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Home My WebLink About2020 Consolidated Annual ReportSOLARIS METROPOLITAN DISTRICT NOS. 1-3 2020 CONSOLIDATED ANNUAL REPORT Pursuant to the Consolidated Service Plan for Solaris Metropolitan District Nos. 1, 2 and 3 (the “Districts”), the Districts are responsible for submitting an annual report to the Town Manager of the Town of Vail (the “Town”) each year. For the year ending December 31, 2020, the Districts make the following report: 1. Boundary changes made to the Districts’ boundaries as of December 31 of the prior year. There were no boundary changes made to the Districts’ boundaries during the prior year. 2. Intergovernmental Agreements with other governmental entities entered into as of December 31 of the prior year. There were no intergovernmental agreements with other governmental entities entered into during the prior year. 3. A list of all facilities and improvements constructed by the Districts that have been dedicated to and accepted by the Town as of December 31 of the prior year. No facilities or improvements constructed by the Districts were dedicated to the Town in 2020. 4. The assessed valuation of the Districts for the current year. The assessed valuation of each district is as follows: District No. 1 - $11,660 District No. 2 - $32,177,050 District No. 3 - $8,516,620 5. Current year budget including a description of the Public Improvements to be constructed in such year. Copies of the Districts’ 2021 budgets are attached hereto as Exhibit A. 6. Audit of the District’s financial statements, for the year ending December 31 of the previous year, prepared in accordance with generally accepted accounting principles or audit exemption, if applicable. Copies of the 2020 Audits are attached hereto as Exhibit B. 7. Notice of any uncured events of default by the Districts, which continue beyond a ninety (90) day period, under any Debt instrument. There were not uncured events of default by the Districts which continued beyond 90 days under any debt instrument. EXHIBIT A 2021 Budgets SOLARIS METROPOLITAN DISTRICT NO. 1 2021 BUDGET MESSAGE Solaris Metropolitan District No. 1 is a quasi-municipal corporation organized and operated pursuant to provisions set forth in the Colorado Special District Act. The District was established to supply the necessary public improvements and related operation and maintenance services as such power and authority is described in the Special District Act, and other applicable statutes. The District has no employees and all operations and administrative functions are contracted. The following budget is prepared on the modified accrual basis of accounting, which is consistent with the basis of accounting used in presenting the District's financial statements. 2021 BUDGET STRATEGY The District was formed in late 2006. The District has joined with Solaris Metropolitan District No. 2 and Solaris Metropolitan District No. 3 in adopting a consolidated service plan. Under this consolidated service plan, the District is the “service district” and Solaris Metropolitan District No. 2 and No. 3 are the “financing districts.” As such, the District is responsible for managing the construction and operation of facilities and improvements needed for the Solaris Metropolitan District No. 2 and No. 3 areas. For this reason, the District issued $30,560,000 property tax revenue variable rate bonds on March 25, 2008 to be repaid with revenues pledged by Solaris Metropolitan District No. 2 and No. 3. During 2013 Solaris Metropolitan District No. 2 issued bonds and transferred the proceeds to District No. 1 and the 2008 bonds were paid off and the District has no bonds currently outstanding. Operating expenses are funded pursuant to an Operating Agreement between Solaris Metropolitan District Nos. 1, 2 and 3. District No. 1 performs the operations and the operating expenses are funded through property tax revenues collected by the “financing” districts (No. 2 and No. 3) and paid to District No. 1. Additionally, the Developer in the District advances funds to District No. 1 for operations and then such advances are repaid as the property tax revenues are received. Page 1 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 1 TO ADOPT 2021 BUDGET A RESOLUTION SUMMARIZING EXPENDITURES AND REVENUES FOR EACH FUND AND ADOPTING A BUDGET FOR THE SOLARIS METROPOLITAN DISTRICT NO. 1, COLORADO, FOR THE CALENDAR YEAR BEGINNING ON THE FIRST DAY OF JANUARY 2021 AND ENDING ON THE LAST DAY OF DECEMBER 2021. WHEREAS, the Board of Directors of the Solaris Metropolitan District No. 1 has appointed a budget committee to prepare and submit a proposed 2021 budget at the proper time; and WHEAREAS, such committee has submitted a proposed budget to this governing body at the proper time, for its consideration, and; WHEREAS, upon due and proper notice, published or posted in accordance with the law, said proposed budget was open for inspection by the public at a designated place, and a public hearing was held on October 22, 2020, and interested taxpayers were given the opportunity to file or register any objections to said proposed budget; and; WHEREAS, whatever increases may have been made in the expenditures, like increases were added to the revenues or planned to be expended from reserves/fund balances so that the budget remains in balance, as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board of directors of the Solaris Metropolitan District No. 1, Eagle County, Colorado: Section 1. That the budget as submitted, amended, and summarized by fund, hereby is approved and adopted as the budget of the Solaris Metropolitan District No. 1 for the year stated above, as adjusted for immaterial changes in the final certified assessed value of the District as certified by the county assessor and corresponding adjustments resulting from such changes to the assessed value. In the event there are material changes to the assessed value then a subsequent meeting of the Board shall be called to consider such changes. Furthermore, to the extent capital or significant operating expenditures forecasted for the current year are anticipated to be extended into the following year, the expenditures and offsetting change in the budgeted beginning fund balance shall be updated to reflect management’s best estimate at the time the budget is to be filed with the Colorado Division of Local Affairs. Section 2. That the budget hereby approved and adopted shall be certified by any officer or the District Administrator of the District and made a part of the public records of the District. Page 2 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 1 (CONTINUED) TO SET MILL LEVIES A RESOLUTION LEVYING PROPERTY TAXES FOR THE YEAR 2020, TO HELP DEFRAY THE COSTS OF GOVERNMENT FOR THE SOLARIS METROPOLITAN DISTRICT NO. 1, EAGLE COUNTY, COLORADO, FOR THE 2021 BUDGET YEAR. WHEREAS, the Board of Directors of the Solaris Metropolitan District No. 1, has adopted the annual budget in accordance with the Local Government Budget Law, on October 22, 2020 and; WHEREAS, the amount of money necessary to balance the budget for general operating expenses and capital expenditure purposes from property tax revenue is $0.00 and; WHEREAS, the Solaris Metropolitan District No. 1 finds that it is required to temporarily lower the general operating mill levy to render a refund for $0.00, and; WHEREAS, the amount of money necessary to balance the budget for capital expenditure purposes from property tax revenue approved by voters or at public hearing is $0.00, and; WHEREAS, the amount of money necessary to balance the budget for voter approved bonds and interest is $0.00, and; WHEREAS, the 2020 valuation for assessment for the Solaris Metropolitan District No. 1, as certified by the County Assessor is $11,660. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the SOLARIS METROPOLITAN DISTRICT No. 1, EAGLE COUNTY, COLORADO: Section 1. That for the purposes of meeting all general operating expenses of the Solaris Metropolitan District No. 1 during the 2021 budget year, there is hereby levied a tax of 0.