ORD. 2021-14 - Town-of-Trophy-Club-OS-RevisedADDENDUM
TO
OFFICIAL STATEMENT
Dated August 24, 2021
Relating to
$4,305,000
Town of Trophy Club, Texas
Combination Tax and Limited Pledge Revenue Certificates of Obligation,
Series 2021
PLEASE BE ADVISED that the referenced Official Statement, dated August 24, 2021, relating to
the captioned obligations (the “Certificates”) is hereby amended in the following manner as a result
of an error on page 5 referencing the Record Date.
Correct language for Record Date on page 5:
The record date (“Record Date”) for interest payable to the registered owner of a Certificate on any interest payment
date means the fifteenth (15th) day of the month next preceding such interest payment date.
September 22, 2021
Stickers will be mailed out for the hard copies
NEW ISSUE BOOK-ENTRY-ONLY Ratings: S&P: “AA+”
(See “OTHER PERTINENT INFORMATION - Ratings” herein)
OFFICIAL STATEMENT
Dated: August 24, 2021
In the opinion of Bond Counsel, under existing law, interest on the Certificates is excludable from gross income for federal income tax
purposes under section 103 of the Internal Revenue Code of 1986, as amended, and is nota specific preference item for purposes of the
alternative minimum tax”. See “TAX MATTERS” for a discussion of the opinion of Bond Counsel.
THE CERTIFICATES WILL BE DESIGNATED AS “QUALIFIED TAX-EXEMPT OBLIGATIONS” FOR FINANCIAL INSTITUTIONS.
See “PURCHASE OF TAX-EXEMPT OBLIGATIONS BY FINANCIAL INSTITUTIONS” herein.
$4,305,000
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021
TOWN OF TROPHY CLUB, TEXAS
(DENTON AND TARRANT COUNTIES)
Dated Date: September 1, 2021 Due: March 1, as shown on page ii
The Town of Trophy Club, Texas (the “Town” or the “Issuer” $4,305,000 Combination Tax and Revenue Certificates of Obligation, Series
2021 (the “Certificates”), are being issued pursuant to the Constitution and laws of the State of Texas (the “State”), including particularly
Texas Local Government Code, Subchapter C, Chapter 271, as amended, and an ordinance (the “Ordinance”) adopted by the Town
Council authorizing the issuance of the Certificates. (See “THE CERTIFICATES - Authority for Issuance” herein.)
The Certificates constitute direct obligations of the Issuer payable from an annual ad valorem tax levied against all taxable property in the
Town, within the limits prescribed by law, and further secured by and payable from a lien on and limited pledge (not to exceed $1,000)
of the surplus net revenues derived from the operation of the Issuer's municipal drainage utility system (the "System"). (See “THE
CERTIFICATES - Security for Payment” herein.)
Interest on the Certificates will accrue from September 1, 2021 (the "Dated Date") as shown above and will be payable on March 1, 2022,
and on each September 1 and March 1 thereafter until maturity or prior redemption, and will be calculated on the basis of a 360-day year
of twelve 30-day months. The definitive Obligations will be issued as fully registered obligations in book-entry form only and when issued
will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York. DTC will act
as securities depository (the “Securities Depository”). Book-entry interests in the Obligations will be made available for purchase in
principal amounts of $5,000 or any integral multiple thereof within a maturity. Purchasers of the Obligations (“Beneficial Owners”) will not
receive physical delivery of certificates representing their interest in the Obligations purchased. So long as DTC or its nominee is the
registered owner of the Obligations, the principal of and interest on the Obligations will be payable by BOKF, NA, Dallas, Texas, as Paying
Agent/Registrar, to DTC, which will in turn remit such principal and interest to its participants, which will in turn remit such principal and
interest to the Beneficial Owners of the Obligations. (See “BOOK-ENTRY-ONLY SYSTEM” herein.)
Proceeds from the sale of the Certificates will be used for the purpose of providing funds for: (i) designing, developing, constructing and
acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing,
constructing, improving and renovating Town park and recreation facilities, including the acquisition of land therefor, (iii) designing,
developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the
Town, including streetscaping, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and
acquiring rights-of-way in connection therewith, (iv) professional services incurred in connection with items (i) through (iii) and (iv) to pay
the costs incurred in connection with the issuance of the Certificates. (See “THE CERTIFICATES - Use of Certificate Proceeds” herein.)
The Issuer reserves the right to redeem the Certificates maturing on and after March 1, 2031, on March 1, 2030, or any date thereafter,
in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, at the redemption price of par plus accrued interest, as
further described herein. See “THE BONDS - Redemption Provisions” and “THE CERTIFICATES - Redemption Provisions” herein.)
STATED MATURITY SCHEDULE
(On Page ii)
The Certificates are offered for delivery, when, as and if issued and received by the initial purchaser (the “Purchaser”) and subject to the
approving opinion of the Attorney General of the State of Texas and the approval of certain legal matters by Bracewell LLP, Dallas,
Texas, Bond Counsel. (See Appendix C – Form of Legal Opinion of Bond Counsel.) It is expected that the Obligations will be available
for delivery through DTC on or about September 22, 2021.
ii
STATED MATURITY SCHEDULE FOR THE CERTIFICATES
Base CUSIP – 897062
$4,305,000 Combination Tax and Revenue Certificates of Obligation, Series 2021
(Due March 1)
$2,335,000 Serial Certificates
$1,970,000 Term Certificates
$365,000 2.000% Term Certificates due March 1, 2033 and priced to yield 1.3% (b) CUSIP Suffix KR5
$375,000 2.000% Term Certificates due March 1, 2035 and priced to yield 1.45% (b) CUSIP Suffix KT1
$395,000 2.000% Term Certificates due March 1, 2037 and priced to yield 1.60% (b) CUSIP Suffix KV6
$410,000 2.000% Term Certificates due March 1, 2039 and priced to yield 1.80% (b) CUSIP Suffix KX2
$425,000 2.000% Term Certificates due March 1, 2041 and priced to yield 2.00% (b) CUSIP Suffix KZ7
(Interest on the Certificates to accrue from the Dated Dates)
The Issuer reserves the right to redeem the Certificates maturing on and after March 1 2031, on March 1, 2030, or any date thereafter,
in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, at the redemption price of par plus accrued interest, as
further described herein. Additionally, the Certificates maturing on March 1, 2033, March 1, 2035, March 1, 2037, March 1, 2039 and
March 1, 2041 (the “Term Certificates”) will also be subject to mandatory sinking fund redemption. See “THE CERTIFICATES -
Redemption Provisions” herein.)
___________
(a) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services,
managed by S&P Global Market Intelligence. This data is not intended to create a database and does not serve in any way as a
substitute for the CUSIP Services. Neither the Town nor the Financial Advisor is responsible for the selection or the correctness of the
CUSIP numbers set forth herein.
(b) Yield calculated is based on the assumption that the Certificates denoted and sold at premium will be redeemed on March 1, 2030, the
first optional call date for the Certificates, at a redemption of par plus accrued interest to the date of redemption.
Stated CUSIP
Maturity Principal Interest Initial No.
3/1 Amount Rate Yield Suffix (a)
2022 645,000$ 4.000% 0.17% KE4
2023 575,000 4.000% 0.23% KF1
2024 55,000 4.000% 0.28% KG9
2025 100,000 4.000% 0.40% KH7
2026 145,000 4.000% 0.55% KJ3
2027 150,000 4.000% 0.65% KK0
2028 155,000 4.000% 0.80% KL8
2029 165,000 4.000% 1.00% KM6
2030 170,000 4.000% 1.02% KN4
2031 175,000 3.000% 1.10% KP9
(b)
iii
TOWN OF TROPHY CLUB, TEXAS
100 Municipal Drive
Trophy Club, Texas 76262
214-975-0405
ELECTED OFFICIALS
Name
Position
On Council
Since
Term
Expires
May
Occupation
Alicia Fleury Mayor May 2017 2023 Pilot
Greg Lamont Mayor Pro Tem May 2013 2023 Retired
Greg Wilson Council Member November 2020 2023 Chief Information
Security Officer/Director
Dennis Sheridan Council Member May 2021 2024 Retired
Karl Monger Council Member May 2018 2024 Executive Director
Michael Geraci Council Member May 2019 2022 Director
Phillip Shoffner Council Member November 2013 2022 Business Owner
ADMINISTRATION
Name
Position
Years of
Municipal
Experience
Wade Carroll Town Manager 30 years
Mike Erwin Finance Manager 30 years
Leticia Vacek Town Governance Officer/Town Secretary 30 years
J. Taylor Fire Chief 26 years
Patrick Arata Police Chief 6 years
Haley Archer Human Resources Manager 7 years
Matt Cox Director of Community Development 10 years
Jill Lind Communications & Marketing Manager 17 years
Tony Jaramillo Parks & Recreation Director 18 years
CONSULTANTS AND ADVISORS
Bond Counsel Bracewell LLP
Dallas, Texas
Financial Advisor SAMCO Capital Markets, Inc.
San Antonio, Texas
Certified Public Accountants BrooksWatson & Company
Dallas, Texas
For Additional Information Please Contact:
Mr. Wade Carroll Mr. Mark McLiney
Town Manager Senior Managing Director
Mike Erwin SAMCO Capital Markets, Inc.
Finance Manager 1020 NE Loop 410, Suite 640
Town of Trophy Club San Antonio, Texas 78209
100 Municipal Drive (210) 832-9760
Trophy Club, Texas 76062 mmcliney@samcocapital.com
682-831-4606
wcarroll@trophyclub.org
merwin@trophyclub.org
iv
USE OF INFORMATION IN THE OFFICIAL STATEMENT
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation
of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale.
No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those
contained in this Official Statement, and, if given or made, such other information or representation must not be relied upon as having
been authorized by the Town or any other person. The information and expressions of opinion herein are subject to change without notice,
and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create the implication
that there has been no change in the matters described herein since the date hereof.
Certain information set forth herein has been provided by sources other than the Town that the Town believes to be reliable, but the Town
makes no representation as to the accuracy of such information. Any information and expressions of opinion herein contained are subject
to change without notice, and neither the delivery of the Official Statement nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the Town or other matters described herein since the date hereof.
See "CONTINUING DISCLOSURE OF INFORMATION" for a description of the Town's undertaking to provide certain information on a
continuing basis.
This Official Statement includes descriptions and summaries of certain events, matters and documents. Such descriptions and summaries
do not purport to be complete, and all such descriptions, summaries and references thereto are qualified in their entirety by reference to
this Official Statement in its entirety and to each such document, copies of which may be obtained from the Town or from the Financial
Advisor to the Town for this issuance. Any statements made in this Official Statement or the appendices hereto involving matters of
opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation
is made that any of such opinions or estimates will be realized. CUSIP Numbers have been assigned to this issue by CUSIP Global
Services for the convenience of the owners of the Certificates.
This Official Statement is delivered in connection with the sale of securities referred to herein and may not be produced or used, in whole
or in part, for any other purpose.
The cover page contains certain information for general reference only and is not intended as a summary of this offering. Investors should
read the entire Official Statement, including all schedules and appendices attached hereto, to obtain information essential to making an
informed investment decision.
NEITHER THE TOWN NOR ITS FINANCIAL ADVISOR MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE
INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY (“DTC”) OR ITS
BOOK-ENTRY-ONLY SYSTEM, AS SUCH INFORMATION HAS BEEN FURNISHED BY DTC.
THE CERTIFICATES ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND
CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE
CERTIFICATES IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THE
CERTIFICATES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION
THEREOF.
THIS OFFICIAL STATEMENT CONTAINS “FORWARD-LOOKING” STATEMENTS WITHIN THE MEANING OF SECTION 21e OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS
TO BE DIFFERENT FROM THE FUTURE RESULTS, PERFORMANCE AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. See “OTHER PERTINENT INFORMATION--Forward
Looking Statements Disclaimer” herein.
[The remainder of this page is intentionally left blank.]
v
TABLE OF CONTENTS
INTRODUCTORY STATEMENT ...........................................1 TOWN’S APPLICATION OF THE
THE CERTIFICATES ............................................................ 1 PROPERTY TAX CODE ................................................ 20
REGISTRATION TRANSFER AND EXCHANGE..................5 ADDITIONAL TAX COLLECTIONS ....................................20
BOOK-ENTRY-ONLY SYSTEM ............................................ 6 TAX MATTERS ................................................................... 21
INVESTMENT AUTHORITY AND INVESTMENT ADDITIONAL FEDERAL INCOME
PRACTICES OF THE ISSUER ......................................... 7 TAX CONSIDERATIONS ............................................... 22
EMPLOYEE BENEFITS ......................................................10 PURCHASE OF TAX-EXEMPT OBLIGATIONS BY
AD VALOREM TAX PROCEDURES ................................... 16 FINANCIAL INSTITUTIONS ........................................... 22
PUBLIC HEARING AND MAINTENANCE CONTINUING DISCLOSURE OF INFORMATION.............23
AND OPERATIONS TAX RATE LIMITATIONS ............. 18 OTHER PERTINENT INFORMATION ................................ 24
Financial Information of the Issuer Appendix A
General Information Regarding the Town of Trophy Club and Denton County, Texas Appendix B
Form of Legal Opinion of Bond Counsel Appendix C
The Issuer’s General Purpose Audited Financial Statements for the Fiscal Year Ended September 30, 2020 Appendix D
The cover page, subsequent pages hereof and appendices attached hereto, are part of this Official Statement.
vii
SELECTED DATA FROM THE OFFICIAL STATEMENT
The selected data is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Certificates to potential investors is made only by means of this entire Official Statement.
No person is authorized to detach this page from this Official Statement or to otherwise use it without the entire Official Statement.
The Issuer The Town of Trophy Club, Texas (the “Town” or “Issuer”) is a political subdivision of the State of Texas
located in Denton and Tarrant Counties, and is a municipal corporation organized and existing under
the laws of the State. The Town is a home-rule municipality operating under the council-manager form
of government, governed by a mayor and six-member council as provided in the home-rule charter.
The Town’s population, as established by the 2010 U.S. Census, was 10,500. The Town’s current
population estimate is 12,451. (See “APPENDIX B - GENERAL INFORMATION REGARDING THE
TOWN OF TROPHY CLUB AND DENTON COUNTY, TEXAS” herein.)
The Certificates The Certificates are being issued pursuant to the Constitution and general laws of the State, including
particularly, Subchapter C, Chapter 271, Texas Local Government Code as amended, and an
ordinance (the “Ordinance”) adopted by the Town Council. (See “THE CERTIFICATES - Authority for
Issuance” herein.)
Paying Agent/Registrar The initial Paying Agent/Registrar for the Certificates is BOKF, NA, Dallas, Texas.
Security The Certificates constitute direct obligations of the Issuer payable from an annual ad valorem tax levied
against all taxable property in the Town, within the limits prescribed by law, and further secured by and
payable from a lien on and limited pledge (not to exceed $1,000) of the surplus net revenues derived
from the operation of the Issuer's municipal drainage utility system (the "System"). (See “THE
CERTIFICATES - Security for Payment” herein.)
Redemption Provisions The Issuer reserves the right to redeem the Certificates maturing on and after March 1, 2031 on March
1, 2030, or any date thereafter, in whole or in part, in principal amounts of $5,000 or any integral
multiple thereof, at the redemption price of par plus accrued interest, as further described herein.
Additionally, the Certificates maturing on March 1, 2033, March 1, 2035, March 1, 2037, March 1, 2039
and March 1, 2041 (the “Term Certificates”) will also be subject to mandatory sinking fund redemption.
See “THE CERTIFICATES - Redemption Provisions” herein.)
Tax Matters In the opinion of Bond Counsel, under existing law, interest on the Certificates will be excludable from
gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986,
as amended, and is not a specific preference item for purposes of the alternative minimum tax. See
“TAX MATTERS” for a discussion of the opinion of Bond Counsel. (See “TAX MATTERS” and
APPENDIX C - FORM OF LEGAL OPINION OF BOND COUNSEL” herein.)
Use of Proceeds Proceeds from the sale of the Certificates will be used for the purpose of providing funds for:
(i) designing, developing, constructing and acquiring drainage improvements and facilities within the
Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and
renovating Town park and recreation facilities, including the acquisition of land therefor, (iii) designing,
developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks,
bridges, and other public ways of the Town, including streetscaping, streetlighting, right-of-way
protection, utility relocation, and related storm drainage improvements; and acquiring rights-of-way in
connection therewith, (iv) professional services incurred in connection with items (i) through (iii) and
(iv) to pay the costs incurred in connection with the issuance of the Certificates. (See “THE
CERTIFICATES - Use of Certificate Proceeds” herein.)
Qualified Tax-Exempt
Obligations
The Issuer has designated the Certificates as “Qualified Tax-Exempt Obligations” for financial
institutions. (See “TAX MATTERS - Qualified Tax-Exempt Obligations for Financial Institutions”
herein.)
Book-Entry-Only System The Issuer intends to utilize the Book-Entry-Only System of The Depository Trust Company, New
York, New York described herein. No physical delivery of the Certificates will be made to the
beneficial owners of the Certificates. Such Book-Entry-Only System may affect the method and
timing of payments on the Certificates and the manner the Certificates may be transferred. (See
“BOOK-ENTRY-ONLY SYSTEM” herein.)
Ratings S&P Global Ratings (“S&P”) has assigned an unenhanced, underlying rating of “AA+” to the
Certificates. (See “OTHER PERTINENT INFORMATION - Ratings” herein.)
Issuance of Additional Debt The Town does not anticipate the issuance of additional debt within the next twelve months.
Payment Record The Town has never defaulted in the payment of its general obligation tax debt.
Delivery It is anticipated the Certificates will be available for delivery through DTC on or about September 22,
2021.
Legality Delivery of the Certificates is subject to the approval by the Attorney General of the State of Texas
and the rendering of an opinion as to certain legal matters by Bracewell LLP, Bond Counsel,
Dallas, Texas.
1
INTRODUCTORY STATEMENT
This Official Statement provides certain information in connection with the issuance by Town of Trophy Club, Texas (the “Town”
or “Issuer”) of its $4,305,000 Combination Tax and Revenue Certificates of Obligation, Series 2021 (the “Certificates”) identified
on the cover page hereof.
The Issuer is a political subdivision of the State of Texas (the “State”) and operates under the statutes and the Constitution of the
State and a Home Rule Charter. The Certificates are being issued pursuant to the Constitution and general laws of the State and
an ordinance (the “Ordinance”) adopted by the Town Council authorizing the issuance of the Certificates. (See “THE
CERTIFICATES - Authority for Issuance” herein.)
Unless otherwise indicated, capitalized terms used in this Official Statement have the same meanings assigned to such terms in
the Ordinance. Included in this Official Statement are descriptions of the Certificates and certain information about the Issuer and
its finances. ALL DESCRIPTIONS OF DOCUMENTS CONTAINED HEREIN ARE SUMMARIES ONLY AND ARE QUALIFIED
IN THEIR ENTIRETY BY REFERENCE TO EACH SUCH DOCUMENT. Copies of such documents may be obtained from the
Issuer or the Financial Advisor.
All financial and other information presented in this Official Statement has been provided by the Town from its records, except for
information expressly attributed to other sources. The presentation of information, including tables of receipts from taxes and other
sources, is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial
position or other affairs of the Town. No representation is made that past experience, as is shown by that financial and other
information, will necessarily continue or be repeated in the future (see “FORWARD-LOOKING STATEMENTS”).
This Official Statement speaks only as of its date, and the information contained herein is subject to change. A copy of this Official
Statement relating to the Certificates will be submitted to the Municipal Securities Rulemaking Board, and will be available through
its Electronic Municipal Market Access (“EMMA”) system. See “CONTINUING DISCLOSURE OF INFORMATION” for a
description of the Town’s undertaking to provide certain information on a continuing basis
THE CERTIFICATES
General Description
The Certificates are dated September 1, 2021 (the "Dated Date"). The Certificates are stated to mature on March 1 in the years
and in the principal amounts set forth on page ii hereof. The Certificates shall bear interest from their Dated Date on the unpaid
principal amounts, and the amount of interest to be paid with respect to each payment period shall be computed on the basis of a
360-day year consisting of twelve 30-day months. Interest on the Certificates will be payable on March 1, 2022, and on each
September 1 and March 1 thereafter, until maturity or prior redemption. Principal is payable at the designated offices of the Paying
Agent/Registrar for the Certificates, initially BOKF, NA, Dallas, Texas.; provided, however, that so long as Cede & Co. (or other
DTC nominee) is the registered owner of the Certificates, all payments will be made as described under “BOOK-ENTRY-ONLY
SYSTEM” herein. Interest on the Certificates shall be paid to the registered owners whose names appear on the registration
books of the Paying Agent/Registrar at the close of business on the Record Date (as hereinafter defined) and shall be paid by the
Paying Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address of the registered owner
recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the
risk of, the registered owner. If the date for the payment of the principal of or interest on the Certificates shall be a Saturday,
Sunday, a legal holiday or a day when banking institutions in the Town where the designated payment/transfer office of the Paying
Agent/Registrar is located are authorized to be closed, then the date for such payment shall be the next succeeding day which is
not such a day, and payment on such date shall have the same force and effect as if made on the date payment was due.
Initially, the Certificates will be registered and delivered only to Cede & Co., the nominee of The Depository Trust Company (“DTC”)
pursuant to the Book-Entry-Only System described below. No physical delivery of the Certificates will be made to the Beneficial
Owners. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede &
Co., which will distribute the amounts received to the appropriate DTC Participants, who shall in turn make payment to the
Beneficial Owners of the Certificates. Such Book-Entry-Only System may change the method and timing of payment for the
Certificates and the method of transfer. See “BOOK-ENTRY-ONLY SYSTEM” herein.
Authority for Issuance
The Certificates are being issued pursuant to the Constitution and general laws of the State, including Texas Local Government
Code, Subchapter C, Chapter 271, as amended, the Town’s Home Rule Charter and the Ordinance.
Security for Payment
The Certificates constitute direct obligation of the Issuer payable from an annual ad valorem tax levied against all taxable property
in the Town, within the limits prescribed by law, and further secured by and payable from a lien on and limited pledge (not to
exceed $1,000) of the surplus net revenues derived from the operation of the Issuer's municipal drainage utility system (the
"System").
2
Use of Certificate Proceeds
Proceeds from the sale of the Certificates will be used for the purpose of providing funds for: (i) designing, developing, constructing
and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing,
developing, constructing, improving and renovating Town park and recreation facilities, including the acquisition of land therefor,
(iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other
public ways of the Town, including streetscaping, streetlighting, right-of-way protection, utility relocation, and related storm
drainage improvements; and acquiring rights-of-way in connection therewith, (iv) professional services incurred in connection with
items (i) through (iii) and (iv) to pay the costs incurred in connection with the issuance of the Certificates.
Redemption Provisions
Optional Redemption: The Issuer reserves the right, at its option, to redeem the Certificates maturing on and after
March 1, 2031 on March 1, 2030, or any date thereafter, in whole or in part, in principal amounts of $5,000 or any integral
multiple thereof (and, if within a stated maturity, selected at random and by lot by the Paying Agent/Registrar), at the redemption
price of par plus accrued interest to the date fixed for redemption.
The Certificates scheduled to mature on March 1 in the years 2033, 2035, 2037, 2039, and 2041 (the “Term Certificates”) are
subject to scheduled mandatory sinking fund redemption by the Paying Agent/Registrar by lot, or by any other customary method
that results in a random selection, at a price equal to the principal amount thereof, plus accrued interest to the redemption date,
out of moneys available for such purpose in the interest and sinking fund for the Certificates, on the dates, and in the respective
principal amounts, set forth in the following schedule:
Term Certificates
to Mature on
March 1, 2033
Term Certificates
to Mature on
March 1, 2035
Term Certificates
to Mature on
March 1, 2037
Year
Principal
Amount Year
Principal
Amount Year
Principal
Amount
2032 $ 180,000 2034 $ 185,000 2036 $ 195,000
2033* 185,000 2035* 190,000 2037* 200,000
Term Certificates
to Mature on
March 1, 2039
Term Certificates
to Mature on
March 1, 2041
Year
Principal
Amount Year
Principal
Amount
2038 $ 205,000 2040 $ 210,000
2039* 205,000 2041* 215,000
*Payable at Stated Maturity
The principal amount of a Term Certificate required to be redeemed pursuant to the operation of such mandatory redemption
provisions shall be reduced, at the option of the Town, by the principal amount of any Term Certificates of such stated maturity
which, at least forty-five (45) days prior to the mandatory redemption date (1) shall have been defeased or acquired by the Town
and delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the Paying
Agent/Registrar at the request of the Town, or (3) shall have been redeemed pursuant to the optional redemption provisions set
forth above and not theretofore credited against a mandatory redemption requirement.
Notice Of Redemption: Not less than 30 days prior to a redemption date for the Certificates, the Town shall cause a notice of
redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Certificates to be
redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying
Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO
MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED
OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE CERTIFICATES CALLED FOR REDEMPTION
SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY
CERTIFICATES OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH
CERTIFICATES OR PORTION THEREOF SHALL CEASE TO ACCRUE.
The Town reserves the right, in the case of an optional redemption, to give notice of its election or direction to redeem
Certificates conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned
upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption,
with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that
the Town retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the Town delivers a
certificate of the Town to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice, and
such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice
is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to
the affected holders. Any Certificates subject to conditional redemption and such redemption has been rescinded shall remain
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outstanding, and the rescission of such redemption shall not constitute an event of default. Further, in the case of a conditional
redemption, the failure of the Town to make moneys and/or authorized securities available in part or in whole on or before the
redemption date shall not constitute an event of default by the Town.
The Paying Agent/Registrar and the Issuer, so long as a Book-Entry-Only System is used for the Certificates, will send any
notice of redemption, notice of proposed amendment to the Certificates or other notices with respect to the Certificates only to
DTC. Any failure by DTC to advise any DTC participant, or of any DTC participant or indirect participant to notify the Beneficial
Owner, will not affect the validity of the redemption of the Certificates called for redemption or any other action premised on any
such notice. Redemption of portions of the Certificates by the Issuer will reduce the outstanding principal amount of such
Certificates held by DTC. In such event, DTC may implement, through its Book-Entry-Only System, a redemption of such
Certificates held for the account of DTC participants in accordance with its rules or other agreements with DTC participants and
then DTC participants and indirect participants may implement a redemption of such Certificates from the Beneficial Owners.
Any such selection of Certificates to be redeemed will not be governed by the Ordinance and will not be conducted by the Issuer
or the Paying Agent/Registrar. Neither the Issuer nor the Paying Agent/Registrar will have any responsibility to DTC participants,
indirect participants or the persons for whom DTC participants act as nominees, with respect to the payments on the Certificates
or the providing of notice to DTC participants, indirect participants, or Beneficial Owners of the selection of portions of the
Certificates for redemption. (See "BOOK-ENTRY-ONLY SYSTEM" herein.)
Payment Record
The Town has never defaulted on the payment of any debt obligations.
Legality
The Certificates are offered when, as and if issued, subject to the approval by the Attorney General of the State of Texas and the
rendering of an opinion by Bracewell LLP, Dallas, Texas. The legal opinion of Bond Counsel will accompany the global
Certificates to be deposited with DTC or will be printed on the Certificates should the Book-Entry-Only System be discontinued.
A Form of the legal opinion of Bond Counsel appears in Appendix C attached hereto.
Tax Rate Limitations
All taxable property within the Town is subject to the assessment, levy and collection by the Town of a continuing, direct ad valorem
tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law.
Article XI, Section 5, of the Texas Constitution, applicable to cities of more than 5,000 population, is applicable to the Town, and
limits the maximum ad valorem tax rate of the Town to $2.50 per $100 taxable assessed valuation for all Town purposes.
Administratively, the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all
general obligation debt service, as calculated at the time of issuance and based on a 90% collection factor.
Defeasance
The Ordinance relating to the Certificates provides that the Town may discharge its Certificates to the registered owners of any
of all of the Certificates to pay principal, interest and redemption price thereon in any manner permitted by law. Under current
Texas law, such discharge may be accomplished by either by (i) depositing with the Comptroller of Public Accounts of the State
of Texas a sum of money equal to the principal of, premium if any, and all interest to accrue on the Obligations to maturity or
prior redemption or (ii) by depositing with a paying agent, or other authorized escrow agent, amounts sufficient to provide for the
payment and/or redemption of the Obligations; provided that such deposits may be invested and reinvested only in (a) direct,
noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United
States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including
obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated as to investment
quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, and (c) noncallable obligations of a
state or an agency or a county, municipality or other political subdivision of a state that have been refunded and that are rated as
to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent; or (iii) any
combination of (i) and (ii) above. The foregoing obligations may be in book-entry form, and shall mature and/or bear interest
payable at such times and in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of the
Certificates, as the case may be. If any of the Certificates are to be redeemed prior to their respective dates of maturity,
provision must have been made for the payment to the registered owners of such Certificates at the date of maturity or prior
redemption of the full amount to which such owner would be entitled and for giving notice of redemption as provided in the
respective Ordinances.
There is no assurance that the current law will not be changed in a manner which would permit investments other than those
described above to be made with amounts deposited to defease the Certificates. Because the respective Ordinances do not
contractually limit such investments, registered owners may be deemed to have consented to defeasance with such other
investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently
permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Government Securities
or that for any other Government Security will be maintained at any particular rating category.
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Under Current State Law, upon such deposit as described above, such Certificates shall no longer be regarded to be outstanding
or unpaid and will cease to be outstanding obligations secured by the Ordinances or treated as debt of the Town for purposes
of taxation or applying any limitation on the Town’s ability to issue debt or for any other purpose. After firm banking and
financial arrangements for the discharge and final payment or redemption of the Certificates have been made as described
above, all rights of the Town to initiate proceedings to call the Certificates for redemption or take any other action amending the
terms of the Certificates are extinguished; provided, however, that the right to call the Certificates for redemption is not
extinguished if the Town: (i) in the proceedings providing for the firm banking and financial arrangements, expressly reserves the
right to call the Certificates for redemption; (ii) gives notice of the reservation of that right to the owners of the Certificates
immediately following the making of the firm banking and financial arrangements; and (iii) directs that notice of the reservation be
included in any redemption notices that it authorizes
Amendments to the Ordinance
The Town may amend the Ordinance without consent of or notice to any Owners, from time to time and at any time, amend the
Ordinance in any manner not detrimental to the interests of the Owners, including the curing of any ambiguity, inconsistency, or
formal defect or omission herein. In addition, the Town may, with the written consent of the Owners of the Certificates holding a
majority in aggregate principal amount of the Certificates then outstanding, amend, add to, or rescind any of the provisions of the
Ordinances; provided that, without the consent of all Owners of outstanding Certificates, no such amendment, addition, or
rescission shall (i) extend the time or times of payment of the principal of and interest on the Certificates, reduce the principal
amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the
principal of or interest on the Certificates, (ii) give any preference to any Certificate over any other required, or (iii) reduce the
aggregate principal amount of Certificates required to be held by Owners for consent to any such amendment, addition, or
rescission.
