage Last Ten Fiscal Years (Unaudited) Table 12 96 Special Assessment Bonds Special Fiscal Assessment Annual Times Year Collections Requirement (1)Coverage 2020 $ 2,187,165 $ 2,180,573 1.00 2021 2,195,144 2,220,073 0.99 2022 2,263,090 2,249,922 1.01 2023 2,267,110 2,283,923 0.99 2024 2,275,465 2,319,852 0.98 2025 2,278,454 2,369,256 0.96 Note: (1) Includes Principal and Interest Special assessment bonds pledged-revenue coverage presented starting with fiscal year 2020. DRAFT - 3.3.26 Page 198 of 212 Town of Trophy Club, Texas Demographic and Economic Statistics Last Ten Fiscal Years (Unaudited) Table 13 97 Total Median Total Estimated Households Household Personal Unemployment Year Population (1)(1)Income (2)Income Rate (3) 2016 12,446 4,342 $ 128,750 $ 559,032,500 3.66% 2017 12,950 4,435 133,457 591,881,795 3.38 2018 13,838 4,723 139,156 657,233,788 3.40 2019 12,369 4,490 142,483 639,748,670 3.10 2020 12,451 4,600 147,477 678,394,200 3.10 2021 13,301 4,555 147,477 671,757,735 6.60 2022 13,745 4,234 170,679 722,654,886 3.80 2023 13,843 4,625 183,125 846,953,125 5.60 2024 13,666 4,864 193,026 938,878,464 3.90 2025 13,704 4,891 201,054 983,355,114 3.90 Sources: (1) Estimated population using residential water connections (2) United States Census Bureau (3) Federal Bank of St. Louis Economic Research; Denton and Tarrant Counties' data averaged 2018. DRAFT - 3.3.26 Page 199 of 212 Town of Trophy Club, Texas Principal Employers Current Year and Ten Years Ago (Unaudited) 98 2025 Percentage of Total Town Employer Employees Employment Northwest Independent School District 393 5.61% Baylor Medical Center at Trophy Club 230 2.92% Trophy Club Country Club 205 3.28% Tom Thumb 202 2.88% Town of Trophy Club* 108 1.54% HG Sply Co. 100 1.43% Hutchins 100 1.43% Fellowship United Methodist Church 39 0.56% The Church at Trophy Lakes 30 0.43% Trophy Lakes Academy 25 0.36% Total 1,432 20.44% (*) Includes Full Time, Part Time, and Seasonal DRAFT - 3.3.26 Page 200 of 212 Table 14 99 2016 Percentage of Total Town Employer Employees Employment Northwest Independent School District 418 27.87% Baylor Medical Center at Trophy Club 230 15.33% Trophy Club Country Club 220 14.67% Town of Trophy Club 190 12.67% Tom Thumb 127 8.47% Bread Winners Cafe 72 4.80% Fellowship United Methodist Church 51 3.40% Premier Academy - Trophy Club 42 2.80% Trophy Lake Academy 41 2.73% Cristina's Mexican Restaurant 28 1.87% Total 1,419 94.61% DRAFT - 3.3.26 Page 201 of 212 Town of Trophy Club, Texas Full-time Equivalent Town Government Employees By Function/Program Last Ten Fiscal Years (Unaudited) Table 15 100 Function 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 General Government and Administration 14 13 14 14 13 12 12 14 12 11 Public Safety 33 33 34 41 41 38 42 43 46 43 Streets 4 4 2 3 3 3 3 3 3 3 Parks and Recreation 17 16 17 14 14 16 14 17 19 17 Community Development 6 6 6 5 4 4 3 4 4 4 Total 74 72 73 77 75 73 74 81 84 78 Source: Departmental records DRAFT - 3.3.26 Page 202 of 212 Town of Trophy Club, Texas Operating Indicators by Function/Program Last Ten Fiscal Years (Unaudited) Table 16 101 Function 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Public Safety Police Number of stations 1 1 2 2 1 1 1 1 1 1 Number of police personnel 25 26 26 24 25 23 26 26 27 27 Number of arrests 145 148 130 275 157 158 47 141 144 170 Number of traffic stops 3,635 2,922 4,262 5,397 3,106 3,206 2,987 5,312 7,033 7,202 Fire Number of stations 1 1 1 1 1 1 1 1 1 1 Number of fire personnel 16 17 18 17 17 18 19 19 18 18 Number of calls answered 898 868 858 871 965 981 1,061 944 953 986 Developmental Miles of streets 43 43 43 52 52 52 52 52 52 52 Parks/Recreational Changes Parks 6 6 6 6 6 6 6 6 6 6 Park acreage 1,039 1,039 1,039 1,039 1,039 1,039 1,039 1,039 929 929 Source: Departmental records DRAFT - 3.3.26 Page 203 of 212 DRAFT - 3.3.26 Page 204 of 212 TOWN COUNCIL COMMUNICATION MEETING DATE: March 9, 2026 FROM: Brandon Wright, Town Manager AGENDA ITEM: Consider an ordinance amending Section 12.04.003 "Prohibited Parking Generally" of the Trophy Club Code of Ordinances in its entirety to amend the parking restriction on Indian Creek Drive to apply to the section between Trophy Club Drive and Hogans Drive, to indicate parking restrictions at marked or unmarked crosswalks, and to renumber the remaining sections. (Brandon Wright, Town Manager) BACKGROUND/SUMMARY: At the February 23, 2026 Town Council Work Shop, the Town Council directed staff to modify Section 12.04.003 "Prohibited Parking Generally" of the Town of Trophy Club Code of Ordinances. The purpose of the ordinance amendment is to remove the parking restriction on the majority of Indian Creek Drive while maintaining the restriction between Trophy Club Drive and Hogans Drive. As discussed during the Work Shop, the Town Council indicated that parking on Indian Creek Drive could be allowed while maintaining neighborhood and vehicular safety due to the existing calming lanes. The ordinance amendment modifies current paragraph 1 to read that it is unlawful for any person to leave, park or stand a motor vehicle, mobile home, motor home, recreational vehicle, trailer or boat upon Indian Creek between its intersection with Trophy Club Drive and Hogans Drive. Paragraph 2 is removed with this amendment, and the remaining sections are renumbered as a result of the deletion of paragraph 2. Additionally, newly numbered paragraphs 12 and 13 have been clarified that parking on or within twenty feet of a crosswalk is prohibited whether it is marked or unmarked. BOARD REVIEW/CITIZEN FEEDBACK: N/A FISCAL IMPACT: There is no financial impact associated with this agenda item. LEGAL REVIEW: Town Attorney, Dean Roggia, has reviewed the ordinance as to form and legality. ATTACHMENTS: 1. Ordinance ACTIONS/OPTIONS: Staff recommends that the Town Council move to approve the ordinance amending Section 12.04.003 "Prohibited Parking Generally" of the Trophy Club Code of Ordinances in its entirety Page 205 of 212 to amend the parking restriction on Indian Creek Drive to apply to the section between Trophy Club Drive and Hogans Drive, to indicate parking restrictions at marked or unmarked crosswalks, and to renumber the remaining sections. Page 206 of 212 TOWN OF TROPHY CLUB, TEXAS ORDINANCE NO. 2026-XX AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, AMENDING CHAPTER 12 “TRAFFIC AND VEHICLES”; ARTICLE 12.04 “PARKING”; SECTION 12.04.003 “PROHIBITED PARKING GENERALLY” OF THE CODE OF ORDINANCES OF THE TOWN OF TROPHY CLUB, TEXAS, IN ITS ENTIRETY TO AMEND THE PARKING RESTRICTION ON INDIAN CREEK DRIVE TO APPLY TO THE SECTION BETWEEN TROPHY CLUB DRIVE AND HOGANS DRIVE, TO INDICATE PARKING RESTRICTIONS AT MARKED OR UNMARKED CROSSWALKS, AND TO RENUMBER THE REMAINING SECTIONS; PROVIDING THIS ORDINANCE IS CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A SAVINGS CLAUSE; PROVIDING A PENALTY NOT TO EXCEED THE SUM OF TWO HUNDRED DOLLARS ($200.00) FOR EACH OFFENSE AND A SEPARATE OFFENSE SHALL BE DEEMED COMMITTED EACH DAY DURING OR ON WHICH A VIOLATION OCCURS OR CONTINUES; PROVIDING FOR PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Town of Trophy Club (the “Town”) is a home rule municipality acting under its charter adopted by the electorate pursuant to Article XI, Section 5 of the Texas Constitution and Chapter 9 of the Local Government Code; and WHEREAS, the regulation of traffic and parking is essential to the furtherance of public health, safety, and welfare; and WHEREAS, due to traffic and neighborhood patterns on Indian Creek Drive, the Town has identified the need to allow parking on Indian Creek Drive while generally restricting parking between Trophy Club Drive and Hogans Drive; and WHEREAS, the Town Council determines that regulating parking in certain areas within the Town will increase visibility and further the public health, safety, and welfare. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF TROPHY CLUB, TEXAS, THAT: SECTION 1. INCORPORATION OF PREMISES The above and foregoing premises are true and correct and are incorporated herein and made a part hereof for all purposes. Page 207 of 212 SECTION 2. AMENDMENT Chapter 12 “Traffic and Vehicles”, Article 12.04 “Parking”, Section 12.04.003 “Prohibited Parking Generally” of the Code of Ordinances, Town of Trophy Club, Texas, is hereby amended and replaced in its entirety to read as follows: “SECTION 12.04.003 PROHIBITED PARKING GENERALLY. It shall be unlawful for any person to leave, park, or stand a motor vehicle, mobile home, motor home, recreational vehicle, trailer, or boat upon the following portions of the public streets located within the town: (1) Indian Creek Drive between its intersection with Trophy Club Drive and Hogans Drive; (2) Trophy Club Drive between its intersection with State Highway 114 and Avenue Twenty; provided, however, that there shall be excluded from this portion of the public street that area which lies between median number two and median number three along Trophy Club Drive and adjacent to the town information/map sign (said area being located approximately one-fourth (1/4) mile from the intersection of Trophy Club Drive and State Highway 114), and which area is designated and marked by striping or otherwise as a parking area where vehicles may park, stop, or stand for no more than five (5) minutes for the purpose of reviewing the information/map sign; (3) Trophy Lake Drive; (4) Along the south side of the entire length of Fairway Village Drive; (5) Along the south side of the entire length of Summit Cove Drive; (6) Along the east and west sides of Parkview Drive from Park Lane to 500 Parkview Drive between the hours of 7:00 a.m. and 9:30 a.m. and between the hours of 2:30 p.m. and 3:30 p.m. on school days; (7) Along the east and west sides of Parkview Drive from 500 Parkview Drive to Bobcat Boulevard between the hours of 7:00 a.m. and 9:30 a.m. and between the hours of 4:00 p.m. and 5:00 p.m. on school days; (8) Between 22 and 42 West Hillside Place; (9) On a sidewalk; (10) In front of a public or private driveway; (11) Within an intersection; (12) On a crosswalk, whether marked or unmarked; (13) Within twenty (20) feet of a crosswalk, whether marked or unmarked, at an intersection; (14) Within fifteen (15) feet of a fire hydrant; or (15) Where signs are erected or curbs are painted indicating that parking is not allowed.” Page 208 of 212 SECTION 3. CUMULATIVE This Ordinance shall be cumulative of all provisions of ordinances of the Town, except where the provisions of this Ordinance are in direct conflict with the provisions of such ordinances and such code, in which event the conflicting provisions of such ordinances and such code are hereby repealed. SECTION 4. SEVERABILITY It is hereby declared to be the intention of the Town Council that the sections, paragraphs, sentences, clauses, and phrases of this Ordinance are severable, and if any section, paragraph, sentence, clause, or phrase of this Ordinance shall be declared unconstitutional by a valid judgment or decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the remaining sections, paragraphs, sentences, clauses, or phrases of this Ordinance; since the same would have been enacted by the Town Council without the incorporation in this Ordinance of any such unconstitutional section, paragraph, sentence, clause, or phrase. SECTION 5. SAVINGS All rights and remedies of the Town are expressly saved as to any and all violations of the ordinances of the Town that have accrued at the time of the effective date of this Ordinance; and, as to such accrued violations and all pending litigation, both civil and criminal, whether pending in court or not, under such ordinances, same shall not be affected by this Ordinance, but may be prosecuted until final disposition by the courts. SECTION 6. PENALTY It shall be unlawful for any person to violate any provision of this Ordinance, and any person violating or failing to comply with any provision hereof shall be fined, upon conviction, in an amount not less than One Dollar ($1.00) nor more than Two Hundred Dollars ($200.00), and a separate offense shall be deemed committed each day during or on which a violation occurs or continues. SECTION 7. PUBLICATION The Town Secretary of the Town of Trophy Club is hereby directed to publish the caption and penalty clause of this Ordinance as required by Section 3.16 of the Town’s Charter. Page 209 of 212 SECTION 8. EFFECTIVE DATE This Ordinance shall become effective upon approval and publication as provided by law, and it is so ordained. PASSED AND APPROVED by the Town Council of the Town of Trophy Club, Texas, this 9th day of March 2026. Jeannette Tiffany, Mayor Town of Trophy Club, Texas [SEAL] ATTEST: Tammy Dixon, Town Secretary Town of Trophy Club, Texas APPROVED AS TO FORM: Dean Roggia, Town Attorney Town of Trophy Club, Texas Page 210 of 212 TOWN COUNCIL COMMUNICATION MEETING DATE: March 9, 2026 FROM: April Duvall, Director of Finance AGENDA ITEM: Consider authorizing the Town Manager and Town Attorney to file legal action against SHRI Siddhi Vinayak LLC, a/k/a Shri Siddhi Vinayakm LLC, dba Holiday Inn & Suites, and Raj Patel, owner(s) of Holiday Inn Trophy Club, to pursue recovery of delinquent taxes and associated collection costs. (April Duvall, Director of Finance) BACKGROUND/SUMMARY: On December 17, 2025, the Town’s legal counsel issued a formal Notice of Violation and Demand for Payment to Raj Patel (owner) and Brian Angerer (manager) of Holiday Inn Trophy Club regarding delinquent hotel occupancy taxes (HOT) owed to the Town. The letter outlined that multiple monthly HOT payments are more than ninety (90) days delinquent and that required payments have not been remitted for several reporting periods. Under the Town’s Code of Ordinances, hotel occupancy tax payments are due no later than the twentieth day following each monthly reporting period. Because the payments were not timely submitted, statutory penalties have been assessed in accordance with Section 11.02.002(e) of the Code. The notice further advises that failure to remit payment authorizes the Town to initiate legal proceedings under Section 11.02.005(a) of the Code and applicable provisions of the Texas Tax Code, including Section 351.004, which allows the Town to file suit to recover delinquent taxes, penalties, audit costs, and attorney’s fees. The Town may also seek injunctive relief prohibiting continued hotel operations within the Town until all required reports are filed and taxes are paid in full. The letter provided the hotel operator five (5) business days to coordinate payment arrangements, with notice that failure to do so would result in legal action. As of the date of this agenda item, the delinquency has not been resolved. Accordingly, staff is seeking Council authorization to proceed with formal legal action to recover all amounts owed. In addition to the foregoing, the Town may also issue criminal citations in an amount