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Section 2. That for the purposes of rendering a refund to its constituents during budget year 2021 there is hereby levied a temporary tax credit/mill levy reduction of 0.00 mills. Section 3. That for the purpose of meeting all capital expenditures of the Solaris Metropolitan District No. 1 during the 2021 budget year, there is hereby levied a tax of 0.00 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Page 3 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 1 (CONTINUED) TO SET MILL LEVIES (CONTINUED) Section 4. That for the purpose of meeting all payments for bonds and interest of the Solaris Metropolitan District No. 1 during the 2021 budget year, there is hereby levied a tax of 0.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Section 5. That any officer or the District Administrator is hereby authorized and directed to either immediately certify to the County Commissioners of Eagle County, Colorado, the mill levies for the Solaris Metropolitan District No. 1 as hereinabove determined and set, or be authorized and directed to certify to the County Commissioners of Eagle County, Colorado, the mill levies for the Solaris Metropolitan District No. 1 as hereinabove determined and set based upon the final (December) certification of valuation from the county assessor. (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) Page 4 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 1 (CONTINUED) TO APPROPRIATE SUMS OF MONEY (PURSUANT TO SECTION 29-1-108, C.R.S.) A RESOLUTION APPROPRIATING SUMS OF MONEY TO THE VARIOUS FUNDS AND SPENDING AGENCIES, IN THE AMOUNT AND FOR THE PURPOSE AS SET FORTH BELOW, FOR THE SOLARIS METROPOLITAN DISTRICT NO. 1, EAGLE COUNTY, COLORADO, FOR THE 2021 BUDGET YEAR. WHEREAS, the Board of Directors has adopted the annual budget in accordance with the Local Government Budget Law, on October 22, 2020, and; WHEREAS, the Board of Directors has made provision therein for revenues in an amount equal or greater to the total proposed expenditures as set forth in said budget, and; WHEREAS, it is not only required by law, but also necessary to appropriate the revenues and reserves or fund balances provided in the budget to and for the purposes described below, thereby establishing a limitation on expenditures for the operations of the District. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SOLARIS METROPOLITAN DISTRICT No. 1, EAGLE COUNTY, COLORADO: Section 1. That the following sums are hereby appropriated from the revenues of each fund, to each fund, for the purposes stated: GENERAL FUND: General and Admin Expenditures $93,645 Operations Expenditures $636,632 Developer Repayment $235,756 Advance Note Principal & Interest $0 TOTAL GENERAL FUND $966,033 (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) Page 5 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 1 (CONTINUED) TO ADOPT 2021 BUDGET, SET MILL LEVIES AND APPROPRIATE SUMS OF MONEY (CONTINUED) The above resolutions to adopt the 2021 budget, set the mill levies and to appropriate sums of money were adopted this 22nd day of October, 2020. Attest: ___________________________________ Title: ____________________________________ President SOLARIS METROPOLITAN DISTRICT #1 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET, ACTUAL AND FORECAST FOR THE PERIODS INDICATED GENERAL FUND Cal Yr Cal Yr Cal Yr 9 Months Cal Yr 2018 2019 2020 Variance Cal Yr Ended 2021 Audited Audited Adopted Favorable 2020 09/30/20 Adopted Actual Actual Budget (Unfav)Forecast Actual Budget Assessed Valuation Solaris Metro Dist # 1 10,910 10,910 11,660 11,660 11,660 Solaris Metro Dist # 2 30,609,830 31,562,590 32,218,330 32,218,330 32,177,050 Allowance for Protests/Abatements Solaris Metro Dist # 3 5,969,430 8,103,340 8,512,280 8,512,280 8,516,620 Residential Service Obligation Mill Levy 10.000 10.000 10.000 10.000 10.000 Residential Advance Note Mill Levy 3.000 3.000 3.000 3.000 (8.888) Commercial Service Obligation Mill Levy 10.000 10.000 10.000 10.000 10.000 Commercial Advance Note Mill Levy 3.000 3.000 3.000 3.000 3.000 REVENUES Developer Cost Recovery Advance 0 0 0 0 SMD No. 2 Operations Costs Payment 419,449 420,336 325,683 0 325,683 422,319 325,271 SMD No. 2 Advance Note Payment Incl Above Incl Above 96,655 0 96,655 (285,976) SMD No. 3 Operations Costs Payment 107,619 106,919 85,123 0 85,123 110,033 85,166 SMD No. 3 Advance Note Payment Incl Above Incl Above 25,537 0 25,537 25,550 Ice Skate Rental Income 224,529 192,220 225,000 (100,000) 125,000 77,015 150,000 Skate Shop Rent Income 20,971 21,600 22,248 0 22,248 16,603 22,916 Special Event Income 38,250 28,600 40,000 (19,425) 20,575 20,575 25,000 Miscellaneous Income 0 0 0 0 Interest Income 3,879 5,479 2,500 0 2,500 1,405 2,500 Total Revenues 814,697 775,154 822,746 (119,425) 703,321 647,950 350,427 GENERAL & ADMIN EXPENDITURES Accounting 26,069 33,758 28,250 (3,750) 32,000 12,861 29,098 Audit 8,950 9,100 9,275 0 9,275 9,275 9,350 Elections 1,505 0 0 (600) 600 450 0 General Engineering 000000 0 Insurance 11,531 12,140 13,354 1,320 12,034 12,034 13,237 Legal - General Counsel 10,427 18,058 15,000 (5,000) 20,000 6,843 15,000 Miscellaneous 565 1,279 750 0 750 291 750 Contingency 0 0 10,000 10,000 0 0 10,000 Contributions to SMD 2 and 3 16,125 15,904 14,824 (2,361) 17,185 17,185 16,210 TOTAL G&A EXPENDITURES 75,172 90,239 91,453 (391) 91,844 58,939 93,645 No assurance is provided on these financial statements; substantially all disclosures required by GAAP omitted. PAGE 2 SOLARIS METROPOLITAN DISTRICT #1 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET, ACTUAL AND FORECAST FOR THE PERIODS INDICATED GENERAL FUND - (CONTINUED) Cal Yr Cal Yr Cal Yr 9 Months Cal Yr 2018 2019 2020 Variance Cal Yr Ended 2021 Audited Audited Adopted Favorable 2020 09/30/20 Adopted Actual Actual Budget (Unfav)Forecast Actual Budget OPERATING EXPENDITURES Bank Fees 38(38)0000 0 Cash Short (Sales Tax not Collected) 0 0 0 0 Credit Card Fees 6,856 6,126 6,750 2,750 4,000 2,696 4,500 Insurance Expense 13,115 13,514 13,920 (572) 14,492 14,492 14,500 Janitorial Expense / Trash 10,135 14,890 14,884 2,884 12,000 9,422 13,000 Misc Expense 77 0 0 0 Dues and Subscriptions 0 0 0 0 Rent & CAM 106,341 109,402 112,272 (1,226) 113,498 84,925 115,785 Management Labor 58,750 76,750 81,250 4,500 76,750 57,562 81,750 Repairs and Maintenance 43,729 48,381 35,000 (10,000) 45,000 32,255 35,000 Supplies 206 424 1,500 1,500 0 0 1,500 Skate Shop Contract Labor 40,144 46,926 43,832 13,832 30,000 21,434 43,832 Skate Shop Management Fee 22,453 19,152 22,500 10,000 12,500 7,700 15,000 Skate Shop Supplies 5,507 9,346 2,100 600 1,500 1,271 2,100 Special Event Expenses 3,875 2,860 4,000 1,942 2,058 2,058 2,500 Utilities - Skate Shop 1,074 1,290 1,100 (200) 1,300 1,023 1,100 Utilities - Electricity 29,631 41,275 37,079 2,079 35,000 17,119 37,079 Utilities - Gas 75,109 49,537 65,381 17,881 47,500 24,687 50,000 Utilities - Water 4,879 6,566 5,806 (1,694) 7,500 10,086 7,500 Utilities - Street Scapes 16,839 19,009 18,054 0 18,054 9,201 18,054 Landscaping - Plaza 20,605 30,110 25,322 (11,536) 36,858 29,555 25,322 Plaza Repair & Maintenance 86,893 33,700 40,000 35,000 5,000 3,915 40,000 Plaza Maintenance Labor 31,937 54,788 50,571 0 50,571 38,496 50,571 Public Bathroom Labor 21,262 22,411 16,995 0 16,995 14,213 16,995 Loading Dock Labor 19,439 18,757 23,344 0 23,344 19,291 23,344 Loading Dock Repair & Maintenance 3,150 48,003 7,500 6,000 1,500 0 7,500 Art Repair & Maintenance 8,324 20,000 14,000 6,000 0 20,000 Ice Rink Repair & Maintenance 10,506 7,500 4,500 3,000 0 7,500 Zamboni Maint. And Fuel 1,066 1,533 1,200 (789) 1,989 1,989 1,200 Turf 550 0 1,000 1,000 0 0 1,000 Contingency 0 Operating Expenditures 623,659 693,543 658,859 92,450 566,409 403,389 636,632 REVENUE OVER (UNDER) EXPEND. 