Default and Remedies
The Ordinance authorizing the issuance of the Certificates establishes the following Events of Default with respect to the
Certificates: (i) failure to make payment of principal of or interest on any of the Certificates when due and payable; or (ii) defaults
in the observance or performance of any other of the covenants, conditions or obligations set forth in the Ordinance which
materially and adversely affects the rights of the related Owners, including but not limited to their prospect or ability to be repaid
in accordance with the Ordinances, and the continuation thereof for a period of sixty days after notice of such default is given by
any Owner to the Town. Under State law, there is no right to the acceleration of maturity of the Certificates upon an event of default
under the Ordinance.
Although a registered Owner could presumably obtain a judgment against the Town if a default occurred in any payment of the
principal of or interest on any such Certificates, such judgment could not be satisfied by execution against any property of the
Town. Such registered Owner’s only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to
compel the Town to assess and collect an annual ad valorem tax sufficient to pay principal of and interest on the Certificates as
they become due. The enforcement of any such remedy may be difficult and time consuming and a registered owner could be
required to enforce such remedy on a periodic basis. No assurance can be given that a mandamus or other legal action to enforce
a default under the Ordinances would be successful.
The Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W. 3rd 325 (Tex. 2006), that a waiver of governmental immunity
in a contractual dispute must be provided for by statute in “clear and unambiguous” language. Because it is unclear whether the
Texas legislature has effectively waived the Town’s governmental immunity from a suit for money damages, registered owners
may not be able to bring such a suit against the Town for breach of the Obligations or covenants in the Ordinances. Even if a
judgment against the Town could be obtained, it could not be enforced by direct levy and execution against the Town’s property.
Further, the registered owners cannot themselves foreclose on property within the Town or sell property within the Town to enforce
the tax lien on taxable property to pay the principal of and interest on the Certificates.
On April 1, 2016, the Texas Supreme Court ruled in Wasson Interests, Ltd. v. City of Jacksonville, 59 Tex. Sup. Ct. J. 524 (Tex.
2016) that governmental immunity does not imbue a Town with derivative immunity when it performs proprietary, as opposed to
governmental, functions in respect to contracts executed by a Town. Texas jurisprudence has generally held that proprietary
functions are those conducted by a Town in its private capacity, for the benefit only of those within its corporate limits, and not as
an arm of the government or under the authority or for the benefit of the state. In Wasson, the Court recognized that the distinction
between governmental and proprietary functions is not clear. Therefore, in considering municipal breach of contract cases, it is
incumbent on the courts to determine whether a function is proprietary or governmental based upon the common law and statutory
guidance. Issues related to the applicability of governmental immunity as they relate to the issuance of municipal debt have not
been adjudicated. Each situation will be evaluated based on the facts and circumstances surrounding the contract in question.
Chapter 1371, Texas Government Code (“Chapter 1371”), which pertains to the issuance of public securities by issuers such as
the Town, permits the Town to waive sovereign immunity in the proceedings authorizing its bonds, but in connection with the
issuance of the Bonds, the Town is not using the authority provided by Chapter 1371 and has not waived sovereign immunity in
the proceedings authorizing the Certificates.
The Ordinance does not provide for the appointment of a trustee to represent the interest of the holders of the Certificates upon
any failure of the Town to perform in accordance with the terms of the Ordinance, or upon any other condition. Furthermore, the
Town is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although Chapter 9
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provides for the recognition of a security interest represented by a specifically pledged source or revenues, the pledge of ad
valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under
Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the
prosecution of any other legal action by creditors or Bondholders of an entity which has sought protection under Chapter 9.
Therefore, should the Town avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval
of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court);
and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought
before it. The opinions of Bond Counsel will note that the rights of holders of the Certificates are subject to the applicable provisions
of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and
may be limited by general principles of equity which permit the exercise of judicial discretion.
REGISTRATION, TRANSFER AND EXCHANGE
Paying Agent/Registrar
The initial Paying Agent/Registrar for the Certificates is BOKF, NA, Dallas, Texas. In the Ordinance, the Issuer retains the right
to replace the Paying Agent/Registrar. If the Paying Agent/Registrar is replaced by the Issuer, the new Paying Agent/Registrar
shall accept the previous Paying Agent/Registrar’s records and act in the same capacity as the previous Paying Agent/Registrar.
The Town covenants to maintain and provide a Paying Agent/Registrar at all times until the Certificates are duly paid. Any
successor Paying Agent/Registrar, selected at the sole discretion of the Issuer, shall be a bank, trust company, financial institution
or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar.
Upon a change in the Paying Agent/Registrar for the Certificates, the Issuer agrees to promptly cause written notice thereof to be
sent to each registered owner of the Certificates by United States mail, first-class, postage prepaid.
In the event use of the Book-Entry-Only System should be discontinued, interest on the Certificates shall be paid to the
registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date
(hereinafter defined), and such interest shall be paid (i) by check sent United States Mail, first class postage prepaid to the
address of the registered owner recorded in the registration books of the Paying Agent/Registrar or (ii) by such other method,
acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner.
The Certificates will be issued in fully registered form in multiples of $5,000 for any one stated maturity, and principal and
semiannual interest will be paid by the Paying Agent/Registrar. Interest will be paid by check mailed on each interest payment by
the Paying Agent/Registrar to the registered owner at the last known address as it appears on the Paying Agent/Registrar’s books
or by such other method, acceptable to the Paying Agent/Registrar, requested by and at the risk and expense of the registered
owner. Principal will be paid to the registered owner at its stated maturity or its prior redemption upon presentation to the Paying
Agent/Registrar at its designated office in Dallas, Texas; provided, however, that so long as DTC’s Book-Entry-Only System is
utilized, all payments will be made as described under "BOOK-ENTRY-ONLY SYSTEM" herein. If the date for the payment of the
principal of or interest on the Certificates shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the
town where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment
shall be the next succeeding day which is not such a day and payment on such date shall have the same force and effect as if
made on the original date payment was due.
Record Date
The record date (“Record Date”) for interest payable to the registered owner of a Certificate on any interest payment date means
the fifteenth (15th) day of the month next preceding such interest payment date.
In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (a “Special Record Date”) will be established by the Paying Agent/Registrar, if and when funds for the payment
of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the
past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the
Special Record Date by United States mail, first class postage prepaid, to the address of each registered owner of an Obligation
appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding
the date of mailing of such notice.
Future Registration
The Certificates are initially to be issued utilizing the Book-Entry-Only System of The Depository Trust Company, New York, New
York (“DTC”). In the event such Book-Entry-Only System should be discontinued, printed certificates will be issued to the owners
of the Certificates and thereafter, the Certificates may be transferred, registered, and assigned on the registration books of the
Paying Agent/Registrar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar, and such
registration and transfer shall be without expense or service charge to the registered owner, except for any tax or other
governmental charges required to be paid with respect to such registration and transfer. A Certificate may be assigned by the
execution of an assignment form on the Certificate or by other instrument of transfer and assignment acceptable to the Paying
Agent/Registrar. A new Certificate or Certificates will be delivered by the Paying Agent/Registrar in lieu of the Certificates being
transferred or exchanged at the designated office of the Paying Agent/Registrar, or sent by United States registered mail to the
new registered owner at the registered owner’s request, risk and expense. New Certificates issued in an exchange or transfer of
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Certificates will be delivered to the registered owner or assignee of the registered owner in not more than three (3) business days
after the receipt of the Certificates to be canceled in the exchange or transfer and the written instrument of transfer or request for
exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar.
New Certificates registered and delivered in an exchange or transfer shall be in denominations of $5,000 for any one stated
maturity or any integral multiple thereof and for a like aggregate principal amount and rate of interest as the Certificate or
Certificates surrendered for exchange or transfer. (See “BOOK-ENTRY-ONLY SYSTEM” herein for a description of the system
to be initially utilized in regard to ownership and transferability of the Certificates.)
Limitation on Transferability
Neither the Issuer nor the Paying Agent/Registrar shall be required to transfer or exchange any Certificates or any portion thereof
during the period commencing with the close of business on any Record Date and ending with the opening of business on the
next following principal or interest payment date. Neither the Issuer nor the Paying Agent/Registrar shall be required to transfer
or exchange any Certificate during the period commencing with the close of business on any Record Date immediately preceding
a principal or interest payment date for such Certificate and ending with the opening of business on the next following principal or
interest payment date; or with respect to any Certificate or portion thereof called for redemption prior to maturity, within 45 days
prior to its redemption date, provided, however, such limitation of transfer shall not be applicable to an exchange by the registered
owner of the uncalled balance of an Certificate.
Replacement Certificates
If any Certificate is mutilated, destroyed, stolen or lost, a new Certificate in the same principal amount as the Certificate so
mutilated, destroyed, stolen or lost will be issued. In the case of a mutilated Certificate, such new Certificate will be delivered only
upon surrender and cancellation of such mutilated Certificate. In the case of any Certificate issued in lieu of an substitution for an
Certificate which has been destroyed, stolen or lost, such new Certificate will be delivered only (a) upon filing with the Town and
the Paying Agent/Registrar a certificate to the effect that such Certificate has been destroyed, stolen or lost and proof of the
ownership thereof, and (b) upon furnishing the Town and the Paying Agent/Registrar with indemnity satisfactory to them. The
person requesting the authentication and delivery of a new Certificate must pay such expenses as the Paying Agent/Registrar
may incur in connection therewith.
BOOK-ENTRY-ONLY SYSTEM
This section describes how ownership of the Certificates is to be transferred and how the principal of, premium, if any, and interest on
the Certificates are to be paid to and credited by DTC while the Certificates are registered in its nominee name. The information in this
section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this
Official Statement. The Town and the Financial Advisor believe the source of such information to be reliable, but take no responsibility
for the accuracy or completeness thereof.
The Town cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Certificates, or
redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or
its nominee (as the registered owner of the Certificates), or redemption or other notices, to the Beneficial Owners, or that they will do
so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to
DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC
Participants are on file with DTC.
DTC will act as securities depository for the Certificates. The Certificates will be issued as fully registered securities registered in
the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative
of DTC. One fully registered certificate will be issued for each maturity of the Certificates, in the aggregate principal amount of
each maturity, and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100
countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among
Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry
transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing
Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to
the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,
and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has a Standard & Poor's rating of “AAA+”. The DTC Rules applicable to its Participants are on file
with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
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Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for
the Certificates on DTC’s records. The ownership interest of each actual purchaser of Certificates (“Beneficial Owner”) is in turn
to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC
of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of
Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Certificates representing
their ownership interests in Certificates, except in the event that use of the book-entry system for the Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are registered in the name of DTC’s
partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit
of Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Certificates may wish
to take certain steps to augment the transmission to then of notices of significant events with respect to the Certificates, such as
defaults and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to
ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners.
In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent/Registrar and request
that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Certificates within a maturity are being redeemed, DTC’s practice
is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede
& Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in
accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose
accounts Certificates are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).
All payments on the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding
detail information from the Issuer or Paying Agent/Registrar, on payable date in accordance with their respective holdings shown
on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will
be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent/Registrar, or the Issuer, subject to any
statutory or regulatory requirements as may be in effect from time to time. All payments to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) are the responsibility of the Issuer or Paying Agent/Registrar,
disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving
reasonable notice to the Issuer or Paying Agent/Registrar. Under such circumstances, in the event that a successor securities
depository is not obtained, Certificates are required to be printed and delivered to DTC Participants or the Beneficial Owners, as
the case may be.
The Issuer may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities
depository). In that event, Certificates will be printed and delivered. (See "REGISTRATION, TRANSFER, AND EXCHANGE"
herein.)
Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy
or completeness by, and is not to be construed as a representation by the Town, the Financial Advisor, or the initial purchaser of
the Certificates.
Use of Certain Terms in Other Sections of this Official Statement
In reading this Official Statement it should be understood that while the Certificates are in the Book-Entry-Only System, references
in other sections of this Official Statement to registered owners should be read to include the person for which the Direct or Indirect
Participant acquires an interest in the Certificates, but (i) all rights of ownership must be exercised through DTC and the Book-
Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinances
will be given only to DTC.
Effect of Termination of Book-Entry-Only System
In the event that the Book-Entry-Only System is discontinued by DTC or the use of the Book-Entry-Only System is discontinued
by the Town, printed Certificates will be issued to the holders and the Certificates will be subject to transfer, exchange and
registration provisions as set forth in the Ordinance and summarized under "REGISTRATION, TRANSFER AND EXCHANGE"
supra.
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INVESTMENT AUTHORITY AND INVESTMENT PRACTICES OF THE ISSUER
In accordance with the Town of Trophy Club and the Public Funds Investment Act, the Town Council designates the Director of
Finance as the Town of Trophy Club’s Investment Officer. The Investment Officer is authorized to execute investment
transactions on behalf of the Town of Trophy Club and may designate a secondary investment officer to act in his/her absence.
No other person may engage in an investment transaction or the management of the Town of Trophy Club funds except as
provided under the terms of this Investment Policy. The investment authority granted to the investing officer is effective until
rescinded.
Under State law, the Town is authorized to invest in (1) obligations, including letters of credit, of the United States or its agencies
and instrumentalities, including the Federal Home Loan Banks; (2) direct obligations of the State or its agencies and
instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States,
the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) 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 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; (5) obligations of states,
agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized
investment rating firm not less than “A” or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7)
interest-bearing banking deposits that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor,
or the National Credit Union Share Insurance Fund or its successor; (8) interest-bearing banking deposits other than those
described by clause (7) if (A) the funds invested in the banking deposits are invested through: (i) a broker with a main office or
branch office in this State that the Town selects from a list the Town Council or a designated investment committee of the Town
adopts as required by Section 2256.025, Texas Government Code; or (ii) a depository institution with a main office or branch office
in the State that the Town selects; (B) the broker or depository institution selected as described by (A) above arranges for the
deposit of the funds in the banking deposits in one or more federally insured depository institutions, regardless of where located,
for the Town’s account; (C) the full amount of the principal and accrued interest of the banking deposits is insured by the United
States or an instrumentality of the United States; and (D) the Town appoints as the Town’s custodian of the banking deposits
issued for the Town’s account: (i) the depository institution selected as described by (A) above; (ii) an entity described by Section
2257.041(d), Texas Government Code; or (iii) a clearing broker dealer registered with the SEC and operating under SEC Rule
15c3-3; (9) (i) certificates of deposit or share certificates meeting the requirements of Chapter 2256, Texas Government Code (the
“Public Funds Investment Act”), that are issued by an institution that has its main office or a branch office in the State and are
guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or their
respective successors, and are secured as to principal by obligations described in clauses (1) through (8) or in any other manner
and provided for by law for Town deposits, or (ii) certificates of deposits where (a) the funds are invested by the Town through (A)
a broker that has its main office or a branch office in the State and is selected from a list adopted by the Town as required by law,
or (B) a depository institution that has its main office or branch office in the State that is selected by the Town, (b) the broker or
the depository institution selected by the Town 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, (c) 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 (d) the Town appoints the depository institution selected under (a) above, a custodian as described by Section 2257.041(d),
Texas Government Code, or a clearing broker-dealer registered with the SEC and operating pursuant to SEC Rule 15c3-3 (17
C.F.R. Section 240.15c3-3) as custodian for the Town with respect to the certificates of deposit; (10) fully collateralized repurchase
agreements as defined in the Public Funds Investment Act, that have a defined termination date, are secured by a combination of
cash and obligations described in clauses (1) or (13) in this paragraph, require the securities being purchased by the Town or
cash held by the Town to be pledged to the Town, held in the Town’s name, and deposited at the time the investment is made
with the Town or with a third party selected and approved by the Town, and are placed through a primary government securities
dealer, as defined by the Federal Reserve, or a financial institution doing business in the State; (11) securities lending programs
if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at
any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (8)
above, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized
investment rating firm at not less than “A” or its equivalent or (c) cash invested in obligations described in clauses (1) through (8)
above, clauses (13) through (15) below, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged
to the Town, held in the Town’s name and deposited at the time the investment is made with the Town or a third party designated
by the Town; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial
institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less; (12) certain bankers’
acceptances with stated maturity of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated not
less than “A-1” or “P-1” or the equivalent by at least one nationally recognized credit rating agency; (13) commercial paper with a
stated maturity of 365 days or less that is rated not less than “A-1” or “P-1” or the equivalent by either (a) two nationally recognized
credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of
credit issued by a United States or state bank; (14) no-load money market mutual funds registered with and regulated by the SEC
that provide the Town with a prospectus and other information required by the Securities Exchange Act of 1934 or the Investment
Company Act of 1940 and that comply with federal SEC Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated under the
Investment Company Act of 1940 (15 U.S.C. Section 80a- 1 et seq.); and (15) no-load mutual funds registered with the SEC that
have an average weighted maturity of less than two years, and h ave either (a) a duration of one year or more and invest exclusively
in obligations described in under this heading, or (b) a duration of less than one year and the investment portfolio is limited to
investment grade securities, excluding asset-backed securities. In addition, bond proceeds may be invested in guaranteed
9
investment contracts that have a defined termination date and are secured by obligations, including letters of credit, of the United
States or its agencies and instrumentalities, other than the prohibited obligations described below, in an amount at least equal to
the amount of bond proceeds invested under such contract.
Governmental bodies in the State are authorized to invest in securities lending programs if (i) the securities loaned under the
program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the
program is either secured by (a) obligations that are described in clauses (1) through (6) of the second paragraph under this
caption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized
investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1)
through (6) and (10) through (12) of the second paragraph under this caption, or an authorized investment pool; (ii) securities
held as collateral under a loan are pledged to the governmental body, held in the name of the governmental body and deposited
at the time the investment is made with the Town or a third party designated by the Town; (iii) a loan made under the program is
placed through either a primary government securities dealer or a financial institution doing business in the State of Texas; and
(iv) the agreement to lend securities has a term of one year or less.
The Town may invest in such obligations directly or through government investment pools that invest solely in such obligations
provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating
service. The Town may also contract with an investment management firm registered under the Investment Advisers Act of
1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its
public funds or other funds under its control for a term up to two years, but the Town retains ultimate responsibility as fiduciary of
its assets. In order to renew or extend such a contract, the Town must do so by order, ordinance, or resolution. The Town is
specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding
principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment
represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3)
collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage
obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.
Under Texas law, the Town is required to invest its funds under written investment policies that primarily emphasize safety of
principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment
management; and that include a list of authorized investments for Town funds, the maximum allowable stated maturity of any
individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups, methods to monitor
the market price of investments acquired with public funds, a requirement for settlement of all transactions, except investment
pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments
acquired with public funds and the liquidation of such investments consistent with the PFIA. All Town funds must be invested
consistent with a formally adopted “Investment Strategy Statement” that specifically addresses each fund’s investment. Each
Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and
safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield.
Under Texas law, the Town’s investments must be made “with judgment and care, under prevailing circumstances, that a person
of prudence, discretion, and intelligence would exercise in the management of the person’s own affairs, not for speculation, but
for investment considering the probable safety of capital and probable income to be derived.” At least quarterly the Town’s
investment officers must submit an investment report to the Town Council detailing: (1) the investment position of the Town, (2)
that all investment officers jointly prepared and signed the report, (3) the beginning market value, the ending market value, and
the fully accrued interest for the reporting period of each pooled fund group, (4) the book value and market value of each
separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset,
(6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the
investment portfolio as it relates to: (a) adopted investment strategies and (b) Texas law.
Under State law, the Town is additionally required to: (1) annually review its adopted policies and strategies, (2) adopt a rule,
order, ordinance or resolution stating that it has reviewed its investment policy and investment strategies and records any
changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution, (3)
require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the entity
to disclose the relationship and file a statement with the Texas Ethics Commission and the Town Council; (4) require the
qualified representative of firms offering to engage in an investment transaction with the Town to: (a) receive and review the
Town’s investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude
investment transactions conducted between the Town and the business organization that are not authorized by the Town’s
investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the Town’s entire
portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement in a form acceptable
to the Town and the business organization attesting to these requirements; (5) perform an annual audit of the management
controls on investments and adherence to the Town’s investment policy; (6) provide specific investment training for the Town’s
designated Investment Officer; (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment
of reverse repurchase agreement funds to no greater than the term of the reverse purchase agreement; (8) restrict the
investment in no-load mutual funds in the aggregate to no more than 15% of the Town’s monthly average fund balance,
excluding bond proceeds and reserves and other funds held for debt service; (9) require local government investment pools to
conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements, and (10) at least
annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the
Town.
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Current Investments
As of June 30, 2021, the following percentages of the Town’s investable funds were invested in the following categories of
investments.
Investment Description Total Invested Percent
TexPool Investment Pool Accounts $5,423,012.35 30.62%
InterBank CDRS 8,504,149.15 48.03%
Wells Fargo Checking Account 1,662,499.87 9.40%
Texas Class 2,116,272.94 11.95%
Total $17,705,934.31 100.000%
As of such date, the market value of such investments (as determined by the Town by reference to published quotations, dealer
bids, and comparable information) was approximately 100% of their book value. No funds of the Town are invested in derivative
securities, i.e., securities whose rate of return is determined by reference to some other instrument, index, or commodity.
EMPLOYEE BENEFITS
Pension Plan
Plan Description and Benefits Provided
The Town of Trophy Club, Texas participates as one of 887 plans in the nontraditional, joint contributory, hybrid defined benefit
pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency 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 municipal employees in the State of Texas.
All eligible employees of the Town are required to participate in TMRS.
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 benefit is calculated as if the sum of the employee’s contributions, with interest, and the town-financed monetary
credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven
payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount
equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest.
The plan provisions are adopted by the governing body of the Town, within the options available in the state statutes governing
TMRS and within the actuarial constraints also in the statutes. Plan provisions for the Town were as follows:
Employee deposit rate 7%
Matching ratio (Town to Employee) 2 to 1
Years required for vesting 5
Service retirement eligibility 60/5, 0/20
Updated Service Credit 100% Repeating, Transfers
Annuity Increase (to retirees) 30% of CPI Repeating
The Town also participates in Social Security.
At the December 31, 2019 valuation and measurement date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 40
Inactive employees entitled but not yet receiving benefits 109
Active employees 77
Total 226
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, 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 actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees
during the year, with an additional amount to finance any unfunded accrued liability.
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Employees for the Town of Trophy Club, Texas were required to contribute 7% of their annual gross earnings during the fiscal
year. The contribution rates for the Town of Trophy Club, Texas were 12.95% and 13.09% in calendar years 2019 and 2020,
respectively. The Town’s contributions to TMRS for the year ended September 30, 2020, were $719,013 and were equal to the
required
contributions.
Net Pension Liability
The Town’s Net Pension Liability (NPL) was measured as of December 31, 2019, 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, 2019 actuarial valuation was determined using the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 3.5% to 10.5%, including inflation
Investment Rate of Return 6.75% net of pension plan investment expense, including inflation
Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based
on the gender-distinct RP2000 Combined Healthy Mortality Table, with male rates multiplied by 109% and female rates multiplied
by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For
disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with
males rates multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In
addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled. The rates
are projected on a fully generational basis by scale BB 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, 2010 to December 31, 2014. They were adopted in 2015 and first used in the December 31, 2015
actuarial valuation. The postretirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based
on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. In conjunction with
these changes first used in the December 31, 2013 valuation, the System adopted the Entry Age Normal actuarial cost method
and a one-time change to the amortization policy. Plan assets are managed on a total return basis with an emphasis on both
capital appreciation as well as the production of income in order to satisfy the short-term and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments is 6.75%. The pension plan’s policy in regard to the allocation
of invested assets is established and may be amended by the TMRS Board of Trustees. Plan assets are managed on a total
return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term
and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best
estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation)
are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In
determining their best estimate of a recommended investment return assumption under the various alternative asset allocation
portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and
(2) the geometric mean (conservative) with an adjustment for time (aggressive).
The target allocation and best estimates of real rates of return for each major asset class in fiscal year 2020 are summarized in
the following table:
Asset Class
Target
Allocation
Long-Term Expected
Real Rate of Return
(Arithmetic)
Global Equity 30.0% 5.30%
Core Fixed Income 10.0% 1.25%
Non-Core Fixed Income 20.0% 4.14%
Real Return 10.0% 3.85%
Real Estate 10.0% 4.00%
Absolute Return 10.0% 3.48%
Private Equity 10.0% 7.75%
Total 100.00%
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 employee contributions will remain at the current 7.0% and employer contributions will be made at the
rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to
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make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension
plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability.
Changes in Net Pension
Liability
Total Pension
Liability (a)
Plan Fiduciary
Net Position (b)
Net Pension
Liability (a) – (b)
Balance at 12/31/2018 $ 19,854,961 $17,072,317 $ 2,782,644
Changes for the year:
Service Cost 980,663 980,663
Interest 1,354,175 1,354,175
Changes in benefit terms
Difference between expected
and actual experience
(3,497)
(3,497)
Changes in assumptions (802) (802)
Contributions - employer 710,975 (710,975)
Contributions – employee 384,574 (384,574)
Net Investment Income 2,642,216 (2,642,216)
Benefit payments, including
refunds of employee
contributions
(566,895)
(566,895)
Administrative expense (14,914) 14,914
Other Changes (448) 448
Net Changes 1,763,644 3,155,508 (1,391,864)
Balance at 12/31/2019 $ 21,618,605 20,227,825 $ 1,390,780
The following presents the net pension liability of the Town, calculated using the discount rate of 6.75%, as well as what the Town’s
net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or 1-percentage-
point higher (7.75%) than the current rate:
1% Decrease in
Discount Rate
Current
Discount Rate
1% Increase in
Discount Rate
Town’s net pension liability $4,820,954 $1,390,780 $1,374,467
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued TMRS financial report.
That report may be obtained on the Internet at www.tmrs.com.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions:
For the year ended September 30, 2020, the Town recognized an increase in pension expense of $615,030. This amount is
included as part of expenses within the functional program activities.
At September 30, 2020, the Town reported deferred outflows and inflows of resources related to pensions from the following
sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Difference between projected and actual investment earnings $ 609,044
Changes in actuarial assumptions 550
Differences between expected and actual economic experience 115,038
Contributions subsequent to the measurement date $ 539,353
Total $ 539,353 $ 724,632
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Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date of $539,353
will be recognized as a reduction of the net pension liability for the year ending September 30, 2021. Other amounts reported as
deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:
Measurement Year
Ended Dec 31
2020 $ (261,395)
2021 (202,532)
2022 37,262
2023 (297,967)
2024 0
Thereafter
$ (724,632)
Other Post-Employment Benefits
Plan Description
The Town provides post-employment medical, dental, and vision benefits (OPEB) for eligible retirees, their spouses and
dependents through a single-employer plan with United Healthcare, which covers both active and retired members.
The retiree pays 195% of the active participant contribution rate for the coverage selected.
As of September 30, 2020, membership consisted of:
Retirees or beneficiaries currently receiving benefits
Active employees 67
Total 67
The three optional benefit levels, Plan 05X8617, 05X8569 and 05X8589, are the same for retirees as those afforded to active
employees. Regular full-time employees retiring from the Town have the option to continue medical insurance coverage until the
retiree becomes eligible for Medicare or is eligible to be covered under another medical plan.
Funding Policy
The benefit levels and contribution rates are approved annually by the Town management and the Town Council as part of the
budget process. By the Town not contributing anything toward this plan in advance, the Town employs a pay-as-you-go method
through ensuring the annual retiree contributions are equal to the benefits that are paid on behalf of the retirees.
The monthly retiree health coverage contribution rates for offered benefit levels are as follows:
High Plan
05X8589
Standard Plan
05X8569
HSA Plan
05X8617
Single Coverage $ 488 $ 440 $ 330
Single + Spouse 1,302 1,174 881
Single + Children 923 832 625
Single + Family 1,641 1,479 1,111
An irrevocable trust has not been established; therefore, the plan is not accounted for as a trust fund. The plan does not issue a
separate financial report.
The following table shows the components of the Town’s annual OPEB expense for the year, the amount contributed to the
plan, and changes in the Town’s net OPEB liability.
Annual OPEB Expense and Net OPEB Liability
The Town’s annual OPEB cost is calculated based on actuarially assumptions determined in accordance with the parameters of
GASB 75.
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The following table shows the components of the Town’s annual OPEB expense for the year, the amount contributed to the
plan, and changes in the Town’s net OPEB liability.
Service Cost $ 5,389
Interest Cost 2,624
Difference between expected and actual exp (1,194)
Changes in assumptions (6,481)
Annual OPEB cost expense 338
Contributions made -
Change in net OPEB liability 338
Net OPEB Liability-beginning of year 59,249
Net OPEB Liability-end of year $ 59,587
At the December 31, 2019 valuation and measurement date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving
benefits
27
Inactive employees entitled to but not yet receiving
benefits
29
Active employees 77
Total 133
The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB liability for 2020
and the preceding year are as follows:
Fiscal
Annual
OPEB
Percentage of
Annual OPEB
Net
OPEB
Liability
Year Expense Cost Contributed Beginning Ending
2018 $7,198 0.00% $ 44,561 $ 51,759
2019 7,490 0.00% 51,759 59,249
2020 338 0.00% 59,249 59,587
Funded Status and Funding Progress
As of September 30, 2019, the actuarial accrued liability for benefits was $59,587, all of which was unfunded. The actuarial accrued
liability for benefits was determined based on the September 30, 2020 valuation, the most recent actuarial valuation date available.
The covered payroll (annual payroll of active employees covered by the plan) for fiscal year 2020 was $5,449,088, and the ratio
of the unfunded actuarial accrued liability to the covered payroll was 1.09%.
Actuarial valuations of an ongoing program involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the
healthcare cost trend.
Amounts determined regarding the funded status of the Program and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend
information about whether the actuarial value of Program, assets is increasing or decreasing over time relative to the actuarial
accrued liabilities for benefits.
