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Home My WebLink AboutVMDS_Final FS Report_2018 THE VILLAGE METROPOLITAN DISTRICT SPECIAL Eagle County, Colorado FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2018 THE VILLAGE METROPOLITAN DISTRICT SPECIAL TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2018 INDEPENDENT AUDITOR’S REPORT I BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION 1 STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS BALANCE SHEET – GOVERNMENTAL FUND 3 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUND 4 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES 5 GENERAL FUND – STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 6 NOTES TO BASIC FINANCIAL STATEMENTS 7 SUPPLEMENTARY INFORMATION SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY 18 SCHEDULE OF ASSESSED VALUATION, MILL LEVY, AND PROPERTY 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VWDWHPHQWVWKHPVHOYHVDQGRWKHUDGGLWLRQDOSURFHGXUHVLQDFFRUGDQFHZLWKDXGLWLQJVWDQGDUGV JHQHUDOO\DFFHSWHGLQWKH8QLWHG6WDWHVRI$PHULFD,QRXURSLQLRQWKHLQIRUPDWLRQLVIDLUO\VWDWHGLQ DOOPDWHULDOUHVSHFWVLQUHODWLRQWRWKHILQDQFLDOVWDWHPHQWVDVDZKROH Stratagem PC Certified Public Accountants Lakewood, Colorado -XO\ II BASIC FINANCIAL STATEMENTS THE VILLAGE METROPOLITAN DISTRICT SPECIAL STATEMENT OF NET POSITION DECEMBER 31, 2018 See accompanying Notes to Basic Financial Statements. (1) Governmental Activities ASSETS Cash and Investments 5,439$ Cash and Investments - Restricted 1,533 Prepaid Expenses 4,115 Receivable - County Treasurer 3,408 Property Taxes Receivable 713,495 Total Assets 727,990 LIABILITIES Accounts Payable 1,901 Accrued Interest Payable - Loans 14,054 Noncurrent Liabilities: Due Within One Year 331,360 Due in More Than One Year 5,799,596 Total liabilities 6,146,911 DEFERRED INFLOWS OF RESOURCES Property Tax Revenue 713,495 Total Deferred Inflows of Resources 713,495 NET POSITION Restricted for: Emergencies 1,100 Unrestricted (6,133,516) Total Net Position (6,132,416)$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL STATEMENT ACTIVITIES YEAR ENDED DECEMBER 31, 2018 See accompanying Notes to Basic Financial Statements. (2) Net (Expense) Revenue and Changes in Program Revenues Net Position Charges Operating Capital for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities FUNCTIONS/PROGRAMS Primary Government: Government Activities: General Government 51,763$ -$ 36,268$ -$ (15,495)$ Interest and Related Costs on Long Term-Term Debt 176,936 - - - (176,936) Intergovernmental Expenditure 212,533 - - - (212,533) Total Governmental Activities 441,232$ -$ 36,268$ -$ (404,964) GENERAL REVENUES Property Taxes 692,406 Specific Ownership Taxes 35,179 Net Investment Income 3,146 Total General Revenues 730,731 CHANGES IN NET POSITION 325,767 Net Position - Beginning of Year (6,458,183) NET POSITION - END OF YEAR (6,132,416)$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL BALANCE SHEET GOVERNMENTAL FUND DECEMBER 31, 2018 See accompanying Notes to Basic Financial Statements. (3) General Fund ASSETS Cash and Investments 5,439$ Cash and Investments - Restricted 1,533 Prepaid Expenses 4,115 Receivable - County Treasurer 3,408 Property Taxes Receivable 713,495 Total Assets 727,990$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts Payable 1,901$ Total Liabilities 1,901 DEFERRED INFLOWS OF RESOURCES Property Tax Revenue 713,495 Total Deferred Inflows of Resources 713,495 FUND BALANCES Nonspendable for: Prepaid Expenses 4,115 Restricted for: Debt Service 433 Emergency Reserves 1,100 Unassigned, Reported in: General Fund 6,946 Total Fund Balances 12,594 Amounts reported for governmental activities in the statement of net position are different because: Long-term liabilities, including loans payable and interest payable, are due and payable in the current period and, therefore, are not reported in the funds. Loan Payable (6,130,956) Accrued Interest Payable - Loan (14,054) Net Position of Governmental Activities (6,132,416)$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BAL ANCES GOVERNMENTAL FUND YEAR ENDED DECEMBER 31, 2018 See accompanying Notes to Basic Financial Statements. (4) General Fund REVENUES Property Taxes 692,406$ Specific Ownership Taxes 35,179 Intergovernmental Revenue - Traer Creek 36,268 Net Investment Income 3,146 Total Revenues 766,999 EXPENDITURES Accounting 13,890 Audit 4,200 County Treasurer's Fees 20,772 District Management 6,797 Dues and Membership 501 Election Expense 275 Insurance and Bonds 2,826 Legal 2,161 Miscellaneous Expense 341 Loan Principal 322,311 Interest Expense 177,689 Intergovernmental Expense - Traer Creek 212,533 Total Expenditures 764,296 NET CHANGE IN FUND BALANCES 2,703 Fund Balances - Beginning of Year 9,891 FUND BALANCES - END OF YEAR 12,594$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2018 See accompanying Notes to Basic Financial Statements. (5) Net Change in Fund Balance - Total Governmental Funds 2,703$ Amounts reported for governmental activities in the statement of activities are different because: The issuance of long-term debt (e.g., loans, Developer