not to exceed $500 for each and every day a violation occurs. BOARD REVIEW/CITIZEN FEEDBACK: N/A FISCAL IMPACT: Page 211 of 212 The Town calculates, as of the date of the notice, that the Town is currently owed $56,757.77 in delinquent hotel occupancy taxes (HOT), inclusive of assessed penalties and applicable charges, as outlined in the formal demand notice. These revenues are restricted by state law for eligible tourism-related expenditures and are accounted for in the Town’s Hotel Occupancy Fund, a special revenue fund. If collection efforts are successful, the Town may also recover additional statutory penalties, interest, audit costs (if applicable), attorney’s fees, and court costs as authorized by the Texas Tax Code and the Town’s Code of Ordinances. There may be upfront legal expenses associated with initiating litigation; however, state law provides for recovery of reasonable attorney’s fees and related costs if judgment is obtained. Failure to pursue enforcement could result in continued non-compliance, loss of legally due revenues, and the establishment of an adverse precedent regarding enforcement of hotel occupancy tax requirements. LEGAL REVIEW: The Town of Trophy Club’s outside legal counsel, Taylor, Olson, Adkins, Sralla & Elam, L.L.P. (TOASE), has reviewed this matter and issued the formal Notice of Violation and Demand for Payment to the hotel operator. TOASE has advised that, pursuant to Chapter 351 of the Texas Tax Code and the Town of Trophy Club Code of Ordinances, the Town has clear legal authority to assess penalties and interest on delinquent hotel occupancy taxes and to initiate civil legal action to recover all unpaid amounts. TOASE has further advised that, if authorized by the Town Council, the Town may pursue recovery of delinquent taxes, penalties, interest, audit costs, attorney’s fees, and court costs, and may seek injunctive relief as permitted by state law to compel compliance with reporting and payment requirements. This item is presented in accordance with legal counsel’s recommendation. ATTACHMENTS: None ACTIONS/OPTIONS: Staff recommends that the Town Council move to authorize the Town Manager and Town Attorney to file legal action against SHRI Siddhi Vinayak LLC, a/k/a Shri Siddhi Vinayakm LLC, dba Holiday Inn & Suites, and Raj Patel, owner(s) of Holiday Inn Trophy Club, to pursue recovery of delinquent taxes and associated collection costs. Page 212 of 212 HANDOUTS DISTRIBUTED AT MEETING Forvis Mazars Report to the Town Council and Management Town of Trophy Club, Texas Results of the 2025 Financial Statement Audit, Including Required Communications September 30, 2025 Required Communications Regarding Our Audit Strategy & Approach (AU-C 260) Overview & Responsibilities Matter Discussion Scope of Our This report covers audit results related to your financial statements and supplementary information: Audit • As of and for the year ended September 30, 2025. • Conducted in accordance with our contract dated September 30, 2025. Our Forvis Mazars is responsible for forming and expressing opinions about whether the financial Responsibilities statements that have been prepared by management, with the oversight of those charged with governance, are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Audit Scope& An audit performed in accordance with auditing standards generally accepted in the United States of Inherent America (GAAS) and Government Audting Standards issued by the Comptroller General of the Limitations to United States (GAGAS) is designed to obtain reasonable, rather than absolute, assurance about the Reasonable financial statements. The scope of our audit tests was established in relation to the financial Assurance statements taken as a whole and did not include a detailed audit of all transactions. Extent of Our In addition to areas of interest and noting prior communications made during other phases of the Communication engagement, this report includes communications required in accordance with GAAS that are relevant to the responsibilities of those charged with governance in overseeing the financial reporting process, including audit approach, results, and internal control. The standards do not require the auditor to design procedures for the purpose of identifying other matters to be communicated with those charged with governance. Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence. Your Our audit does not relieve management or those charged with governance of your responsibilities. Responsibilities Your responsibilities and ours are further referenced in our contract. forws mazars Town of Trophy Club,Texas 1 March 9, 2026 Matter Discussion Distribution This communication is intended solely for the information and use of the following and is not intended Restriction to be, and should not be, used by anyone other than these specified parties: • Town Council • Town Management Government Auditing Standards Matter Discussion Additional We also provided reports as of September 30, 2025 on the following as required by GAGAS: GAGAS Reporting • Internal control over financial reporting and on compliance and other matters based on an audit of the financial statements performed in accordance with GAGAS Reporting Our consideration of internal control over financial reporting and our tests of compliance were not Limitations designed with an objective of forming an opinion on the effectiveness of internal control or on compliance, and accordingly,we do not express such an opinion. Other Information Accompanying the Audited Financial Statements The audited financial statements are presented along with management's annual comprehensive financial report (ACFR). Management, or those charged with governance, is responsible for preparing the ACFR. We were not engaged to audit the introductory and statistical information contained in the ACFR, and as a result, our opinions do not provide assurance as to the completeness and accuracy of the information contained therein. As part of our procedures, we read the entire report to determine if financial information discussed in sections outside the financial statements materially contradicts the audited financial statements. If we identify any such matters, we bring them to management's attention and review subsequent revisions. Auditor Objectives Related to Other Information Our objectives related to the other information accompanying the audited financial statements were to: • Consider whether a material inconsistency exists between the other information and the financial statements • Remain alert for indications that: • A material inconsistency exists between the other information and the auditor's knowledge obtained in the audit, or o A material misstatement of fact exists or the other information is otherwise misleading • Respond appropriately when we identify that such material inconsistencies appear to exist or when we otherwise become aware that other information appears to be materially misstated. Potential responsive actions would include requesting management to correct the identified inconsistency • Include the appropriate communication in our auditor's report, disclosing the procedures performed on the Other Information, as well as the results obtained o No material inconsistencies were noted in our review of the other information. forvis mazars Town of Trophy Club,Texas 2 March 9,2026 Qualitative Aspects of Significant Accounting Policies & Practices Significant Accounting