Actuarial Methods and Assumptions:
The Net OPEB Liability in the September 30, 2020 actuarial valuation was determined using the following actuarial assumptions:
Inflation 3.0% per year
Health care cost trend Level 5.00%
Discount rate 2.25% (-0.25% real rate of return plus 2.50% inflation)
Salary scale 3.50%
Mortality RPH-2014 Total Table with Projection MP-2019
Projections of benefits are based on a substantive plan (the plan understood by the employer and plan members) and include the
type of benefits in force at the valuation date and the pattern of sharing benefits between the Town and the plan members at that
point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial
accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations.
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The GASB statement requires that the discount rate used to determine the plan liabilities for retiree healthcare benefits be based
on the earnings rate of the plan assets if the projected assets are sufficient to cover the projected benefit payments. If the projected
assets are not sufficient then a municipal bond index rate must be used for discounting benefits not covered by the projected
assets. Since there are no plan assets held in trust the Bond Buyer GO Bond 20 Index is used for determining the discount rate
of 4.06%.
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 both the trend and discount rate of 4.5% and
2.25%, respectively, as well as what the Town’s total OPEB liability (asset) would be if it were calculated using a discount rate
that is 1-percentage-point lower or 1- percentage-point higher than the current rate:
Trend Rate
1% Decrease
3.50%
Current Single Rate
Assumption 4.50%
1% Increase
5.50%
$50,799 $59,587 $70,147
Discount Rate
1% Decrease
1.25%
Current Single Rate
Assumption 2.25%
1% Increase
3.25%
$53,067 $59,587 $66,852
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At September 30, 2020, the Town reported deferred outflows of resources and deferred inflows of resources related to the
OPEB liability from the following sources:
Deferred Inflows
of Resources
Differences between expected and actual experience $ 1,042
Changes in assumptions 5,656
Total $ 6,698
The Town reported no deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement
date that will be recognized as a reduction of the net OPEB liability for the year ending September 30, 2021.
Other amounts reported as deferred outflows of resources related to OPEB will be recognized in OPEB expense as follows:
Year ended December 31:
2021 $ (977)
2022 (977)
2023 (977)
2024 (977)
2025 (977)
Thereafter (1,813)
$(6,698)
Aggregate Amount of OPEB Expense and Deferred Outflows and Inflows of Resources
The following summaries the aggregate amount of OPEB expense and deferred outflows and inflows of resources for fiscal year
ending September 30, 2020.
SDBF Healthcare Total
OPEB Liability $ (251,655)$ (59,587) $ (311,242)
OPEB contributions 824 - 824
OPEB experience 35,374 (1,042) 34,332
OPEB change in assumptions (4,195) (5,656) (9,851)
OPEB expense 29,354 7,036 36,390
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AD VALOREM TAX PROCEDURES
The following is a summary of certain provisions of State law as it relates to ad valorem taxation and is not intended to be complete.
Reference is made to Title I of the Texas Tax Code, as amended (the “Property Tax Code”), for identification of property subject
to ad valorem taxation, property exempt or which may be exempted from ad valorem taxation if claimed, the appraisal of property
for ad valorem tax purposes, and the procedures and limitations applicable to the levy and collection of ad valorem taxes.
VALUATION OF TAXABLE PROPERTY . . . The Property Tax Code provides for countywide appraisal and equalization of taxable
property values and establishes in each county of the State an appraisal district and an appraisal review board (an “Appraisal
Review Board”) responsible for appraising property for all taxing units within the county. The appraisal of property within the Town
is the responsibility of the Dallas Central Appraisal District (the “Appraisal District”). Except as described below, the Appraisal
District is required to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited
from applying any assessment ratios. In determining market value of property, the Appraisal District is required to consider the
cost method of appraisal, the income method of appraisal and the market data comparison method of appraisal, and use the
method the chief appraiser of the Appraisal District considers most appropriate. The Property Tax Code requires appraisal districts
to reappraise all property in its jurisdiction at least once every three years. A taxing unit may require annual review at its own
expense, and is entitled to challenge the determination of appraised value of property within the taxing unit by petition filed with
the Appraisal Review Board.
State law requires the appraised value of an owner’s principal residence (“homestead” or “homesteads”) to be based solely on the
property’s value as a homestead, regardless of whether residential use is considered to be the highest and best use of the property.
State law further limits the appraised value of a homestead to the lesser of (1) the market value of the property or (2) 110% of the
appraised value of the property for the preceding tax year plus the market value of all new improvements to the property (the “10%
Homestead Cap”). The 10% increase is cumulative, meaning the maximum increase is 10% times the number of years since the
property was last appraised. See Table 1 for the reduction in taxable valuation attributable to the 10% Homestead Cap.
State law provides that eligible owners of both agricultural land and open-space land, including open-space land devoted to farm
or ranch purposes or open-space land devoted to timber production, may elect to have such property appraised for property
taxation on the basis of its productive capacity (“Productivity Value”). The same land may not be qualified as both agricultural and
open-space land. See Table 1 for the reduction in taxable valuation attributable to valuation by Productivity Value.
The appraisal values set by the Appraisal District are subject to review and change by the Appraisal Review Board.
The appraisal rolls, as approved by the Appraisal Review Board, are used by taxing units, such as the Town, in establishing their
tax rolls and tax rates. See “AD VALOREM PROPERTY TAXATION – Issuer and Taxpayer Remedies.”
STATE MANDATED HOMESTEAD EXEMPTIONS. . . State law grants, with respect to each taxing unit in the State, various
exemptions for disabled veterans and their families, surviving spouses of members of the armed services killed in action and
surviving spouses of first responders killed or fatally wounded in the line of duty. See Table 1 for the reduction in taxable valuation
attributable to state-mandated homestead exemptions.
LOCAL OPTION HOMESTEAD EXEMPTIONS . . . The governing body of a taxing unit, including a town, county, school district,
or special district, at its option may grant: (1) an exemption of up to 20% of the market value of all homesteads (but not less than
$5,000) and (2) an additional exemption of the market value of the homesteads of persons 65 years of age or older and the
disabled. Each taxing unit decides if it will offer the local option homestead exemptions and at what percentage or dollar amount,
as applicable. See “AD VALOREM PROPERTY TAXATION – Town Application of Tax Code” and Table 1 for the reduction in
taxable valuation of the Town attributable to local option homestead exemptions.
LOCAL OPTION FREEZE FOR THE ELDERLY AND DISABLED . . . The governing body of a county, municipality or junior
college district may, at its option, provide for a freeze on the total amount of ad valorem taxes levied on the homesteads of persons
65 years of age or older or of disabled persons above the amount of tax imposed in the year such residence qualified for such
exemption. Also, upon voter initiative, an election may be held to determine by majority vote whether to establish such a freeze
on ad valorem taxes. Once the freeze is established, the total amount of taxes imposed on such homesteads cannot be increased
except for certain improvements, and such freeze cannot be repealed or rescinded. The Town has established an ad valorem tax
freeze on the residence homesteads of persons 65 years of age or older and the disabled.
PERSONAL PROPERTY . . . Tangible personal property (furniture, machinery, supplies, inventories, etc.) used in the “production
of income” is taxed based on the property’s market value. Taxable personal property includes income producing equipment and
inventory. Intangibles such as goodwill, accounts receivable, and proprietary processes are not taxable. Tangible personal
property not held or used for production of income, such as household goods, automobiles or light trucks, and boats, is exempt
from ad valorem taxation unless the governing body of a taxing unit elects to tax such property.
FREEPORT EXEMPTIONS . . . Certain goods detained in the State for 175 days or less for the purpose of assembly, storage,
manufacturing, processing or fabrication (“Freeport Property”) are exempt from ad valorem taxation unless a taxing unit took
official action to tax Freeport Property before April 1,1990 and has not subsequently taken official action to exempt Freeport
Property. Decisions to continue to tax Freeport Property may be reversed in the future; decisions to exempt Freeport Property are
not subject to reversal. Certain goods, principally inventory, that are stored for the purposes of assembling, storing, manufacturing,
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processing or fabricating the goods in a location that is not owned by the owner of the goods and are transferred from that location
to another location within 175 days (“Goods–in-Transit”), are exempt from ad valorem taxation unless a taxing unit takes official
action by January 1 of the year preceding a tax year, after holding a public hearing, to tax Goods-in-Transit beginning the following
tax year. Goods-in- Transit and Freeport Property do not include oil, natural gas or petroleum products, and Goods-in-Transit does
not include special inventories such as motor vehicles or boats in a dealer’s retail inventory. A taxpayer may receive only one of
the Goods-in-Transit or Freeport Property exemptions for items of personal property. See Table 1 for the reduction in taxable
valuation, if any, attributable to Goods-in-Transit or Freeport Property exemptions.
OTHER EXEMPT PROPERTY . . . Other major categories of exempt property include property owned by the State or its political
subdivisions if used for public purposes, property exempt by federal law, property used for pollution control, farm products owned
by producers, property of nonprofit corporations used for scientific research or educational activities benefitting a college or
university, designated historic sites, solar and wind-powered energy devices, and certain classes of intangible personal property.
TAX INCREMENT FINANCING ZONES . . . A town or county, by petition of the landowners or by action of its governing body,
may create one or more tax increment financing zones (“TIRZ”) within its boundaries, and other overlapping taxing units may
agree to contribute taxes levied against the “Incremental Value” in the TIRZ to finance or pay for project costs, as defined in
Chapter 311, Texas Government Code, general located within the TIRZ. At the time of the creation of the TIRZ, a “base value” for
the real property in the TIRZ is established and the difference between any increase in the assessed valuation of taxable real
property in the TIRZ in excess of the base value is known as the “Incremental Value”, and during the existence of the TIRZ, all or
a portion of the taxes levied by each participating taxing unit against the Incremental Value in the TIRZ are restricted to paying
project and financing costs within the TIRZ and are not available for the payment of other obligations of such taxing units. See
“AD VALOREM PROPERTY TAXATION – Tax Increment Financing Zones #1 through #6 herein for descriptions of the TIRZ
created in the Town.
TAX ABATEMENT AGREEMENTS . . . Taxing units may also enter into tax abatement agreements to encourage economic
development. Under the agreements, a property owner agrees to construct certain improvements on its property. The taxing unit,
in turn, agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the
agreement. The abatement agreement could last for a period of up to 10 years.
See “AD VALOREM PROPERTY TAXATION – Tax Abatement Policy” for a general description of the Town’s tax abatement
agreements. Table 1 for the reduction in taxable valuation, if any, attributable to tax abatement agreements.
For a discussion of how the various exemptions described above are applied by the Town, see “AD VALOREM PROPERTY
TAXATION – Town Application of The Property Tax Code” herein.
TEMPORARY EXEMPTION FOR QUALIFIED PROPERTY DAMAGED BY A DISASTER . . . The Property Tax Code entitles the
owner of certain qualified (i) tangible personal property used for the production of income, (ii) improvements to real property, and
(iii) manufactured homes located in an area declared by the governor to be a disaster area following a disaster and is at least 15
percent damaged by the disaster, as determined by the chief appraiser, to an exemption from taxation of a portion of the appraised
value of the property. The amount of the exemption ranges from 15 percent to 100 percent based upon the damage assessment
rating assigned by the chief appraiser. Except in situations where the territory is declared a disaster on or after the date the taxing
unit adopts a tax rate for the year in which the disaster declaration is issued, the governing body of the taxing unit is not required
to take any action in order for the taxpayer to be eligible for the exemption. If a taxpayer qualifies for the exemption after the
beginning of the tax year, the amount of the exemption is prorated based on the number of days left in the tax year following the
day on which the governor declares the area to be a disaster area. For more information on the exemption, reference is made to
Section 11.35 of the Tax Code. Section 11.35 of the Tax Code was enacted during the 2019 legislative session, and there is no
judicial precedent for how the statute will be applied. Texas Attorney General Opinion KP-0299, issued on April 13, 2020,
concluded a court would likely find the Texas Legislature intended to limit the temporary tax exemption to apply to property
physically harmed as a result of a declared disaster.
DEBT TAX RATE LIMITATIONS . . . All taxable property within the Town is subject to the assessment, levy and collection by the
Town of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem
tax-supported debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the Town,
and limits its maximum ad valorem tax rate to $2.50 per $100 of Taxable Assessed Valuation. Administratively, the Attorney
General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all debt service on ad valorem tax-
supported debt, as calculated at the time of issuance.
TOWN’S RIGHTS IN THE EVENT OF TAX DELINQUENCIES . . . Taxes levied by the Town are a personal obligation of the
owner of the property as of January 1 of the year for which the tax is imposed. On January 1 of each year, a tax lien attaches to
property to secure the payment of all State and local taxes, penalties, and interest ultimately imposed for the year on the property.
The lien exists in favor of the State and each local taxing unit, including the Town, having power to tax the property. Personal
property, under certain circumstances, is subject to seizure and sale for the payment of delinquent taxes. At any time after taxes
on property become delinquent, the Town may file suit to foreclose the lien securing payment of the tax, to enforce personal liability
for the tax, or both. In filing a suit to foreclose a tax lien on real property, the Town must join other taxing units that have claims
for delinquent taxes against all or part of the same property. Collection of delinquent taxes may be adversely affected by the
amount of taxes owed to other taxing units, by the effects of market conditions on the foreclosure sale price, by taxpayer
redemption rights (a taxpayer may redeem property within two (2) years after the purchaser’s deed issued at the foreclosure sale
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is filed in the county records) or by bankruptcy proceedings which restrict the collection of taxpayer debts. Federal bankruptcy law
provides that an automatic stay of actions by creditors and other entities, including governmental units, goes into effect with the
filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents
liens for post-petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting
the stay is obtained from the bankruptcy court. In many cases, post-petition taxes are paid as an administrative expense of the
estate in bankruptcy or by order of the bankruptcy court.
PUBLIC HEARING AND MAINTENANCE AND OPERATIONS TAX RATE LIMITATIONS
The following terms as used in this section have the meanings provided below:
“adjusted” means lost values are not included in the calculation of the prior year’s taxes and new values are not included in the
current year’s taxable values.
“de minimis rate” means the maintenance and operations tax rate that will produce the prior year’s total maintenance and
operations tax levy (adjusted) from the current year’s values (adjusted), plus the rate that produces an additional $500,000 in tax
revenue when applied to the current year’s taxable value, plus the debt service tax rate.
“effective tax rate” means the combined maintenance and operations tax rate and debt service tax rate that will produce the prior
year’s total tax levy (adjusted) from the current year’s total taxable values (adjusted).
“no-new-revenue tax rate” means the combined maintenance and operations tax rate and debt service tax rate that will produce
the prior year’s total tax levy (adjusted) from the current year’s total taxable values (adjusted).
“rollback tax rate” means the maintenance and operations tax rate that will produce the prior year’s total maintenance and
operations tax levy (adjusted) from the current year’s values (adjusted) multiplied by 1.08, plus the debt service tax rate.
“special taxing unit” means a town for which the maintenance and operations tax rate proposed for the current tax year is 2.5 cents
or less per $100 of taxable value.
“unused increment rate” means the cumulative difference between a town’s voter-approval tax rate and its actual tax rate for each
of the tax years 2020 through 2022, which may be applied to a town’s tax rate in tax years 2021 through 2023 without impacting
the voter-approval tax rate.
“voter-approval tax rate” means the maintenance and operations tax rate that will produce the prior year’s total maintenance and
operations tax levy (adjusted) from the current year’s values (adjusted) multiplied by 1.035, plus the debt service tax rate, plus the
“unused increment rate”. The Town’s tax rate consists of two components: (1) a rate for funding of maintenance and operations
expenditures in the current year (the “maintenance and operations tax rate”), and (2) a rate for funding debt service in the current
year (the “debt service tax rate”). Under State law, the assessor for the Town must submit an appraisal roll showing the total
appraised, assessed, and taxable values of all property in the Town to the Town Council by August 1 or as soon as practicable
thereafter.
A town must annually calculate its “voter-approval tax rate” and “no-new-revenue tax rate” (as such terms are defined above) in
accordance with forms prescribed by the State Comptroller and provide notice of such rates to each owner of taxable property
within the town and the county tax assessor-collector for each county in which all or part of the town is located. A town must adopt
a tax rate before the later of September 30 or the 60th day after receipt of the certified appraisal roll, except that a tax rate that
exceeds the voter-approval tax rate must be adopted not later than the 71st day before the next occurring November uniform
election date. If a town fails to timely adopt a tax rate, the tax rate is statutorily set as the lower of the no-new-revenue tax rate for
the current tax year or the tax rate adopted by the town for the preceding tax year.
As described below, the Property Tax Code provides that if a town adopts a tax rate that exceeds its voter-approval tax rate or, in
certain cases, its “de minimis rate”, an election must be held to determine whether or not to reduce the adopted tax rate to the
voter-approval tax rate.
A town may not adopt a tax rate that exceeds the lower of the voter-approval tax rate or the no-new-revenue tax rate until each
appraisal district in which such town participates has delivered notice to each taxpayer of the estimated total amount of property
taxes owed and the town has held a public hearing on the proposed tax increase.
For cities with a population of 30,000 or more as of the most recent federal decennial census, if the adopted tax rate for any tax
year exceeds the voter-approval tax rate, that town must conduct an election on the next occurring November uniform election
date to determine whether or not to reduce the adopted tax rate to the voter-approval tax rate.
For cities with a population less than 30,000 as of the most recent federal decennial census, if the adopted tax rate for any tax
year exceeds the greater of (i) the voter-approval tax rate or (ii) the de minimis rate, the town must conduct an election on the next
occurring November uniform election date to determine whether or not to reduce the adopted tax rate to the voter-approval tax
rate. However, for any tax year during which a town has a population of less than 30,000 as of the most recent federal decennial
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census and does not qualify as a special taxing unit, if a town’s adopted tax rate is equal to or less than the de minimis rate but
greater than both (a) the no-new-revenue tax rate, multiplied by 1.08, plus the debt service tax rate or (b) the town’s voter-approval
tax rate, then a valid petition signed by at least three percent of the registered voters in the town would require that an election be
held to determine whether or not to reduce the adopted tax rate to the voter-approval tax rate.
Any town located at least partly within an area declared a disaster area by the Governor of the State or the President of the United
States during the current year may calculate its “voter-approval tax rate” using a 1.08 multiplier, instead of 1.035, until the earlier
of (i) the second tax year in which such town’s total taxable appraised value exceeds the taxable appraised value on January 1 of
the year the disaster occurred, or (ii) the third tax year after the tax year in which the disaster occurred. State law provides cities
and counties in the State the option of assessing a maximum one-half percent (1/2%) sales and use tax on retail sales of taxable
items for the purpose of reducing its ad valorem taxes, if approved by a majority of the voters in a local option election. If the
additional sales and use tax for ad valorem tax reduction is approved and levied, the no-new-revenue tax rate and voter-approval
tax rate must be reduced by the amount of the estimated sales tax revenues to be generated in the current tax year.
The calculations of the no-new-revenue tax rate and voter-approval tax rate do not limit or impact the Town’s ability to
set a debt service tax rate in each year sufficient to pay debt service on all of the Town’s tax-supported debt obligations,
including the Obligations.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the
calculation of the various defined tax rates.
ISSUER AND TAXPAYER REMEDIES . . . Under certain circumstances, the Town and its taxpayers may appeal the
determinations of the Appraisal District by timely initiating a protest with the Appraisal Review Board. Additionally, taxing units
such as the Town may bring suit against the Appraisal District to compel compliance with the Property Tax Code.
Owners of certain property with a taxable value of at least $50 million and situated in a county with a population of one million or
more as of the most recent federal decennial census may additionally protest the determinations of appraisal district directly to a
three-member special panel of the appraisal review board, selected by a State district judge, consisting of highly qualified
professionals in the field of property tax appraisal.
The Property Tax Code sets forth notice and hearing procedures for certain tax rate increases by the Town and provides for
taxpayer referenda that could result in the repeal of certain tax increases (See “– Public Hearing and Maintenance and Operation
Tax Rate Limitations”.) The Property Tax Code also establishes a procedure for notice to property owners of reappraisals reflecting
increased property value, appraisals which are higher than renditions, and appraisals of property not previously on an appraisal
roll.
PROPERTY ASSESSMENT AND TAX PAYMENT . . . Property within the Town is generally assessed as of January 1 of each
year. Business inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on
the basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due
October 1 of the same year, and become delinquent on February 1 of the following year.
Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on
February 1 of each year and the final installment due on August 1.
PENALTIES AND INTEREST . . . Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Month Penalty Interest Total
February 6% 1% 7%
March 7% 2% 9%
April 8% 3% 11%
May 9% 4% 13%
June 10% 5% 15%
July 32%(1) 6%(2) 38%
(1) Includes an additional 20% penalty to defray attorney’s fees.
(2) Interest continues to accrue after July 1 at the rate that increases 1% per month until paid. After July, penalty remains at 12%,
and interest increases at the rate of 1% each month. A delinquent tax continues to accrue interest as long as the tax remains
unpaid, regardless of whether a judgment for the delinquent tax has been rendered. In addition, if an account is delinquent in July,
an attorney's collection fee of up to 20% may be added to the total tax penalty and interest charge. A taxpayer who is 65 years of
age or older or is disabled may defer the collection of delinquent property taxes on his or her residence homestead and prevent
the filing of a lawsuit to collect delinquent taxes until the 181st day after the taxpayer no longer owns and occupies the property
as a residence homestead.
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However, taxes and interest continue to accrue against the property, and the delinquent taxes incur a penalty of 8% per annum
with no additional penalties or interest assessed. The lien securing such taxes and interest remains in existence during the deferral
or abatement period. In general, property subject to the Town's lien may be sold, in whole or in parcels, pursuant to court order to
collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy.
Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units,
goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on
property and prevents liens for post petition taxes from attaching to property and obtaining secured creditor status unless, in either
case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative
expense of the estate in bankruptcy or by order of the bankruptcy court.
TOWN’S APPLICATION OF THE PROPERTY TAX CODE
The Town grants an additional local exemption of $35,000 to the market value of the residence homestead of persons 65 years
of age or older and the disabled.
The Town does not grant an additional exemption of up to 20% for residence homesteads.
The Town taxes only business personal property.
The Denton County Tax Collector collects property taxes for the Town. The Town does not permit discounts or split payments,
except in the case of persons 65 years of age or older or disabled persons who are permitted to pay taxes on homesteads in
four installments. The first installment is due on February 1 of each year and the final installment is due on August 1 of the same
year.
The Town does grant the Article VIII, Section 1-j property exemption (“freeport property”).
The Town does not grant an exemption for “goods-in-transit”.
The Town does participate in a Tax Increment Financing Zone called the Trophy Club Reinvestment Zone #1 (The Trophy Wood
District). The District encompasses 30.5 acres and when fully developed will contain hotels, restaurants, retail shopping area and
the Town Hall. 2021 Tax Increment is $14,553,489.
The Town does not grant tax abatements.
On November 3, 2003, voters of the Town approved the adoption of the tax freeze described above under “Homestead Tax
Limitation”. The freeze became effective with the 2005 Tax Year.
ADDITIONAL TAX COLLECTIONS
Municipal Sales Tax Collections
The Town has adopted the Municipal Sales and Use Tax Act, Texas Tax Code, Chapter 321, which grants the Town the power to
impose and levy a 1% Local Sales and Use Tax within the Town; the proceeds are credited to the General Fund and are not
pledged to the payment of the Certificates or other bonded indebtedness. Collections and enforcements are effected through the
offices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service
fee, to the Town monthly. Net collections on a fiscal year basis are shown in Table 15 of Appendix A.
Optional Sales Tax
The Tax Code provides certain cities and counties the option of assessing a maximum one-half percent (½%) sales tax on retail
sales of taxable items for the purpose of reducing its ad valorem taxes, if approved by a majority of the voters in a local option
election. If the additional tax is approved and levied, the ad valorem property tax levy must be reduced by the amount of the
estimated sales tax revenues to be generated in the current year. Further, the Tax Code provides certain cities the option of
assessing a maximum one-half percent (½%) sales tax on retail sales of taxable items for economic development purposes, if
approved by a majority of the voters in a local option election.
At an election held on May 7, 1996, the Town’s registered voters approved an additional one-half percent (½%) sales tax to be
collected for community development purposes in accordance with Chapters 501, 502 and 505, Texas Local Government Code,
as amended (formerly Section 4B of Article 6190.6, Texas Revised Civil Statutes). Levy of this sales tax began on October 1,
1996 and the Town received its first payment in December 1996.
At an election held on March 21, 2000, the Town’s registered voters approved an additional one-half percent (½%) sales tax to be
collected for economic development purposes in accordance with Chapters 501, 502 and 504, Texas Local Government Code,
as amended (formerly Section 4A of Article 6190.6, Texas Revised Civil Statutes). Levy of this sales tax began on October 1,
2000 and the Town received its first payment in December 2000.
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At an election held on May 22, 2006, the Town’s registered voters approved a reduction in the sales tax levied pursuant to Chapters
501, 502 and 505, Texas Local Government Code, as amended (formerly Section 4B of Article 6190.6, Texas Revised Civil
Statutes), from one-half percent (½%) to one-quarter percent (¼%) and, at the same time, voted a one-quarter percent (¼%)
additional sales tax to be collected and designated for street repairs.
At an election held on November 6, 2012, the Town’s registered voters approved an increase in the sales tax levied pursuant to
Chapters 501, 502 and 505, Texas Local Government Code, as amended (formerly Section 4B of Article 6190.6, Texas Revised
Civil Statutes), from one-quarter percent (¼%) to one-half percent (½%) and, at the same time, approved a reduction in the sales
tax levied pursuant to Chapters 501, 502 and 504, Texas Local government Code, as amended (formerly Section 4A of Article
6190.6, Texas Revised Civil Statutes), from one-half percent (½%) to one-quarter percent (¼%). This change in tax collection
percentages began in April 2013.
At an election held on May 11, 2013, the town’s registered voters approved the dissolution of its Economic Development
Corporation (4A) and the cessation of the one-quarter percent (¼%) sales tax levied for economic development purposes. At the
same election voters created a Crime Control and Prevention District (“CCPD”) and authorized the levy of a one-quarter percent
(¼%) sales tax pursuant to Chapter 363, Texas Local Government Code, as amended to fund the CCPD. This ¼% tax began with
the October 2013 collections.
The Town has not held an election regarding an additional sales tax for the purpose of reducing its ad valorem taxes, because the
maximum combined sales tax rate of 8¼%, including the State portion of 6¼%, has been reached.
TAX MATTERS
The following discussion of certain federal income tax considerations is for general information only and is not tax
advice. Each prospective purchaser of the Certificates should consult is own tax advisor as to the tax consequences of
the acquisition, ownership and disposition of the Certificates.
Tax Exemption
In the opinion of Bracewell LLP, Bond Counsel, under existing law, interest on the Certificates is excludable from gross income
for federal income tax purposes under section of 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not
a specific preference item of purposes of the alternative minimum tax.
The Code imposes a number of requirements that must be satisfied for interest on state or local obligations, such as the
Certificates, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the
use of bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure,
a requirement that excess arbitrage earned on the investment of bond proceeds be paid periodically to the United States and a
requirement that the issuer file an information report with the Internal Revenue Service (the “Service”). The Town has covenanted
in the Ordinance that it will comply with these requirements.
Bond Counsel’s opinion will assume continuing compliance with the covenants of the Ordinance pertaining to those sections of
the Code that affect the exclusion from gross income of interest on the Certificates for federal income tax purposes and, in addition,
will rely on representations by the Town, the Town’s Financial Advisor and the initial purchasers with respect to matters solely
within the knowledge of the Town, the Town’s Financial Advisor and the initial purchasers, respectively, that Bond Counsel has
not independently verified. If the Town fails to comply with the covenants in the Ordinance or if the foregoing representations are
determined to be inaccurate or incomplete, interest on the Certificates could become includable in gross income from the date of
delivery of the Certificates, regardless of the date on which the event causing such inclusion occurs.
Except as stated above, Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting from
the receipt or accrual of interest on, or acquisition, ownership or disposition of, the Certificates.
Bond Counsel’s opinions are based on existing law, which is subject to change. Such opinions are further based on Bond
Counsel’s knowledge of facts as of the date thereof. Bond Counsel assumes no duty to update or supplement its opinions to reflect
any facts or circumstances that may thereafter come to Bond Counsel’s attention or to reflect any changes in any law that may
thereafter occur or become effective. Moreover, Bond Counsel’s opinions are not a guarantee of result and are not binding on the
Service; rather, such opinions represent Bond Counsel’s legal judgment based upon its review of existing law and in reliance upon
the representations and covenants referenced above that it deems relevant to such opinions. The Service has an ongoing audit
program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross
income for federal income tax purposes. No assurance can be given as to whether or not the Service will commence an audit of
the Certificates. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the
Town as the taxpayer and the Owners may not have a right to participate in such audit. Public awareness of any future audit of
the Certificates could adversely affect the value and liquidity of the Certificates regardless of the ultimate outcome of the audit.
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ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS
Collateral Tax Consequences
Prospective purchasers of the Certificates should be aware that the ownership of tax-exempt obligations may result in collateral
federal income tax consequences to financial institutions, life and property and casualty insurance companies, certain S
corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, low and
middle income taxpayers otherwise qualifying for the health insurance premium assistance credit and individuals otherwise
qualifying for the earned income credit. In addition, certain foreign corporations doing business in the United States may be subject
to the “branch profits tax” on their effectively connected earnings and profits, including tax-exempt interest such as interest on the
Certificates. These categories of prospective purchasers should consult their own tax advisors as to the applicability of these
consequences. Prospective purchasers of the Certificates should also be aware that, under the Code, taxpayers are required to
report on their returns the amount of tax-exempt interest, such as interest on the Certificates, received or accrued during the year.
Tax Accounting Treatment of Original Issue Premium
The issue price of a portion of the Certificates exceedS the stated redemption price payable at maturity of such Certificates. Such
Certificates (the “Premium Certificates”) are considered for federal income tax purposes to have “bond premium” equal to the
amount of such excess. The basis of a Premium Certificate in the hands of an initial owner is reduced by the amount of such
excess that is amortized during the period such initial owner holds such Premium Certificate in determining gain or loss for federal
income tax purposes. This reduction in basis will increase the amount of any gain or decrease the amount of any loss recognized
for federal income tax purposes on the sale or other taxable disposition of a Premium Certificate by the initial owner. No
corresponding deduction is allowed for federal income tax purposes for the reduction in basis resulting from amortizable bond
premium. The amount of bond premium on a Premium Certificate that is amortizable each year (or shorter period in the event of
a sale or disposition of a Premium Certificate) is determined using the yield to maturity on the Premium Certificate based on the
initial offering price of such Certificate.