advances) 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 issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Principal Payment 322,311 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. Accrued Interest on Loan - Change in Liability 753 Changes in Net Position of Governmental Activities 325,767$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2018 See accompanying Notes to Basic Financial Statements. (6) Variance with Original Final Budget and Final Actual Positive Budget Amounts (Negative) REVENUES Property Taxes 692,855$ 692,406$ (449)$ Specific Ownership Taxes 27,710 35,179 7,469 Intergovernmental Revenue - Traer Creek 43,808 36,268 (7,540) Net Investment Income 500 3,146 2,646 Total Revenues 764,873 766,999 2,126 EXPENDITURES Accounting 15,000 13,890 1,110 Audit 4,200 4,200 - County Treasurer's Fees 20,786 20,772 14 Director's Fees 600 - 600 District Management 9,000 6,797 2,203 Dues and Membership 1,000 501 499 Election Expense 1,000 275 725 Insurance and Bonds 4,900 2,826 2,074 Legal 7,000 2,161 4,839 Miscellaneous Expense 1,108 341 767 Loan Principal 322,311 322,311 - Interest Expense 177,689 177,689 - Intergovernmental Expense - Traer Creek 199,779 212,533 (12,754) Total Expenditures 764,373 764,296 77 NET CHANGE IN FUND BALANCES 500 2,703 2,203 Fund Balances - Beginning of Year 7,923 9,891 1,968 FUND BALANCES - END OF YEAR 8,423$ 12,594$ 4,171$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (7) NOTE 1 DEFINITION OF REPORTING ENTITY The Village Metropolitan District (the District), a quasi-municipal corporation and political subdivision of the state of Colorado, was organized by order and decree of the District Court on November 30, 1998, concurrently with Traer Creek Metropolitan District (Traer Creek), and is governed pursuant to provisions of the Colorado Special Districts Act (Title 32, Article 1, Colorado Revised Statutes). The District’s service area is located entirely within the town of Avon (the Town) in Eagle County, Colorado. The District operates under a Service Plan approved by the Town on August 25, 1998. The District was established to provide financing for the construction of streets and safety control, water systems, sewer systems, park and recreation facilities, safety protection, fire protection, transportation systems, television relay, mosquito control and the operation and maintenance of the District. Under its Service Plan, the District is intended to be the Financing District related to Traer Creek as the Service District for the development of the service area, which encompasses the area of both Districts. The District follows the Governmental Accounting Standards Board (GASB) accounting pronouncements which provide guidance for determining which governmental activities, organizations and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, a potential for the organization to provide specific financial benefits or burdens and fiscal dependency. The District has no employees and all operations and administrative functions are contracted. The District is not financially accountable for any other organization, nor is the District a component unit of any other primary governmental entity, including the Town and Traer Creek. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The more significant accounting policies of the District are described as follows: Government-Wide and Fund Financial Statements The government-wide financial statements include the statement of net position and the statement of activities. These financial statements include all of the activities of the District. Governmental activities are normally supported by taxes and intergovernmental revenues. The statement of net position reports all financial and capital resources of the District. The difference between the sum of assets and deferred outflows and the sum of liabilities and deferred inflows is reported as net position. THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (8) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. 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 that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 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. 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 measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. The major sources of revenue susceptible to accrual are property taxes. All other revenue items are considered to be measurable and available only when cash is received by the District. The District determined that Developer advances are not considered as revenue susceptible to accrual. Expenditures, other than interest on long-term obligations are recorded when the liability is incurred or the long-term obligation is due. The District reports the following major governmental fund: The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Budgets In accordance with the State Budget Law, the District’s Board of Directors holds public hearings in the fall of each year to approve the budget and appropriate the funds for the ensuing year. The appropriation is at the total fund expenditures