Policies Significant accounting policies are described in Note 1 of the audited financial statements. • Adoption of Governmental Accounting Standards Board (GASB) Statement 101, Compensated Absences Unusual Policies or Methods • No matters are reportable Alternative Accounting Treatments • No matters are reportable Management Judgments &Accounting Estimates Accounting estimates are an integral part of financial statement preparation by management, based on its judgments. Significant areas of such estimates for which we are prepared to discuss management's estimation process and our procedures for testing the reasonableness of those estimates include: • Allowance for uncollectible accounts receivable • Net pension liability and related deferred inflows and outflows of resources • Total other postemployment benefit liability(OPEB) and related deferred inflows and outflows of resources • Key estimates related to leases—lease discount rate, lease term, and lease payments • Arbitrage estimate • Leave more likely than not to be used—compensated absences • Depreciation and useful lives of capital assets Financial Statement Disclosures The following areas involve particularly sensitive financial statement disclosures for which we are prepared to discuss the issues involved and related judgments made in formulating those disclosures: • Revenue recognition • Net pension liability • Total OPEB liability • Tax abatement disclosures • Leases Our Judgment About the Quality of the Town's Accounting Principles • No matters are reportable forvis Ynazars Town of Trophy Club,Texas 3 March 9, 2026 Adjustments Identified by Audit During the course of any audit, an auditor may propose adjustments to financial statement amounts. Management evaluates our proposals and records those adjustments that, in its judgment, are required to prevent the financial statements from being materially misstated. A misstatement is a difference between the amount, classification, presentation, or disclosure of a reported financial statement item and that which is required for the item to be presented fairly in accordance with the applicable financial reporting framework. Proposed & Recorded Adjustments Auditor-proposed and management-recorded entries include the following: • Entries related to GASB 68, 75, and 87—outsourced to Forvis Mazars • Entries to convert from modified accrual to full accrual basis of accounting—outsourced to Forvis Mazars • Various reclassification entries for reporting purposes—outsourced to Forvis Mazars Uncorrected Misstatements Some adjustments proposed were not recorded because their effect is not currently considered material. We request that all identified misstatements be corrected. Uncorrected misstatements that were determined by management to be immaterial, both individually and in the aggregate, but more than trivial to the financial statements as a whole are included as an attachment to this communication. While these uncorrected misstatements were deemed to be immaterial to the current-period financial statements, it is possible that the impact of these uncorrected misstatements, or matters underlying these uncorrected misstatements, could potentially cause future-period financial statements to be materially misstated. Other Required Communications Other Material Communication Listed below is another material communication between management and us related to the audit: • Management representation letter(see Attachments) forvis mazars Town of Trophy Club,Texas 4 March 9,2026 Required Communications Regarding Internal Control (AU-C 265) Consideration of Internal Control Over Financial Reporting In planning and performing our audit of the financial statements of the Town as of and for the year ended September 30, 2025, in accordance with GAGAS, we considered the Town's internal control over financial reporting (internal control). This consideration served as a basis for designing audit procedures that are appropriate in the circumstance for the purpose of expressing our opinion on the financial statements. However, this consideration was not for the purpose of expressing an opinion on the effectiveness of the Town's internal control. Accordingly, we do not express an opinion on the effectiveness of the Town's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraphs and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Categorizing Deficiencies by Severity Deficiency Significant Deficiency Material Weakness 11 A deficiency in internal control A significant deficiency is a A material weakness is a deficiency, or exists when the design or operation deficiency, or a combination of a combination of deficiencies, in of a control does not allow deficiencies, in internal control that internal control, such that there is a management or employees, in the is less severe than a material reasonable possibility that material normal course of performing their weakness, yet important enough misstatements of the Entity's financial assigned functions, to prevent or to merit attention by those charged statements will not be prevented or I detect and correct misstatements with governance. detected and corrected on a timely on a timely basis, basis. q�Q ioinn C tl�' ` III Identified Deficiencies We identified certain deficiencies in internal control as follows:. Deficiencies • Segregation of Duties: Management is responsible for establishing and maintaining effective internal controls to safeguard the Town's assets. During internal control analysis, we noted instances where individuals had access, recording, and monitoring capabilities within the cash outflow (including payroll) and cash inflow transactions cycles. Although this concentration of responsibilities may be efficient, it could lead to possible errors or irregularities. Management should evaluate the cost versus the benefits of further segregating these duties by hiring additional personnel or shifting certain accounting duties to other current employees to assist in implementing additional monitoring or other compensating controls. • We observed matters that we consider to be deficiencies that we communicated to management orally. forvis mazars Town of Trophy Club,Texas 5 March 9,2026 Other Matters We also observed other matters and offer these comments and suggestions with respect to matters that came to our attention during the course of the audit of the financial statements. We can discuss these matters further at your convenience and may provide implementation assistance for changes or improvements. • GASB Statement No. 103, Financial Reporting Model Improvements (GASB 103) improves the financial reporting model by standardizing the presentation for various matters within governmental financial statements. The purpose is to eliminate diversity in practice and improve comparability. Impacted areas include management's discussion and analysis, unusual or infrequent items, the definitions and presentation of operating and nonoperating revenues and expenses in enterprise funds, presentation of major component units, presentation of budgetary comparison information, and financial trends information within the statistical section of separately issued financial reports. GASB 103 is effective for the Town's fiscal year ended September 30, 2026, and all reporting periods thereafter. Earlier application is encouraged. Changes are required to be made retroactively to the earliest period presented. • Governmental Accounting