The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of Premium
Certificates that are not purchased in the initial offering at the initial offering price may be determined according to rules that differ
from those described above. All owners of Premium Certificates should consult their own tax advisors with respect to the
determination for federal, state, and local income tax purposes of amortized bond premium upon the redemption, sale or other
disposition of a Premium Certificate and with respect to the federal, state, local, and foreign tax consequences of the purchase,
ownership, and sale, redemption or other disposition of such Premium Certificates.
Tax Legislative Changes
Current law may change so as to directly or indirectly reduce or eliminate the benefit of the exclusion of interest on the Certificates
from gross income for federal income tax purposes. Any proposed legislation, whether or not enacted, could also affect the value
and liquidity of the Certificates. Prospective purchasers of the Certificates should consult with their own tax advisors with respect
to any proposed, pending or future legislation.
PURCHASE OF TAX-EXEMPT OBLIGATIONS BY FINANCIAL INSTITUTIONS
Section 265(a) of the Code provides, in general, that a deduction for interest on indebtedness incurred to acquire or carry tax-
exempt obligations is disallowed. Section 265(b) of the Code provides a specific complete disallowance of any deduction by a
financial institution of its pro rata interest expense to reflect such financial institution’s investment in tax-exempt obligations
acquired after August 7, 1986. Section 265(b) also provides an exception for financial institutions for tax-exempt obligations that
are properly designated or deemed designated by an issuer as “qualified tax-exempt obligations.”
The Certificates have been designated as “qualified tax-exempt obligations” based, in part, on the Town’s representation that the
amount of the Certificates, when added to the amount of all other tax-exempt obligations (not including private activity bonds other
than “qualified 501(c)(3) bonds” or any obligations issued to currently refund any obligation to the extent the amount of the
refunding obligation did not exceed the outstanding amount of the refunded obligation) issued or reasonably anticipated to be
issued by or on behalf of the Town during 2021, is not expected to exceed $10,000,000. Further, the Town and entities aggregated
with the Town under the Code have not designated more than $10,000,000 in “qualified tax-exempt obligations” (including the
Certificates) during 2021. Notwithstanding the designation of the Certificates as “qualified tax-exempt obligations” under this
exception, financial institutions acquiring the Certificates will be subject to a 20% disallowance of allocable interest expense.
23
CONTINUING DISCLOSURE OF INFORMATION
In the respective Ordinance, the Town has made the following agreement for the benefit of the holders and beneficial owners of
the Certificates. The Town is required to observe the agreement for so long as it remains obligated to advance funds to pay the
Certificates. Under the agreement, the Town will be obligated to provide certain updated financial information and operating data
annually, and timely notice of certain specified events, to the Municipal Securities Rulemaking Board (the “MSRB”). The
information will be available free of charge from the MSRB via the Electronic Municipal Market Access System (“EMMA”) at
www.emma.msrb.org.
Annual Reports
The Town shall provide annually to the MSRB, (1) within six months after the end of each fiscal year of the Town, financial
information and operating data with respect to the Town of the general type included in the final Official Statement, being
information described in Tables 1-3, 9, 10, 12, 13 and 18 of Appendix A thereof and (2) if not provided as part of such financial
information and operating data, audited financial statements of the Town within 12 months after the end of the fiscal year, when
and if available. Any financial statements so to be provided shall be (i) prepared in accordance with the accounting principles the
accounting principles described in Exhibit B hereto or such other accounting principles as the Town may be required to employ,
from time to time, by State law or regulation, and (ii) audited, if the Town commissions an audit of such statements and the audit
is completed within the period during which they must be provided. If the audit of such financial statements is not complete within
12 months after any such fiscal year end, then the Town shall file unaudited financial statements within such 12-month period and
audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available.
The financial information and operating data to be provided may be set forth in full in one or more documents or may be included
by specific reference to any document available to the public on the MSRB’s Internet Website or filed with the United States
Securities and Exchange Commission (the “SEC”), as permitted by SEC Rule 15c2-12 (the “Rule”).
The Town’s current fiscal year end is September 30. Accordingly, it must provide updated financial information by the last day in
March in each year and audited financial statements for the preceding fiscal year (or unaudited financial statements if the audited
financial statements are not yet available) must be provided by September 30 of each year, unless the Town changes its fiscal
year, unless the Town changes its fiscal year. If the Town changes its fiscal year, it will notify the MSRB of the change.
Notice of Certain Events
The Town will also provide timely notices of certain events to the MSRB. The Town will provide notice of any of the following
events with respect to the Certificates to the MSRB in a timely manner (but not in excess of ten business days after the occurrence
of the event): (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled
draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the
Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or
other material notices or determinations with respect to the tax status of the Certificates, or other material events affecting the tax
status of the Certificates; (7) modifications to rights of holders of the Certificates, if material; (8) Certificate calls, if material, and
tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Certificates, if material;
(11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the Town, which shall occur as described below;
(13) the consummation of a merger, consolidation, or acquisition involving the Town or the sale of all or substantially all of its
assets, other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment
of a successor or additional trustee or the change of name of a trustee, if material. In addition, the Town will provide timely notice
of any failure by the Town to provide annual financial information in accordance with their agreement described above under
“Annual Reports”; (15) Incurrence of a Financial Obligation of the Town, if material, or agreement to covenants, events of default,
remedies, priority rights, or other similar terms of a financial obligation of the Town, any of which affect security holders, if material;
and (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a
Financial Obligation of the Town, any of which reflect financial difficulties. In addition, the Town will provide timely notice of any
failure by the Town to provide annual financial information in accordance with their agreement described above under “Annual
Reports.”
For these purposes, (A) any event described in the immediately preceding clause (12) is considered to occur when any of the
following occur: the appointment of a receiver, fiscal agent, or similar officer for the Town in a proceeding under the United States
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed
jurisdiction over substantially all of the assets or business of the Town, or if such jurisdiction has been assumed by leaving the
existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of the assets of business of the Town, and (B) the Town intends
the words used in clauses (15) and (16) in the immediately preceding paragraph and in the definition of Financial Obligation to
have the meanings ascribed to them in SEC Release No. 34-83885 dated August 20, 2018. The Ordinances define “Financial
Obligation” as a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of
payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided
24
that “financial obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended)
as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.
Availability of Information from MSRB
The Issuer has agreed to provide the foregoing information only as described above. Investors will be able to access continuing
disclosure information filed with the MSRB free of charge at www.emma.msrb.org.
Limitations and Amendments
The Issuer has agreed to update information and to provide notices of certain specified events only as described above. The
Issuer has not agreed to provide other information that may be relevant or material to a complete presentation of its financial
results of operations, condition, or prospects or agreed to update any information that is provided, except as described above.
The Issuer makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest
in or sell Certificates at any future date. The Issuer disclaims any contractual or tort liability for damages resulting in whole or in
part from any breach of its agreement or from any statement made pursuant to its agreement, although holders or beneficial
owners of Certificates may seek a writ of mandamus to compel the Issuer to comply with its agreement.
The Issuer may amend its agreement to adapt to changed circumstances that arise from a change in legal requirements, a change
in law, or a change in the identity, nature, status, or type of operations of the Issuer, if the agreement, as amended, would have
permitted an underwriter to purchase or sell Certificates in the offering described herein in compliance with the Rule, taking into
account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances,
and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or any person unaffiliated
with the Issuer (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests
of the beneficial owners of the Certificates. The Issuer may also repeal or amend its agreement if the SEC amends or repeals the
applicable provisions of the Rule or any court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but
in either case only if and to t he extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing
or selling Certificates in the primary offering of the Certificates giving effect to (a) such provisions as so amended and (b) any
amendments or interpretations of the Rule. If the Issuer amends its agreement, it must include with the next financial information
and operating data provided in accordance with its agreement described above under “Annual Reports” an explanation, in narrative
form, of the reasons for the amendment and of the impact of any change in the type of information and data provided.
Compliance with Prior Agreements
During the past five years, the Issuer has complied in all material respects with its continuing disclosure agreements in accordance
with the Rule.
OTHER PERTINENT INFORMATION
Registration and Qualification of Certificates for Sale
The sale of the Certificates has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the
exemption provided thereunder by Section 3(a)(2); and the Certificates have not been qualified under the Securities Act of Texas
in reliance upon various exemptions contained therein; nor have the Certificates been qualified under the securities acts of any
other jurisdiction. The Issuer assumes no responsibility for qualification of the Certificates under the securities laws of any
jurisdiction in which the Certificates may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of
responsibility for qualification for sale or other disposition of the Certificates shall not be construed as an interpretation of any kind
with regard to the availability of any exemption from securities registration provisions.
Litigation
In the opinion of the Town Attorney, the Issuer is not a party to any litigation or other proceeding pending or to its knowledge,
threatened, in any court, agency or other administrative body (either state or federal) which, if decided adversely to the Issuer,
would have a material adverse effect on the financial condition of the Town.
Future Debt Issuance
The Town does not anticipate the issuance of additional debt within the next twelve months.
Legal Investments and Eligibility to Secure Public Funds in Texas
Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Certificates
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are real and authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political
subdivisions or public agencies of the State. With respect to investment in the Certificates by municipalities or other political
subdivisions or public agencies of the State, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires
that the Certificates be assigned a rating of not less than "A" or its equivalent as to investment quality by a national rating agency.
25
See "OTHER PERTINENT INFORMATION - Ratings" herein. In addition, various provisions of the Texas Finance Code provide
that, subject to a prudent investor standard, the Certificates are legal investments for state banks, savings banks, trust companies
with capital of one million dollars or more, and savings and loan associations. The Certificates are eligible to secure deposits of
any public funds of the State, its agencies, and its political subdivision, and are legal security for those deposits to the extent of
their fair market value. No review by the Town has been made of the laws in other states to determine whether the Certificates
are legal investments for various institutions in those states.
No representation is made that the Certificates will be acceptable to public entities to secure their deposits or acceptable to such
institutions for investment purposes. The Town has made no investigation of other laws, rules, regulations or investment criteria
which might apply to any such persons or entities or which might otherwise limit the suitability of the Certificates for any of the
foregoing purposes or limit the authority of such persons or entities to purchase or invest in the Certificates for such purposes.
Additionally, with respect to the Certificates, Section 271.051 of the Texas Local Government Code expressly provides that
certificates of obligation approved by the Attorney General of Texas are legal authorized investments for banks, savings banks,
trust companies, and savings and loan associations, insurance companies, fiduciaries, trustees, and guardians, and sinking funds
of municipalities, counties, school districts, or other political corporations or subdivisions of the State. The Certificates are eligible
to secure deposits of any public funds of the State, municipalities, school and other political subdivisions of the State, and are
legal security for those deposits to the extent of the market value.
Ratings
S&P Global Ratings, a division of S&P Global Inc. (“S&P”) has assigned an unenhanced, underlying rating of “AA+” to the
Certificates. A rating by a rating agency reflects only the view of such company at the time the rating is given, and the Issuer
makes no representations as to the appropriateness of the rating. There is no assurance that such a rating will continue for any
given period of time, or that it will not be revised downward or withdrawn entirely by the rating agency if, in the judgment of such
rating agency, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on
the market price of the Certificates.
Legal Matters
The Town will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Certificates,
including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Certificates and to the effect
that the Certificates are valid and legally binding special obligations of the Town, and based upon examination of such transcript
of proceedings, the approving legal opinion of Bond Counsel, to like effect and to the effect that the interest on the Certificates will
be excludable from gross income for federal income tax purposes under existing law and the Certificates are not private activity
bonds, subject to the matters described under "TAX MATTERS" herein. The customary closing papers, including a certificate to
the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates,
or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Certificates
will also be furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of
Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility
with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as
Bond Counsel, such firm has reviewed the information describing the Certificates in the Official Statement to verify that such
description conforms to the provisions of the Ordinance. The legal fee to be paid Bond Counsel for services rendered in connection
with the issuance of the Certificates is contingent on the sale and delivery of the Certificates. The legal opinion will accompany
the Certificates deposited with DTC or will be printed on the Certificates in the event of the discontinuance of the Book-Entry- Only
System.
The various legal opinions to be delivered concurrently with the delivery of the Certificates express the professional judgment of
the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering legal opinions the attorney
does not become an insurer or guarantor of the expression of professional judgment, of the transaction opined upon, or of the
future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal
dispute that may arise from the transaction.
Initial Purchase of the Certificates
On August 24, 2021, after requesting competitive bids for the Certificates, the Town accepted the bid of Raymond James &
Associates (the "Initial Certificate Purchaser") to purchase the Certificates at the interest rates shown on page iii of the Official
Statement at a price of $4,576,824.28 plus accrued interest from the dated date of the Certificates. The Purchaser can give no
assurance that any trading market will be developed or the Certificates after their sale by the Town to the Initial Purchaser. The
Town has no control over the price at which the Certificates are subsequently sold and the initial yield at which the Certificates will
be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser of the Certificates.
26
Financial Advisor
SAMCO Capital Markets, Inc. is employed as a Financial Advisor to the Issuer in connection with the issuance of the Certificates.
In this capacity, the Financial Advisor has compiled certain data relating to the Certificates and has assisted in drafting this Official
Statement. The Financial Advisor has not independently verified any of the data contained herein or conducted a detailed
investigation of the affairs of the Issuer to determine the accuracy or completeness of this Official Statement. Because of its
limited participation, the Financial Advisor assumes no responsibility for the accuracy or completeness of any of the information
contained herein. The fees for Financial Advisor are contingent upon the issuance, sale and delivery of the Certificates.
Certification of the Official Statement
At the time of payment for and delivery of the Certificates, the Purchaser will be furnished a certificate executed by the proper
officials of the Town acting in their official capacity, to the effect that: (a) the descriptions and statements of or pertaining to the
Town contained in its Official Statement relating to the Certificates, and any addenda, supplement or amendment thereto, on the
date of such Official Statement, on the date of the sale of the Certificates, and on the date of the delivery, were and are true and
correct in all material respects; (b) insofar as the Town and its affairs, including its financial affairs, are concerned, such Official
Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading;
(c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the Town and its
activities, contained in such Official Statement are concerned, such statements and data have been obtained from sources which
the Town believes to be reliable and the Town has no reason to believe that they are untrue in any material respect; and (d) there
has been no material adverse change in the financial condition of the Town since September 30, 2020, the date of the last audited
financial statements of the Issuer, portions of which appear in the Official Statement.
The Official Statement was approved as to form and content and the use thereof in the offering of the Certificates was authorized,
ratified and approved by the Town Council on the date of sale in the Ordinance, and the Purchaser will be furnished, upon request,
at the time of payment for and the delivery of the Certificates, a copy of such Ordinance, duly executed by the proper officials of
the Issuer.
Forward-Looking Statements Disclaimer
The statements contained in this Official Statement, and in any other information provided by the Town, that are not purely
historical, are forward-looking statements, including statements regarding the Town' expectations, hopes, intentions, or strategies
regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements
included in this Official Statement are based on information available to the Town on the date hereof, and the Town assumes no
obligation to update any such forward-looking statements. The Town's actual results could differ materially from those discussed
in such forward-looking statements.
The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers,
business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related
to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and
future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control
of the Town. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Official Statement will prove to be accurate.
Concluding Statement
The financial data and other information contained in this Official Statement have been obtained from the Town’s records, audited
financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or
estimates contained herein will be realized. All of the summaries of the statutes, documents and ordinances contained in this
Official Statement are made subject to all of the provisions of such statues, documents and ordinances. These summaries do not
purport to be complete statements of such provisions and reference is made to such documents for further information. Reference
is made to original documents in all respects.
The Certificate Ordinance authorizing the issuance of the Certificates approved the form and content of this Official Statement
and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Certificates by the
Purchasers.
APPENDIX A
FINANCIAL INFORMATION RELATING TO
THE TOWN OF TROPHY CLUB, TEXAS
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ASSESSED VALUATION TABLE 1
2021 Certified Market Value of Taxable Property (100% of Market Value)...……………………………………………………………2,506,591,585$
Less Exemptions:
Optional Over 65 or Disabled…………………………………………………………………………………………… 35,952,083$
Veterans' Exemptions………………………………………………………………………………………………………21,651,515
Open-Space Land and Timberland………………………………………………………………………………………3,418,067
Homestead Exemption……………………………………………………………………………………………………20,703,942
Pollution Control……………………………………………………………………………………………………………11,890
Loss to 10% HO Cap………………………………………………………………………………………………………21,793,647
TOTAL EXEMPTIONS ……………………………………………………………………………………………………103,531,144$
2021 Certified Assessed Value of Taxable Property………………………………………………………………………………………2,403,060,441$
Less: Freeze Adjustment……………………………………………………………………………………………………386,061,424
2021 Certified Freeze Adjusted Certified Assessed Value of Taxable Property………………………………………………………2,016,999,017$
Source: Denton and Tarrant County Appraisal Districts
GENERAL OBLIGATION BONDED DEBT TABLE 2
(as of August 1, 2021)
General Obligation Debt Principal Outstanding
Combination Tax and Revenue Certificates of Obligation, Series 2004 134,000$
Combination Tax and Revenue Certificates of Obligation, Series 2013 1,260,000
Combination Tax and Revenue Certificates of Obligation, Series 2014 1,900,000
General Obligation Refunding Bonds, Series 2015 1,170,000
Combination Tax and Revenue Certificates of Obligation, Series 2016 3,585,000
General Obligation Bonds, Series 2016 4,285,000
Combination Tax and Revenue Certificates of Obligation, Series 2017 3,335,000
General Obligation Refunding Bonds, Series 2020 3,550,000
Combination Tax and Revenue Certificates of Obligation, Series 2021 (the "Obligations")4,305,000
Total Gross General Obligation Debt 23,524,000$
2021 Preliminary Net Taxable Assessed Valuation 2,403,060,441$
Ratio of Total Gross General Obligation Debt to 2021 Preliminary Net Taxable Assessed Valuation 0.98%
CITY DEBT OBLIGATIONS - CAPITAL LEASE AND NOTES PAYABLE TABLE 3
(As of September 30, 2020)
NONE
FINANCIAL INFORMATION OF THE ISSUER
Per Capita Gross General Obligation Debt Principal - $1,889.33
Per Capita Certified Net Taxable Assessed Valuation - $193,001.40
Population: 1990 - 3,992; 2000 - 6,350; 2010 - 10,500; est. 2021 - 13,688
A-1
GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS TABLE 4
Fiscal Year Current Total Combined
Ending Outstanding Debt
Sept. 30 Debt(a)Principal Interest Total Service(a)
2022 2,093,096$ 645,000$ 118,150$ 763,150$ 2,856,246$
2023 1,878,445 575,000 93,750 668,750 2,547,195
2024 1,876,976 55,000 81,150 136,150 2,013,126
2025 1,664,790 100,000 78,050 178,050 1,842,840
2026 1,430,749 145,000 73,150 218,150 1,648,899
2027 1,429,368 150,000 67,250 217,250 1,646,618
2028 1,428,128 155,000 61,150 216,150 1,644,278
2029 1,303,975 165,000 54,750 219,750 1,523,725
2030 1,304,988 170,000 48,050 218,050 1,523,038
2031 1,028,788 175,000 42,025 217,025 1,245,813
2032 1,034,513 180,000 37,600 217,600 1,252,113
2033 1,029,413 185,000 33,950 218,950 1,248,363
2034 1,032,713 185,000 30,250 215,250 1,247,963
2035 854,375 190,000 26,500 216,500 1,070,875
2036 856,150 195,000 22,650 217,650 1,073,800
2037 247,200 200,000 18,700 218,700 465,900
2038 - 205,000 14,650 219,650 219,650
2039 - 205,000 10,550 215,550 215,550
2040 - 210,000 6,400 216,400 216,400
2041 - 215,000 2,150 217,150 217,150
Total 20,493,664$ 4,305,000$ 920,875$ 5,225,875$ 25,719,539$
(a) Includes self-supporting debt.
TAX ADEQUACY (Includes Self-Supporting Debt) TABLE 5
2021 Preliminary Freeze Adjusted Net Taxable Assessed Valuation 2,016,999,017$
Maximum Annual Debt Service Requirements (Fiscal Year Ending 9-30-2022)2,856,246.00
Indicated required I&S Fund Tax Rate at 98% Collections to produce Maximum Debt Service requirements 0.1445$
Note: Above computations are exclusive of investment earnings, delinquent tax collections and penalties and interest on
delinquent tax collections.
The Obligations
A-2
GENERAL OBLIGATION PRINCIPAL REPAYMENT SCHEDULE TABLE 6
2021 1,983,000$ 1,983,000$ 21,541,000$ 8.43%
2022 1,658,000 645,000$ 2,303,000 19,238,000 18.22%
2023 1,483,000 575,000 2,058,000 17,180,000 26.97%
2024 1,520,000 55,000 1,575,000 15,605,000 33.66%
2025 1,345,000 100,000 1,445,000 14,160,000 39.81%
2026 1,145,000 145,000 1,290,000 12,870,000 45.29%
2027 1,170,000 150,000 1,320,000 11,550,000 50.90%
2028 1,195,000 155,000 1,350,000 10,200,000 56.64%
2029 1,095,000 165,000 1,260,000 8,940,000 62.00%
2030 1,120,000 170,000 1,290,000 7,650,000 67.48%
2031 870,000 175,000 1,045,000 6,605,000 71.92%
2032 900,000 180,000 1,080,000 5,525,000 76.51%
2033 920,000 185,000 1,105,000 4,420,000 81.21%
2034 950,000 185,000 1,135,000 3,285,000 86.04%
2035 800,000 190,000 990,000 2,295,000 90.24%
2036 825,000 195,000 1,020,000 1,275,000 94.58%
2037 240,000 200,000 440,000 835,000 96.45%
2038 - 205,000 205,000 630,000 97.32%
2039 - 205,000 205,000 425,000 98.19%
2040 - 210,000 210,000 215,000 99.09%
2041 - 215,000 215,000 - 100.00%
Total 19,219,000$ 4,305,000$ 23,524,000$
(a) Includes self-supporting debt .
INTEREST AND SINKING FUND MANAGEMENT INDEX TABLE 7
Interest and Sinking Fund Balance, FYE 2020 706,640$
FY 2020-21 Interest and Sinking Fund Tax Levy at 99% of Collections* 2,479,135
Estimated I&S Tax Collections on Frozen Property 296,765
Total Available for Debt Service 3,482,540$
Less: General Obligation Debt Service Requirements for FYE 2021 2,708,530
Estimated Surplus at FYE 2021 774,010$
* Does not include delinquent tax collections, penalties and interest on delinquent tax collections
earnings on the debt service fund.
(as of July 1, 2021)
Principal Repayment Schedule
The
Obligations*
Percent of
Principal
Retired (%)*
Currently
Outstanding(a)FYE (9/30)Total*
Principal Unpaid
at End of Year*
A-3
TAXABLE ASSESSED VALUATION FOR TAX YEARS 2013-2021 TABLE 8
Net Taxable
Tax Year Assessed Valuation Amount ($)Percent
2013-14 1,184,919,046$ --- 0.00%
2014-15 1,368,841,034 183,921,988 15.52%
2015-16 1,568,410,078 199,569,044 14.58%
2016-17 1,774,008,268 205,598,190 13.11%
2017-18 1,963,766,966 189,758,698 10.70%
2018-19 2,103,729,572 139,962,606 7.13%
2019-20 2,143,330,485 39,600,913 1.88%
2020-21 2,276,524,688 133,194,203 6.21%
2021-22 2,403,060,441 126,535,753 5.56%
Source: Denton and Tarrant County Appraisal Districts
PRINCIPAL TAXPAYERS 2020-2021 TABLE 9
% of Total 2021
2021 Net Taxable Assessed
Name Type of Business/Property Assessed Value Valuation
NAP Trophy Club LP Apartments 42,200,000$ 1.85%
Trophy Club 18 LLC Property Management 16,335,450 0.76%
TC Town Center 1 LP Real Estate/Development 14,328,008 0.67%
Quasar Hotels LLC Hotels 11,214,061 0.52%
Oncor Electric Delivery Co Utility 9,040,000 0.42%
Armore II - Quorum LLC Real Estate Development 6,993,186 0.33%
Clubcorp Golf Tex LP P/S Golf Course/Country Club 6,479,626 0.30%
Real Estate Development 6,200,000 0.29%
915 Trophy Club LLC Preschool 6,008,327 0.28%
Wonderland Plaza LLC Real Estate
4,227,500 0.20%
123,026,158 5.62%
Source: Denton and Tarrant County Appraisal Districts
FUND BALANCES TABLE 10
(as of September 30, 2020)
General Fund 7,547,423$
Debt Service Fund 706,640
Capital Projects Fund 1,984,646
Drainage Fund 1,731,975
Economic Development Fund 365,706
Crime Control Prevention District Fund 9,886
Total 12,346,276$
Change From Preceding Year
4663 Okeechobee Blvd & Palm
Beach Holdings
A-4
CLASSIFICATION OF ASSESSED VALUATION TABLE 11
2021 % of Total 2020 % of Total 2019 % of Total
2,232,230,685$ 89.05% 2,111,952,456$ 89.59% 2,009,264,815$ 90.36%
70,496,474 2.81% 30,650,978 1.30% 6,440,653 0.29%
5,491,701 0.22% 3,959,547 0.17% 5,087,579 0.23%
478,431 0.02% 483,665 0.02% 478,431 0.02%
329,992 0.01% 334,391 0.01% 337,958 0.02%
154,827,272 6.18% 171,240,986 7.26% 159,972,546 7.19%
14,294,370 0.57% 13,232,630 0.56% 12,078,970 0.54%
26,947,645 1.08% 24,489,424 1.04% 22,860,614 1.03%
1,495,015 0.06%1,000,387 0.04%7,098,677 0.32%
$ 2,506,591,585 100.00%$2,357,344,464 100.00% $ 2,223,620,243 100.00%
35,952,083$ 36,265,130$ 34,813,848$
21,651,515 18,770,759 15,024,866
3,418,067 472,428 472,354
20,703,942 21,842,334 21,815,614
11,890 8,539 3,150
21,793,647 3,460,586 8,159,926
$ 2,403,060,441 $2,276,524,688 $ 2,143,330,485
TAX DATA TABLE 12
Tax Net Taxable Tax Tax Year
Year Assessed
Valuation
Rate Levy Current Total Ended
2012 $ 1,020,211,149 $ 0.518543 5,290,233$ 99.59%99.86%9/30/2013
2013 1,184,919,046 0.499300 5,916,301 99.71%99.86%9/30/2014
2014 1,368,841,034 0.490000 6,707,321 99.41%99.87%9/30/2015
2015 1,568,410,078 0.484000 7,591,105 99.66%99.90%9/30/2016
2016 1,774,008,268 0.473000 8,391,059 99.72%99.71%9/30/2017
2017 1,963,766,966 0.473000 9,288,618 99.58%99.87%9/30/2018
2018 2,103,729,572 0.451442 9,497,119 99.61%100.00%9/30/2019
2019 2,143,330,485 0.446442 9,568,727 98.91%98.91%9/30/2020
2020 2,276,524,688 0.446442 10,163,362 98.38%100.00%9/30/2021*
2021 2,403,060,441 - - 9/30/2022
* As of June 30, 2021.
TAX RATE DISTRIBUTION TABLE 13
2020 2019 2018 2017 2016
General Fund $ 0.336442 $ 0.336442 $ 0.336442 $0.341442 $ 0.363000
I & S Fund 0.110000 0.110000 0.110000 0.110000 0.110000
Total Tax Rate $ 0.446442 $ 0.446442 $ 0.446442 $0.451442 $ 0.473000
Real, Farm and Ranch Improvements
Real, Acreage (Land Only)
Real, Vacant Lots/Tracts
Real, Residential, Multi-Family
Real, Residential, Single-Family
Tangible Personal, Commercial &
Industrial
Real & Tangible, Personal Utilities
Real, Commercial and Industrial
Veterans' Exemptions
Less:
Total Appraised Value
Pollution Control
Open-Space Land and Timberland
Optional Over 65 or Disabled
Homestead Exemption
Real Property, Inventory
Source: Denton and Tarrant County Appraisal Districts
% of Collections
Source: Texas Municipal Report published by the Municipal Advisory Council of Texas, the Denton and Tarrant Central Appraisal
Districts, the Issuer’s Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2020, and information supplied
by the Issuer.
Net Taxable Assessed Valuation
Loss to 10% HO Cap
(In process of collection)
A-5
MUNICIPAL SALES TAX COLLECTIONS TABLE 14
Calendar Year Total Collected % of Ad Valorem
Tax Levy
Equivalent of Ad Valorem
Tax Rate
2012 $ 1,181,846 22.34% 0.116
2013 2,354,738 39.80% 0.199
2014 2,452,191 36.56% 0.179
2015 2,732,477 36.00% 0.174
2016 3,037,179 36.20% 0.171
2017 3,213,568 34.60% 0.164
2018 3,371,456 35.50% 0.160
2019 3,763,339 39.33% 0.176
2020 4,388,055 43.18% 0.193
2021 2,822,384
Source: State Comptroller's Office of the State of Texas.
OVERLAPPING DEBT INFORMATION TABLE 15
(As of July 1, 2021)
Gross Debt %Amount
Taxing Body (As of 7/1/2021)Overlapping Overlapping
Carroll ISD $ 330,630,000 0.29% $ 958,827
Denton Co 605,905,000 1.82% 11,027,471
Northwest ISD 1,040,921,739 7.99% 83,169,647
Tarrant Co 240,445,000 0.06% 144,267
Tarrant Co College District 264,175,000 0.06% 158,505
Tarrant Co Hospital District 14,495,000 0.06% 8,697
Trophy Club MUD #1 7,205,000 78.79% 5,676,820
Total Gross Overlapping Debt $ 101,144,233
Town of Trophy Club $ 23,524,000 *
Total Gross Direct and Overlapping Debt $ 124,668,233 *
Ratio of Gross Direct and Overlapping Debt to 2021 Certified Net Taxable Assessed Valuation 5.19% *
Per Capita Gross Direct and Overlapping Debt $ 9,042 *
Source: Texas Municipal Reports published by the Municipal Advisory Council of Texas
* Includes the Certificates.