level and lapses at year- end. The District’s Board of Directors can modify the budget by line item within the total appropriation without notification. The appropriation can only be modified upon completion of notification and publication requirements. The budget includes each fund on its basis of accounting unless otherwise indicated. THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (9) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property Taxes Property taxes are levied by the District’s Board of Directors. The levy is based on assessed valuations determined by the County Assessor generally as of January 1 of each year. The levy is normally set by December 15 by certification to the County Commissioners to put the tax lien on the individual properties as of January 1 of the following year. The County Treasurer collects the determined taxes during the ensuing calendar year. The taxes are payable by April or if in equal installments, at the taxpayer’s election, in February and June. Delinquent taxpayers are notified in August and generally sales of the tax liens on delinquent properties are held in November or December. The County Treasurer remits the taxes collected monthly to the District. Property taxes, net of estimated uncollectible taxes, are recorded initially as deferred inflow of resources in the year they are levied and measurable. The unearned property tax revenues are recorded as revenue in the year they are available or collected. Deferred Outflows/Inflows of Resources In addition to liabilities, the statement of net position reports 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 and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies for reporting in this category. Accordingly, the item, deferred property tax revenue, is deferred and recognized as an inflow of resources in the period that the amount becomes available. Equity Net Position For government-wide presentation purposes when both restricted and unrestricted resources are available for use, it is the government’s practice to use restricted resources first, then unrestricted resources as they are needed. Fund Balance Fund balance for governmental funds should be reported in classifications that comprise a hierarchy based on the extent to which the government is bound to honor constraints on the specific purposes for which spending can occur. Governmental funds report up to five classifications of fund balance: nonspendable, restricted, committed, assigned, and unassigned. Because circumstances differ among governments, not every government or every governmental fund will present all of these components. The following classifications describe the relative strength of the spending constraints: Nonspendable Fund Balance – The portion of fund balance that cannot be spent because it is either not in spendable form (such as prepaid amounts or inventory) or legally or contractually required to be maintained intact. THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (10) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Equity (Continued) Fund Balance (Continued) Restricted Fund Balance – The portion of fund balance that is constrained to being used for a specific purpose by external parties (such as bondholders), constitutional provisions, or enabling legislation. Committed Fund Balance – The portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority, the Board of Directors. The constraint may be removed or changed only through formal action of the Board of Directors. Assigned Fund Balance – The portion of fund balance that is constrained by the government’s intent to be used for specific purposes, but is neither restricted nor committed. Intent is expressed by the Board of Directors to be used for a specific purpose. Constraints imposed on the use of assigned amounts are more easily removed or modified than those imposed on amounts that are classified as committed. Unassigned Fund Balance – The residual portion of fund balance that does not meet any of the criteria described above. If more than one classification of fund balance is available for use when an expenditure is incurred, it is the District’s practice to use the most restrictive classification first. NOTE 3 CASH AND INVESTMENTS Deposits with Financial Institutions Cash and investments as of December 31, 2018 are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and Investments 5,439$ Cash and Investments - Restricted 1,533 Total Cash and Investments 6,972$ Cash and investments as of December 31, 2018 consist of the following: Deposits with Financial Institutions 1,983$ Investments 4,989 Total Cash and Investments 6,972$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (11) NOTE 3 CASH AND INVESTMENTS (CONTINUED) Deposits with Financial Institutions (Continued) The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is determined by the PDPA. PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least 102% of the aggregate uninsured deposits. The State Commissioners for banks and financial services are required by statute to monitor the naming of