Standards Board (GASB) Statement No. 104, Disclosure of Certain Capital Assets, (GASB 104) requires certain types of capital assets to be disclosed separately in the capital assets note disclosures. GASB 104 requires lease assets recognized in accordance with Statement No. 87, Leases, intangible right-to-use assets recognized in accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, subscription assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements, and intangible assets other than those three types to be disclosed separately by major class. In addition, GASB 104 requires additional disclosures for capital assets held for sale. GASB 104 is effective for the Town's fiscal year ended September 30, 2026, and all reporting periods thereafter. Earlier application is encouraged. The requirements of this Statement should be applied retroactively to all periods presented in the basic financial statements, if practicable. • GASB Statement No. 105, Subsequent Events (GASB 105) improves the financial reporting requirements for subsequent events, thereby enhancing consistency in the application and better meeting the information needs of financial statement users. The statement clarifies the subsequent events that constitute recognized and nonrecognized events and establishes specific note disclosure requirements for nonrecognized events. The requirements of this statement are effective for the Town's fiscal year 2027. forv®s mazars Town of Trophy Club,Texas 6 March 9,2026 Attachments Management Representation Letter (Attachment A) As a material communication with management, included herein is a copy of the representation letter provided by management at the conclusion of our engagement. Schedule of Uncorrected Misstatements (Attachment B) The details of uncorrected misstatements identified as a result of our engagement are included herein. forv`s mazars Town of Trophy Club,Texas 7 March 9, 2026 • Attachment A Management Representation Letter forvis mazars Town of Trophy Club,Texas March 9, 2026 TOWN OF TROPHY CLUB i Trophy Wood Drive,Trophy Club,TX 76262 1682.237.2900 I info@trophydub.org I trophyclub.org Representation of: Town of Trophy Club,Texas 1 Trophy Wood Dr Trophy Club,Texas 76262 Provided to: Forvis Mazars, LLP Certified Public Accountants 14221 North Dallas Parkway, Suite 400 Dallas,TX 75254 The undersigned ("We") are providing this letter in connection with Forvis Mazars' audit of our financial statements as of and for the year ended September 30, 2025. Our representations are current and effective as of the date of Forvis Mazars' report: March 9, 2026. Our engagement with Forvis Mazars is based on our contract for services dated: September 30, 2025. Our Responsibility&Consideration of Material Matters We confirm that we are responsible for the fair presentation of the financial statements subject to Forvis Mazars' report in conformity with accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies; establishing and maintaining effective internal control over financial reporting, operations, and compliance; and preventing and detecting fraud. Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors. Confirmation of Matters Specific to the Subject Matter of Forvis Mazars' Report We confirm,to the best of our knowledge and belief, the following: Broad Matters 1. We have fulfilled our responsibilities, as set out in the terms of our contract, for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America. 2. We acknowledge our responsibility for the design, implementation, and maintenance of: a. Internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. b. Internal control to prevent and detect fraud. 3. We have provided you with: Town of Trophy Club,Texas Page 2 a. Access to all information of which we are aware that is relevant to the preparation and fair presentation of the financial statements, such as financial records and related data, documentation, and other matters. b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. d. All minutes of Town Council meetings, if any, held through the date of this letter or summaries of actions of recent meetings for which minutes have not yet been prepared. All unsigned copies of minutes provided to you are copies of our original minutes approved by the Town Council, if applicable, and maintained as part of our records. e. All significant contracts and grants. 4. We have disclosed to you all instances in which artificial intelligence (Al) systems or tools were used related to financial reporting, internal controls, and other processes relevant to the financial statements. We acknowledge our responsibility for the design, implementation, and maintenance of internal controls related to the use of Al. 5. We have responded fully and truthfully to all your inquiries. Government Auditing Standards 6. We acknowledge that we are responsible for compliance with applicable laws, regulations, and provisions of contracts and grant agreements. 7. We have identified and disclosed to you all laws, regulations, and provisions of contracts and grant agreements that have a direct and material effect on the determination of amounts in our financial statements or other financial data significant to the audit objectives. 8. We have identified and disclosed to you any violations or possible violations of laws, regulations,including those pertaining to adopting, approving, and amending budgets, and provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for recognition and/or disclosure in the financial statements or for your reporting on noncompliance. 9. We have taken or will take timely and appropriate steps to remedy any fraud, abuse, illegal acts, or violations of provisions of contracts or grant agreements that you or other auditors report. 10. We have a process to track the status of audit findings and recommendations. 11. We have identified to you any previous financial audits, attestation engagements, performance audits, or other studies related to the objectives of your audit and the corrective actions taken to address any significant findings and recommendations made in such audits, attestation engagements, or other studies. Misappropriation, Misstatements, &Fraud 12. We have informed you of all current risks of a material amount that are not adequately prevented or detected by our procedures with respect to: a. Misappropriation of assets. b. Misrepresented or misstated assets, deferred outflows of resources, liabilities, deferred Town of Trophy Club,Texas Page 3 inflows of resources, net position or fund balance. 13. We have no knowledge of fraud or suspected fraud affecting the entity involving: a. Management or employees who have significant roles in internal control over financial reporting, or b. Others when the fraud could have a material effect on the financial statements. 14. We understand that the term "fraud" includes misstatements arising from fraudulent financial reporting and misstatements arising from misappropriation of assets. Misstatements arising from fraudulent financial reporting are intentional misstatements, or omissions of amounts or disclosures in financial statements to deceive financial statement users. Misstatements arising from misappropriation of assets involve the theft of an entity's assets where the effect of the theft causes the financial statements not to be presented in conformity with accounting principles generally accepted in the United States of America. 