115,866 (8,628) 72,434 (27,366) 45,068 185,623 (379,850) OTHER FINANCING SOURCES and (USES) Advance/Loan from District No. 2 0 0 0 0 0 Advance/Loan from District #3 0 0 0 0 Transfer in from District #3 0 0 0 0 Transfer in from District #3 0 0 0 0 Developer Advances 357,063 442,876 610,778 (210,778) 400,000 338,878 560,000 Repayment of Developer Advances/Intere (469,445) (330,000) (559,737) 109,737 (450,000) (250,000) (235,756) Repayment of Developer Principal from Ne 0000 Repayment of Developer Interest from Ne 0 0 0 0 Advance Note Principal 0 0 (13,172) 13,172 0 0 0 Advance Note Interest (45,555) 0 (109,019) 109,019 0 0 0 Transfer to Debt Service Fund TOTAL OTHER FINANCING SOURCES (157,937) 112,876 (71,151) 21,151 (50,000) 88,878 324,244 FUND BALANCE - BEGINNING 46,560 4,489 48,082 60,655 108,737 108,737 103,804 FUND BALANCE - ENDING 4,489 108,737 49,365 54,439 103,804 383,238 48,198 No assurance is provided on these financial statements; substantially all disclosures required by GAAP omitted. = = = = = PAGE 3 121 County Tax entity code DOLA LGID/SID 65739 TO: County Commissioners1 of Eagle County , Colorado. On behalf of the Solaris Metropolitan District #1 the Board of Directors of the Solaris Metropolitan District #1 $11,660 $11,660 Submitted:12/7/2020 for budget/fiscal year 2021 . (not later than Dec 15) (mm/dd/yyyy)(yyyy) PURPOSE (see end notes for definitions and examples)LEVY2 REVENUE2 1.General Operating ExpensesH 0.000 mills -$ 2. (0.000) mills -$ SUBTOTAL FOR GENERAL OPERATING: (0.000)mills -$ 3.General Obligation Bonds and InterestJ 0.000 mills -$ 4.Contractual ObligationsK 0.000 mills -$ 5.Capital ExpendituresL 0.000 mills -$ 6.Refunds/AbatementsM 0.000 mills -$ 7.OtherN (specify): 0.000 mills -$ 0.000 mills -$ TOTAL:[]0.000 mills -$ Daytime phone: (970) 926-6060 x8 Signed: Title: District Accountant (local government)C Include one copy of this tax entity's completed form when filing the local government's budget by January 31st, per 29-1-113 C.R.S. with the Division of Local Government (DLG), Room 521, 1313 Sherman Street, Denver, Colorado 80203. Questions? Call DLG (303) 864-7720. 1 If the taxing entity's boundaries include more than one county, you must certify the levies to each county. Use a separate form for each county and certify the same levies uniformly to each county per Article X, Section 3 of the Colorado Constitution. 2 Levies must be rounded to three decimal places and revenue must be calculated from the total NET assessed valuation (Line 4 of Form DLG57 on the County Assessor's FINAL certification of valuation). USE VALUE FROM FINAL CERTIFICATION OF VALUATION PROVIDED BY ASSESSOR NO LATER THAN DECEMBER 10 <Minus> Temporary General Property Tax Credit/ Temporary Mill Levy Rate ReductionI (GrossD assessed valuation, Line 2 of the Certification of Valuation From DLG 57E) (NETG assessed valuation, Line 4 of the Certification of Valuation Form DLG 57) Hereby officially certifies the following mills to be levied against the taxing entity's GROSS assessed valuation of: Contact person: (print) Ken Marchetti Sum of General Operating Subtotal and Lines 3 to 7 Note: If the assessor certified a NET assessed valuation (AV) different than the GROSS AV due to a Tax Increment Financing (TIF) AreaF the tax levies must be calculated using the NET AV. The taxing entity's total property tax revenue will be derived from the mill levy multiplied against the NET assessed valuation of: CERTIFICATION OF TAX LEVIES for NON-SCHOOL Governments (taxing entity)A (governing body)B Form DLG 70 (rev 6/16)Page 1 of 4 SOLARIS METROPOLITAN DISTRICT NO. 2 2021 BUDGET MESSAGE Solaris Metropolitan District No. 2 is a quasi-municipal corporation organized and operated pursuant to provisions set forth in the Colorado Special District Act. The District was established to supply the necessary public improvements and related operation and maintenance services as such power and authority is described in the Colorado Special District Act, and other applicable statutes. The District has no employees and all operations and administrative functions are contracted. The following budget is prepared on the modified accrual basis of accounting, which is consistent with the basis of accounting used in presenting the District's financial statements. 2021 BUDGET STRATEGY The District was formed in late 2006. The District has joined with Solaris Metropolitan District No. 1 and Solaris Metropolitan District No. 3 in adopting a consolidated service plan. Under this consolidated service plan, Solaris Metropolitan District No. 1 is the “service district” and Solaris Metropolitan Districts No. 2 and No. 3 are the “financing districts.” As such, Solaris Metropolitan District No.1 is responsible for managing the construction and operation of facilities and improvements needed for the Solaris Metro Districts No. 2 and No. 3 areas. Initially Solaris Metropolitan District No. 1 issued $30,560,000 property tax revenue variable rate bonds on March 25, 2008 to be repaid with revenues pledged by Solaris Metropolitan District No. 2 and No. 3. During 2013 Solaris Metropolitan District No. 2 issued bonds and transferred the proceeds to District No. 1 and District No. 1’s 2008 bonds were paid off. During 2016 Solaris Metropolitan District No. 3 issued bonds and transferred the proceeds to District No. 2 and District No. 2’s 2013 bonds were paid off. Solaris Metropolitan District No. 2 and No. 3 levy a debt service mill levy to pay the debt service on District No. 3’s 2016 bonds. Operating expenses are funded pursuant to an Operating Agreement between Solaris Metropolitan District Nos. 1, 2 and 3. District No. 1 performs the operations and the operating expenses are funded through property tax revenues collected by the “financing” districts (No. 2 and No. 3) and paid to District No. 1. Page 1 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 2 TO ADOPT 2021 BUDGET A RESOLUTION SUMMARIZING EXPENDITURES AND REVENUES FOR EACH FUND AND ADOPTING A BUDGET FOR THE SOLARIS METROPOLITAN DISTRICT NO. 2, COLORADO, FOR THE CALENDAR YEAR BEGINNING ON THE FIRST DAY OF JANUARY 2021 AND ENDING ON THE LAST DAY OF DECEMBER 2021. WHEREAS, the Board of Directors of the Solaris Metropolitan District No. 2 has appointed a budget committee to prepare and submit a proposed 2021 budget at the proper time; and WHEAREAS, such committee has submitted a proposed budget to this governing body at the proper time, for its consideration, and; WHEREAS, upon due and proper notice, published or posted in accordance with the law, said proposed budget was open for inspection by the public at a designated place, and a public hearing was held on October 22, 2020, and interested taxpayers were given the opportunity to file or register any objections to said proposed budget; and; WHEREAS, whatever increases may have been made in the expenditures, like increases were added to the revenues or planned to be expended from reserves/fund balances so that the budget remains in balance, as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board of directors of the Solaris Metropolitan District No. 2, Eagle County, Colorado: Section 1. That the budget as submitted, amended, and summarized by fund, hereby is approved and adopted as the budget of the Solaris Metropolitan District No. 2 for the year stated above, as adjusted for immaterial changes in the final certified assessed value of the District as certified by the county assessor and corresponding adjustments resulting from such changes to the assessed value. In the event there are material changes to the assessed value then a subsequent meeting of the Board shall be called to consider such changes. Furthermore, to the extent capital or significant operating expenditures forecasted for the current year are anticipated to be extended into the following year, the expenditures and offsetting change in the budgeted beginning fund balance shall be updated to reflect management’s best estimate at the time the budget is to be filed with the Colorado Division of Local Affairs. Section 2. That the budget hereby approved and adopted shall be certified by any officer or the District Administrator of the District and made a part of the public records of the District. Page 2 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 2 (CONTINUED) TO SET MILL LEVIES A RESOLUTION LEVYING PROPERTY TAXES FOR THE YEAR 2020, TO HELP DEFRAY THE COSTS OF GOVERNMENT FOR THE SOLARIS METROPOLITAN DISTRICT NO. 2, EAGLE COUNTY, COLORADO, FOR THE 2021 BUDGET YEAR. WHEREAS, the Board of Directors of the Solaris Metropolitan District No. 2, has adopted the annual budget in accordance with the Local Government Budget Law, on October 22, 2020 and; WHEREAS, the amount of money necessary to balance the budget for general operating expenses and capital expenditure purposes from property tax revenue is $321,771.00 and; WHEREAS, the Solaris Metropolitan District No. 2 finds that it is required to temporarily lower the general operating mill levy to render a refund for $0.00, and; WHEREAS, the amount of money necessary to balance the budget for capital expenditure purposes from property tax revenue approved by voters or at public hearing is $0.00, and; WHEREAS, the amount of money necessary to balance the budget for voter approved bonds and interest is $1,683,087.57, and; WHEREAS, the 2020 valuation for assessment for the Solaris Metropolitan District No. 2, as certified by the County Assessor is $32,177,100. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the SOLARIS METROPOLITAN DISTRICT No. 2, EAGLE COUNTY, COLORADO: Section 1. That for the purposes of meeting all general operating expenses of the Solaris Metropolitan District No. 2 during the 2021 budget year, there is hereby levied a tax of 10.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Section 2. That for the purposes of rendering a refund to its constituents during budget year 2021 there is hereby levied a temporary tax credit/mill levy reduction of 3.000 mills. Section 3. That for the purpose of meeting all capital expenditures of the Solaris Metropolitan District No. 2 during the 2021 budget year, there is hereby levied a tax of 0.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Page 3 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 2 (CONTINUED) TO SET MILL LEVIES (CONTINUED) Section 4. That for the purpose of meeting all payments for bonds and interest of the Solaris Metropolitan District No. 2 during the 2021 budget year, there is hereby levied a tax of 52.307 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Section 5. That any officer or the District Administrator is hereby authorized and directed to either immediately certify to the County Commissioners of Eagle County, Colorado, the mill levies for the Solaris Metropolitan District No. 2 as hereinabove determined and set, or be authorized and directed to certify to the County Commissioners of Eagle County, Colorado, the mill levies for the Solaris Metropolitan District No. 2 as hereinabove determined and set based upon the final (December) certification of valuation from the county assessor. (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) Page 4 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 2 (CONTINUED) TO APPROPRIATE SUMS OF MONEY (PURSUANT TO SECTION 29-1-108, C.R.S.) A RESOLUTION APPROPRIATING SUMS OF MONEY TO THE VARIOUS FUNDS AND SPENDING AGENCIES, IN THE AMOUNT AND FOR THE PURPOSE AS SET FORTH BELOW, FOR THE SOLARIS METROPOLITAN DISTRICT NO. 2, EAGLE COUNTY, COLORADO, FOR THE 2021 BUDGET YEAR. WHEREAS, the Board of Directors has adopted the annual budget in accordance with the Local Government Budget Law, on October 22, 2020, and; WHEREAS, the Board of Directors has made provision therein for revenues in an amount equal or greater to the total proposed expenditures as set forth in said budget, and; WHEREAS, it is not only required by law, but also necessary to appropriate the revenues and reserves or fund balances provided in the budget to and for the purposes described below, thereby establishing a limitation on expenditures for the operations of the District. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SOLARIS METROPOLITAN DISTRICT No. 2, EAGLE COUNTY, COLORADO: Section 1. That the following sums are hereby appropriated from the revenues of each fund, to each fund, for the purposes stated: GENERAL FUND: Operating Expenditures $56,488 TOTAL GENERAL FUND $56,488 DEBT SERVICE FUND: Debt Service Expenditures $ 1,779,739 TOTAL DEBT SERVICE FUND: $ 1,779,739 (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) Page 5 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 2 (CONTINUED) TO ADOPT 2021 BUDGET, SET MILL LEVIES AND APPROPRIATE SUMS OF MONEY (CONTINUED) The above resolutions to adopt the 2021 budget, set the mill levies and to appropriate sums of money were adopted this 22nd day of October, 2020. Attest: ___________________________________ Title: ____________________________________ President SOLARIS METROPOLITAN DISTRICT # 2 1/19/21 Printed: 1/19/21 STATEMENT OF REVENUE, EXPENDITURE Modified Modified Modified BUDGET, ACTUAL AND FORECAST FOR T Accrual Accrual Accrual Basis Basis Basis Cal Yr Cal Yr Cal Yr 9 Months Cal Yr GENERAL FUND 2018 2019 2020 Variance Cal Yr Ended 2021 Audited Audited Adopted Favorable 2020 09/30/20 Adopted Actual Actual Budget (Unfav)Forecast Actual Budget Assessed Valuation 31,562,590 31,544,280 32,218,330 0 32,218,330 32,177,050 Allowance for Protests/Abatements Service Obligation Mill Levy 10.000 10.000 10.000 10.000 10.000 Advance Note Mill Levy 3.000 3.000 3.000 3.000 (8.888) REVENUES SMD #2 Prop Tax - Service Obligation 315,626 315,443 322,183 0 322,183 322,183 321,771 SMD #2 Prop Tax - Advance Note 94,688 94,633 96,655 0 96,655 96,655 (285,976) SMD #2 SO Tax - Service Ob & Adv Note 20,835 22,140 20,942 0 20,942 13,682 1,790 SMD #1 Expense Reimbursement 9,675 7,613 7,924 0 7,924 3,629 8,620 Interest Income 4,012 3,609 3,500 0 3,500 1,343 3,500 TOTAL REVENUES 444,835 443,438 451,205 0 451,205 437,491 49,704 EXPENDITURES Insurance 3,350 2,113 2,324 0 2,324 3,629 2,970 Advance repayment 0 0 0 0 0 0 0 Audit 6,325 5,500 5,600 0 5,600 0 5,650 Election 000 0 000 Legal 0 0 0 0 0 0 0 Office Supplies 0 0 0 0 0 0 0 Treasurer's Fees - Service Ob & Adv Note 12,328 12,315 12,565 0 12,565 12,578 1,074 Operations Costs Payment to SMD No. 1 419,449 420,336 325,683 0 325,683 420,355 325,271 Advance Note Payments to SMD No. 1 Incl Above 96,655 (0) 96,655 (285,976) Contingency Allowance 0 0 7,500 0 7,500 0 7,500 TOTAL EXPENDITURES 441,452 440,264 450,328 (0) 450,328 436,562 56,488 REVENUE OVER (UNDER) EXPEND.3,383 3,174 877 (0) 877 930 (6,784) OTHER SOURCES AND (USES) Advance/Loan to District 1 to be Repaid 0 TOTAL OTHER SOURCES & (USES) 0 0 0 0 0 0 0 FUND BALANCE - BEGINNING 40,089 43,472 50,812 (4,167) 46,645 46,645 47,522 FUND BALANCE - ENDING 43,472 46,645 51,689 (4,167) 47,522 47,575 40,738 No assurance is provided on these financial statements; substantially all disclosures required by GAAP omitted. = = = = = SOLARIS METROPOLITAN DISTRICT # 2 1/19/21 Printed: 1/19/21 STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET, ACTUAL AND FORECAST FOR THE PERIODS INDICATED Cal Yr Cal Yr Cal Yr 9 Months Cal Yr DEBT SERVICE FUND 2018 2019 2020 Variance Cal Yr Ended 2021 Audited Audited Adopted Favorable 2020 09/30/20 Adopted Actual Actual Budget (Unfav) Forecast Actual Budget Assessed Valuation 31,562,590 31,544,280 32,218,330 0 32,218,330 32,177,050 Allowance for Protests/Abatements 0 Senior Debt Service Mill Levy 51.935 51.938 52.300 47.000 47.000 Subordinate Debt Mill Levy 5.300 5.307 REVENUES SMD #2 Prop Tax - Senior Debt Service 1,639,203 1,638,347 1,685,019 (170,757) 1,514,262 1,685,018 1,512,321 SMD #2 Prop Tax - Subordinate Debt Svc 170,757 170,757 170,764 Specific Ownership Taxes 83,236 88,455 84,251 0 84,251 55,042 84,154 SMD #3 Property Tax Transfer 0 0 0 0 0 0 0 Developer Advance 0 0 0 0 0 0 0 Interest Income 2,512 1,738 2,500 0 2,500 1,662 2,500 TOTAL REVENUES 1,724,951 1,728,540 1,771,770 (0) 1,771,770 1,741,722 1,769,739 EXPENDITURES Senior Bond Costs Payment to SMD #3 1,675,700 1,679,337 1,721,219 169,822 1,551,397 1,691,122 1,549,417 Sub Bond Costs Payment to SMD #3 (174,945) 174,945 174,952 Treasurer's Fees 49,251 49,203 50,551 5,123 45,428 50,600 45,370 Cash Management Fee 0 0 0 0 0 0 0 Contingency 10,000 10,000 10,000 TOTAL EXPENDITURES 1,724,951 1,728,540 1,781,770 10,000 1,771,770 1,741,722 1,779,739 REVENUE OVER (UNDER) EXPEND. (0) 0 (10,000) 10,000 0 0 (10,000) OTHER SOURCES/(USES) Xfer from No. 3 Bond Proceeds 0 0 0 0 Proceeds from Bond Issuance 0 0 0 Payment to SMD #3 0 0 0 0 Payment from SMD #1 for Special Fund Payment from SMD #1 for Bond Reserve Fu 00 0 Cost of Issuance 0 0 0 TOTAL OTHER FINANCING SOURCES 0 0 0 0 0 0 0 FUND BALANCE - BEGINNING 75,499 75,499 75,499 0 75,499 75,499 75,499 FUND BALANCE - ENDING 75,499 75,499 65,499 10,000 75,499 75,499 65,499 No assurance is provided on these financial statements; substantially all disclosures required by GAAP omitted. = = = = = .. . Components of Fund Balance: Developer Loan Special Fund 0 0 0 0 0 0 Bond Reserve Fund 0 0 0 0 0 0 Other 75,499 75,499 65,499 10,000 75,499 65,499 Total 75,499 75,499 65,499 10,000 75,499 65,499 122 County Tax entity code DOLA LGID/SID 65740 TO: County Commissioners1 of Eagle County , Colorado. On behalf of the Solaris Metropolitan District #2 the Board of Directors of the Solaris Metropolitan District #2 $32,177,050 $32,177,050 Submitted:12/7/2020 for budget/fiscal year 2021 . (not later than Dec 15) (mm/dd/yyyy)(yyyy) PURPOSE (see end notes for definitions and examples)LEVY2 REVENUE2 1.General Operating ExpensesH 10.000 mills 321,770.50$ 2. (8.888) mills (285,989.62)$ SUBTOTAL FOR GENERAL OPERATING: 1.112 mills 35,780.88$ 3.General Obligation Bonds and InterestJ 52.307 mills 1,683,084.95$ 4.Contractual ObligationsK 0.000 mills -$ 5.Capital ExpendituresL 0.000 mills -$ 6.Refunds/AbatementsM 0.000 mills -$ 7.OtherN (specify): 0.000 mills -$ 0.000 mills -$ TOTAL:[]53.419 mills 1,718,865.83$ Daytime phone: (970) 926-6060 x8 Signed: Title: District Accountant (local government)C Include one copy of this tax entity's completed form when filing the local government's budget by January 31st, per 29-1-113 C.R.S. with the Division of Local Government (DLG), Room 521, 1313 Sherman Street, Denver, Colorado 80203. Questions? Call DLG (303) 864-7720. 