The Issuer has adopted the provisions of Chapter 321, as amended, Texas Tax Code, authorizing the City to levy a 1% sales tax. In
addition, some issuers are subject to a property tax relief and/or an economic and industrial development sales tax. The Issuer approved a
½¢ sales tax for economic development (4B) in 1996 and a ½¢ sales tax for economic development (4A) in 2000. In 2006 the Issuer
approved reducing the sales tax for economic evelopment (4B) to 1/4 cent sales tax and approved 1/4 cent sales tax for street
repair/maintenance. In April 2013 the Issuer approved the reducing the economic development (4A) to 1/4 cent and increasing the sales
tax for economic development (4B) to 1/2 cent. In October 2013 the Issuer approved eliminating its sales tax for economic development
(4A) and increasing the sales tax for economic development (4B) to 1/2 cent and approved the levy of 1/4 cent sales tax for the Trophy
Club Crime Control District. The City’s total sales tax rate is 2.00%. Net collections on calendar year basis are as follows:
The following table indicates the indebtedness, defined as outstanding bonds payable from ad valorem taxes, of governmental entities
overlapping the Town and the estimated percentages and amounts of such indebtedness attributable to property within the Town.
Expenditures of the various taxing bodies overlapping the territory of the Issuer are paid out of ad valorem taxes levied by these taxing
bodies on properties overlapping the Issuer. These political taxing bodies are independent of the Issuer and may incur borrowings to
finance their expenditures. The following statements of direct and estimated overlapping ad valorem tax bonds was developed from
information contained in the "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts
relating to the Issuer, the Issuer has not independently verified the accuracy or completeness of such information, and no person should
rely upon such information as being accurate or complete. Furthermore, certain of the entities listed below may have authorized or issued
additional bonds since the date stated below, and such entities may have programs requiring the authorization and/or issuance of
substantial amounts of additional bonds, the amount of which cannot be determined.
(As of July 2021)
A-6
ASSESSED VALUATION AND TAX RATE OF OVERLAPPING ISSUERS TABLE 16
Governmental Subdivision % of Actual 2020 Tax Rate
Carroll ISD 100% $ 1.286000
Denton Co 100% 0.225000
Northwest ISD 100% 1.466000
Tarrant Co 100% 0.234000
Tarrant Co College District 100% 0.130000
Tarrant Co Hospital District 100% 0.224000
Trophy Club MUD #1 100% 0.108000
Source: Texas Municipal Reports published by the Municipal Advisory Council of Texas.
AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS OF DIRECT AND OVERLAPPING GOVT SUBDIVISIONS TABLE 17
Date of Amount Issued
Authorization Authorized To-Date Unissued
Carroll ISD None
Denton Co None
Northwest ISD 5/1/2021
745,700,000$ 200,000,000$ 545,700,000$
Tarrant Co 5/13/2006 62,300,000$ 47,300,000$ 15,000,000$
Tarrant Co College District 11/5/2019 825,000,000$ 300,000,000$ 525,000,000$
Tarrant Co Hospital District None
Trophy Club MUD #1 None
Trophy Club, Town of None
Source: Texas Municipal Reports published by the Municipal Advisory Council of Texas.
GENERAL FUND COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES TABLE 18
9/30/2020 9/30/2019 9/30/2018 9/30/2017 9/30/2016
Fund Balance - Beginning of Year 5,823,253$ 5,440,518$ 4,611,119$ 4,194,162$ 3,691,189$
Revenues 12,247,375$ 11,525,812$ 11,125,639$ 10,276,946$ 9,092,668$
Expenditures 10,644,689 11,206,077 10,477,295 9,450,360 8,425,653
Excess (Deficit) of Revenues
Over Expenditures 1,602,686$ 319,735$ 648,344$ 826,586$ 667,015$
Other Financing Sources (Uses):
Operating Transfers In 61,500$ 63,000$ 63,000$ 63,000$ 111,702$
Operating Transfers Out - - (35,817) (720,934) (275,744)
Capital Lease Proceeds - - 264,732 - -
Sale of General Capital Assets 32,213 - - - -
Insurance Recoveries 27,769 - - - -
Total Other Financing Sources (Uses): 121,482$ 63,000$ 291,915$ (657,934)$ (164,042)$
Fund Balance - End of Year 7,547,421$ 5,823,253$ 5,551,378$ 4,362,814$ 4,194,162$ _______________
Source: The Issuer’s Comprehensive Annual Financial Reports and information provided by the Issuer.
EMPLOYEE'S PENSION PLAN AND OTHER POST-EMPLOYMENT BENEFITS TABLE 19
Information regarding the Issuer's pension plan can be found in the Issuer's Comprehensive Annual Financial Report under "Defined
Benefit Pension Policies". (See "Appendix D - Financial Statements for the Fiscal Year Ended September 30, 2020.")
115,692,123,870
22,291,509,381
219,908,316,431
220,876,522,612
220,311,777,399
1,914,799,192
School Building & Security,
Technology
County Buildings
(1)The City anticipates ending the fiscal year ending September 30, 2021 with an unaudited general fund balance of $6,700,000. The City
transferred roughly $1,000,000 to its capital replacement fund to fund one-time capital investments.
The following statements set forth in condensed form reflect the historical operations of the Issuer. Such summary has been prepared for
inclusion herein based upon information obtained from the Issuer’s audited financial statements and records. Reference is made to such
statements for further and complete information.
Fiscal Year Ended
2020 Assessed Valuation
$ 9,937,472,170
Issuer Purpose
College Facility
(1)
A-7
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APPENDIX B
GENERAL INFORMATION REGARDING THE TOWN OF TROPHY CLUB
AND DENTON COUNTY, TEXAS
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GENERAL INFORMATION REGARDING THE TOWN OF TROPHY CLUB
AND DENTON COUNTY, TEXAS
General:
The Town of Trophy Club (the “Town”), incorporated in January of 1985, is Texas’s first premiere planned residential and
country-club community. The Town is located in the southern portion of the Denton County (the “County”) on State Highway 114
approximately 8 miles west of the City of Grapevine, 17 miles south of the City of Denton and 14 miles northwest of the Dallas-
Fort Worth International Airport. Lake Grapevine is located approximately 2 miles north and east of the Town. The majority of
property within the Town consists of single-family and multi-family housing. The Solana Business Complex is located adjacent to
the Town's eastern border in the cities of Westlake and Southlake. Both residents and businesses of the Town (including those
located in the Trophy Club Public Improvement District) are furnished water and wastewater treatment from Trophy Club
Municipal Utility District No. 1. The Town's 2010 Census was 10,500, which is a 60.5% increase over the 2000 Census. The
Town's current estimated population estimate is 12,451.
Source: Latest Texas Municipal Report published by the Municipal Advisory Council of Texas, U.S. Census Report and
the Town of Trophy Club.
Population Trends:
Census
Report
Town of
Trophy Club
Denton
County
Current Estimate 12,451 887,207
2010 10,500 662,614
2000 6,350 432,976
1990 3,922 273,525
1980 N/A 143,126
____________
Sources: U.S. Census Bureau and the Issuer.
Principal Employers in the Town of Trophy Club:
Employer
Product or
Type of Business
Number of
Employees (2020)
Northwest Independent School District Public School District 414
Baylor Medical Center at Trophy Club Healthcare Services 230
Trophy Club Country Club Country Club and Golf Course 215
Town of Trophy Club Municipal Government 152
Tom Thumb Retail Grocery 127
HG Sply Co. Restaurant 67
Fellowship United Methodist Church Church 39
Premier Academy – Trophy Club Pre School 33
Trophy Lake Academy Preschool 30
Church at Trophy Club Lake Church 30
___________
Source: The Issuer
Trophy Club Public Improvement District
Trophy Club Public Improvement District No. 1 (the “PID”) was created principally to finance certain improvement projects for the
remaining portions of the residential component of a master-planned residential community located within the boundaries of the
Town known as "The Highlands at Trophy Club" (the "Development"). The PID is located entirely within the Town limits and is not
a political subdivision of the State and does not function as an autonomous entity, but rather is a part of the Town. The PID is also
located within the boundaries of the Development and contains approximately 610 of the 697 acres of the Development, and is
located generally to the north of Oakmont Drive, Oak Hill Drive and the Quorum Condominiums, east of the Lakes Subdivision and
Parkview Drive, south of the Corps of Engineer's property and west of the Town's eastern limit. The District contains approximately
129 acres of land for parks and open space. Hiking and biking trails are located within the open spaces, as well as cart path access
to the Trophy Club Country Club. Pocket parks surround the hiking and biking trails, which parks include benches, gazebos, picnic
tables and activity areas for children, along with other small park amenity items. The Town has issued revenue bonds backed by a
pledge of the assessments to fund certain public infrastructure within the PID. In 2015, the Town issued assessment revenue bonds
to refinance the original assessment bonds. Such assessments are pledged only to assessment revenue bonds and are not
available to pay debt service on the Town’s ad valorem tax bonds.
Education
The Town is served by the Northwest Independent School District (the “School District” or “Northwest ISD”). Northwest ISD covers
approximately 232 square miles in Denton, Wise and Tarrant Counties. In addition to serving the Town, the School District also
serves the communities of Aurora, Fairview, Haslet, Justin, Newark, Northlake, Rhome, Roanoke and portions of Flower Mound,
Fort Worth, Keller, Southlake and Westlake. Northwest ISD is comprised of 17 primary schools for grades pre- kindergarten
through fifth, 5 middle schools for grades sixth through eighth, 4 high schools for grades ninth through twelfth, and 2 alternative
education campuses for grades seventh through twelfth. One of the high schools, Byron Nelson High School, is located in the
Town of Trophy Club. All campuses offer enriched curricula with special programs for gifted/talented students as well as students
achieving below grade level, and all are equipped with computers and full cafeteria service. The School District has an estimated
enrollment of 25,040 students.
Source: Information from the Town of Trophy Club
Residential and Commercial Building Construction:
Residential (a) Commercial (b)Total
Fiscal
Year
Ended 9-30
Number
of
Permits
AV Property
Value
$$ Amount
Number
of
Permits
AV Property
Value
$$ Amount
Number
of
Permits
AV Property
Value
$$ Amount
2011 227 105,226,995 2 2,510,508 229 107,737,503
2012 338 162,338,645 3 11,914,610 341 174,253,255
2013 268 131,624,919 11 13,974,024 279 145,598,943
2014 193 99,698,578 5 15,295,596 198 114,994,174
2015 154 77,663,874 2 10,804,300 156 88,648,194
2016 118 62,254,440 7 14,765,380 125 77,019,820
2017 49 25,877,901 1 5,000,000 50 30,877,901
2018 29 15,651,991 8 47,276,566 37 62,928,557
2019 35 18,036,562 1 9,800,000 36 27,836,562
2020 39 13,313,284 0 0 39 13,313,284
2021* 1 685,000 0 0 1 685,000
_____________ (a) The Trophy Club Public Improvement District was created in May 7, 2007, which spurred an increase in residential building
activity. (b) This was the construction of a new high school, which is tax exempt.
* Current fiscal year figures are as of June 30, 2021 (unaudited)
Sources: The Issuer.
DENTON COUNTY
General
Denton County (the “County”) is located in north central Texas. The County was created in 1846 from Fannin County. The
2010 Census was 662,614, which is a 53.0% increase since 2000. The current population estimate for the County is 806,180,
according to the U.S., Census website. The County seat is the City of Denton.
The economy is diversified by manufacturing, state supported institutions, and agriculture. The Texas Almanac designates
cattle, horses, poultry, hay, wheat and sorghum as the principal sources of agricultural income. Minerals produced in Denton
County include natural gas and clay. Institutions of higher education include the University of North Texas and Texas Woman’s
University.
Nearby Lake Lewisville attracts over 3,000,000 visitors annually.
Alliance Airport, the largest industrial airport in the world is located in the county and continues to attract new transportation,
distribution, and manufacturing tenants. The Texas Motor Speedway, a major NASCAR race track, was completed in 1997 and
has had a positive impact on employment and recreational spending for the area. A major Wal-Mart distribution center located in
Sanger is adding to the growth of the northern portion of the County. Large housing developments that were begun several
years ago have been completed and new developments such as Rayzor Ranch, the Hills of Denton, Hunter Ranch and Cole
Ranch are expected to add over 28,000 new housing units in the next 20 years.
Source: Texas Municipal Report and information from the County.
Labor Force Statistics:
Denton County State of Texas
June
2021
June
2020
June
2021
June
2020
Civilian Labor Force 514,387 504,314 14,127,096 14,074,215
Total Employed 487,484 458,499 13,188,254 12,620,076
Total Unemployed 26,903 45,815 938,842 1,454,139
% Unemployed 5.2% 9.1% 6.6% 10.3%
% Unemployed (United States) 6.1% 11.2% 6.1% 11.2%
___________
Source: Texas Workforce Commission, Labor Market Information Department.
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APPENDIX C
FORM OF LEGAL OPINION OF BOND COUNSEL
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[Form of Bond Opinion]
[Date]
$4,305,000
TOWN OF TROPHY CLUB, TEXAS
COMBINATION TAX AND
REVENUE CERTIFICATES OF OBLIGATION,
SERIES 2021
WE HAVE represented the Town of Trophy Club, Texas (the “Issuer”), as its bond counsel in
connection with an issue of certificates of obligation (the “Certificates”) described as follows:
TOWN OF TROPHY CLUB, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF
OBLIGATION, SERIES 2021, dated September 1, 2021, in the principal amount of
$4,305,000.
The Certificates mature, bear interest, are subject to redemption prior to maturity and
may be transferred and exchanged as set out in the Certificates and in the ordinance
adopted by the City Council of the Issuer authorizing their issuance (the “Ordinance”).
WE HAVE represented the Issuer as its bond counsel for the purpose of rendering an opinion
with respect to the legality and validity of the Certificates under the Constitution and laws of the State
of Texas and with respect to the exclusion of interest on the Certificates from gross income for federal
income tax purposes. We have not investigated or verified original proceedings, records, data or other
material, but have relied solely upon the transcript of proceedings described in the following paragraph.
We have not assumed any responsibility with respect to the financial condition or capabilities of the
Issuer or the disclosure thereof in connection with the sale of the Certificates. Our role in connection
with the Issuer’s Official Statement prepared for use in connection with the sale of the Certificates has
been limited as described therein.
IN OUR CAPACITY as bond counsel, we have participated in the preparation of and have
examined a transcript of certified proceedings pertaining to the Certificates, on which we have relied in
giving our opinion. The transcript contains certified copies of certain proceedings of the Issuer;
customary certificates of officers, agents and representatives of the Issuer and other public officials and
other certified showings relating to the authorization and issuance of the Certificates. We also have
analyzed such laws, regulations, guidance, documents and other materials as we have deemed
necessary to render the opinions herein. We have also examined executed Certificate No. 1 of this
issue.
‐2‐
In providing the opinions set forth herein, we have relied on representations and certifications
of the City and other parties involved with the issuance of the Certificates with respect to matters solely
within the knowledge of the City and such parties, which we have not independently verified. In
addition, we have assumed for purposes of this opinion continuing compliance with the covenants in the
Ordinance, including, but not limited to, covenants relating to the tax‐exempt status of the Certificates.
BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal authority for the
issuance of the Certificates in full compliance with the Constitution and laws of the State
of Texas presently effective and, therefore, the Certificates constitute valid and legally
binding obligations of the Issuer; and
(B) A continuing ad valorem tax upon all taxable property within the Town of Trophy Club
necessary to pay the principal of and interest on the Certificates, has been levied and
pledged irrevocably for such purposes, within the limit prescribed by law, and the total
indebtedness of the Issuer, including the Certificates, does not exceed any
constitutional, statutory or other limitations. In addition, the Certificates are further
secured by a limited pledge of the surplus net revenues of the Issuer’s municipal
drainage system as provided in the Ordinance.
(C) Interest on the Certificates is excludable from gross income for federal income tax
purposes under section 103 of the Internal Revenue Code of 1986, as amended. In
addition, interest on the Certificates is not a specific preference item for purposes of the
alternative minimum tax.
The rights of the owners of the Certificates are subject to the applicable provisions of the federal
bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions
generally, and may be limited by general principles of equity which permit the exercise of judicial
discretion.
Except as stated above, we express no opinion as to the amount of interest on the Certificates
or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or the
acquisition, ownership or disposition of, the Certificates. This opinion is specifically limited to the laws
of the State of Texas and, to the extent applicable, the laws of the United States of America. Further, in
the event that the representations of the Issuer and other parties upon which we relied are determined
to be inaccurate or incomplete or the Issuer fails to comply with the covenants of the Ordinance,
interest on the Certificates could become includable in gross income for federal income tax purposes
from the date of the original delivery of the Certificates, regardless of the date on which the event
causing such inclusion occurs.
Our opinions are based on existing law and our knowledge of facts as of the date hereof and
may be affected by certain actions that may be taken or omitted on a later date. We assume no duty to
‐3‐
update or supplement our opinions, and this opinion letter may not be relied upon in connection with
any changes to the law or facts, or actions taken or omitted, after the date hereof.
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APPENDIX D
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020
(Independent Auditor’s Report, General Financial Statements and Notes to the Financial Statements – not intended to be a complete statement of
the Issuer’s financial condition. Reference is made to the complete Annual Financial Report for further information.)
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14950 Heathrow Forest Pkwy | Suite 530 | Houston, TX 77032 | Tel: 281.907.8788 | Fax: 888.875.0587 | www.BrooksWatsonCPA.com
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and
Members of the Town Council
Town of Trophy Club, Texas:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit s,each major fund, and the
aggregate remaining fund information of the Town of Trophy Club, Texas (the “Town”), as of
and for the year ended September 30,2020, and the related notes to the financial statements,
which collectively comprise the Town’s basic financial statements as listed in the table of
contents. These financial statements ar e the responsibility of the Town ’s management. Our
responsibility is to express opinions on these financial statements based on our audit.
Management’s Responsibility for the Financial Statements
The Town’s management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted in the United
States of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on thes e financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of th e United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about th e amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
2
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinions
In our opinion the 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 units,each major fund, and the aggregate remaining fund
information of the Town as of September 30, 2020 and the respective changes in financial
position and cash flows, where applicable, thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, schedule of changes in net pension liability and related
ratios, schedule of employer contributions to pension plan, schedule of changes in other
postemployment benefits liability and related ratios, general fund budgetary comparison, and
PID budgetary comparison information be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town of Trophy Club basic financial statements. The combining and
3
budgetary comparison schedules for the other governmental funds are presented for purposes
of additional analysis and are not a required part of the basic financial statements.
The supplementary information noted above 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. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the
supplementary information is fairly stated, in all material respects, in relation to the basic
financial statements as a whole.
The introductory section and the statistical sections have not been subjected to the auditing
procedures applied in the audit of the basic financial statements, and accordingly, we do not
express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March
23, 2021 on our consideration of the Town’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements, and other matters. The purpose of that report is solely to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the effectiveness of the Town’s internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Town’s internal control over
financial reporting and compliance.
BrooksWatson & Co., PLLC
Certified Public Accountants
Houston, Texas
March 23, 2021
4
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020
5
As management of the Town of Trophy Club, Texas (the “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, 2020. 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-iv of this report.
Financial Highlights
The assets and deferred outflows of the Town exceeded its liabilities and deferred inflows (net
position) at September 30, 2020 by $65,032,094.
The Town's total net position increased by $369,643. The majority of the Town's net position is
invested in capital assets or restricted for specific purposes.
The Town's governmental funds reported combined ending fund balances of $16,358,617 at
September 30, 2020, an increase of $851,580 from the prior fiscal year; this includes an increase
of $1,724,168 in the general fund, an increase of $232,970 in the debt service fund, a decrease of
$1,583,426 in the capital projects fund, a decrease of $992 in the PID No. 1 fund, and an increase
of $478,860 in the nonmajor governmental funds.
At the end of the fiscal year, unassigned fund balance for the general fund was $6,988,719 or
66%of total general fund expenditures.
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 and liabilities. The
difference between the two 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.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
6
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 me dical 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 units, 4B Economic De velopment Corporation,the
Tax Increment Re investment Zone #1, and the Crime Control and Prevention fund, which the Town is
financially accountable. Financial information for these component units are reported separately from
the financial information presented for the primary government itself.
The government-wide financial statements can be found on pages 18-25 of this report.
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 de monstrate 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
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
7
revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The Town maintains eleven individual governmental funds. Information is presented separately in the
governmental 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, 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 adopted an annual appropriated budget for each fund other than the grant fund. A
budgetary comparison statement has been provided for each fund with an adopted budget to
demonstrate compliance with their respective budget.
The basic governmental fund financial statements can be found on pages 26-33 of this report.
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 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, both of which are considered to be
major funds of the Town.
The basic proprietary fund financial statements can be found on pages 36-39 of this report.
Component Units
The Town maintains the accounting and financial statements for three discretely presented component
units. The 4B Economic Development Corporation, the Tax Increment Reinvestment Zone #1, and the
Crime Control and Prevention fund are all discretely presented component units displayed on the
government-wide financial statements.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
8
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.
The notes to the financial statements can be found on pages 41-84 of this report.
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, schedule of changes in the net pension liability and related ratios and
schedule of employer contributions for the Texas Municipal Retirement System. RSI can be found after
the basic financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted previously, net position may serve over time as a useful indicator of the Town’s financial
position. For the Town of Trophy Club, Texas, assets exceeded liabilities by $65,032,094 as of
September 30, 2020,in the primary government.
The largest portion of the Town’s net position,$52,182,832 reflects its investments in capital assets (e.g.,
land, buildings, water system, machinery and equipment, construction in progress),less any debt used
to acquire those assets that are still outstanding. The Town uses these capital assets to provide services
to citizens; consequently,these assets are not available for future spending. Although the Town’s
investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the assets themselves cannot be
used to liquidate these liabilities.
An additional portion of the Town of Trophy Club, Texas’ net position of $6,821,486 represents
resources that are subject to external restrictions on how they may be used.
At the end of the current fiscal year, the Town of Trophy Club, Texas is able to report positive balances
in all reported categories of net position for the primary government, both for the government as a
whole, as well as for its separate governmental and business-type activities. The same situation held
true for the prior fiscal year.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
9
Statement of Net Position:
The following table reflects the condensed Statement of Net Position:
Cur rent and
ot her assets $18,646,044 $721,486 $19,367,530 $18,125,219 $754,874 $18,880,093
Ca pit al assets, n et 69,044,358 1,803,997 70,848,355 71,314,642 1,824,936 73,139,578
Long-term r eceivables 23,031,503 - 23,031,503 24,371,503 - 24,371,503
Tota l As sets 110,721,905 2,525,483 113,247,388 113,811,364 2,579,810 116,391,174
3,314,815 - 3,314,815 4,387,577 - 4,387,577
Cur rent liab ilit ies 5,117,270 175,286 5,292,556 5,013,048 168,549 5,181,597
Long-term l iabilit ies 44,980,548 522,522 45,503,070 49,930,132 686,939 50,617,071
To ta l Lia bilitie s 50,097,818 697,808 50,795,626 54,943,180 855,488 55,798,668
734,483 - 734,483 317,632 - 317,632
Net Posit ion:
Net inves tment in
n et of r elated deb tcapital a ssets 51,061,357 1,121,475 52,182,832 52,718,444 982,997 53,701,441
Restrict ed 6,821,486 - 6,821,486 6,112,682 - 6,112,682
Unrestricted 5,321,576 706,200 6,027,776 4,107,003 741,325 4,848,328
Tota l Net Po sitio n $63,204,419 $1,827,675 $65,032,094 $62,938,129 $1,724,322 $64,662,451
Deferre d Outflo ws
of Re source s
2020 2019
Gove rnmental Business-Type
Activitie s Activitie sTotalActivities Total
Business-TypeGovernmental
Activitie s
Deferred Inflo ws of
Re source s
Current and other assets of governmental activities were $18,646,044 and $18,125,219 as of September
30, 2020 and September 30, 2019, respectively. The increase is primarily due to grant funds received
from the CARES Act to support expenses pertained to the COVID-19 pandemic response increasing
cash, in addition to some nonrecurring grant receivables. Long-term receivables were $23,031,503 and
$24,371,503 as of September 30, 2020 and September 30, 2019, respectively. The decrease is due to the
current year collection of the assessments, which is consistent with the PID assessment service plan.
Current liabilities of governmental activities were $5,117,270 and $5,013,048 as of September 30,2020
and September 30, 2019, respectively. The increase is primarily a result of the increase in the current
portion of long term debt in the current year, and is consistent with the debt service schedules.Total
long-term liabilities decreased by $4,949,584 or 10%due to principal payments made in the current year
and the reduction in the net pension liability.Deferred outflows and inflows of resources experienced
changes due to the market fluctuation and the changes in investment returns impacting pension
liability balances.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
10
Statement of Activities:
The following table provides a summary of the Town’s changes in net position:
Revenues
Program revenues:
Charges for services $1,797,916 $619,011 $2,416,927 $3,266,108 $539,295 $3,805,403
Operating grants
and contributions 2,056,622 - 2,056,622 1,392,787 - 1,392,787
Capital grants
and contributions - 68,146 68,146 2,127,040 3,360 2,130,400
General revenues:
Property tax 9,347,776 - 9,347,776 8,974,426 - 8,974,426
Sales tax 1,445,994 - 1,445,994 1,271,864 - 1,271,864
Franchise and local taxes 850,543 - 850,543 911,738 - 911,738
Occupancy taxes 387,759 - 387,759 669,983 - 669,983
Investment income 183,858 2,711 186,569 512,922 11,818 524,740
Other revenues 414,384 - 414,384 235,107 - 235,107
Total Revenues 16,484,852 689,868 17,174,720 19,361,975 554,473 19,916,448
Expenses
General government 3,561,521 - 3,561,521 3,650,893 - 3,650,893
Public safety 5,139,151 - 5,139,151 5,109,461 - 5,109,461
PID activities 50,152 - 50,152 26,875 - 26,875
Parks and recreation 2,593,588 - 2,593,588 2,871,283 - 2,871,283
Community development 563,312 - 563,312 717,215 - 717,215
Streets and infrastructure 2,052,018 - 2,052,018 2,371,290 - 2,371,290
Interest on long-term debt 1,639,671 - 1,639,671 2,663,286 - 2,663,286
Trophy Club Park - 229,670 229,670 - 122,186 122,186
Storm drainage - 93,912 93,912 - 131,370 131,370
Total Expenses 15,599,413 323,582 15,922,995 17,410,303 253,556 17,663,859
Change in Net Position
Before Transfers 885,439 366,286 1,251,725 1,951,672 300,917 2,252,589
Transfers 262,933 (262,933) - 86,937 (86,937) -
Special item (882,082)- (882,082) - - -
Total (619,149)(262,933)(882,082)86,937 (86,937)-
Change in Net Position 266,290 103,353 369,643 2,038,609 213,980 2,252,589
Beginning Net Position 62,938,129 1,724,322 64,662,451 60,899,520 1,510,342 62,409,862
Ending Net Position $63,204,419 $1,827,675 $65,032,094 $62,938,129 $1,724,322 $64,662,451
For the Year Ended September 30, 2020 For the Year Ended September 30, 2019
Total Total
Governmental Business-Type Primary Governmental Business-Type Primary
Activities Activities Government Activities Activities Government
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
11
Graphic presentations of selected data from the summary tables are displayed below to assist in the
analysis of the Town’s activities.
Governmental Activities –Revenues
For the year ended September 30, 2020, revenues from governmental activities totaled $16,484,852.
Property tax,grants and contributions, special assessments and sales tax are the Town’s largest general
revenue sources. Overall revenue increased $1,468,192 or 45%from the prior year. Charges for services
decreased by $1,468,192 or 45%due primarily to a reduction in the amount PID special assessments
received during the ye ar, which is consistent with the PID's special assessment service schedule and
service assessment plan, in addition to a reduction in fines and fees received compared to the prior year
due to the impact of COVID-19.Operating grants and contributions increased by $663,835 or 48%
primarily due to grants received from the CARES Act to support expenses pertained to the COVID-19
pandemic response. Capital grants and contributions decreased by $2,127,040 due to the nonrecurring
capital contributions received in the previous year from TXDOT. Sales and tax increased by $174,130 or
14%primarily due to the added online sales caused by more residents staying in and shopping online
as a result of the COVID-19 pandemic, in addition to the continued growth within the Town.
Occupancy taxes de creased by $282,224 or 42%which is directly related to the impact of COVID-19
travel restrictions. Investment income de creased by $329,064 or 64%due to the impact of the market
and realization of lower interest rates. Other revenues increased by $179,277 or 76%, primarily as a
result of nonrecurring refunds received in the park land dedication fund and a settlement received in
the park land de dication fund.All other revenues remained relatively stable when compared to the
previous year.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
12
This graph shows the governmental function expenses of the Town:
Governmental Activities –Expenses
For the year ended September 30, 2020, expenses for governmental activities totaled $15,599,413.This
represents a decrease of $1,810,890 or 10%from the prior year. The Town’s largest expense category is
public safety, which totaled $5,139,151 at year-end.Parks and recreation expenses decreased by
$277,695 or 10%primarily due to a reduction in nonrecurring non-capital park projects in the previous
year. Community development expenses decreased by $153,903 or 21%due to a reduction in the
amount of professional services provided when compared to the previous year.Streets and
infrastructure expenses reduced by $319,272 or 13%due to a reduction in the current year depreciation
expenses for street and infrastructure capital assets.Interest on long-term debt decreased by $1,023,615
or 38%which is consistent with the debt service schedule and is primarily due to the reduction in the
interest portion of the debt service payment for the special assessment bond.All other expenses
remained relatively consistent when compared to the previous year. During the current year, the town
disposed of the old town hall, and any related assets, resulting in a loss on disposal of asset which the
Town recognized as a special item in the amount of $882,082 in the current year.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
13
Business-type activities are shown comparing operating costs to revenues generated by related
services.
For the year ended September 30, 2020, charges for services by business-type activities totaled $619,011.
This is an increase of $79,716 or 15%from the previous year.The increase was primarily due to the
park being temporarily closed for a portion of the previous year for repairs and maintenance and after
having been flooded.In addition,there was an increase of $64,786 in capital grants, which was a result
of a new nonrecurring Texas Parks and Wildlife grant received in the current year.
Total business-type activity expenses increased by $70,026 or 28%.Most of the increase is attributed to
the unanticipated expense of a reimbursement of past received grant funds that during the current year
FEMA determined to have been paid to the Town in error.
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 spending at the end of the year.
At September 30, 2020, the Town’s governmental funds reported combined fund balances of
$16,358,617, an increase of $851,580 in comparison with the prior year. Approximately 43%of this
amount,$6,988,719,constitutes unassigned fund balance, which is available for spending at the
government’s discretion. The remainder of the fund balance is either nonspendable, restricted or
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
14
committed to indicate that it is 1) not in spendable form $389,112 or 2) committed for particular purposes
$174,654.