15. We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, customers, analysts, regulators, citizens, suppliers, or others. 16. We have assessed the risk that the financial statements may be materially misstated as a result of fraud and disclosed to you any such risk identified. Related Parties 17. We have disclosed to you the identity of all of the entity's related parties and all the related-party relationships of which we are aware. In addition, we have disclosed to you all related-party transactions and amounts receivable from or payable to related parties of which we are aware, including any modifications during the year that were made to related-party transaction agreements which existed prior to the beginning of the year under audit, as well as new related-party transaction agreements that were executed during the year under audit. Related-party relationships and transactions have been appropriately accounted for and disclosed in accordance with accounting principles generally accepted in the United States of America. 18. We understand that the term related party refers to: • Affiliates • Town council members and members of their immediate families • Management and members of their immediate families • Any other party with which the entity may deal if one party can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Another party is also a related party if it can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting Town of Trophy Club,Texas Page 4 parties might be prevented from fully pursuing its own separate interests. The term affiliate refers to a party that directly or indirectly controls, or is controlled by, or is under common control with, the entity. Litigation,Laws,Rulings &Regulations 19. We are not aware of any pending or threatened litigation or claims whose effects should be considered when preparing the financial statements. We have not sought or received attorney's services related to pending or threatened litigation or claims during or subsequent to the audit period. Also, we are not aware of any litigation or claims, pending or threatened, for which legal counsel should be sought. 20. We have no knowledge of communications, other than those specifically disclosed, from regulatory agencies, governmental representatives, employees, or others concerning investigations or allegations of noncompliance with laws and regulations, deficiencies in financial reporting practices, or other matters that could have a material adverse effect on the financial statements. 21. We have disclosed to you all known instances of violations or noncompliance or possible violations or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements or as a basis for recording a loss contingency. 22. There are no regulatory examinations currently in progress for which we have not received examination reports. 23. We have no reason to believe the entity owes any penalties or payments under the Employer Shared Responsibility Provisions of the Patient Protection and Affordable Care Act, nor have we received any correspondence from the IRS or other agencies indicating such payments may be due. 24. We have not been designated as a potentially responsible party (PRP or equivalent status) by the Environmental Protection Agency (EPA) or other cognizant regulatory agency with authority to enforce environmental laws and regulations: Nonattest Services 25. You have provided nonattest services, including the following, during the period of this engagement: • Preparing a draft of the financial statements and related notes and supplementary information • Preparing lease schedules • Assistance with year-end entries related to GASB Statements No. 68, 75, and 87,where applicable • Preparing entries to convert from modified accrual to full-accrual basis statements 26. With respect to these services: a. We have designated a qualified management-level individual to be responsible and accountable for overseeing the nonattest services. • Town of Trophy Club,Texas Page 5 b. We have established and monitored the performance of the nonattest services to ensure they meet our objectives. c. We have made any and all decisions involving management functions with respect to the nonattest services and accept full responsibility for such decisions. d. We have evaluated the adequacy of the services performed and any findings that resulted. e. We have established and maintained internal controls, including monitoring ongoing activities. f. When we receive final deliverables from you, we will store those deliverables in information systems controlled by us. We have taken responsibility for maintaining internal control over these deliverables. Financial Statements&Reports 27. We have reviewed and approved a draft of the financial statements and related notes referred to above, which you prepared in connection with your audit of our financial statements. We acknowledge that we are responsible for the fair presentation of the financial statements and related notes. 28. With regard to supplementary information: a. We acknowledge our responsibility for the presentation of the supplementary information in accordance with the applicable criteria. b. We believe the supplementary information is fairly presented, both in form and content, in accordance with the applicable criteria. c. The methods of measurement and presentation of the supplementary information are unchanged from those used in the prior period, and we have disclosed to you any significant assumptions or interpretations underlying the measurement and presentation of the supplementary information. d. We believe the significant assumptions or interpretations underlying the measurement and/or presentation of the supplementary information are reasonable and appropriate. 29. With regard to other information that is presented in the form of our annual report: a. We confirm that the Annual Comprehensive Financial Report (ACFR) comprise the annual report for the entity. b.We have reviewed and approved the final draft of the ACFR. Transactions, Records, &Adjustments 30. All transactions have been recorded in the accounting records and are reflected in the financial statements. 31. The entity has appropriately reconciled its general ledger accounts to their related supporting information. All related reconciling items considered to be material were identified and included on the reconciliations and were appropriately adjusted in the financial statements. All intracompany (and intercompany) accounts have been eliminated or appropriately measured and considered for disclosure in the financial statements. Town of Trophy Club,Texas Page 6 32. We have everything we need to keep our books and records. 33. We have disclosed any significant unusual transactions the entity has entered into during the period, including the nature, terms, and business purpose of those transactions. 34. We are in agreement with the adjusting journal entries you have proposed, and they have been posted to the entity's accounts. 35. We believe the effects of the uncorrected financial statement misstatement(s) and omitted disclosures summarized in the attached schedule and aggregated by you during the current engagement are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Governmental Accounting&Disclosure Matters 36. Interfund, internal, and intra-entity activity and balances have been appropriately classified and reported. 