eligible depositories and for the reporting of the uninsured deposits and assets maintained in the collateral pools. At December 31, 2018, the District’s cash deposits had a bank and a carrying balance of $1,983. Investments The District has not adopted a formal investment policy; however, the District follows state statutes regarding investments. The District generally limits its concentration of investments to those noted with an asterisk (*) below, which are believed to have minimal credit risk, minimal interest rate risk, and no foreign currency risk. Additionally, the District is not subject to concentration risk or investment custodial risk disclosure requirements for investments that are in the possession of another party. Colorado revised statutes limit investment maturities to three to five years or less unless formally approved by the Board of Directors. Such actions are generally associated with a debt service reserve or sinking fund requirements. Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments may invest which include: . Obligations of the United States, certain U.S. government agency securities, and securities of the World Bank . General obligation and revenue bonds of U.S. local government entities . Certain certificates of participation . Certain securities lending agreements . Bankers’ acceptances of certain banks . Commercial paper . Written repurchase agreements and certain reverse repurchase agreements collateralized by certain authorized securities * Certain money market funds . Guaranteed investment contracts * Local government investment pools THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (12) NOTE 3 CASH AND INVESTMENTS (CONTINUED) As of December 31, 2018, the District had the following investments: Investment Maturity Amount Colorado Liquid Asset Trust Plus Weighted Average (COLOTRUST PLUS) Under 60 Days 4,556$ U.S. Treasury Money Market Fund Weighted Average Under 60 Days 433 Total 4,989$ COLOTRUST The District invested in the Colorado Local Government Liquid Asset Trust (COLOTRUST) (the Trust), an investment vehicle established for local government entities in Colorado to pool surplus funds. The State Securities Commissioner administers and enforces all state statutes governing the Trust. The Trust operates similarly to a money market fund and each share is equal in value to $1.00. The Trust offers shares in two portfolios, COLOTRUST PRIME and COLOTRUST PLUS+. Both portfolios may invest in U.S. Treasury securities and repurchase agreements collateralized by U.S. Treasury securities. COLOTRUST PLUS+ may also invest in certain obligations of U.S. government agencies, highest rated commercial paper and any security allowed under CRS 24-75-601. A designated custodial bank serves as custodian for the Trust’s portfolios pursuant to a custodian agreement. The custodian acts as safekeeping agent for the Trust’s investment portfolios and provides services as the depository in connection with direct investments and withdrawals. The custodian’s internal records segregate investments owned by the Trust. COLOTRUST is rated AAAm by Standard & Poor’s. COLOTRUST records its investments at fair value and the District records its investment in COLOTRUST at net asset value as determined by fair value. There are no unfunded commitments, the redemption frequency is daily and there is no redemption notice period. U.S. Treasury Money Market Fund The money at US Bank is invested in the Fidelity Governmental Fund 57 (Class 1). The Fidelity Governmental Fund is a money market fund that is managed by Fidelity Investments and each share is equal in value to $1.00. The fund is AAAm rated and invests in high quality short-term obligations, with approximately 80% of assets invested in government securities. The average maturity of the underlying securities is 60 days or less. THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (13) NOTE 4 LONG-TERM OBLIGATIONS The following is an analysis of the changes in the District’s long-term obligations for the year ended December 31, 2018: Balance at Balance at Due December 31,December 31,Within 2017 Additions Reductions 2018 One Year Limited Tax General Obligation: Refunding Loan, Series 2015 6,453,267$ -$ 322,311$ 6,130,956$ 331,360$ Total 6,453,267$ -$ 322,311$ 6,130,956$ 331,360$ On May 14, 2015, the District entered into a loan agreement with NBH Bank, N.A. to obtain a loan in the amount of $7,460,000 (Loan). The maturity date of the Loan is May 14, 2025, with an interest rate of 2.75%, paid semiannually on June 1 and December 1. The first $500,000 of property taxes received each year from the Village Metropolitan District will be pledged for Tank Project Financing and deposited into the Escrow account. If the 2015 Loan is not refinanced, extended or paid in full on or before the Maturity Date, the Post Maturity Interest Rate shall be computed using the following formula: 65% of One Month LIBOR plus 275 basis points. The Loan Balance of the Loan shall bear interest at the Post Maturity Interest Rate from and including the first day following the Maturity Date