1 If the taxing entity's boundaries include more than one county, you must certify the levies to each county. Use a separate form for each county and certify the same levies uniformly to each county per Article X, Section 3 of the Colorado Constitution. 2 Levies must be rounded to three decimal places and revenue must be calculated from the total NET assessed valuation (Line 4 of Form DLG57 on the County Assessor's FINAL certification of valuation). USE VALUE FROM FINAL CERTIFICATION OF VALUATION PROVIDED BY ASSESSOR NO LATER THAN DECEMBER 10 <Minus> Temporary General Property Tax Credit/ Temporary Mill Levy Rate ReductionI (GrossD assessed valuation, Line 2 of the Certification of Valuation From DLG 57E) (NETG assessed valuation, Line 4 of the Certification of Valuation Form DLG 57) Hereby officially certifies the following mills to be levied against the taxing entity's GROSS assessed valuation of: Contact person: (print) Kenneth J. Marchetti Sum of General Operating Subtotal and Lines 3 to 7 Note: If the assessor certified a NET assessed valuation (AV) different than the GROSS AV due to a Tax Increment Financing (TIF) AreaF the tax levies must be calculated using the NET AV. The taxing entity's total property tax revenue will be derived from the mill levy multiplied against the NET assessed valuation of: CERTIFICATION OF TAX LEVIES for NON-SCHOOL Governments (taxing entity)A (governing body)B Form DLG 70 (rev 6/16)Page 1 of 4 THIS SECTION APPLIES TO TITLE 32, ARTICLE 1 SPECIAL DISTRICTS THAT LEVY TAXES FOR PAYMENT OF GENERAL OBLIGATION DEBT (32-1-603 C.R.S.). Taxing entities that are Special Districts or Subdistricts of Special Districts must certify separate mill levies and revenue to the Board of County Commissioners, one each for the funding requirements of each debt (32-1-603, C.R.S.) Use additional pages as necessary. The Special District's or Subdistrict's total levies for general obligation bonds and total levies for contractual obligations should be recorded on Page 1, Lines 3 and 4 respectively. CERTIFY A SEPARATE MILL LEVY FOR EACH BOND OR CONTRACT: BONDSJ: 1. Purpose of Issue: To issue new bonds substituting Solaris Metropolitan District No. 3 as the obligor and paying off 2013 Bonds issued by Solaris Metropolitan District #2. The 2013 bonds were originally issued by Solaris Metropolitan District No. 1 in 2008 for public improvements. Series: Property Tax Revenue Multi-Modal Bonds, Series 2016A Date of Issue: 10/13/2016 Coupon rate: 3.75% Maturity Date: 12/1/2026 Levy: 47.000 Revenue: $1,512,321.35 2. Purpose of Issue: To issue new bonds to reimburse the Developer for advances made to the Districts pursuant to multiple funding and reimbursement agreements and ultimately summarized in an omnibus agreement. Series: Property Tax Revenue Multi-Modal Bonds, Series 2016B Date of Issue: 10/13/2016 Coupon rate: 7.00% Maturity Date: 12/15/2046 Levy: 5.307 Revenue: $170,763.60 CONTRACTSK: 3. Purpose of Contract: Title: Date: Principal Amount: Maturity Date: Levy: Revenue: 4. Purpose of Contract: Title: Date: Principal Amount: Maturity Date: Levy: Revenue: Use multiple copies of this page as necessary to separately report all bond and contractual obligations per 32-1-1603, C.R.S. CERTIFICATION OF TAX LEVIES, continued Form DLG 70 (rev 6/16)Page 2 of 4 SOLARIS METROPOLITAN DISTRICT NO. 3 2021 BUDGET MESSAGE Solaris Metropolitan District No. 3 is a quasi-municipal corporation organized and operated pursuant to provisions set forth in the Colorado Special District Act. The District was established to supply the necessary public improvements and related operation and maintenance services as such power and authority is described in the Colorado Special District Act, and other applicable statutes. The District has no employees and all operations and administrative functions are contracted. The following budget is prepared on the modified accrual basis of accounting, which is consistent with the basis of accounting used in presenting the District's financial statements. 2021 BUDGET STRATEGY The District was formed in late 2006. The District has joined with Solaris Metropolitan District No. 1 and Solaris Metropolitan District No. 2 in adopting a consolidated service plan. Under this consolidated service plan, Solaris Metropolitan District No. 1 is the “service district” and Solaris Metropolitan Districts No. 2 and No. 3 are the “financing districts.” As such, Solaris Metropolitan District No.1 is responsible for managing the construction and operation of facilities and improvements needed for the Solaris Metro Districts No. 2 and No. 3 areas. Initially Solaris Metropolitan District No. 1 issued $30,560,000 property tax revenue variable rate bonds on March 25, 2008 to be repaid with revenues pledged by Solaris Metropolitan District Nos. 2 and 3. During 2013 Solaris Metropolitan District No. 2 issued bonds and transferred the proceeds to District No. 1 and District No. 1’s 2008 bonds were paid off. During 2016 Solaris Metropolitan District No. 3 issued bonds and transferred the proceeds to District No. 2 and District No. 2’s 2013 bonds were paid off. Solaris Metropolitan District No. 2 and No. 3 levy a debt service mill levy to pay the debt service on District No. 3’s 2016 bonds. Operating expenses are funded pursuant to an Operating Agreement between Solaris Metropolitan District Nos. 1, 2 and 3. District No. 1 performs the operations and the operating expenses are funded through property tax revenues collected by the “financing” districts (No. 2 and No. 3) and paid to District No. 1. Page 1 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 3 TO ADOPT 2021 BUDGET A RESOLUTION SUMMARIZING EXPENDITURES AND REVENUES FOR EACH FUND AND ADOPTING A BUDGET FOR THE SOLARIS METROPOLITAN DISTRICT NO. 3, COLORADO, FOR THE CALENDAR YEAR BEGINNING ON THE FIRST DAY OF JANUARY 2021 AND ENDING ON THE LAST DAY OF DECEMBER 2021. WHEREAS, the Board of Directors of the Solaris Metropolitan District No. 3 has appointed a budget committee to prepare and submit a proposed 2021 budget at the proper time; and WHEAREAS, such committee has submitted a proposed budget to this governing body at the proper time, for its consideration, and; WHEREAS, upon due and proper notice, published or posted in accordance with the law, said proposed budget was open for inspection by the public at a designated place, and a public hearing was held on October 22, 2020, and interested taxpayers were given the opportunity to file or register any objections to said proposed budget; and; WHEREAS, whatever increases may have been made in the expenditures, like increases were added to the revenues or planned to be expended from reserves/fund balances so that the budget remains in balance, as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board of directors of the Solaris Metropolitan District No. 3, Eagle County, Colorado: Section 1. That the budget as submitted, amended, and summarized by fund, hereby is approved and adopted as the budget of the Solaris Metropolitan District No. 3 for the year stated above, as adjusted for immaterial changes in the final certified assessed value of the District as certified by the county assessor and corresponding adjustments resulting from such changes to the assessed value. In the event there are material changes to the assessed value then a subsequent meeting of the Board shall be called to consider such changes. Furthermore, to the extent capital or significant operating expenditures forecasted for the current