37. With regard to deposit and investment activities: a. All deposit and investment transactions have been made in accordance with legal and contractual requirements. b. Investments are properly valued. c. Disclosures of deposit and investment balances and risks in the financial statements are consistent with our understanding of the applicable laws regarding enforceability of any pledges of collateral. d. We understand that your audit does not represent an opinion regarding the enforceability of any collateral pledges. e. Risk disclosures associated with deposit and investment securities are presented in accordance with GASB requirements. 38. The financial statements include all component units and properly disclose all other joint ventures and other related organizations, if any. 39. We have identified and evaluated all potential fiduciary activities and have determined the Town has no fiduciary activities required to be reported by GASB Statement No. 84, Fiduciary Activities, as amended. 40. Components of net position (net investment in capital assets, restricted, and unrestricted) and classifications of fund balance (nonspendable, restricted, committed, assigned, and unassigned) are properly classified and, if applicable, approved. 41. Capital assets, including infrastructure and intangible assets, are properly capitalized, reported, and, if applicable, depreciated or amortized. 42. We have appropriately disclosed the entity's policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance is available and have determined that net position is properly recognized under the policy. 43. Leases have been properly identified, recorded, and disclosed in accordance with GASB Town of Trophy Club,Texas Page 7 Statement No. 87, Leases. 44. The government has properly measured, recorded, and disclosed compensated absences and other salary-related payments in accordance with GASB Statement No. 101, Compensated Absences. 45. The government has appropriately considered and disclosed its vulnerabilities due to certain concentrations or constraints in accordance with GASB Statement No. 102, Certain Risk Disclosures. 46. We have identified and evaluated all potential tax abatements, and we believe there are no material tax abatements other than those that have been disclosed in the notes to the financial statements. 47. The entity's ability to continue as a going concern was evaluated and that appropriate disclosures are made in the financial statements as necessary under GASB requirements. 48. The supplementary information required by the Governmental Accounting Standards Board, consisting of management's discussion and analysis, budgetary comparisons, pension, and other postemployment benefit information, has been prepared and is measured and presented in conformity with the applicable GASB pronouncements, and we acknowledge our responsibility for the information. The information contained therein is based on all facts, decisions, and conditions currently known to us and is measured using the same methods and assumptions as were used in the preparation of the financial statements. We believe the significant assumptions underlying the measurement and/or presentation of the information are reasonable and appropriate. There has been no change from the preceding period in the methods of measurement and presentation. 49. With regard to pension and other postemployment benefits (OPEB): a. We believe the actuarial assumptions and methods used to measure pension and OPEB liabilities and costs for financial accounting purposes are appropriate in the circumstances. b. We have provided you with the entity's most current pension and OPEB plan instrument for the audit period, including all plan amendments. c. The participant data provided to you related to pension and OPEB plans are true copies of the data submitted or electronically transmitted to the plan's actuary. d. The participant data that we provided the plan's actuary for the purposes of determining the actuarial present value of accumulated plan benefits and other actuarially determined amounts in the financial statements were complete. General Government Matters 50. The financial statements properly classify all funds and activities in accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as amended. 51. All funds that meet the quantitative criteria in in GASB Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, as amended, and No. 37, Basic Financial Statements—and Management's Discussion and Analysis-for State and Local Governments: Omnibus—an Amendment of GASB Statements No. 21 and No. 34, for presentation as major are identified and presented as such and all other Town of Trophy Club,Texas Page 8 funds that are presented as major are particularly important to financial statement users. 52. Expenses have been appropriately classified in or allocated to functions and programs in the statement of activities, and allocations have been made on a reasonable basis. 53. Revenues are appropriately classified in the statement of activities within program revenues, general revenues. 54. We have appropriately disclosed that the entity is following either its established accounting policy regarding which governmental fund resources (that is, restricted, committed, assigned, or unassigned) are considered to be spent first for expenditures for which more than one resource classification is available or is following paragraph 18 of GASB Statement No. 54 to determine the fund balance classifications for financial reporting purposes and have determined that fund balance is properly recognized under the policy. 55. We have exercised due care in the preparation of the introductory and statistical sections included in our annual comprehensive financial report (ACFR) and are not aware of any information contained therein that is inconsistent with the information contained in our basic financial statements. Accounting&Disclosure 56. All transactions entered into by the entity are final. We are not aware of any unrecorded transactions, side agreements or other arrangements (either written or oral)that are in place. 57. Except as reflected in the financial statements, there are no: a. Plans or intentions that may materially affect carrying values or classifications of assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position or fund balance. b. Material transactions omitted or improperly recorded in the financial records. c. Material unasserted claims or assessments that are probable of assertion or other gain/loss contingencies requiring accrual or disclosure, including those arising from environmental remediation obligations. d. Events occurring subsequent to the balance sheet/statement of net position date through the date of this letter, which is the date the financial statements were available to be issued, requiring adjustment or disclosure in the financial statements. e. Agreements to purchase assets previously sold. f. Arrangements with financial institutions involving compensating balances or other arrangements involving restrictions on cash balances, lines of credit, or similar arrangements. g. Guarantees,whether written or oral, under which the entity is contingently liable. h. Known or anticipated asset retirement obligations. 58. Except as disclosed in the financial statements, the entity has: a. Satisfactory title to all recorded assets, and those assets are not subject to any liens, Town of Trophy Club,Texas Page 9 pledges, or other encumbrances. b. Complied with all aspects of contractual and grant agreements, for which noncompliance would materially affect the financial statements. 