until the earlier of (A) the Loan is paid in full or (B) the Maximum Amount Due has been paid to the Bank. Upon any Determination of Taxability, the Loan Balance of the Loan shall bear interest at a fixed rate equal to 4.23% (the Taxable Rate). The proceeds of the Loan were transferred to Traer Creek to refund the Developer obligation for costs associated with the construction of a water tank improvement project. The District’s long-term obligations will mature as follows: Year Ending December 31,Principal Interest Total 2019 331,360$ 168,640$ 500,000$ 2020 340,214 159,786 500,000 2021 350,216 149,784 500,000 2022 360,048 139,952 500,000 2023 370,157 129,843 500,000 2024-2025 4,378,961 169,885 4,548,846 Total 6,130,956$ 917,890$ 7,048,846$ THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (14) NOTE 5 DEBT AUTHORIZATION On November 3, 1998, the District’s electors authorized the issuance of indebtedness in an amount not to exceed $52,250,000 at an interest rate not to exceed 18%. On November 6, 2001, the District’s electors authorized the issuance of additional indebtedness in an amount not to exceed $1,763,000,000 at an interest rate not to exceed 18%. The total authorized indebtedness is allocated for the following purposes: Amount Authorization Used Remaining Authorized on for Series 2014 Electoral November 3, 1998 Bonds Authorization Street and Street Improvements $ 176,750,000 $ - $ 176,750,000 Water 160,850,000 7,460,000 153,390,000 Sanitary or Storm Sewer 174,500,000 - 174,500,000 Parks and Recreation 162,050,000 - 162,050,000 Traffic and Safety 158,300,000 - 158,300,000 Mosquito Control 10,150,000 - 10,150,000 Public Transportation 160,700,000 - 160,700,000 Fire Protection and Ambulance 158,300,000 - 158,300,000 Television Relay and Translation 158,150,000 - 158,150,000 Operations and Maintenance 15,000,000 - 15,000,000 Debt Refunding 158,000,000 - 158,000,000 Intergovernmental Agreements - General 164,500,000 - 164,500,000 Intergovernmental Agreements - Traer Creek 158,000,000 - 158,000,000 Total 1,815,250,000$ 7,460,000$ 1,807,790,000$ Per the Service Plan dated August 25, 1998, the District, combined with Traer Creek Metropolitan District, is limited to issuing $158,000,000 in debt. Traer Creek Metropolitan District’s authorization used is $52,100,000. In addition, the maximum debt service mill levy for the District is 50 mills, as adjusted for changes in the ratio of actual value to assessed value of property within the District. NOTE 6 NET POSITION The District has net position consisting of two components - restricted and unrestricted. Restricted assets include net position that are restricted for use either externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The District has restricted net assets as of December 31, 2018 as follows: Governmental Activities Restricted Net Position: Emergencies 1,100$ Total Restricted Net Position 1,100$ The District’s unrestricted net position as of December 31, 2018 is $(6,133,516). This deficit is a result of the District being responsible for the repayment of the loan for a water tank improvement project. THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (15) NOTE 7 RELATED PARTIES The Developer of the property within the District and Traer Creek is Traer Creek LLC and several affiliated limited liability companies (Developer). The members of the Board of Directors are employees, owners or associated with the Developer and may have conflicts of interest in dealing with the District. The members of the Board also serve as the Board members of Traer Creek. NOTE 8 AGREEMENTS In 2014, Traer Creek issued $40,175,000 Taxable Variable Rate Revenue Refunding Bonds, Series 2014, dated August 1, 2014, to refund Series 2002 bonds and Series 2004 bonds (the Bonds). The Bonds are secured by an irrevocable, direct pay letter of credit (LOC) pursuant to a Letter of Credit Reimbursement Agreement (LOC Agreement) by and among the District, Traer Creek, and BNP Paribas (BNPP). The District has pledged to pay its property tax revenues (after the first $500,000 – see Tank Project Financing Reimbursement and Pledge Agreement) and specific ownership tax revenues to BNPP. The LOC expires on July 31, 2019, unless extended by BNPP at its sole discretion. The District entered into a Facilities Funding, Construction and Operations Agreement on July 31, 2001, and later amended on March 4, 2002, with Traer Creek to provide funding in exchange for certain services and facilities, as described in the District’s Service Plan, to current and future residents and property owners of both the District and Traer Creek. Additionally, the District will provide funding to Traer Creek in exchange for the operations, maintenance and administrative service functions. The District pledges all revenue it receives from ad valorem property taxes, specific ownership taxes and other rates, fees, tolls and charges that may be imposed and collected to Traer Creek, if such revenue is not otherwise pledged, to assist in financing the facilities and services. Tank Project Financing Reimbursement and Pledge