As of the end of the year the general fund reflected a total fund balance of $7,547,423.General fund
balance increased by $1,724,168 during the current year. This increase can be attributed to greater than
anticipated revenues, caused primarily to grant funds received to assist the Town in supporting
expenses associated with the COVID-19 pandemic, in addition to expenditures being less than
anticipated, primarily in community development and parks and recreation, caused by many programs
in these departments not occurring due to the COVID-19 pandemic.
The debt service fund had an ending fund balance of $706,640 at September 30, 2020, an increase of
$232,970 when compared to the previous year. The increase in the total fund balance was a result of
transfers from other funds. During the year, the fund recorded total principal and interest payments of
$2,355,930 and property tax revenue of $2,328,496.
The capital projects fund had an ending fund balance of $1,984,646.The capital projects fund decreased
$1,583,426 when compared to the previous year. The decrease was a result of current year capital
outlay expenditures exceeding interest income, which is consistent with that which was budgeted.
The PID No. 1 fund reflected an ending fund balance of $3,971,196.The fund balance decreased $992,
which is a result of debt service expenditures exceeding property assessments and other revenues.
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 largest
proprietary fund, the Storm Drainage Utility fund,totaled $1,731,975. Unrestricted net position at the
close of the fiscal year for the Town’s utility funds amounted to $706,200, an increase of $35,125 over
the previous year.Total investment in capital assets, net of related debt was $1,121,475,and capital
assets,net of depreciation totaled $1,803,997.
GENERAL FUND BUDGETARY HIGHLIGHTS
Total budgeted revenues of $11,311,480 were less than actual revenues of $12,247,375, resulting in a
positive revenue variance of $935,895.The positive variance was primarily the result of greater than
expected revenues from property tax, sales tax, license and permits, and intergovernmental revenues.
Total budgeted expenditures of $11,699,943 were greater than actual expenditures of $10,644,689,
resulting in a positive expenditure variance of $1,055,254. The variance in total expenditures was
primarily due to positive variances within the community development and parks and recreation
departments.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
15
CAPITAL ASSETS
As of the end of the year, the Town’s governmental activities funds had invested $69,044,358 in a
variety of capital assets and infrastructure, net of accumulated depreciation. The Town’s business-type
activities funds had invested $1,803,997 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.
Major capital asset events during the current year include the following:
Investments in Trophy Club Drive, Indian Creek, Phoenix Drive and Meadowbrook Lane
totaling $1,599,123.
Purchase of new vehicles for fire and police totaling $84,721.
Purchase of new equipment for parks and recreation department totaling $219,274.
Fence replacement at Trophy Club Park totaling $33,365.
More detailed information about the Town’s capital assets is presented in note 4.C to the financial
statements.
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 $3,210,455 for governmental
activities and $159,418 for business-type activities, from the prior year. The total bonds payable at the
close of the fiscal year, net of premiums and discounts, was $46,651,927 for governmental-activities and
$682,522 for business-type activities. Of this amount, $19,464,000 (excluding unamortized
premium/discount) comprises of bonded debt backed by the full faith and credit of the Town, and the
remaining represents bonds secured solely by self-supporting activities.
More detailed information about the Town’s long-term liabilities is presented in note 4.E to the
financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
The Town is approximately 90% residential, and 10% commercial, with both residential and
commercial development substantially built out.The Town issued 50 residential construction permits
in fiscal year 2020 and 1 commercial permit for a total of $27,396,468. The Town does not expect this
trend to continue. The Town estimates only 50-60 additional residential permits will be pulled in the
future and 3-5 large commercial permits.
PD-30 finished most commercial construction in fiscal year 2020 and the Aloft Hotel and the
townhouses are to be completed in FY21. The large multi-family complex and a large development of
retail along SH114 are completed. There are still 2-3 commercial buildings projected in the PD-30 area.
Town of Trophy Club, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2020
16
In fiscal ye ar 2021, General Fund revenues are budgeted to increase 4.25% over fiscal year 2020
estimated revenues, while expenditures are budgeted to increase by 9.83% over fiscal year 2020
estimated expenditures.The larger changes are due to estimates and expenditure reductions during the
COVID-19 pandemic.
The fiscal year 2021 budget maintained the ad valorem tax rate to $0.446442 per hundred dollars of
assessed value.
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
Finance Manager, 1 Trophy Wood Drive,Trophy Club, Texas, 76262. This information can also be
accessed on the Town of Trophy Club’s website at www.trophyclub.org.
BASIC FINANCIAL STATEMENTS
17
Current assets:
Cash and cash equivalents $16,571,967 $627,565 $17,199,532
Taxes receivable, net 410,117 - 410,117
Special assessments receivable - current 1,340,000 - 1,340,000
Receivables, net 289,613 40,753 330,366
Intergovernmental receivable - 50,271 50,271
Due from other governments 31,738 - 31,738
Prepaid and other assets 2,609 2,897 5,506
18,646,044 721,486 19,367,530
Noncurrent assets:
Capital assets:
Non-depreciable 10,478,676 - 10,478,676
Net depreciable capital assets 58,565,682 1,803,997 60,369,679
Advances to component unit 386,503 - 386,503
Special assessments receivable - noncurrent 22,645,000 - 22,645,000
92,075,861 1,803,997 93,879,858
110,721,905 2,525,483 113,247,388
Deferred Outflows of Resources
Pension contributions 539,353 - 539,353
OPEB contributions 824 - 824
OPEB experience 34,332 - 34,332
Deferred charge on refunding 2,740,306 - 2,740,306
3,314,815 - 3,314,815
Activities Activities Total
Town of Trophy Club, Texas
STATEMENT OF NET POSITION (Page 1 of 2)
September 30, 2020
Primary Government
Business-TypeGovernmental
Total Current Assets
Total Noncurrent Assets
Total Deferred Outflows of Resources
Assets
Total Assets
18
$469,490
-
-
156,600
-
-
-
626,090
2,538,765
335,252
-
-
2,874,017
3,500,107
-
-
-
-
-
Component
Units
19
Liabilities
Current liabilities:
Accounts payable 562,749 13,422 576,171
Accrued liabilities 506,503 - 506,503
Accrued interest payable 328,628 1,864 330,492
Compensated absences - current 311,390 - 311,390
Long-term debt due within one year 3,408,000 160,000 3,568,000
5,117,270 175,286 5,292,556
Noncurrent liabilities:
Long-term debt due in more than one year 43,243,927 522,522 43,766,449
Compensated absences - noncurrent 34,599 - 34,599
OPEB liability 311,242 - 311,242
Net pension liability 1,390,780 - 1,390,780
Advances from primary government - - -
44,980,548 522,522 45,503,070
50,097,818 697,808 50,795,626
Deferred Inflows of Resources
Pension investment earnings 609,044 - 609,044
Pension experience 115,038 - 115,038
Pension changes in assumptions 550 - 550
OPEB assumption changes 9,851 - 9,851
734,483 - 734,483
Net investment in capital assets 51,061,357 1,121,475 52,182,832
Restricted for:
Municipal court 32,838 - 32,838
Debt service 706,640 - 706,640
Public safety 9,886 - 9,886
PID Activities 3,971,196 - 3,971,196
Street maintenance 184,556 - 184,556
Tourism 1,530,643 - 1,530,643
Parks 385,727 - 385,727
Unrestricted 5,321,576 706,200 6,027,776
$63,204,419 $1,827,675 $65,032,094
See Notes to Financial Statements.
Total Net Position
Total Deferred Inflows of Resources
Business-Type
Net Position
Total Liabilities
September 30, 2020
Governmental
Activities Activities
Total Noncurrent Liabilities
Town of Trophy Club, Texas
STATEMENT OF NET POSITION (Page 2 of 2)
Total
Total Current Liabilities
Primary Government
20
5,882
-
8,402
-
110,000
124,284
2,045,124
-
-
-
386,503
2,431,627
2,555,911
-
-
-
-
718,893
-
-
222,811
-
-
-
-
2,492
$944,196
Component
Units
21
Primary Government
Governmental Activities
General government $746,961 $479,513 $799,938 $-
Manager's office 708,646 - - -
Human resources 423,299 - -
Finance 607,160 - - -
Information services 636,688 - - -
Legal 102,606 - - -
Court 79,609 128,925 - -
Police 2,556,947 - 743,066 -
Fire 1,221,699 - 513,618 -
Emergency medical services 1,280,896 277,313 - -
Facilities management 336,161 - - -
Parks 2,593,588 - - -
Community development 498,920 - - -
Tourism 64,392 - - -
Streets and infrastructure 2,052,018 - - -
PID Activities 50,152 912,165 - -
Interest on long-term debt 1,639,671 - - -
15,599,413 1,797,916 2,056,622 -
Business-Type Activities
Trophy Club Park 229,670 188,708 - 68,146
Storm drainage utility 93,912 430,303 - -
323,582 619,011 - 68,146
$15,922,995 $2,416,927 $2,056,622 68,146
See Notes to Financial Statements.
Total Governmental Activities
Functions/Programs Services
Total Business-Type Activities
Total Primary Government
Expenses
Town of Trophy Club, Texas
STATEMENT OF ACTIVITIES (Page 1 of 2)
For the Year Ended September 30, 2020
Contributions
Program Revenues
Grants and
Operating Capital
Contributions
Charges for Grants and
22
$532,490 $- $532,490 $-
(708,646) - (708,646) -
(423,299) - (423,299) -
(607,160) - (607,160) -
(636,688) - (636,688) -
(102,606) - (102,606) -
49,316 - 49,316 -
(1,813,881) - (1,813,881) -
(708,081) - (708,081) -
(1,003,583) - (1,003,583) -
(336,161) - (336,161) -
(2,593,588) - (2,593,588) -
(498,920) - (498,920) -
(64,392) - (64,392) -
(2,052,018) - (2,052,018) -
862,013 - 862,013 -
(1,639,671) - (1,639,671) -
(11,744,875) - (11,744,875) -
- 27,184 27,184 -
- 336,391 336,391 -
- 363,575 363,575 -
(11,744,875) 363,575 (11,381,300) -
Component
Units
Business-Type
Activities
Governmental
Activities
Net (Expense) Revenue and Changes in Net Position
Primary Government
Total
23
Component Units
4B Economic Development Corporation 171,811 ---
Tax Increment Reinvestment Zone #1 13,411 ---
Crime Control and Prevention 200,994 -5,669
Total Component Units $386,216 $-$5,669 $-
General Revenues:
Taxes
Property taxes
Sales and mixed beverage taxes
Franchise and local taxes
Occupancy tax
Other revenues
Investment income
Transfers
Special item - asset disposal
Total General Revenues and Transfers
Change in Net Position
Beginning Net Position
Ending Net Position
See Notes to Financial Statements.
Town of Trophy Club, Texas
STATEMENT OF ACTIVITIES (Page 2 of 2)
For the Year Ended September 30, 2020
Program Revenues
Grants and Grants and
Operating Capital
Expenses Services Contributions Contributions
Charges for
24
-
(171,811)
(13,411)
(195,325)
(380,547)
9,347,776 -9,347,776 129,579
1,445,994 -1,445,994 911,951
850,543 -850,543 -
387,759 -387,759 -
414,384 -414,384 67,306
183,858 2,711 186,569 -
262,933 (262,933) --
(882,082) -(882,082) -
12,011,165 (260,222) 11,750,943 1,108,836
266,290 103,353 369,643 728,289
62,938,129 1,724,322 64,662,451 215,907
$63,204,419 $1,827,675 $65,032,094 $944,196
Net (Expense) Revenue and Changes in Net Position
Primary Government
Component
UnitsActivitiesActivitiesTotal
Governmental Business-Type
25
Cash and cash equivalents $7,613,333 $706,054 $2,194,239 $3,971,196
Taxes receivable, net 318,051 19,181 - -
Special assessments receivable - - - 23,985,000
Accounts receivable, net 289,613 - - -
Due from other governments 31,738 - - -
Due from other funds - - - -
Prepaid and other assets 2,609 - - -
Advances to component units 386,503 - - -
$8,641,847 $725,235 $2,194,239 $27,956,196
Liabilities
Accounts payable $341,838 $- $209,593 $-
Accrued liabilities 506,503 - - -
848,341 - 209,593 -
Deferred Inflows of Resources
Unavailable revenue - property taxes 62,671 18,595 - -
Unavailable revenue - fines and forfeitures 25,509 - - -
Unavailable revenue - emergency medical services 132,586 - - -
Unavailable revenue - special assessments - - - 23,985,000
Unavailable revenue - property liens 25,317 - - -
Total Deferred Inflows of Resources 246,083 18,595 - 23,985,000
Nonspendable:
Prepaid items 2,609 - - -
Advances to component unit 386,503 - - -
Restricted for:
Debt service - 706,640 - -
Capital projects - - 1,984,646 -
Municipal court - - - -
Public safety - - - -
Street maintenance - - - -
Tourism - - - -
Parks - - - -
PID Activities - - - 3,971,196
Committed for:
Police 169,592 - - -
Recreation programs - - - -
Unassigned 6,988,719 - - -
7,547,423 706,640 1,984,646 3,971,196
$8,641,847 $725,235 $2,194,239 $27,956,196
Total Liabilities
Total Assets
PID No. 1
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
Total Fund Balances
Assets
General
Debt Capital
Fund Balances
See Notes to Financial Statements.
Town of Trophy Club, Texas
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2020
Service Projects
26
$2,087,145 $16,571,967
72,885 410,117
- 23,985,000
- 289,613
- 31,738
- -
- 2,609
- 386,503
$2,160,030 $41,677,547
$11,318 $562,749
- 506,503
11,318 1,069,252
- 81,266
- 25,509
- 132,586
- 23,985,000
- 25,317
- 24,249,678
- 2,609
- 386,503
- 706,640
- 1,984,646
32,838 32,838
9,886 9,886
184,556 184,556
1,530,643 1,530,643
385,727 385,727
- 3,971,196
- 169,592
5,062 5,062
- 6,988,719
2,148,712 16,358,617
$2,160,030 $41,677,547
Total
Governmental
Funds
Nonmajor
Governmental
Funds
27
28
Fund Balances - Total Governmental Funds $16,358,617
Adjustments for the Statement of Net Position:
Capital assets used in governmental activities are not current financial
resources and, therefore, not reported in the governmental funds.
Capital assets - non-depreciable 10,478,676
Capital assets - net depreciable 58,565,682
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are deferred in the governmental funds.24,249,678
Deferred inflows of resources, represents an acquisition of net position that applies
to a future period(s) and so will not be recognized as an inflow of resources
(revenues) until that time
Pension experience (115,038)
Pension changes in assumptions (550)
Pension investment earnings (609,044)
OPEB changes in assumptions (9,851)
Deferred outflows of resources, represent a consumption of net position that applies
to a future period(s) and is not recognized as an outflow of resources (expense/
expenditures) until then
Pension contributions 539,353
OPEB experience 34,332
OPEB contributions 824
Some liabilities, including bonds payable and deferred charges, are not reported as
liabilities in the governmental funds.
Accrued interest (328,628)
Deferred charges on bond refunding 2,740,306
Bond premium (3,872,927)
Net pension liability (1,390,780)
OPEB liability (311,242)
Compensated absences (345,989)
Non-current liabilities due in one year (3,408,000)
Non-current liabilities due in more than one year (39,371,000)
Net Position of Governmental Activities $63,204,419
September 30, 2020
GOVERNMENTAL FUNDS
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION
Town of Trophy Club, Texas
29
Revenues
Property tax $7,031,351 $2,328,496 $-
Sales and mixed beverage taxes 1,158,083 --
Franchise and local taxes 850,543 --
Occupancy tax ---
Special assessments ---
License and permits 479,513 --
Intergovernmental 2,005,341 51,281 -
Charges for services 292,490 --
Fines and forfeitures 128,166 --
Investment income 75,137 9,664 44,234
Other revenue 226,751 --
12,247,375 2,389,441 44,234
Expenditures
Current:
General government --6,212
Manager's office 682,231 --
Human resources 428,851 --
Finance 601,249 --
Information services 621,055 --
Legal 102,606 --
Court 77,456 --
Police 2,500,524 --
Fire 1,256,964 --
Emergency medical services 1,219,728 --
Facilities management 336,161 --
Parks 2,041,863 -
Community development 491,941 --
Tourism ---
Streets 192,608 --
PID activities ---
Debt Service:
Principal 88,205 1,718,000 -
Interest and fiscal charges 3,247 637,930 -
Bond issuance costs -67,636
Capital outlay --1,621,448
10,644,689 2,423,566 1,627,660
1,602,686 (34,125) (1,583,426)
Service
Debt
General Projects
Total Expenditures
Over (Under) Expenditures
Excess (Deficiency) of Revenues
Total Revenues
Town of Trophy Club, Texas
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS (Page 1 of 2)
For the Year Ended September 30, 2020
Capital
30
$-$-$9,359,847
-287,911 1,445,994
--850,543
-387,759 387,759
2,187,165 -2,187,165
--479,513
--2,056,622
-4,457 296,947
-4,711 132,877
42,568 12,255 183,858
-159,864 386,615
2,229,733 856,957 17,767,740
--6,212
--682,231
--428,851
--601,249
--621,055
--102,606
-409 77,865
--2,500,524
--1,256,964
--1,219,728
--336,161
-2,424 2,044,287
--491,941
-64,385 64,385
-195,811 388,419
50,152 -50,152
1,275,000 - 3,081,205
905,573 - 1,546,750
--67,636
-113,568 1,735,016
2,230,725 376,597 17,303,237
(992) 480,360 464,503
Nonmajor Total
Governmental
PID No. 1 Funds
Governmental
Funds
31
Other Financing Sources (Uses)
Transfers in 61,500 202,933 -
Transfers (out)- - -
Refunding bonds issued - 3,550,000 -
Payment to refunding bond escrow agent - (3,485,838) -
Sale of general capital assets 32,213 - -
Insurance recoveries 27,769 - -
121,482 267,095 -
1,724,168 232,970 (1,583,426)
Beginning fund balances 5,823,255 473,670 3,568,072
$7,547,423 $706,640 $1,984,646
See Notes to Financial Statements.
Debt Capital
Ending Fund Balances
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Town of Trophy Club, Texas
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS (Page 2 of 2)
For the Year Ended September 30, 2020
General Service Projects
32
- - 264,433
- (1,500) (1,500)
- - 3,550,000
- - (3,485,838)
- - 32,213
- - 27,769
- (1,500) 387,077
(992)478,860 851,580
3,972,188 1,669,852 15,507,037
$3,971,196 $2,148,712 $16,358,617
Funds
Nonmajor Total
GovernmentalGovernmental
PID No. 1 Funds
33
34
Amounts reported for governmental activities in the statement of activities are
different because:
Net changes in fund balances - total governmental funds $851,580
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 expense.
2,048,348
(3,404,337)
Capital outlay
Depreciation expense
Carrying value of capital assets disposed (914,295)
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds.(1,310,657)
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences (40,704)
Accrued interest (100,893)
Pension expense 80,987
OPEB expense (36,390)
The issuance of long-term debt (e.g., bonds, leases, certificates of obligation)
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 they are 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.
Amortization of deferred loss on refunding (206,009)
Amortization of premium 287,455
Principal payments on long-term debt 3,081,205
Current year debt refunding 3,480,000
Bond issuance (3,550,000)
$266,290
See Notes to Financial Statements.
Change in Net Position of Governmental Activities
For the Year Ended September 30, 2020
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
35
Current Assets
Cash and cash equivalents $13,079 $614,486 $627,565
Accounts receivable - 40,753 40,753
Intergovernmental receivable 50,271 - 50,271
Prepaid items 2,897 - 2,897
66,247 655,239 721,486
Noncurrent Assets
Capital assets:
Net depreciable capital assets 42,875 1,761,122 1,803,997
42,875 1,761,122 1,803,997
109,122 2,416,361 2,525,483
Current Liabilities
Accounts payable $13,422 $- $13,422
Accrued interest - 1,864 1,864
Long-term debt due within one year - 160,000 160,000
13,422 161,864 175,286
Noncurrent Liabilities
Long-term debt due in more than one year - 522,522 522,522
13,422 684,386 697,808
Net investment in capital assets 42,875 1,078,600 1,121,475
Unrestricted 52,825 653,375 706,200
$95,700 $1,731,975 $1,827,675
See Notes to Financial Statements.
Total Net Position
Net Position
Liabilities
Total Liabilities
Town of Trophy Club, Texas
Park Total
Total Current Liabilities
Assets
Total Current Assets
Utility
Storm DrainageTrophy Club
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2020
Total Noncurrent Assets
Total Assets
36
Operating Revenues
Charges for services $188,708 $430,303 $619,011
Intergovernmental revenues 68,146 - 68,146
256,854 430,303 687,157
Operating Expenses
Salaries and benefits 44,572 - 44,572
Supplies and materials 13,121 - 13,121
Repairs and maintenance 63,108 - 63,108
Utilities 9,631 13,024 22,655
Other operating expenses 96,017 34,224 130,241
Depreciation 3,221 51,083 54,304
229,670 98,331 328,001
27,184 331,972 359,156
Nonoperating Revenues (Expenses)
Investment income - 2,711 2,711
Interest and fiscal expense - 4,419 4,419
- 7,130 7,130
27,184 339,102 366,286
Capital Contributions and Transfers
Transfers (out)(20,000) (242,933) (262,933)
Total Capital Contributions and Transfers (20,000) (242,933) (262,933)
7,184 96,169 103,353
Beginning net position 88,516 1,635,806 1,724,322
$95,700 $1,731,975 $1,827,675
See Notes to Financial Statements.
Town of Trophy Club, Texas
Trophy Club
Total Nonoperating Revenues (Expenses)
Income Before Capital Contributions and Transfers
Park
Storm Drainage
Utility
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
For the Year Ended September 30, 2020
Total
Ending Net Position
Total Operating Revenues
Total Operating Expenses
Change in Net Position
Operating Income (Loss)
37
Cash Flows from Operating Activities
Payments to employees $(44,572) $- $(44,572)
Payments to suppliers (101,792) (50,474) (152,266)
Receipts from customers 206,583 425,155 631,738
60,219 374,681 434,900
Cash Flows from Noncapital Financing Activities
Transfers (out)(20,000) (242,933) (262,933)
(20,000) (242,933) (262,933)
Cash Flows from Capital and Related Financing Activities
Acquisition and construction of capital assets (33,365) - (33,365)
Interest paid on capital debt - 5 5
Principal paid on capital debt - (155,000) (155,000)
(33,365) (154,995) (188,360)
Cash Flows from Investing Activities
Interest on investments - 2,711 2,711
- 2,711 2,711
6,854 (20,536) (13,682)
Beginning cash and cash equivalents 6,225 635,022 641,247
$13,079 $614,486 $627,565
See Notes to Financial Statements.
Net Cash Provided (Used) by Operating Activities
Park Total
Ending Cash and Cash Equivalents
Net Cash Provided by Investing Activities
Utility
Net Cash Provided (Used) by Noncapital Financing
Activities
Net Cash Provided (Used) by Capital and Related
Financing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Town of Trophy Club, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS (Page 1 of 2)
For the Year Ended September 30, 2020
Trophy Club Storm Drainage
38
Reconciliation of Operating Income (Loss)
to Net Cash Provided (Used) by Operating Activities
Operating Income (Loss)$27,184 $331,972 $359,156
Adjustments to reconcile operating
income (loss) to net cash provided (used):
Depreciation 3,221 51,083 54,304
Changes in Operating Assets and Liabilities:
(Increase) Decrease in:
Accounts receivable (50,271) (5,148) (55,419)
Prepaid (1,447) - (1,447)
Increase (Decrease) in:
Accounts payable 4,960 (3,226) 1,734
Due from other funds 76,572 - 76,572
$60,219 $374,681 $434,900
See Notes to Financial Statements.
Net Cash Provided (Used) by Operating Activities
Total
Storm Drainage
UtilityPark
Trophy Club
For the Year Ended September 30, 2020
Town of Trophy Club, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS (Page 2 of 2)
39
40
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS
September 30, 2020
41
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Town of Tr ophy Club (the “Town”) is a “home rule town” incorporated in 1985. The Town
operates under a Council-Manager form of government and provides the following services as
authorized by its charter: council, public safety (police and emergency me dical services), parks,
public works (public improvements, streets, planning and zoning), and general administrative
services.
The accounting and reporting policies of the Town relating to the funds included in the
accompanying basic financial statements conform to accounting principles generally accepted in
the United States of America applicable to state and local governments. Ge nerally Accepted
Accounting Principles for local governments include those principles prescribed by the
Governmental Accounting Standards Board (GASB). The more significant accounting policies of
the Town are described below.
A.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. All fiduciary activities are reported only in the fund financial statements.
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 certain legally separate component units for which the
primary government is financially accountable.
B. 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. Discretely presented component units are reported in separate columns
in the government-wide financial statements to emphasize that they are legally separate from the
government.
As required by accounting principles generally accepted in the United States of America, these
financial statements include the primary government and organizations for which the primary
government is financially accountable and other organizations for which the nature and
significance of their relationship with the primary government are such that exclusion would
cause the reporting entity's financial statements to be misleading or incomplete.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
42
The definition of the reporting entity is based primarily on the notion of financial accountability.
A primary government is financially accountable for the organizations that make up its legal
entity. It is also financially accountable for legally separate organizations if its officials appoint a
voting majority of an organization's governing body and either it is able to impose its will on that
organization or there is a potential for the organization to provide specific financial benefits to, or
to impose specific financial burdens on, the primary government. A primary government may
also be financially accountable for governmental organizations that are fiscally dependent on it.
A primary government has the ability to impose its will on an organization if it can significantly
influence the programs, projects, or activities of, or the level of services performed or provided
by, the organization. A financial benefit or burden relationship exists if the primary government
(a) is entitled to the organization's resources; (b) is legally obligated or has otherwise assumed the
obligation to finance the deficits of, or provide financial support to, the organization; or (c) is
obligated in some manner for the debt of the organization.
Some organizations are included as component units because of their fiscal dependency on the
primary government. An organization is fiscally dependent on the primary government if it is
unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without
approval by the primary government.
Discretely Presented Component Units
4B Economic Development Corporation
The 4B Economic Development Corporation (“4B”) serves all citizens of the Town and is
governed by a board appointed by the Town’s elected council. The Town can impose its will
on the 4B and affect the day-to-day operations of the 4B by removing appointed board
members at will. The scope of public service of the 4B benefits the Town and its citizens and
is operated within the geographic boundaries of the Town.Since the 4B'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.
Tax Increment Reinvestment Zone #1
The Tax Increment Reinvestment Zone #1 (“TIRZ #1”) 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 TIRZ #1 and affect the day-to-day operations of the TIRZ #1 by removing appointed
board members at will. The scope of public service of the TIRZ #1 benefits the Town and its
citizens and is operated within the geographic boundaries of the Town.Since the TIRZ's
governing body is not substantively the same as the governing body of the primary
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
43
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.
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 me mber board appointed by the Town Council. The
annual budget and issuance of debt must be approved by the Town Council. Since the
CCPD'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 individual component units are not prepared.
C. Basis of Presentation -Government-Wide and Fund 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 government’s enterprise funds. Separate
financial statements are provided for governmental funds and the proprietary funds.
As discussed earlier, the government has three discretely presented component units which are
shown in separate columns 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 ge neral rule are payments where the amounts are
reasonably equivalent in value to the interfund services provided and other charges between the
various other functions of the government. Elimination of these charges would distort the direct
costs and program revenues reported for the various functions concerned.
The fund financial statements provide information about the government’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.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
44
Governmental Funds
Governmental funds are those funds through which most governmental functions are typically
financed.The government 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 fund
are accounted for in this fund. General operating expenditures, fixed charges and capital
improvement costs that are not paid through other funds are paid from the General Fund.
Debt Service Fund
The Debt Se rvice 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 De bt 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.
Proprietary Fund Types
Proprietary funds are used to account for activities that are similar to those often found in the
private sector. All assets, liabilities, equities, revenues, expenses, and transfers relating to the
government’s business activities are accounted for through proprietary funds. The measurement
focus is on de termination of net income, financial position, and cash flows. Proprietary funds
distinguish operating revenues and expenses from non-operating items. Operating revenues
include charges for services. Operating expenses include costs of materials, contracts, personnel,
and de preciation. All revenues and expenses not meeting this definition are reported as non-
operating revenues and expenses. Proprietary fund types follow GAAP prescribed by the
Governmental Accounting Standards Board (GASB) and all Financial Accounting Standards
Board’s standards issued prior to November 30, 1989. Subsequent to this date, the Town
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
45
accounts for its enterprise funds as presented by GASB. The proprietary fund types used by the
Town include enterprise funds.
The government reports the following major proprietary funds:
Trophy Club Park Fund
The Trophy Club park fund is utilized to account for funds received and expended for the
maintenance of park land.
Storm Drainage Utility Fund
The storm drainage fund accounts for the storm drainage utility fee designated for the
maintenance of the Town's storm drainage system.
Additionally, the Town reports for the following Non-major governmental 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.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
46
Grant Fund
This fund is used to account for grant monies received by and expended by the Town.
D. 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 transactions or events for recognition in the financial statements.
The government-wide 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 ye ar 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 as soon as
they are both me asurable and available. Re venues 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 government 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 expenditures, as well
as expenditures related to compensated absences, and claims and judgments, are recorded only
when payment is due. General capital asset acquisitions are reported as expenditures in
governmental funds. Issuance of long-term debt and acquisitions under capital 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 pe riod. Entitlements are recorded as revenues when all eligibility requirements
are met, including any time requirements, and the amount is received during the period or
within the availability period for this revenue source (within 60 days of year end). Expenditure-
driven grants are recognized as revenue when the qualifying expenditures have been incur red
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 60 days of year end). All
other revenue items are considered to be measurable and available only when cash is received by
the government.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
47
Proprietary, pension and other postemployment benefit trust funds are reported using the
economic resources measurement focus and the accrual basis of accounting. Agency funds have no
measurement focus but utilize the accrual basis of accounting for reporting its assets and liabilities.
E. Assets, Liabilities, Deferred Outflows/Inflows, and Fund Equity or Net Position
1.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. Fair value is the
amount at which a financial instrument could be exchanged in a current transaction between
willing parties.
2.Fair Value
The Town has applied Governmental Accounting Standards Board (GASB) Statement No. 72, Fair
Value Measurement and Application. GASB Statement No. 72 provides guidance for determining
a fair value measurement for reporting purposes and applying fair value to certain investments
and disclosures related to all fair value measurements.
3.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
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
48
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.