59. We agree with the findings of specialists in evaluating the net pension liability and total OPEB liability and have adequately considered the qualification of the specialists in determining the amounts and disclosures used in the financial statements and underlying accounting records. We did not give or cause any instructions to be given to the specialists with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had impact on the independence or objectivity of the specialists. Revenue and Accounts Receivable 60. Adequate provisions and allowances have been accrued for any material losses from: a. Uncollectible receivables. b. Purchase commitments in excess of normal requirements or at prices in excess of prevailing market prices. Estimates 61. We have identified all accounting estimates that could be material to the financial statements and we confirm the appropriateness of the methods and the consistency in their application, the accuracy and completeness of data, and the reasonableness of significant assumptions used by us in making the accounting estimates, including those measured at fair value reported in the financial statements. 62. Significant estimates that may be subject to a material change in the near term have been properly disclosed in the financial statements. We understand that"near term" means the period within one year of the date of the financial statements. In addition, we have no knowledge of concentrations, which refer to a lack of diversity related to employers, industries, inflows of resources, workforce covered by collective bargaining agreements, providers of financial resources, or suppliers of material, labor or services , or constraints, which refer to a limitation imposed by an external party or by formal action of a government's highest level of decision- making authority related to limitations on raising revenue, limitations on spending, limitations on the incurrence of debt, or mandated spending, existing at the date of the financial statements that would make the entity vulnerable to the risk of severe impact in the near term that have not been properly disclosed in the financial statements. Fair Value 63. With respect to the fair value measurements of financial and nonfinancial assets and liabilities, if any, recognized in the financial statements or disclosed in the notes thereto: a. The underlying assumptions are reasonable and they appropriately reflect management's intent and ability to carry out its stated course of action. b. The measurement methods and significant assumptions used in determining fair value are appropriate in the circumstances for financial statement measurement and disclosure purposes and have been consistently applied. c. The significant assumptions appropriately reflect market participant assumptions. Town of Trophy Club,Texas Page 10 d. The disclosures related to fair values are complete, adequate, and in conformity with accounting principles generally accepted in the United States of America. e. There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements. Tax-Exempt Bonds 64. Tax-exempt bonds issued have retained their tax-exempt status. 65. We have notified you of any instances of noncompliance with applicable disclosure requirements of the SEC Rule 15c2-12 and applicable state laws. GASB Statement 101, Compensated Absences 66. In connection with the adoption of GASB Statement No. 101, Compensated Absences (GASB 101), we represent that footnotes to the financial statements appropriately describe the adoption of GASB 101 and include all disclosures required under GASB 101. Br ndon Wright,Town Manager bwright(a�trophyclub.org [Iva bua, April Duvall, Director of Finance ad u va l l(a.tro p hycl u b.o rg Attachment B Schedule of Uncorrected Misstatements forvis mazars Town of Trophy Club,Texas March 9, 2026 Town of Trophy Club,Texas Period Ending: September 30,2025 ATTACHMENT This analysis and the attached"Schedule of Uncorrected Misstatements(Adjustments Passed)"reflect the effects on the financial statements if the uncorrected misstatements identified were corrected. Governmental Activities(Government-Wide Statements) QUANTITATIVE ANALYSIS Before Subsequent to Misstatements Misstatements Misstatements %Change Total Assets&Deferred Outflows 110,593,370 110,593,370 Total Liabilities&Deferred Inflows (39,962,534) (39,962,534) Total Net Position (70,630,836) (70,630,836) General Revenues&Transfers (21,557,919) 336,144 (21,221,775) -1.56% Net Program Revenues/Expenses 16,204,775 16,204,775 Change in Net Position (5,353,144) 336,144 (5,017,000) -6.28% [Bent Temm Club.T... Governmental Activities(Government-Wide Statements) eI VI Me.I...en r.xomna w F. mm Wlm .. an.,.a... xm emoon B...° c ��menus&vino 0 0 33Gta 0 P...1 Mat Year Mlosimcpag+m 33eta. Bealnnne Mak. F M1, gmeu.gmamm 0 0 030..01 0 0 �pxc enelmnpe In xetPmmm au..I [...setm Met Position 0I Town of Trophy Club, Texas Period Ending: September 30, 2025 ATTACHMENT This analysis and the attached"Schedule of Uncorrected Misstatements(Adjustments Passed)"reflect the effects on the financial statements if the uncorrected misstatements identified were corrected. Capital Projects Fund QUANTITATIVE ANALYSIS Before Subsequent to Misstatements Misstatements Misstatements %Change Total Assets&Deferred Outflows 13,035,221 13,035,221 Total Liabilities&Deferred Inflows (567,688) (567,688) Total Fund Balance (12,467,533) (12,467,533) Revenues (3,684,629) 156,000 (3,528,629) -4.23% Expenditures 4,545,812 4,545,812 Change in Fund Balance (1,771,263) 156,000 (1,615,263) -8.81% Client Town of Trophy Club,Texas Capital Projects Flom Period Ending:September 30,2025 :CHEBvLE OF UNCORRECTED EMS TATEARENTS I<wusiuBxTs PROS, 0.1 Ep.n on Fnw.inavor ./5 Werra. Liab1111.4 Change in Nod Funl ^+v ld�Balnorn on.rl...• R...nt.. Exe.nan.ra. Pend eon.. BAYNE e.ea. Bremen FInercla Om.mmd 1In.. P'ktle°PI n n, Oe rs 00 w OR w w =01 on oil m an Rcvgmerauan F llagvemmm�WOW... a a 164mo B 1+�� 1 1 a year gsMNrcorterayea.� Inlagovenvrereal 154000 Begin..NM 1150,0001 1•>nl puttee agr0 . 0 D tcemn a nnmDl n D IIc ect en Chane.In Fund Balls. 154000 1 IM11..et ee Fund 69am. .l Town of Trophy Club,Texas Period Ending: September 30, 2025 ATTACHMENT This analysis and the attached"Schedule of Uncorrected Misstatements(Adjustments Passed)"reflect the effects on the financial statements if the uncorrected misstatements identified were corrected. General Fund QUANTITATIVE ANALYSIS Before Subsequent to Misstatements Misstatements Misstatements %Change Total Assets&Deferred Outflows 14,068,018 14,068,018 Total Liabilities&Deferred Inflows (1,073,722) (1,073,722) Total Fund Balance (12,994,296) (12,994,296) Revenues (18,981,141) 180,144 (18,800,997) -0.95% Expenditures 15,920,195 15,920,195 Change in Fund Balance (174,996) 180,144 5,148 -102.94% • Client:Town of Trophy Club,Texas elenerai wnd Period Ending:September 30,2025 SCHEDULE OF wxaeaecTeoMSS.,o ooTS l.dneTTETns PASSED, Fel Ellen on FellenvIna War Factual m lv{(taa. .Nao.e oel.,. Deweda.es 6 Change In rune Hod Inflows xe.enuan n.ea area nano Btlan.e Ban. Saki. oe nOm ninanaal emement Una.en ^°Ha'e o..�. oe na .a w Oft.1 ae F..� oe An I on FinI Recognition of PAPP current year rar„cr year intergovernmental;memos ° ,° o a m,+u o nea+u> a an�..m.c. lea+u .o a .. neo.+w Tod pm.aaaa.nmr a a ,n.,,, o n.o+.., n n Imwre.n sane.1n rune moo.. ,soot.I I..os.r.n Fund e..Ka .I