Agreement On August 1, 2014, the District entered into a reimbursement and pledge agreement with Traer Creek and Traer Creek-RP LLC to deposit into Escrow 60 semi-annual payments for Tank Project Financing. The first $500,000 of property taxes received each year from the Village Metropolitan District will be pledged for Tank Project Financing and deposited into the Escrow account. During 2015, the District entered into the Loan Agreement (see Note 4), which pledged the first $500,000 of property taxes received to the Loan Agreement. Payments are made from the Escrow to repay the Loan. THE VILLAGE METROPOLITAN DISTRICT SPECIAL NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2018 (16) NOTE 9 RISK MANAGEMENT The District is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; or acts of God. The District is a member of the Colorado Special Districts Property and Liability Pool (Pool) as of December 31, 2018. The Pool is an organization created by intergovernmental agreement to provide property, liability, public officials’ liability, boiler and machinery and workers’ compensation coverage to its members. Settled claims have not exceeded this coverage in any of the past three fiscal years. The District pays annual premiums to the Pool for liability, property and public officials’ liability coverage. In the event aggregated losses incurred by the Pool exceed amounts recoverable from reinsurance contracts and funds accumulated by the Pool, the Pool may require additional contributions from the Pool members. Any excess funds which the Pool determines are not needed for purposes of the Pool may be returned to the members pursuant to a distribution formula. NOTE 10 TAX, SPENDING AND DEBT LIMITATIONS Article X, Section 20 of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (TABOR), contains tax, spending, revenue and debt limitations which apply to the state of Colorado and all local governments. Spending and revenue limits are determined based on the prior year’s Fiscal Year Spending adjusted for allowable increases based upon inflation and local growth. Fiscal Year Spending is generally defined as expenditures plus reserve increases with certain exceptions. Revenue in excess of the Fiscal Year Spending limit must be refunded unless the voters approve retention of such revenue. The District voters approved an election question in 2001 to remove limits on the amount of revenue, excluding revenues generated from ad valorem taxes, the District is allowed to retain. On November 6, 2001, District voters passed an election question to increase property taxes $1,000,000 annually, without limitation of rate, to pay the District’s administration, operational and maintenance costs. TABOR requires local governments to establish Emergency Reserves. These reserves must be at least 3% of Fiscal Year Spending (excluding bonded debt service). Local governments are not allowed to use the Emergency Reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The District’s Emergency Reserves have been calculated based only on the revenues that the District retains. This does not include the revenue used for debt service. Revenues transferred to Traer Creek Metropolitan District will have an Emergency Reserve on those funds shown in Traer Creek Metropolitan District. The District’s management believes it is in compliance with the provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of the provisions, including the interpretation of how to calculate Fiscal Year Spending limits, will require judicial interpretation. (17) SUPPLEMENTARY INFORMATION THE VILLAGE METROPOLITAN DISTRICT SPECIAL SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY YEAR ENDED DECEMBER 31, 2018 (18) Year Ending December 31,Principal Interest Total 2019 331,360$ 168,640$ 500,000$ 2020 340,214 159,786 500,000 2021 350,216 149,784 500,000 2022 360,048 139,952 500,000 2023 370,157 129,843 500,000 2024 380,211 119,789 500,000 2025 3,998,750 50,096 4,048,846 Total 6,130,956$ 917,890$ 7,048,846$ Interest Rate 2.75% Payable June 1 and December 1 $7,460,000 Limited Tax General Obligation Refunding Loan Series 2015, Dated May 14, 2015 THE VILLAGE METROPOLITAN DISTRICT SPECIAL SCHEDULE OF ASSESSED VALUATION, MILL LEVY, AND PROPERTY TAXES COLLECTED YEAR ENDED DECEMBER 31, 2018 (19) Prior Year Assessed Valuation for Percent Year Ended Current Year Mills Total Property Taxes Collected December 31,Tax Levy Levied Levied Collected to Levied 2014 14,773,310$ 50.000 738,666$ 680,297 92.10 %A 2015 14,636,360 50.000 731,818 731,074 99.90 2016 14,320,870 50.000 716,044 716,072 100.00 2017 14,192,690 50.000 709,635 709,634 100.00 2018 13,857,090 50.000 692,855 692,406 99.94 Estimated for the Year Ending December 31, 2019 14,269,910$ 50.000 713,495$ Note: Property taxes shown as collected in any one year include collections of delinquent property taxes or abatements of property taxes assessed in prior years. This presentation does not attempt to identity specific years' assessment. A - Abatements from prior years caused receipts in the current year to be less than the amount levied.