4.Inventories and Prepaid Items
The costs of governmental fund type inventories are recorded as expenditures when the related
liability is incurred, (i.e., the purchase method). The inventory is carried at historical cost using
the first-in/first-out method. Certain payments to vendors reflect costs applicable to future
accounting periods (prepaid expenditures) are recognized as expenditures when utilized.
5.Restricted Assets
Certain proceeds of governmental and enterprise fund cash and investments are classified as
restricted assets on the statement of net position because their use is limited by applicable bond
covenants, legal restrictions, or restrictions in place by outside parties.
6.Capital Assets
Capital 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 columns in the government-wide financial statements. Capital assets are defined
by the government, as assets with an initial individual cost of more than $5,000 and an estimated
useful life in excess of one year. Such assets are recorded at historical cost or estimated historical
cost if purchased or constructed. Donated capital assets, donated works of art and similar items,
and capital assets received in a service concession are recorded at acquisition value on the date of
donation. Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest costs incurred in connection with construction of enterprise fund capital
assets are capitalized when the effects of capitalization materially impact the financial statements.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets’ lives are not capitalized.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
49
Property, plant, and equipment of the primary government, as well as the component units, are
depreciated using the straight-line method over the following estimated useful years.
Buildings 30 Years
Improvements other than buildings 10-30 Years
Improvements other than buildings (streets)30 Years
Machinery and equipment 7-15 Years
Vehicles 5-10 Years
Water system 25 Years
Infrastructure (storm drainage system)40 Years
7. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section
for deferred outflows / inflows of resources. This separate financial statement element, deferred
outflows of resources, represents a consumption of net position that applies to a future period(s)
and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The
government only has three items that qualify for reporting in this category. One example is the
deferred charge on refunding reported in the government-wide statement of net position. A
deferred charge on refunding results form the difference in the carrying value of refunded debt
and its reacquisition price. This amount is deferred and amortized over the shorter of the life of
the refunded or refunding debt.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred inflows
of resources, represents an acquisition of net position that applies to a future period(s) and so will
not be recognized as an inflow of resources (revenue) until that time. The government has only
one type of item, which arises only under a modified accrual basis of accounting that qualifies for
reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from
property taxes, fines and forfeitures and ambulance fees. These amounts are deferred and
recognized as an inflow of resources in the period that the amounts become available. Deferred
inflows of resources can also occur at the government wide level due to differences between
investment gains and losses realized on pension investments compared to assumption used
within the pension actuarial valuation model.
8. Accumulated Vacation, Compensated Time and Sick Leave
It is the Town’s policy to permit employees to accumulate earned but unused vacation pay
benefits. No liability is reported for unpaid accumulated sick leave. All vacation pay is accrued
when incurred in the government-wide financial statements. A liability for these amounts is
reported in governmental funds only if they are expected to be liquidated with expendable
available financial resources, for example, as a result of employee resignations and retirements.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
50
9.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. The
long-term debt consists primarily of bonds payable and accrued compensated absences.
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. However, claims and judgments
paid from governmental funds are reported as a liability in the fund financial statements
only for the portion expected to be financed from expendable available financial resources.
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 using the effective interest method, if material. Bonds
payable are reported net of the applicable bond premium or discount. Issuance costs are
expensed when incurred.
The net pension liability is included within long term debt. This liability is valued using an
actuarial model and represents the difference between the plan fiduciary net position and the net
pension liability consistent with GASB statement no. 68. The portion of this liability presented as
a current liability is based on actuarial calculations for estimated future payments of benefits and
refunds over the twelve months following yearend.
10.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 Te xas Municipal Retirement System (TMRS) and additions to/deductions
from TMRS’s Fiduciary Net Position have been de termined 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.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
51
11. Other Postemployment Benefits (“OPEB”)
The Town has implemented GASB Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions. This statement applies to the individual
employers (TMRS cities) in the TMRS Supplemental Death Benefits (SDB) plan, with retiree
coverage. The TMRS SDB covers both active and retiree benefits with no segregation of assets,
and therefore doesn’t meet the definition of a trust under GASB No. 75 (i.e., no assets are
accumulated for OPEB) and as such the SDB is considered to be an unfunded OPEB plan. For
purposes of reporting under GASB No. 75, the retiree portion of the SDB is not considered a cost
sharing plan and is instead considered a single employer, defined benefit OPEB plan. The death
benefit for active employees provides a lump-sum payment approximately equal to the
employee’s annual salary, calculated based on the employee’s actual earnings on which TMRS
deposits are made, for the 12-month period preceding the month of death. The death benefit
amount for retirees is $7,500. GASB No. 75 requires the liability of employers and nonemployer
contributing entities to employees for defined benefit OPEB (net OPEB liability) to be measured
as the portion of the present value of projected benefit payments to be provided to current active
and inactive employees that is attributed to those employees’ past periods of service (total OPEB
liability), less the amount of the OPEB plan’s fiduciary net position.
In addition to the contributions made to TMRS, the Town provides post-employment medical,
dental, and vision benefits for eligible retirees, their spouses and dependents through a single-
employer plan with United Healthcare, which covers both active and retired members. Regular
full-time employees retiring from the Town have the option to continue medical insurance
coverage until the retiree becomes eligible for Medicare or is eligible to be covered under another
medical plan.
12. Net Position Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both restricted (e.g.,
restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts
to report as restricted –net position and unrestricted –net position in the government-wide and
proprietary fund financial statements, a flow assumption must be made about the order in which
the resources are considered to be applied. It is the government’s policy to consider restricted –
net position to have been depleted before unrestricted –net position is applied.
13. Fund Balance Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both restricted and
unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order
to calculate the amounts to report as restricted, committed, assigned, and unassigned fund
balance in the governmental fund financial statements a flow assumption must be made about
the order in which the resources are considered to be applied. It is the government’s policy to
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
52
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.The general fund is the only fund that reports a
positive unassigned fund balance amount. In other governmental funds it is not appropriate to
report a positive unassigned fund balance amount. However, in governmental funds other than
the general fund, if expenditures incurred for specific purposes exceed the amounts that are
restricted, committed, or assigned to those purposes, it may be necessary to report a negative
unassigned fund balance in that fund.
14. Fund Balance Policies
Fund balance of governmental funds is reported in various categories based on the nature of any
limitations requiring the use of resources for specific purposes. The government itself can
establish limitations on the use of resources through either a commitment (committed fund
balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for the specific
purposes determined by a formal action of the government’s highest level of decision-making
authority. The governing council is the highest level of decision-making authority for the
government that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund
balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar
action is taken (the adoption of another ordinance) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the government
for specific purposes but do not meet the criteria to be classified as committed. The governing
body (Council) has by resolution authorized the Director of Administrative and Financial
Services 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.The general fund is the only fund that reports a positive
unassigned fund balance amount.
The Town Council adopted a fund balance policy in September 2011 which established new fund
balance categories (as recommended by Statement No. 54 by the Governmental Accounting
Standards Board) and established a minimum unassigned fund balance goal (30% of annual
operating expenditures).
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
53
15. 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 and liabilities and disclosure of contingent assets and liabilities 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.
F. Revenues and Expenditures/Expenses
1. 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 de dicated for specific purposes, and other internally dedicated resources are
reported as general revenues rather than as program revenues.
2. 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 ye ar 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 deferred revenues at the time the
taxes are assessed. Re venues 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.
3.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 utility fund, golf course fund,and storm water utility funds
are charges to customers for sales and services. The utility fund also recognizes as operating
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
54
revenue the portion of tap fees intended to recover the cost of connecting new customers to the
system. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses, and de preciation on capital assets. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
NOTE 2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
A.Explanation of certain differences between the governmental fund balance sheet and the
government-wide statement of net position.
The governmental fund balance sheet includes reconciliation between fund balance-total
governmental funds and net position-governmental activities as reported in the government-wide
statement of net position. One element of that reconciliation explains that long-term liabilities,
including bonds, are not due and payable in the current period and, therefore, are not reported in
the funds.
B.Explanation of certain differences between the governmental fund statement of revenues,
expenditures, and changes in fund balances and the government-wide statement of activities.
The governmental fund statement of revenues, expenditures, and changes in fund balances
includes a reconciliation between net changes in fund balances –total governmental funds and
changes in net position of governmental states that, “the issuance of long-term debt (e.g., bonds)
provides current financial resources to governmental funds, while the repayment of the
principal of long-term de bt consumes the current financial resources of governmental funds.
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.”
NOTE 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Annual budgets are adopted on a basis consistent with Generally Accepted Accounting
Principles (GAAP) for the general, court technology, court security, street maintenance,
hotel/motel tax, crime control and prevention, recreation programs, de bt service fund,capital
projects, park land dedication fund, and enterprise funds. 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. Appropriations lapse at the end of the year.
During the fiscal year ended Se ptember 30, 2020,no supplemental budget appropriations were
made.
As of Se ptember 30, 2020,expenditures exceeded appropriations at the legal level of control for
the Capital Projects fund in the amount of $79,660.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
55
A.Restricted Net Position
The Town records restricted net position on amounts with externally imposed restrictions (e.g.,
through debt covenants or by grantors) or restrictions imposed by law through constitutional
provisions or enabling legislation. Total restricted net position for the primary government was
$6,821,486.Of which, $32,838 and $1,530,643, a total of $1,563,481, is restricted by enabling
legislation.
B.Deficit Equity
At September 30, 2020, the Component Unit, Tax Increment Reinvestment Zone #1 had a deficit
fund balance of $354,812. The deficit balances will be eliminated in the future as assessed values
continue to increase as a result of growth and development within the TIRZ.
NOTE 4. DETAILED NOTES ON ALL FUNDS
A.Deposits and Investments
Deposits -State statutes require that all deposits in financial institutions be fully collateralized by
U.S. Government obligations or its agencies and instrumentalities or direct obligations of Texas
or its agencies and instrumentalities that have a market value of not less than the principal
amount of the deposits. The Town's cash de posits at September 30, 2020 and during the year
ended September 30, 2020 were entirely covered by FDIC insurance or by pledged collateral held
by the Town's agent bank in the Town's name.
Legal and contractual provisions governing deposits and investments
The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions
in the areas of investment practices, management reports and establishment of appropriate
policies. Among other things, it requires the Town to adopt, implement, and publicize an
investment policy. That policy must address the following areas: (1) safety of principal and
liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5)
expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7)
maximum average dollar-weighted maturity, allowed based on the stated maturity date for the
portfolio, and (8) investment staff quality and capabilities.
The Act also requires the Town to have independent auditors perform test procedures related to
investment practices as provided by the Act. The Town is in substantial compliance with the
requirements of the Act and with local policies.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
56
As of Se ptember 30, 2020, the Town had the following investments:
Investment Type
External investment pools 4,733,958 0.12
Total fair value $4,733,958
Portfolio weighted average maturity 0.12
Weighted
Average Maturity
Value (Years)
Carrying
Interest rate risk:In compliance with the Town’s Investment Policy, as of September 30, 2020,the
Town minimized the interest rate risk, related to current events market turmoil in the portfolio
by:limiting the effective duration of security types not to exceed two years with the exception of
securities purchases related to reserve funds; structuring the investment portfolio so that
securities matured to meet cash requirements for ongoing operations,thereby avoiding the need
to sell securities on the secondary market prior to maturity; monitoring credit ratings of portfolio
positions to assure compliance with rating requirements imposed by the Public Funds
Investment Act; and investing operating funds primarily in short-term securities, money market
mutual funds, or similar government investment pools.
Credit risk: The Town’s investment policy limits investments to obligations of the United States,
State of Te xas, 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. As of Se ptember 30, 2020, all of the Town’s purchased investments in
U.S.Agencies Obligations were rated AA+, AAA and Aaa by Standard & Poors, Fitch and
Moody’s, respectively.
Custodial credit risk –deposits: In the case of de posits, this is the risk that in the event of a bank
failure, the Town’s deposits may not be returned to it.State statutes require that all deposits in
financial institutions be insured or fully collateralized by U.S. government obligations or its
agencies and instrumentalities or direct obligations of Texas or its agencies and instrumentalities
that have a market value of not less than the principal amount of the deposits. As of September
30, 2020, the market values of pledged securities and FDIC exceeded bank balances.
Custodial credit risk –investments: For an investment, this is the risk that, in the event of the failure
of the counterparty, the Town will not be able to recover the value of its investments or collateral
securities that are in the possession of an outside party. The Town’s investment policy requires
that it will seek to safeguard securities at financial institutions, avoiding physical possession.
Further, all trades, where applicable, are executed by delivery versus payment to ensure that
securities are deposited in the Town’s safeguard account prior to the release of funds.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
57
TexPool
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, 2020, the
fair value of the position in TexPool approximates fair value of the shares. There were no
limitations or restrictions on withdrawals.
Texas CLASS
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. Te xas 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, 2020, the fair value of the position in Texas CLASS approximates
fair value of the shares.There were no limitations or restrictions on withdrawals.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
58
B.Receivables
The following comprise receivable balances of the primary government at year end:
Property taxes $62,671 $19,181 $- $- $- $81,852
Sales tax 209,656 --52,414 -262,070
Fr anchise t axes 45,724 ----45,724
Ho tel occupa ncy ---20,471 -20,471
Special assessments --23,985,000 --23,985,000
ntsDue from other governments 31,738 ----31,738
Municipal cour t 62,337 ----62,337
EMS 153,570 ----153,570
Stor m dr ainage ----40,753 40,753
Park s er vices 3,987 ----3,987
Ot her 127,640 ----127,640
Allow ance (5 7,921) ----(5 7,921)
To ta l $639,402 $19,181 $23,985,000 $72,885 $40,753 $24,757,221
General Service
No nmajor Storm Drainage
Tota l
Debt
PID No . 1 Gove rnmenta l Utility
The following comprise receivable balances of the component units at year end:
Sales taxes $104,828 $51,772 $156,600
Total $104,828 $51,772 $156,600
Total
4B Crime Control
Corporation Prevention
andEconomic
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
59
C.Capital Assets
A summary of changes in governmental activities capital assets for the year end was as follows:
Capital assets, not being depreciated:
Land $10,463,669 $- $- $10,463,669
Construction in progress 2,826,762 1,599,123 (4,410,878) 15,007
Total capital assets not being depreciated 13,290,431 1,599,123 (4,410,878) 10,478,676
Capital assets, being depreciated:
Buildings 11,877,299 - (1,221,980) 10,655,319
Improvements other than buildings 60,194,248 311,852 4,378,169 64,884,269
Machinery and equipment 2,988,314 52,652 (482,633) 2,558,333
Vehicles 1,613,702 84,721 (191,728) 1,506,695
Water system 5,362,005 - - 5,362,005
Infrastructure 14,332,062 - - 14,332,062
Total capital assets being depreciated 96,367,630 449,225 2,481,828 99,298,683
Less accumulated depreciation
Buildings 1,650,244 400,192 (631,267) 1,419,169
Improvements other than buildings 26,423,223 2,073,162 (26,587) 28,469,798
Machinery and equipment 1,813,329 243,346 (180,780) 1,875,895
Vehicles 1,081,543 130,914 (176,121) 1,036,336
Water system 1,454,206 219,229 - 1,673,435
Infrastructure 5,920,874 337,494 - 6,258,368
Total accumulated depreciation 38,343,419 3,404,337 (1,014,755) 40,733,001
Net capital assets being depreciated 58,024,211 (2,955,112) 3,496,583 58,565,682
$71,314,642 $(1,355,989) $(914,295) $69,044,358 Total capital assets
Beginning Retirements/Ending
Balances Additions Reclassifications Balances
Depreciation expense was charged to governmental functions as follows:
General government $739,640
Emergency medical services 48,849
Information systems 47,719
Police 114,925
Fire 11,329
Parks and recreation 776,946
Streets (Infrastructure)1,664,929
$3,404,337 Total Governmental Activities Depreciation Expense
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
60
A summary of changes in business-type activities capital assets for the year end was as follows:
Capital assets, bein g depreciat ed:
Machinery an d eq uipm ent $24,112 $- $- $24,112
Im provem en ts - 33,365 - 33,365
Infrast ructure 2,039,766 - - 2,039,766
Total capital assets bein g deprec iated 2,063,878 33,365 - 2,097,243
Less accumulat ed depreciation
Machinery an d eq uipm ent 11,380 2,387 - 13,767
Im provem en ts - 834 - 834
Infrast ructure 227,562 51,083 - 278,645
Total ac cum ulated depreciation 238,942 54,304 - 293,246
Net capital assets b ein g depreciated 1,824,936 (2 0,939) - 1,803,997
Total capital assets $1,824,936 $(2 0,939) $- $1,803,997
Beginning Dec reases/En din g
Balances In cr ea ses Reclassification s Ba lances
Depreciation expense was charged to business-type activities as follows:
Trophy Club Park $3,221
Storm Drainage Utility 51,083
$54,304 Total Business-Type Activities Depreciation Expense
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
61
A summary of changes in discretely presented component unit activities capital assets for the
year end was as follows:
Capital assets, not bein g depreciated:
Lan d $2,538,765 $- $- $2,538,765
Total capital assets not being depreciat ed 2,538,765 - - 2,538,765
Capital assets, being depreciated:
In frastructure 367,960 - - 367,960
Total capital assets being depreciated 367,960 - - 367,960
Less accumulated depreciation
In frastructure 8,177 24,531 - 32,708
Total ac cumulated depreciation 8,177 24,531 - 32,708
Net capital assets b eing depreciated 359,783 (24,531) - 335,252
Total capital assets $2,898,548 $(24,531) $- $2,874,017
Balances In cr ea ses Reclassification s Balances
Beginning Dec reases/En din g
D.Other Long-term Liabilities
The following summarizes the changes in other long-term liabilities of the primary government
during the year.
Go ve rnmenta l Activitie s:
Com pensated Ab sences $305,285 $297,365 $(2 56,661) $345,989 $311,390
Tota l Governmental Activitie s $305,285 $297,365 $(2 56,661) $345,989 $311,390
Amounts
Due Within
One Year
Beginning
Balance Additio ns Re ductio ns
Ending
Balance
The general fund has typically been used to liquidate the liability for compensated absences
for governmental activities.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
62
E.Long-term Debt
The Town periodically issues general obligation bonds and contractual obligations to provide
funds for general government purposes. The Town also pe riodically utilizes notes and capital
leases to provide financing for general government purposes.In general, the Town uses the
debt service fund and general fund to liquidate governmental long-term liabilities, with the
exception of special assessment bonds which are fully covered by assessment receivables.The
following is a summary of changes in the Town’s total long-term liabilities for the year ended
September 30, 2020.
Governmental Activities:
Bonds, notes and other
payables:
General Obligation Bonds $9,805,000 $3,550,000 $(4,350,000) $9,005,000 $1,505,000
Certificates of Obligation 10,637,000 - (848,000) 9,789,000 563,000
Special Assessment Bonds 25,260,000 - (1,275,000) 23,985,000 1,340,000
Less deferred amounts:
For premiums 4,160,382 - (287,455) 3,872,927 -
Total Bonds Payable 49,862,382 3,550,000 (6,760,455) 46,651,927 3,408,000
Capital lease 88,205 - (88,205) - -
$49,950,587 $3,550,000 $(6,848,660) $46,651,927 $3,408,000
$43,243,927
Business-Type Activities:
Certificates of Obligation $825,000 $- $(155,000) $670,000 $160,000
Less deferred amounts:
For premiums 16,940 - (4,418) 12,522 -
841,940 - (159,418) 682,522 160,000
$522,522
Component Unit Activities:
Certificates of Obligation $2,280,000 $- $(105,000) $2,175,000 $110,000
Less deferred amounts:
For discounts (21,209) - 1,333 (19,876) -
$2,258,791 $- $(103,667) $2,155,124 $110,000
$2,045,124
One Year
Total Governmental Activities
Total Business-Type Activities
Long-term liabilities due in more than one year
Long-term liabilities due in more than one year
Long-term liabilities due in more than one year
Retired Balance
Amounts
Beginning Ending
Total Component Unit Activities
Due Within
Balance Additions
Long-term liabilities applicable to the Town’s governmental activities are not due and payable
in the current period and accordingly, are not reported as fund liabilities in the governmental
funds. Interest on long-term debt is not accrued in governmental funds, but rather is
recognized as an expenditure when due.The Town intends to retire all of its general long-term
liabilities, plus accrued interest, from property taxes and other current revenues from the debt
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
63
service fund as has been done in prior years. The special assessment bonds are fully offset by
assessment receivables. The proprietary fund type long-term debt will be repaid, plus accrued
interest, from operating revenues of the respective fund. Capital leases are secured by the
underlying asset. In the event of default, the lender may demand immediate payment or take
possession of the asset. As of September 30, 2020, the total net carrying value of the capital lease
assets was $240,465. At year end, long-term debt of governmental activities was comprised of
the following debt issues:
Go ve rnmental Activitie s:
Year Av er age
of Final An nual Or iginal Bala nce
Description Is sue Ma turity Paymen t Amount 9/30/2020
Gener al Ob ligation Bon ds :
Refunding 2.18 %2015 2025 203,000 2,030,000 1,170,000
Im prov em ents 2.00-3.00 %2016 2036 262,250 5,245,000 4,285,000
Refunding 1.16 %2020 2030 355,000 3,550,000 3,550,000
9,005,000$
Cer tificates of Ob ligations:
Com bination Tax and
Rev en ue-Ser ies 2004 3.50 - 4.75 %2004 2024 32,500$ 650,000$ 134,000$
Cer tifi cates of Ob ligation
Ser ies 2013 2.50 - 3.25 %2013 2028 86,667 1,300,000 835,000
Cer tifi cates of Ob ligation
Ser ies 2014 2.00 - 3.75 %2014 2034 125,000 2,500,000 1,900,000
Cer tifi cates of Ob ligation
Ser ies 2016 2.00-4.00 %2016 2036 210,500 4,210,000 3,585,000
Cer tifi cates of Ob ligation
Ser ies 2017 2.50-3.00 %2017 2037 222,250 4,445,000 3,335,000
9,789,000$
Special As sessments:
Special Assessment Revenue
Refunding-Ser ies 2015 2.00-4.00 %2015 2033 1,453,054$ 26,154,979$ 23,985,000
23,985,000$
Rate
In terest
The PID special assessment bonds are secured solely by the pledged property assessments
revenue for the related properties within the Trophy Club PID 1 area. The debt is repaid with
property assessments by the respective property owners. The Town is not obligated to pay the
bonds from any funds raised from taxation or from any other revenues available to the Town.
The Town, through their designed trustee and third-party administrator, set up a separate fund
used to service the bond, collect the property assessments, and for initiating any future
foreclosures.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
64
Busine ss-type Activitie s:
Year Av er age
of Final An nual Or iginal Balance
De script ion Is sue Ma turity Pa yment Am oun t 9/30/2020
Cer tificates of Ob ligation
Ser ies 2013 2.50 - 3.00 %2013 2024 154,545$ 1,700,000$ 670,000$
670,000$
Co mpone nt-Unit Activitie s:
Year Av er age
of Final An nual Or iginal Balance
De script ion Is sue Ma turity Pa yment Am oun t 9/30/2020
Cer tificates of Ob ligation
Ser ies 2015 1.00 - 4.75 %2015 2035 134,500$ 2,690,000$ 2,175,000$
2,175,000$
Rate
In terest
In terest
Rate
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
65
The annual requirements to amortize long-term debt outstanding of governmental activities as of
September 30, 2020, are as follows:
Go ve rnme ntal Activitie s
Year E nding
Se ptember 3 0,
2021 $1,505,000 $175,760 $1,680,760
2022 905,000 153,611 1,058,611
2023 705,000 136,627 841,627
2024 725,000 121,820 846,820
2025 740,000 106,546 846,546
2026-2030 2,625,000 371,858 2,996,858
2031-2035 1,480,000 163,800 1,643,800
2036-2037 320,000 8,800 328,800
Tot al $9,005,000 $1,238,822 $10,243,822
Year E nding
Se ptember 3 0,
2021 $563,000 $288,397 $851,397
2022 588,000 269,358 857,358
2023 608,000 251,275 859,275
2024 620,000 232,559 852,559
2025 605,000 213,244 818,244
2026-2030 3,100,000 800,350 3,900,350
2031-2035 2,960,000 376,000 3,336,000
2036-2037 745,000 29,550 774,550
Tot al $9,789,000 $2,460,733 $12,249,733
Year E nding
Se ptember 3 0,
2021 $1,340,000 $880,073 $2,220,073
2022 1,400,000 849,923 2,249,923
2023 1,469,000 814,923 2,283,923
2024 1,549,000 770,853 2,319,853
2025 1,627,000 724,383 2,351,383
2026-2030 9,541,000 2,734,956 12,275,956
2031-2035 7,059,000 720,850 7,779,850
Tot al $23,985,000 $7,495,961 $31,480,961
Ge ne ra l O blig atio n Bonds To ta l
Principal Inte re st Re quire ments
Spe cial As se ssment B onds To ta l
Principal Inte re st Re quire ments
To ta l
Re quire mentsInterestPrincipal
Ce rtificates of O blig atio n
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
66
The annual requirements to amortize long-term debt outstanding of business-type activities as of
September 30, 2020, are as follows:
Busine ss-Type Activitie s
Year Ending Tota l
September 3 0,Re quire ments
2021 $160,000 $16,462 $176,462
2022 165,000 12,194 177,194
2023 170,000 7,588 177,588
2024 175,000 2,625 177,625
Tot al $670,000 $38,869 $708,869
Ce rtific ates of Oblig atio n
Intere stPrincipal
The annual requirements to amortize long-term debt outstanding of component units as of
September 30, 2020, are as follows:
Year E nding Tota l
Se pte mber 3 0,Principa l Interest Re quirements
2021 110,000$ 93,668$ 203,668$
2022 110,000 90,258 200,258
2023 115,000 86,518 201,518
2024 120,000 82,263 202,263
2025 125,000 77,463 202,463
2026-2030 710,000 303,475 1,013,475
2031-2035 885,000 130,150 1,015,150
Total 2,175,000$ 863,793$ 3,038,793$
Ce rtific ates o f Oblig atio n
Co mponent-Unit Activitie s
F.Advanced Refunding
On September 15, 2020, the Town issued $3,550,000 in general obligation refunding bonds with
an interest rate of 1.16%. The proceeds were used to advance refund $3,070,000 of outstanding
2010 general obligation bonds which had an interest rate of 3% to 4%, and $410,000 of
outstanding 2010 general obligation refunding bonds with an interest rate of 2%to 4%. The net
proceeds of $3,485,838, after issuance costs, were de posited into an irrevocable trust with an
escrow agent to provide funds for the future debt service payment on the refunded bonds. As a
result, the obligations are considered de feased and the liability for those bonds have been
removed from the statement of net position.
The reacquisition price exceeded the net carrying amount of the old debt by $5,838. This
amount was expensed in full during the current year due to it being a relatively small balance.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
67
This advance refunding reduced its total debt service payments by $506,186 and resulted in an
economic gain (difference between the present values of the debt service payments on the old
and new debt) of $422,353.
G.Deferred Charges on Refunding
A deferred charge resulting from the issuance of the 2010 and 2015 general obligation refunding
bonds has been recorded as a deferred outflow of resources and is being amortized to interest
expense over the term of the refunded debt. The net balance outstanding as of September 30,
2020 was $2,740,306 for government-type activity reflected in the government-wide statements.
Current year amortization expense totaled $206,009.
H.Interfund Transactions
Transfers between funds during the year are as follows:
Transfer Out:
Cour t Secur it y Fund 1,500 - 1,500
Tr oph y Cl ub P ar k 20,000 - 20,000
Stor m Dr ainage Ut ilit y Fund 40,000 202,933 242,933
To ta l $61,500 $202,933 $264,433
Tota l
Transfer In:
Ge ne ra l Debt Se rvic e
Transfers were primarily used to support debt service, capital expenditures,and to transfer
funds to the general fund for administrative costs.
NOTE 5. OTHER INFORMATION
A.Risk Management
The Town is exposed to various risks of loss related to torts; theft of, damage to, and de struction
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.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
68
B.Contingent Liabilities
The Town is involved in lawsuits with other parties from time to time. While the ultimate result
of these matters cannot be predicted with certainty, the Town does not expect them to have a
materially adverse effect on the basic financial statements.
Amounts received or receivable from granting agencies are subject to audit and adjustment by
grantor agencies, principally the federal government. Any disallowed claims, including
amounts already collected, may constitute a liability of the applicable funds. The amounts of
expenditures which may be disallowed by the grantor cannot be determined at this time
although the Town expects such amounts, if any, to be immaterial.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss
can be reasonably estimated. Liabilities include an amount for claims that have been incurred
but not reported. Claim liabilities are calculated considering the effects of inflation, recent claim
settlement trends, including frequency and amount of payouts, and other economic and social
factors.
C.Contingencies
Amounts received or receivable from granting agencies are subject to audit and adjustment by
grantor agencies, principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amounts of
expenditures which may be disallowed by the grantor cannot be determined at this time
although the Town expects such amounts, if any, to be immaterial.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss
can be reasonably estimated. Liabilities include an amount for claims that have been incurred
but not reported. Claim liabilities are calculated considering the effects of inflation, recent claim
settlement trends, including frequency and amount of payouts, and other economic and social
factors.
D. Defined Benefit Pension Plans
Texas Municipal Retirement System
Plan Description
The Town of Trophy Club, Texas participates as one of 887 plans in the nontraditional, joint
contributory, hybrid defined benefit pension plan administered by the Texas Municipal
Retirement System (TMRS). TMRS is an agency 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 municipal employees in the State of Texas.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
69
The TMRS Act places the general administration and management of the system with a six-
member board of trustees. Although the Governor, with the advice and consent of the Senate,
appoints the board, TMRS is not fiscally de pendent on the State of Texas. TMRS’s defined
benefit pension plan is a tax-qualified plan under Se ction 401 (a) of the Internal Revenue Code.
TMRS issues a publicly available Comprehensive Annual Financial Report (CAFR) that can be
obtained at www.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 benefit is calculated as if the sum of the employee’s contributions, with
interest, and the town-financed monetary credits with interest were used to purchase an
annuity. Members may choose to receive their retirement benefit in one of seven payment
options. Members may also choose to receive a portion of their benefit as a partial lump sum
Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of
the member’s deposits and interest.