year are anticipated to be extended into the following year, the expenditures and offsetting change in the budgeted beginning fund balance shall be updated to reflect management’s best estimate at the time the budget is to be filed with the Colorado Division of Local Affairs. Section 2. That the budget hereby approved and adopted shall be certified by any officer or the District Administrator of the District and made a part of the public records of the District. Page 2 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 3 (CONTINUED) TO SET MILL LEVIES A RESOLUTION LEVYING PROPERTY TAXES FOR THE YEAR 2020, TO HELP DEFRAY THE COSTS OF GOVERNMENT FOR THE SOLARIS METROPOLITAN DISTRICT NO. 3, EAGLE COUNTY, COLORADO, FOR THE 2021 BUDGET YEAR. WHEREAS, the Board of Directors of the Solaris Metropolitan District No. 3, has adopted the annual budget in accordance with the Local Government Budget Law, on October 22, 2020 and; WHEREAS, the amount of money necessary to balance the budget for general operating expenses and capital expenditure purposes from property tax revenue is $110,722.69 and; WHEREAS, the Solaris Metropolitan District No. 3 finds that it is required to temporarily lower the general operating mill levy to render a refund for $0.00, and; WHEREAS, the amount of money necessary to balance the budget for capital expenditure purposes from property tax revenue approved by voters or at public hearing is $0.00, and; WHEREAS, the amount of money necessary to balance the budget for voter approved bonds and interest is $400,305.11, and; WHEREAS, the 2020 valuation for assessment for the Solaris Metropolitan District No. 3, as certified by the County Assessor is $8,517,130. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the SOLARIS METROPOLITAN DISTRICT No. 3, EAGLE COUNTY, COLORADO: Section 1. That for the purposes of meeting all general operating expenses of the Solaris Metropolitan District No. 3 during the 2021 budget year, there is hereby levied a tax of 13.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Section 2. That for the purposes of rendering a refund to its constituents during budget year 2021 there is hereby levied a temporary tax credit/mill levy reduction of 0.000 mills. Section 3. That for the purpose of meeting all capital expenditures of the Solaris Metropolitan District No. 3 during the 2021 budget year, there is hereby levied a tax of 0.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Page 3 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 3 (CONTINUED) TO SET MILL LEVIES (CONTINUED) Section 4. That for the purpose of meeting all payments for bonds and interest of the Solaris Metropolitan District No. 3 during the 2021 budget year, there is hereby levied a tax of 47.000 mills upon each dollar of the total valuation for assessment of all taxable property within the District for the year 2020. Section 5. That any officer or the District Administrator is hereby authorized and directed to either immediately certify to the County Commissioners of Eagle County, Colorado, the mill levies for the Solaris Metropolitan District No. 3 as hereinabove determined and set, or be authorized and directed to certify to the County Commissioners of Eagle County, Colorado, the mill levies for the Solaris Metropolitan District No. 3 as hereinabove determined and set based upon the final (December) certification of valuation from the county assessor. (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) Page 4 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 3 (CONTINUED) TO APPROPRIATE SUMS OF MONEY (PURSUANT TO SECTION 29-1-108, C.R.S.) A RESOLUTION APPROPRIATING SUMS OF MONEY TO THE VARIOUS FUNDS AND SPENDING AGENCIES, IN THE AMOUNT AND FOR THE PURPOSE AS SET FORTH BELOW, FOR THE SOLARIS METROPOLITAN DISTRICT NO. 3, EAGLE COUNTY, COLORADO, FOR THE 2021 BUDGET YEAR. WHEREAS, the Board of Directors has adopted the annual budget in accordance with the Local Government Budget Law, on October 22, 2020, and; WHEREAS, the Board of Directors has made provision therein for revenues in an amount equal or greater to the total proposed expenditures as set forth in said budget, and; WHEREAS, it is not only required by law, but also necessary to appropriate the revenues and reserves or fund balances provided in the budget to and for the purposes described below, thereby establishing a limitation on expenditures for the operations of the District. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SOLARIS METROPOLITAN DISTRICT NO. 3, EAGLE COUNTY, COLORADO: Section 1. That the following sums are hereby appropriated from the revenues of each fund, to each fund, for the purposes stated: GENERAL FUND: Operating Expenditures $126,628 TOTAL GENERAL FUND $126,628 DEBT SERVICE FUND: Debt Service Expenditures $ 1,870,523 TOTAL DEBT SERVICE FUND: $ 1,870,523 (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) Page 5 of 5 RESOLUTIONS OF SOLARIS METROPOLITAN DISTRICT NO. 3 (CONTINUED) TO ADOPT 2021 BUDGET, SET MILL LEVIES AND APPROPRIATE SUMS OF MONEY (CONTINUED) The above resolutions to adopt the 2021 budget, set the mill levies and to appropriate sums of money were adopted this 22nd day of October, 2020. Attest: ___________________________________ Title: ____________________________________ President SOLARIS METROPOLITAN DISTRICT NO. 3 1/19/21 STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET, ACTUAL AND FORECAST FOR THE PERIODS INDICATED Cal Yr Cal Yr Cal Yr Cal Yr 9 Months Cal Yr GENERAL FUND 2018 2019 2020 Variance 2020 Ended 2021 Audited Audited Adopted Favorable Amended 09/30/20 Adopted Actual Actual Budget (Unfav)Budget Actual Budget Assessed Valuation SMD No. 3 8,103,340 8,025,400 8,512,280 8,512,280 8,516,620 Service Obligation Mill Levy 10.000 10.000 10.000 10.000 10.000 Advance Note Levy 3.000 3.000 3.000 3.000 3.000 REVENUES SMD #3 Prop Tax - Service Obligation 81,033 80,254 85,123 0 85,123 83,993 85,166 SMD #3 Prop Tax - Advance Note 24,310 24,076 25,537 25,537 25,198 25,550 SMD #3 SO Tax - Service Ob & Adv Note 5,348 5,631 5,533 0 5,533 3,614 5,536 SMD #1 Expense Reimbursement 6,450 6,613 6,899 0 6,899 3,381 7,590 Interest Income 834 703 750 0 750 225 750 TOTAL REVENUES 117,976 117,277 123,842 0 123,842 116,412 124,592 EXPENDITURES Insurance 3,100 2,113 2,324 0 2,324 3,381 2,965 Directors Fees & Payroll Taxes 0 0 0 0 0 0 0 Advance repayment 0 0 0 0 0 0 0 Audit 3,350 4,500 4,575 0 4,575 0 4,625 Election 000 0 000 Legal 0 0 0 0 0 0 0 Office Supplies 0 0 0 0 0 0 0 Treasurer's Fees - Service Obligation 3,163 3,133 3,320 0 3,320 3,276 3,321 Operations Costs Payment to SMD No. 1 107,619 105,300 85,123 0 85,123 109,533 85,166 Advance Note Payment to SMD No. 1 Incl Above 25,537 0 25,537 25,550 Contingency Allowance 0 0 5,000 0 5,000 0 5,000 TOTAL EXPENDITURES 117,232 115,046 125,879 0 125,879 116,190 126,628 REVENUE OVER (UNDER) EXPEND.744 2,231 (2,037) 0 (2,037) 222 (2,036) OTHER SOURCES AND (USES) TOTAL OTHER SOURCES & (USES) 0 0 0 0 0 0 0 FUND BALANCE - BEGINNING 11,697 12,441 15,061 (389) 14,672 14,672 12,635 FUND BALANCE - ENDING 12,441 14,672 13,024 (389) 12,635 14,894 10,600 No assurance is provided on these financial statements; substantially all disclosures required by GAAP omitted. = = = = = PAGE 2 SOLARIS METROPOLITAN DISTRICT NO. 3 1/19/21 STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET, ACTUAL AND FORECAST FOR THE PERIODS INDICATED Cal Yr Cal Yr Cal Yr Cal Yr 9 Months Cal Yr DEBT SERVICE FUND 2018 2019 2020 Variance 2020 Ended 2021 Audited Audited Adopted Favorable Amended 09/30/20 Adopted Actual Actual Budget (Unfav) Budget Actual Budget Assessed Valuation SMD No. 3 8,103,340 8,025,400 8,512,280 0 8,512,280 8,516,620 Percent Increase Assessed Valuation SMD No. 2 30,609,830 31,544,280 32,218,330 32,218,330 32,177,050 Percent Increase Debt Service Mill Levy 47.000 47.000 47.000 0 47.000 47.000 REVENUES SMD No. 3 Prop Tax - Debt Service 380,857 377,194 400,077 0 400,077 394,769 400,281 Specific Ownership Taxes 19,336 20,358 20,004 0 20,004 13,066 20,014 Prop Tax Xfer fr SMD No. 2 for Senior Bond 1,675,700 1,679,337 1,721,219 (169,822) 1,551,397 1,691,122 1,549,417 Prop Tax Xfer fr SMD No. 2 for Sub Bonds 174,945 174,945 174,952 Interest Income 51,684 71,221 56,714 0 56,714 20,578 56,714 TOTAL REVENUES 2,127,576 2,148,110 2,198,014 5,123 2,203,137 2,119,535 2,201,379 EXPENDITURES Interest Bond Series 2016A 1,434,125 1,431,500 1,427,750 0 1,427,750 713,875 1,421,563 Principal Bond Series 2016A 70,000 100,000 165,000 0 165,000 0 240,000 Interest Bond Series 2016B (492,661) 492,661 174,952 Principal Bond Series 2016B 0 Bond Costs Payment to SMD No. 2 0 0 0 0 Treasurer's Fees 11,436 11,326 12,002 0 12,002 11,843 12,008 Cash Management Fees 4,868 7,467 6,000 0 6,000 2,013 6,000 Annual Surveilance Fee 6,000 6,000 6,000 0 6,000 0 6,000 Contingency 10,000 0 10,000 10,000 TOTAL EXPENDITURES 1,526,428 1,556,293 1,626,752 (492,661) 2,119,413 727,732 1,870,523 REVENUE OVER (UNDER) EXPEND. 