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:
Plan Year 2019 Plan Year 2018
Employee deposit rate 7%7%
Matching ratio (town to
employee)
2 to 1 2 to 1
Years required for vesting 5 5
Service retirement eligibility
(expressed as age / years of
service)
60/5, 0/20 60/5, 0/20
Updated service credit 100% Repeating Transfers 100% Repeating Transfers
Annuity increase (to retirees)30% of CPI repeating 30% of CPI repeating
The Town also participates in Social Security.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
70
Employees covered by benefit terms
At the December 31, 2019 valuation and measurement date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 40
Inactive employees entitled to but not yet receiving benefits 109
Active employees 77
Total 226
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross
earnings, 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 actuarially determined rate is the estimated amount necessary to
finance the cost of benefits earned by employees during the year, with an additional amount to
finance any unfunded accrued liability.
Employees for the Town of Trophy Club, Texas were required to contribute 7%of their annual
gross earnings during the fiscal ye ar. The contribution rates for the Town of Trophy Club, Texas
were 12.95% and 13.09% in calendar years 2019 and 2020, respectively. The Town’s contributions
to TMRS for the year ended September 30, 2020, were $719,013 and were equal to the required
contributions.
Net Pension Liability
The Town’s Net Pension Liability (NPL) was measured as of December 31, 2019, and the Total
Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an
actuarial valuation as of that date.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
71
The Total Pension Liability in the December 31, 2019 actuarial valuation was determined using
the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 3.5% to 10.5%, including inflation
Investment Rate of Return 6.75%, net of pension plan investment expense,
including inflation
Salary increases were based on a service-related table. Mortality rates for active members,
retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality
Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates
multiplied by 103%.The rates are projected on a fully generational basis by scale BB to account
for future mortality improvements. For disabled annuitants, the gender-distinct RP2000
Combined Healthy Mortality Tables with Blue Collar Adjustment are used with males rates
multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males
and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for
younger members who become disabled. The rates are projected on a fully generational basis by
scale BB 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, 2010 to December 31, 2014.
They were adopted in 2015 and first used in the December 31, 2015 actuarial valuation. The post-
retirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are
based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated
December 31, 2013. In conjunction with these changes first used in the December 31, 2013
valuation, the System adopted the Entry Age Normal actuarial cost method and a one-time
change to the amortization policy. Plan assets are managed on a total return basis with an
emphasis on both capital appreciation as well as the production of income in order to satisfy the
short-term and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation. In determining their best estimate of a recommended investment
return assumption under the various alternative asset allocation portfolios, GRS focused on the
area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and
(2) the geometric mean (conservative) with an adjustment for time (aggressive).
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
72
The target allocation and best estimates of real rates of return for each major asset class in fiscal
year 2020 are summarized in the following table:
Asset Class Target Allocation Long-Term Expected Real
Rate of Return (Arithmetic)
Global Equity 30.0%5.30%
Core Fixed Income 10.0%1.25%
Non-Core Fixed Income 20.0%4.14%
Real Return 10.0%3.85%
Real Estate 10.0%4.00%
Absolute Return 10.0%3.48%
Private Equity 10.0%7.75%
Total 100.0%
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 employee contributions will remain at
the current 7.0% and employer contributions will be made at the rates specified in statute. Based
on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to
make all projected future benefit payments of current plan members. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected
benefit payments to determine the Total Pension Liability.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
73
Changes in Net Pension Liability:
Total Pension
Liability (a )
Plan Fiduciary N et
Po sitio n (b)
Net Pe nsion
Liability (a ) – (b )
Balance at 1 2/31/18 $ 1 9,854,961 $ 1 7,072,317 $ 2 ,7 82,644
Ch anges for t he y ea r:
S er vice Cos t 9 80,663 - 9 80,663
In terest 1 ,3 54,175 - 1 ,3 54,175
Differ en ce b et ween ex pect ed a nd
a ct ual exper ience (3 ,4 97) - (3 ,4 97)
Ch anges of a ssumptions (8 02) - (8 02)
Con tribution s – em ployer - 7 10,975 (7 10,975)
Con tribution s – em ployee - 3 84,574 (3 84,574)
N et inv es tment income - 2 ,6 42,216 (2 ,6 42,216)
Ben efit payments, including
r efunds of em p. con tributions (5 66,895) (5 66,895) -
Adm inist rative ex pense - (1 4,914) 1 4,914
Ot her changes - (4 48) 4 48
N et changes 1 ,7 63,644 3 ,1 55,508 (1 ,3 91,864)
Balance at 1 2/31/19 $ 2 1,618,605 $ 2 0,227,825 $ 1 ,3 90,780
The Town uses the general fund to liquidate pension liabilities.
Sensitivity of the Net Position Liability to Changes in the Discount Rate
The following presents the net pension liability of the Town, calculated using the discount rate of
6.75%, as well as what the Town’s net pe nsion liability 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 Cu rre nt Sin gle Ra te 1% Incre ase
5.75%Assumptio n 6.75% 7.75%
$4,820,954 $1,390,780 $(1 ,3 74,467)
Pension Plan Fiduciary Net Position
Detailed information about the pe nsion plan’s Fiduciary Net Position is available in a separately
issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions:
For the ye ar ended Se ptember 30, 2020, the Town recognized a pension expense of $615,030. This
amount is include d as part of expenses within the functional program activities.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
74
At September 30, 2020, the Town reported deferred outflows and inflows of resources related to
pensions from the following sources:
Prim ary G overnm ent:
Di ffer en ce b et ween project ed a nd a ct ual
invest ment ea rnings $- $609,044
Ch anges i n act uar ia l assumpt ion s - 550
Di ffer en ces between ex pect ed a nd a ct ua l
ec on om ic ex perien ce - 115,038
Con tribution s subsequ en t to t he
measurement da te 539,353 -
Tota l $539,353 $724,632
De fe rre d
Outflo ws of Re so urces
Deferre d
(I nflo ws) o f Re so urce s
Deferred outflows of resources related to pensions resulting from contributions subsequent to the
measurement date of $539,353 will be recognized as a reduction of the net pension liability for the
year ending September 30, 2021.
Other amounts reported as deferred outflows and inflows of resources related to pensions will be
recognized in pension expense as follows:
Year e nded December 3 1:
2020 $(2 61,395)
2021 (2 02,532)
2022 37,262
2023 (2 97,967)
2024 -
Thereafter -
$(7 24,632)
E.Postemployment Benefits Other Than Pensions
The Town also participates in a de fined benefit group-term life insurance plan operated by
the Texas Municipal Retirement System (TMRS) known as the Supplemental De ath Benefits
Fund (SDBF). This is a voluntary program in which participating member cities may elect, by
ordinance, to provide group-term life insurance coverage for their active members, including
or not including retirees. The Town elected, by ordinance, to provide group-term life
insurance coverage to both current and retired employees. The Town may terminate
coverage under and discontinue participation in the SDBF by adopting an ordinance before
November 1 of any year to be effective the following January 1.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
75
The death benefit for active employees provides a lump-sum payment approximately equal
to the employee’s annual salary (calculated based on the employee’s actual earnings, for the
12-month pe riod preceding the month of death); retired employees are insured for $7,500;
this coverage is an “other postemployment benefit,” or OPEB. The SDBF covers both active
and retiree benefits with no segregation of assets and, therefore, doesn’t meet the definition
of a trust under GASB No. 75, paragraph 4b, (i.e., no assets are accumulated for OPEB). As
such, the SDBF is considered to be a single-employer unfunded OPEB plan (and not a cost
sharing plan) with benefit payments treated as being equal to the employer’s yearly
contributions for retirees.
The Town offers supplemental death to: Plan Year 2019 Plan Year 2018
Active employees (yes or no) Yes Yes
Retirees (yes or no) Yes Yes
The Town contributes to the SDBF at a contractually required rate as determined by an
annual actuarial valuation. The rate is equal to the cost of providing one-ye ar term life
insurance. 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; the intent is not to pre-
fund retiree term life insurance during employees’ entire careers.
Employees covered by benefit terms
At the December 31, 2019 valuation and measurement date, the following employees were
covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 27
Inactive employees entitled to but not yet receiving benefits 29
Active employees 77
Total 133
The Town’s contributions to the TMRS SDBF for the years ended 2020, 2019 and 2018 were
$1,105, $1,128 and $982, respectively, which equaled the required contributions each year.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
76
Schedule of Contribution Rates
(RETIREE-only portion of the rate)
Plan/
Calendar Year
Annual Required
Contribution
(Rate)
Actual Contribution
Made
(Rate)
Percentage of ARC
Contributed
2018 0.02%0.02%100.0%
2019 0.02%0.02%100.0%
2020 0.02%0.02%100.0%
Total OPEB Liability
The Town’s Postemployment Benefits Other Than Pensions Liability (OPEB) was measured
as of December 31, 2019, 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, 2019 actuarial valuation was determined using
the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 3.5%to 11.5%, including inflation per year
Discount rate 2.75%
Retirees’ share of benefit-related costs $0
Administrative expenses All administrative expenses are paid through
the Pension Trust and accounted for under
reporting requirements under GASB
Statement No. 68
Salary increases were based on a service-related table. Mortality rates for active me mbers,
retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy
Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and
female rates multiplied by 103%.The rates are projected on a fully generational basis by
scale BB to account for future mortality improvements. For disabled annuitants, the gender-
distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used
with males rates multiplied by 109% and female rates multiplied by 103% with a 3-year set-
forward for both males and females. In addition, a 3% minimum mortality rate is applied to
reflect the impairment for younger members who become disabled. The rates are projected
on a fully generational basis by scale BB to account for future mortality improvements
subject to the 3% floor.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
77
Discount Rate:
The discount rate used to measure the Total OPEB Liability was 2.75%. The discount rate
was based on the Fidelity Index’s “20-Year Municipal GO AA Index” rate as of December 31,
2019.
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 2.75%, as well as what the Town’s total OPEB liability (asset) would be if it were
calculated using a discount rate that is 1-percentage-point lower (1.75%) or 1-percentage-
point higher (3.75%) than the current rate:
$313,827 $251,655 $205,021
1% Decrease
1.75%
Curre nt Sing le Ra te
Assum ptio n 2 .75%
1% Incre ase
3.75%
Changes in the Total OPEB Liability:
To ta l O PEB
Liability
Balance at 1 2/31/18 $ 1 88,329
Ch anges for t he y ea r:
Ser vice Cos t 1 5,383
In terest 7 ,2 52
Differ en ce b et ween ex pect ed a nd
a ctual ex perien ce (4 ,4 43)
Ch anges of a ssumptions 4 6,233
Ben efi t pay ment s (1 ,0 99)
Net changes 6 3,326
Balance at 1 2/31/19 $ 2 51,655
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions
For the year ended September 30, 2020, the Town recognized OPEB expense of $30,422.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
78
At September 30, 2020, the Town reported deferred outflows of resources and deferred
inflows of resources related to the OPEB liability from the following sources:
Di ffer en ces b et ween ex pect ed a nd
a ctual econom ic ex perien ce $ 3 5,374 -
Ch anges i n assumptions - 4 ,1 95
Con tribution s subsequ en t to
measur em en t dat e 8 24 -
To ta l $ 3 6,198 $ 4 ,1 95
Deferre d Outflo ws
of Re so urce s
Deferre d Inflo ws
of Re so urce s
The Town reported $824 as deferred outflows of resources related to pensions resulting from
contributions subsequent to the measurement date that will be recognized as a reduction of
the net pension liability for the year ending September 30, 2021.
Other amounts reported as deferred outflows of resources related to pensions will be
recognized in pension expense as follows:
Year e nde d December 3 1:
2020 $7,787
2021 7,787
2022 6,869
2023 5,640
2024 3,096
Thereafter -
$31,179
F.Other Post-Employment Benefits
Plan Description
The Town provides post-employment medical, dental, and vision benefits (OPEB) for eligible
retirees, their spouses and dependents through a single-employer plan with United Healthcare,
which covers both active and retired members.
The retiree pays 195% of the active participant contribution rate for the coverage selected.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
79
As of September 30, 2020, membership consisted of:
Retirees or beneficiaries currently receiving benefits -
Active employees 67
Total 67
The three optional benefit levels, Plan 05X8617, 05X8569 and 05X8589, are the same for retirees as
those afforded to active employees. Regular full-time employees retiring from the Town have the
option to continue medical insurance coverage until the retiree becomes eligible for Medicare or
is eligible to be covered under another medical plan.
Funding Policy
The benefit levels and contribution rates are approved annually by the Town management and
the Town Council as part of the budget process. By the Town not contributing anything toward
this plan in advance, the Town employs a pay-as-you-go me thod through ensuring the annual
retiree contributions are equal to the benefits that are paid on behalf of the retirees.
The monthly retiree health coverage contribution rates for offered benefit levels are as follows:
Sin gl e Cov er age $488 $440 $330
Sin gl e + Sp ous e $1,302 $1,174 $881
Sin gl e + Ch ildr en $923 $832 $625
Sin gl e + Fa mily $1,641 $1,479 $1,111
Hi gh Plan
05X8589
St andard P lan
05X8569
HS A Plan
05X8617
An irrevocable trust has not been established; therefore, the plan is not accounted for as a trust
fund. The plan does not issue a separate financial report.
Annual OPEB Expense and Net OPEB Liability
The Town’s annual OPEB cost is calculated based on actuarially assumptions determined in
accordance with the parameters of GASB 75.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
80
The following table shows the components of the Town’s annual OPEB expense for the year, the
amount contributed to the plan, and changes in the Town’s net OPEB liability.
Ser vice c os t $5,389
In terest Cos t 2,624
Di ffer en ce b et ween ex pect ed a nd actual ex p (1 ,1 94)
Ch anges i n assumptions (6 ,4 81)
An nual OPEB cos t ex pense 338
Con tributions made -
Ch ange i n net OPEB liab ility 338
Net OPEB L iab ility-begin ning of y ea r 59,249
Net OPEB L iab ility-end of y ea r $59,587
The Town’s annual OPEB expense, the percentage of annual OPEB expense contributed to the
plan, and the net OPEB liability for 2020 and the preceding year are as follows:
Percenta ge of
Fiscal Annual OPEB
Year Co st Co ntributed
2018 $7,198 0.00%$44,561 $51,759
2019 $7,490 0.00%$51,759 $59,249
2020 $338 0.00%$59,249 $59,587
Annual OPEB
Expense Beginning Ending
Net OPEB Lia bility
Funded Status and Funding Progress
As of September 30, 2019,the actuarial accrued liability for benefits was $59,587, all of which was
unfunded. The actuarial accrued liability for benefits was determined based on the September 30,
2020 valuation, the most recent actuarial valuation date available.The covered payroll (annual
payroll of active employees covered by the plan) for fiscal year 2020 was $5,449,088, and the ratio
of the unfunded actuarial accrued liability to the covered payroll was 1.09%.
Actuarial valuations of an ongoing program involve estimates of the value of reported amounts
and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, mortality, and the healthcare cost trend.
Amounts determined regarding the funded status of the Program and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as RSI following the notes to the financial statements, presents multi-year
trend information about whether the actuarial value of Program, assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for benefits.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
81
Actuarial Methods and Assumptions:
The Net OPEB Liability in the September 30, 2020 actuarial valuation was determined using the
following actuarial assumptions:
Inflation 3.0% per year
Health care cost trend Level 5.00%
Discount rate 2.25% (-0.25% real rate of return plus 2.50% inflation)
Salary scale 3.50%
Mortality RPH-2014 Total Table with Projection MP-2019
Projections of benefits are based on a substantive plan (the plan understood by the employer and
plan members) and include the type of benefits in force at the valuation date and the pattern of
sharing benefits between the Town and the plan members at that point. The actuarial methods
and assumptions used include techniques that are designed to reduce short-term volatility in
actuarial accrued liabilities and actuarial value of assets, consistent with the long-term
perspective of the calculations.
The GASB statement requires that the discount rate used to determine the plan liabilities for
retiree healthcare benefits be based on the earnings rate of the plan assets if the projected assets
are sufficient to cover the projected benefit payments. If the projected assets are not sufficient
then a municipal bond index rate must be used for discounting benefits not covered by the
projected assets. Since there are no plan assets held in trust the Bond Buyer GO Bond 20 Index is
used for determining the discount rate of 4.06%.
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 both the trend
and discount rate of 4.5% and 2.25%,respectively,as well as what the Town’s total OPEB liability
(asset) would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-
percentage-point higher than the current rate:
Trend Ra te
$50,799 $59,587 $70,147
Disco unt Ra te
$53,067 $59,587 $66,852
1% Decrease Curre nt Sing le Ra te 1% Increase
1.25%Assumptio n 2.25% 3.25%
1% Decrease
3.50%
Curre nt Sing le Ra te
Assumptio n 4.50%
1% Increase
5.50%
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
82
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to OPEB
At September 30, 2020, the Town reported deferred outflows of resources and deferred inflows of
resources related to the OPEB liability from the following sources:
Di ffer en ces betw een ex pect ed a nd
a ct ua l econ om ic experien ce 1 ,0 42
Ch anges i n assumpt ions 5 ,6 56
To ta l $ 6 ,6 98
De fe rre d Inflo ws
of Re so urces
The Town reported no deferred outflows of resources related to OPEB resulting from
contributions subsequent to the me asurement date that will be recognized as a reduction of the
net OPEB liability for the year ending September 30, 2021.
Other amounts reported as de ferred outflows of resources related to OPEB will be recognized in
OPEB expense as follows:
Year e nded December 3 1:
2021 $(9 77)
2022 (9 77)
2023 (9 77)
2024 (9 77)
2025 (9 77)
Thereafter (1 ,8 13)
$(6 ,6 98)
Aggregate Amount of OPEB Expense and Deferred Outflows and Inflows of Resources
The following summaries the aggregate amount of OPEB expense and deferred outflows and
inflows of resources for fiscal year ending Se ptember 30, 2020.
Tota l
OP EB Lia bilit y $ (2 51,655)$ (5 9,587)$ (3 11,242)
OP EB con tribution s 8 24 - 8 24
OP EB ex perien ce 3 5,374 (1 ,0 42) 3 4,332
OP EB change i n assumptions (4 ,1 95) (5 ,6 56) (9 ,8 51)
OP EB ex pense 2 9,354 7 ,0 36 3 6,390
SDBF He alth ca re
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
83
G.DEFERRED COMPENSATION PLAN
The Town has established a deferred compensation plan (the 457 plan) in accordance with
Internal Re venue Code, Section 457. The 457 plan, available to all employees, permits them to
defer a portion of their salaries until future years. The benefits of the plan are not available to
employees until termination, retirement, or unforeseeable emergency. Benefits are available to
employee's beneficiaries in case of death.
All amounts of compensation deferred under the 457 plan, all property rights purchased with
those amounts, and all income attributable to those amounts, property, or rights are (until paid or
made available to the employee or other beneficiary) solely the property and rights of the Town
(without being restricted to the provisions of benefits under the plan) subject only to the claims of
the Town's general creditors. Participants' rights under the plan are equal to those of the general
creditors of the Town in an amount equal to the fair market value of the deferred account for
each participant.
It is the opinion of the Town that the Town has no liability for investment losses under the 457
plan but does have the duty of due care that would be required of an ordinary prudent investor.
The Town believes that it is unlikely that it will use the 457 plan assets to satisfy the claims of
general creditors in the future.
The Town's deferred compensation plan is administered by a private corporation under contract
with the Town. Participant contributions totaled $23,077 for the year ended September 30, 2020.
H.PUBLIC IMPROVEMENT DISTRICT NO. 1
On May 7, 2007, the Tr ophy Club Town Council approved Resolution 2007-08 authorizing and
providing for the creation of a Public Improvement District. Trophy Club Public Improvement
District No.1 consists of approximately 609.68 acres within the corporate limits of the Town of
Trophy Club. This District was created in accordance with Chapter 372 of the Texas Local
Government Code.
On December 13, 2007 the Trophy Club Town Council approved the issuance and sale of
$27,500,000 in bonds, known as Trophy Club Public Improvement District No. 1 Special
Assessment Revenue Bonds, Series 2007. These bonds were authorized in order to finance the
authorized improvements found in the Se rvice and Assessment Plan. An assessment on each
property located in the District will repay the bonds.
The Service and Assessment Plan included the following projects: thoroughfare improvements,
water distribution system improvements, wastewater collection system improvements, trails and
open space, elevated water storage, thoroughfare landscaping and irrigation, screening walls and
entry features, public parks, drainage improvements, and construction administration.
Town of Trophy Club, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2020
84
In December, 2015,the Town refunded the Public Improvement District No. 1 bonds. Total
interest savings for the over 1,400 residences in the Public Improvement District exceeded
$16.4M, with a net present value savings of over 33% of the refunded amount.
I.TAX INCENTIVES
Chapter 380 of the Texas Tax Code authorizes allows the governing body of a municipality to
establish and provide for the administration of one or more programs, including programs for
making loans and grants of public money and providing personnel and services of the
municipality, to promote state or local economic development and to stimulate business and
commercial activity in the municipality.As of September 30, 2020 the Town of Tr ophy Club,
Texas had no tax incentives.
J.SUBSEQUENT EVENTS
There were no material subsequent events through March 23, 2021, the date the financial
statements were issued.
REQUIRED SUPPLEMENTARY INFORMATION
85
Revenues
Property tax $6,894,957 $7,031,351 $136,394
Sales tax 1,015,684 1,158,083 142,399
Franchise and local taxes 772,648 850,543 77,895
License and permits 304,700 479,513 174,813
Intergovernmental 1,463,711 2,005,341 541,630
Charges for services 305,316 292,490 (12,826)
Fines and forfeitures 300,360 128,166 (172,194)
Investment income 132,000 75,137 (56,863)
Other revenue 122,104 226,751 104,647
11,311,480 12,247,375 935,895
Expenditures
Current:
Manager's office 698,073 682,231 15,842
Human resources 489,378 428,851 60,527
Finance 580,570 601,249 (20,679)
Municipal court 73,942 77,456 (3,514)
Police 2,511,491 2,500,524 10,967
Fire 1,336,445 1,256,964 79,481
Emergency medical services 1,282,592 1,219,728 62,864
Facilities management 343,175 336,161 7,014
Streets 224,673 192,608 32,065
Community development 618,612 491,941 126,671
Parks and recreation 2,570,029 2,041,863 528,166
Legal 126,350 102,606 23,744
Information services 724,161 621,055 103,106
Debt service:
Principal 88,206 88,206 -
Interest 3,246 3,246 -
Capital outlay 29,000 - 29,000
11,699,943 10,644,689 1,055,254
(388,463) 1,602,686 1,991,149
Total Expenditures
Actual (Negative)
Revenues Over (Under) Expenditures
Total Revenues
PositiveOriginal &
Final Budget
GENERAL FUND
For the Year Ended September 30, 2020
Final Budget
Town of Trophy Club, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL (Page 1 of 2)
Variance with
86
Transfers in 61,500 61,500 -
Sale of general capital assets - 32,213 32,213
Insurance recoveries - 27,769 27,769
61,500 121,482 59,982
Net Change in Fund Balance $(326,963) 1,724,168 $2,051,131
Beginning fund balance 5,823,255
$7,547,423
Notes to Required Supplementary Information
1. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
Total Other Financing Sources
Ending Fund Balance
Other Financing Sources (Uses)
Town of Trophy Club, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL (Page 2 of 2)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final Budget
Original &
Final Budget
Positive
Actual (Negative)
87
Total pension liability
Service cost $980,663 $863,553 $789,530
Interest 1,354,175 1,263,163 1,173,728
Changes in benefit terms - - -
Differences between expected and actual
experience (3,497)(258,925)(62,418)
Changes of assumptions (802) - -
Benefit payments, including refunds of
participant contributions (566,895)(589,161)(636,604)
Net change in total pension liability 1,763,644 1,278,630 1,264,236
Total pension liability - beginning 19,854,961 18,576,331 17,312,095
Total pension liability - ending (a)21,618,605 19,854,961 18,576,331
Plan fiduciary net position
Contributions - employer $710,975 $633,832 $606,585
Contributions - members 384,574 347,155 323,389
Net investment income 2,642,216 (515,889) 2,061,434
Benefit payments, including refunds of
participant contributions (566,895) (589,161) (636,604)
Administrative expenses (14,914) (9,961) (10,676)
Other (448) (520) (541)
Net change in plan fiduciary net position 3,155,508 (134,544) 2,343,587
Plan fiduciary net position - beginning 17,072,317 17,206,861 14,863,274
Plan fiduciary net position - ending (b)$20,227,825 $17,072,317 $17,206,861
Fund's net pension liability - ending (a) - (b)$1,390,780 $2,782,644 $1,369,470
93.57%85.99%92.63%
$5,493,911 $4,954,406 $4,619,838
25.31%56.17%29.64%
Notes to schedule:
Plan fiduciary net position as a percentage of
the total pension liability
Covered payroll
Fund's net pension liability as a percentage of
covered payroll
12/31/2019
1) This schedule is presented to illustrate the requirement to show information for ten years. However,
until a full ten-year trend is compiled, only available information is shown.
12/31/201712/31/2018
Town of Trophy Club, Texas
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Years Ended:
88
1
$795,448 804,453 $809,057
1,113,555 1,053,745 970,682
- - (1,544,038)
(471,044)(237,279)(49,303)
- 368,895 -
(450,496)(632,921)(450,100)
987,463 1,356,893 (263,702)
16,324,632 14,967,739 15,231,441
17,312,095 16,324,632 14,967,739
$593,840 658,543 $660,364
329,281 340,458 316,613
912,155 19,357 681,774
(450,496) (632,921) (450,100)
(10,296) (11,788) (7,117)
(555) (582) (585)
1,373,929 373,067 1,200,949
13,489,345 13,116,278 11,915,329
$14,863,274 13,489,345 $13,116,278
$2,448,821 2,835,287 $1,851,461
85.85%82.63%87.63%
$4,704,011 $4,863,685 $4,523,041
52.06%58.30%40.93%
12/31/201412/31/2016 12/31/2015
89
9/30/2020 9/30/2019 9/30/2018
Actuarially determined employer contributions $728,124 $736,208 $638,736
$728,124 $736,208 $638,736
Contribution deficiency (excess)$- $- $-
Annual covered payroll $5,524,768 $5,640,011 $4,911,902
13.18%13.05%13.00%
Valuation Date:
Notes
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization Period 26 years
Asset Valuation Method 10 Year smoothed market; 15% soft corridor
Inflation 2.5%
Salary Increases 3.50% to 11.5%, including inflation
Investment Rate of Return 6.75%
Retirement Age
Mortality
Other Information:
Notes There were no benefit changes during the year.
Actuarially determined contribution rates are calculated as of December 31 and become
effective in January 13 months later.
Experience-based table of rates that are specific to the City's plan of
benefits. Last updated for the 2019 valuation pursuant to an
experience study of the period 2014 - 2018
Post-retirement: 2019 Municipal Retirees of Texas Mortality Tables.
The reates are projected on a fully generational basis with scale UMP.
Pre-retirement: PUB(10) mortality tables, with the Public Safety table
used for males and the General Employee table used for females. The
rates are projeted on a fully generational basis with scale UMP.
Contributions in relation to the actuarially determined
contribution
Employer contributions as a percentage of covered payroll
Town of Trophy Club, Texas
SCHEDULE OF EMPLOYER CONTRIBUTIONS TO PENSION PLAN
Years Ended:
1) This schedule is presented to illustrate the requirement to show information for ten years. However, until a
full ten-year trend is compiled, only available information is shown.
NOTES TO SCHEDULE OF EMPLOYER CONTRIBUTIONS TO PENSION PLAN
90
9/30/2017 9/30/2016 9/30/2015 1
$598,176 $627,419 $642,631
$598,176 $627,419 $642,631
$- $- $-
$4,559,463 $4,822,763 $4,617,652
13.12%13.01%13.92%
91
92
1
Total OPEB liability
Service cost $15,383 $12,386 $10,164
Interest 7,252 6,400 6,033
Changes in benefit terms - - -
Differences between expected and actual
experience (4,443) (887) -
Changes of assumptions 46,233 (16,237) 17,400
Benefit payments, including refunds of participant
contributions (1,099)(991)(924)
Net changes 63,326 671 32,673
Total OPEB liability - beginning 188,329 187,658 154,985
Total OPEB liability - ending $251,655 $188,329 $187,658 2
$5,493,911 $4,954,406 $4,619,838
4.58%3.80%4.06%
Notes to schedule:
1
2
Years Ended:
12/31/2019 12/31/2018 12/31/2017
Town of Trophy Club, Texas
SCHEDULE OF CHANGES IN POSTEMPLOYMENT BENEFITS OTHER THAN
PENSION (OPEB) LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
This schedule is presented to illustrate the requirement to show information for ten years.
However, until a full ten-year trend is compiled, only available information is shown.
No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB
statement No. 75 to pay related benefits.
Covered employee payroll
Total OPEB Liability as a percentage of covered
93
1
Total OPEB liability
Service cost $5,389 $5,389 $5,179
Interest 2,624 2,101 2,019
Changes in benefit terms - - -
Differences between expected and actual
experience (1,194.0) - -
Changes of assumptions (6,481) - -
Benefit payments, including refunds of
participant contributions - - -
Net changes 338 7,490 7,198
Total OPEB liability - beginning 59,249 51,759 44,561
Total OPEB liability - ending $59,587 $59,249 $51,759 2
$4,398,838 $3,662,902 $4,911,902
1.35%1.62%1.05%
Notes to schedule:
1
2
Covered employee payroll
Total OPEB Liability as a percentage of covered
This schedule is presented to illustrate the requirement to show information for ten
years. However, until a full ten-year trend is compiled, only available information is
shown.
No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB
statement No. 75 to pay related benefits.
9/30/2020 9/30/2019 9/30/2018
Town of Trophy Club, Texas
SCHEDULE OF CHANGES IN POSTEMPLOYMENT BENEFITS OTHER THAN
PENSION (OPEB) LIABILITY AND RELATED RATIOS
POST EMPLOYMENT HEALTHCARE BENEFITS
Years Ended:
94
Revenues
Special assessments $2,204,998 $2,187,165 $(17,833)
Other revenue 47,310 42,568 (4,742)
2,252,308 2,229,733 (22,575)
Expenditures
Current:
PID activities 47,310 50,152 (2,842)
Debt service:
Principal 1,340,000 1,275,000 65,000
Interest and fiscal charges 864,998 905,573 (40,575)
2,252,308 2,230,725 21,583
- (992) (992)
Net Change in Fund Balance $- (992) $(992)
Beginning fund balance 3,972,188
$3,971,196
Notes to Required Supplementary Information
1. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
Ending Fund Balance
Variance with
Final Budget
Original &
Final Budget
Positive
Actual (Negative)
Total Revenues
Total Expenditures
Revenues Over (Under) Expenditures
For the Year Ended September 30, 2020
Town of Trophy Club, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
PID No. 1
95
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