601,148 591,817 571,262 (487,538) 83,724 1,391,803 330,856 OTHER SOURCES/(USES) Proceeds from Developer Note 0 0 0 Bond Proceeds Series A 0 0 0 0 Bond Proceeds Series B 0 0 0 0 Xfer From No. 2 0 Advance/Loan to District No. 1 to be Repaid 0 0 (50,000) (50,000) 0 Cost of Issuance 0 0 0 0 Xfer to SMD No. 2 to Refund 2013 Bonds 0 0 0 0 Debt Service Reserve Fund 0 0 0 0 Deposit to Surplus Fund 0 0 0 0 Transfer to Mandatory Redemption Account TOTAL OTHER FINANCING SOURCES 0 0 0 (50,000) (50,000) 0 0 FUND BALANCE - BEGINNING 1,671,464 2,272,612 2,835,721 28,708 2,864,429 2,864,429 2,898,153 FUND BALANCE - ENDING 2,272,612 2,864,429 3,406,983 (508,831) 2,898,153 4,256,232 3,229,009 No assurance is provided on these financial statements; substantially all disclosures required by GAAP omitted. = = = = = Components of Fund Balance: Bond Reserve Fund 1,219,542 1,218,194 1,212,750 0 1,212,750 1,212,750 Bond Surplus Fund 1,022,606 1,596,662 2,167,925 -487,538 1,680,386 2,011,242 Other 30,463 49,572 26,309 -21,292 5,016 5,016 Total 2,272,612 2,864,429 3,406,983 -508,831 2,898,153 3,229,009 123 County Tax entity code DOLA LGID/SID 65741 TO: County Commissioners1 of Eagle County , Colorado. On behalf of the Solaris Metropolitan District #3 the Board of Directors of the Solaris Metropolitan District #3 $8,516,620 $8,516,620 Submitted:12/7/2020 for budget/fiscal year 2021 . (not later than Dec 15) (mm/dd/yyyy)(yyyy) PURPOSE (see end notes for definitions and examples)LEVY2 REVENUE2 1.General Operating ExpensesH 13.000 mills 110,716.06$ 2. (0.000) mills -$ SUBTOTAL FOR GENERAL OPERATING: 13.000 mills 110,716.06$ 3.General Obligation Bonds and InterestJ 47.000 mills 400,281.14$ 4.Contractual ObligationsK 0.000 mills -$ 5.Capital ExpendituresL 0.000 mills -$ 6.Refunds/AbatementsM 0.000 mills -$ 7.OtherN (specify): 0.000 mills -$ 0.000 mills -$ TOTAL:[]60.000 mills 510,997.20$ Daytime phone: (970) 926-6060 x8 Signed: Title: District Accountant CERTIFICATION OF TAX LEVIES for NON-SCHOOL Governments (taxing entity)A (governing body)B Contact person: (print) Ken Marchetti Sum of General Operating Subtotal and Lines 3 to 7 Note: If the assessor certified a NET assessed valuation (AV) different than the GROSS AV due to a Tax Increment Financing (TIF) AreaF the tax levies must be calculated using the NET AV. The taxing entity's total property tax revenue will be derived from the mill levy multiplied against the NET assessed valuation of: (local government)C Include one copy of this tax entity's completed form when filing the local government's budget by January 31st, per 29-1-113 C.R.S. with the Division of Local Government (DLG), Room 521, 1313 Sherman Street, Denver, Colorado 80203. Questions? Call DLG (303) 864-7720. 1 If the taxing entity's boundaries include more than one county, you must certify the levies to each county. Use a separate form for each county and certify the same levies uniformly to each county per Article X, Section 3 of the Colorado Constitution. 2 Levies must be rounded to three decimal places and revenue must be calculated from the total NET assessed valuation (Line 4 of Form DLG57 on the County Assessor's FINAL certification of valuation). USE VALUE FROM FINAL CERTIFICATION OF VALUATION PROVIDED BY ASSESSOR NO LATER THAN DECEMBER 10 <Minus> Temporary General Property Tax Credit/ Temporary Mill Levy Rate ReductionI (GrossD assessed valuation, Line 2 of the Certification of Valuation From DLG 57 E) (NETG assessed valuation, Line 4 of the Certification of Valuation Form DLG 57) Hereby officially certifies the following mills to be levied against the taxing entity's GROSS assessed valuation of: Form DLG 70 (rev 6/16)Page 1 of 4 THIS SECTION APPLIES TO TITLE 32, ARTICLE 1 SPECIAL DISTRICTS THAT LEVY TAXES FOR PAYMENT OF GENERAL OBLIGATION DEBT (32-1-603 C.R.S.). Taxing entities that are Special Districts or Subdistricts of Special Districts must certify separate mill levies and revenue to the Board of County Commissioners, one each for the funding requirements of each debt (32-1-603, C.R.S.) Use additional pages as necessary. The Special District's or Subdistrict's total levies for general obligation bonds and total levies for contractual obligations should be recorded on Page 1, Lines 3 and 4 respectively. CERTIFY A SEPARATE MILL LEVY FOR EACH BOND OR CONTRACT: BONDSJ: 1. Purpose of Issue:To issue new bonds substituting Solaris Metropolitan District No. 3 as the obligor and paying off 2013 Bonds issued by Solaris Metropolitan District #2. The 2013 bonds were originally issued by Solaris Metropolitan District No. 1 in 2008 public improvements. Series: Property Tax Revenue Multi-Modal Bonds, Series 2016A Date of Issue: 10/13/2016 Coupon rate: 3.75% Maturity Date: 12/1/2026 Levy: 47.000 Revenue: $400,281.14 2. Purpose of Issue:To issue new bonds to reimburse the Developer for advances made to the Districts pursuant to multiple funding and reimbursement agreements and ultimately summarized in an omnibus agreement. Series: Property Tax Revenue Multi-Modal Bonds, Series 2016B Date of Issue: 10/13/2016 Coupon rate: 7.00% Maturity Date: 12/15/2046 Levy: 0.000 Revenue: $0.00 CONTRACTSK: 3. Purpose of Contract: Title: Date: Principal Amount: Maturity Date: Levy: Revenue: 4. Purpose of Contract: Title: Date: Principal Amount: Maturity Date: Levy: Revenue: Use multiple copies of this page as necessary to separately report all bond and contractual obligations per 32-1-1603, C.R.S. CERTIFICATION OF TAX LEVIES, continued Form DLG 70 (rev 6/16)Page 2 of 4 EXHIBIT B 2020 Audits SOLARIS METROPOLITAN DISTRICT NO. 1 TOWN OF VAIL, COLORADO FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS December 31, 2020 CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Position 6 Statement of Activities 7 Fund Financial Statements: Balance Sheet – Governmental Funds 8 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 10 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities 11 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 12 Notes to the financial statements 13 2499 Hwy. 6&50 www.csdcpa.com 970-245-3000 Grand Junction, CO 81505 e-mail info @ csdcpa.com FAX 970-242-4716 TOLL FREE 877-245-8080 INDEPENDENT AUDITOR’S REPORT July 21, 2021 Board of Directors Solaris Metropolitan District No. 1 Town of Vail, Colorado We have audited the accompanying financial statements of the governmental activities and each major fund of Solaris Metropolitan District No. 1 (the “District”), Town of Vail, Colorado, as of and for the year ended December 31, 2020 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as 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 opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of Solaris Metropolitan District No. 1, Town of Vail, Colorado, as of December 31, 2020, and the respective changes in financial position and the respective budgetary comparison statement for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Board of Directors Solaris Metropolitan District No. 1 Page Two Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3–5 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. Grand Junction, Colorado - 3 - Solaris Metropolitan District No. 1 Management’s Discussion and Analysis December 31, 2020 As management of Solaris Metropolitan District No. 1 (the “District”), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended December 31, 2020. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’s basic financial statements are composed of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with an overview of the District’s finances, from both a short-term fund perspective and a long-term economic perspective. The Statement of Net Position presents information on all the District’s assets, deferred outflows, liabilities, and deferred inflows with the difference between the amounts 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 District is improving or deteriorating. The Statement of Activities presents information showing how the government’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 in this statement for some items that will only result in cash flows in future fiscal periods. The governmental activity of the District is primarily financing construction, operation, and maintenance of the basic public infrastructure that is performed by Solaris Metropolitan District No. 1. There are no business-type activities within the District. The District’s government-wide and fund financial statements can both be found on pages 6 & 7 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 District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with legal requirements. The District currently has one fund, the General Fund, which is a governmental fund. 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 expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. A reconciliation of the fund balance as reported in the governmental funds to the net position reported in the government-wide financial statements and a reconciliation of the net change in fund balance to the change in net position has been provided to facilitate the comparison between governmental funds and governmental activities. Notes to the financial statements. The notes provide additional information that is essential to 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 13 through 22 of this report. - 4 - Government-wide Financial Analysis. A condensed summary of the District’s government-wide assets, deferred outflows, liabilities, net position, revenues and expenses follows: Statement of Net Position Governmental Activities 2020 2019 Assets: Current and other assets $ 243,918 $ 188,788 Capital and long term assets 21,839,857 22,562,080 Total Assets 22,083,775 22,750,868 Liabilities: Current liabilities 90,143 80,052 Long-term obligations payable 1,284,583 1,225,749 Total Liabilities 1,374,726 1,305,801 Net position: Net investment in capital assets, net of debt 19,901,991 20,605,910 Restricted for TABOR 23,039 23,254 Unrestricted 784,019 815,903 Total Net position $ 20,709,049 $ 21,445,067 Statement of Activities Revenues: Program Revenues Operating grants and contributions $ 524,549 $ 607,165 Charges for Services 223,642 242,421 Capital Grants and contributions - - General revenue: Interest and other revenue 1,488 5,480 Total Revenue 749,679 855,066 Expenses: General government 1,383,719 1,487,704 Interest on long-term debt 101,978 90,180 Total Expenses 1,485,697 1,577,884 Change in Net position (736,018) (722,818) Net position - Beginning 21,445,067 22,167,885 Net position - Ending $ 20,709,049 $ 21,445,067 The District is the “service district” in a triple district structure whereby the District constructed the public infrastructure and provides certain services for Solaris Metropolitan District Nos. 2 and 3. Pursuant to the consolidated service plan for the Districts, the District is obligated to provide certain capital facilities and operational services and obligates Solaris Metropolitan District Nos. 2 & 3 (the “taxing districts”) to fully fund the District’s cost of constructing the facilities and operations. Government-wide Financial Analysis. The District’s primary activity in 2020 has been the operation of the public improvements owned by the District. The District’s primary revenue source is intergovernmental revenues from Solaris Metropolitan Districts No. 2 & 3 reflecting their obligation to ultimately reimburse the District for the cost of constructing and operating the infrastructure. The decrease in net position is primarily the result of depreciation expense. - 5 - Financial Analysis of the District’s Funds As mentioned earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District’s governmental funds reported a combined ending fund balance of $153,775, which is the result of a cumulative surplus of revenues in excess of expenditures. The District adopts budgets for each fund on an annual basis. Budgetary comparisons have been provided on page 12 for the General Fund. Capital assets. The District’s capital assets consist primarily of infrastructure in the District. The capital assets were completed at December 31, 2011 and $703,919 depreciation expense was recorded in 2020. Details can be seen in Note D on page 18 of this report. Economic Factors and Next Year’s Budget. It is anticipated COVID-19 will have impacts on the economy as a whole which will include financial impacts to the District, however the extent of such impacts continues to be unknown at this time. Request for Information This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Marchetti & Weaver, LLC, 28 Second Street, Suite 213, Edwards, CO 81632 or you may call (970) 926-6060. Governmental Activities Assets Cash and investments 137,193$ Accounts receivable - other governments 6,080 Accounts receivable 58,246 Prepaid Insurance 36,088 Security deposits 6,311 Capital and service obligation receivable 1,066,760 Capital assets, net of accumulated depreciation 20,773,097 Total assets 22,083,775 Liabilities Trade accounts payable 90,143 Developer payable 304,267 Accrued interest payable 109,210 Advance note payable 871,106 Total liabilities 1,374,726 Net position Net investment in Capital Assets 19,901,991 Restricted for TABOR 23,039 Unrestricted 784,019 Total net position 20,709,049$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 1 Town of Vail, Colorado STATEMENT OF NET POSITION December 31, 2020 - 6 - Operating Capital TotalCharges for Grants and Grants and GovernmentalFunction/Programs Expenses Services Contributions Contributions ActivitiesGovernmental activities:General government 1,383,719$ 223,642$ 524,549$ -$ (635,528)$ Interest on long-term debt 101,978 - - - (101,978) 1,485,697$ 223,642$ 524,549$ -$ (737,506) Interest income 1,488 Total general revenues 1,488 Change in net position (736,018) Net position, beginning 21,445,067Net position, ending 20,709,049$ The accompanying notes are an integral part of these statements.Solaris Metropolitan District No. 1Town of Vail, ColoradoSTATEMENT OF ACTIVITIESFor the year ended December 31, 2020Program revenues- 7- General Fund Assets Cash and investments 137,193$ Accounts receivable - other governments 6,080 Accounts receivable 58,246 Prepaid expenses 36,088 Security deposits 6,311 Total assets 243,918 Liabilities Trade accounts payable 90,143 Total liabilities 90,143 Fund balance Nonspendable Deposits 6,311 Prepaid expense 36,088 Restricted for TABOR 23,039 Unassigned 88,337 Total fund balance 153,775$ The accompanying notes are an integral part of these statements. December 31, 2020 BALANCE SHEET - GOVERNMENTAL FUNDS Town of Vail, Colorado Solaris Metropolitan District No. 1 - 8 - Amounts reported for governmental activities in the statement of net position are different because: Total fund balance - governmental funds 153,775$ Long term capital assets are expensed as capital outlay in the funds but are capitalized in the government wide statements and amortized as depreciation expense over their expected useful lives. 20,773,097 Long term receivables are not recognized in the fund financial statements but are recognized in the statement of net position. 1,066,760 Accrued interest on long-term obligations are not due and payable in the current period and, therefore, are not recognized in the funds. (109,210) Long-term liabilities are not due and payable in the current period and therefore are not recognized in the funds. (1,175,373) Net position of governmental activities 20,709,049$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 1 Town of Vail, Colorado RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION For the year ended December 31, 2020 - 9 - General Fund Revenues Skate shop income 179,565$ Rent income 22,248 Special event fee 21,829 Interest income 1,488 Intergovernmental revenue 542,853 Total revenues 767,983 Expenditures Accounting 33,036 Audit 9,275 Elections 450 Insurance 12,034 Legal 16,479 Contribution to Solaris Metropolitan District No. 2 9,229 Contribution to Solaris Metropolitan District No. 3 7,956 Miscellaneous 2,672 Operations Utilities 100,806 Janitorial 13,667 Insurance 14,492 Repairs and maintenance 105,879 Supplies 3,935 Rent 113,498 Payroll 212,250 Fees 24,142 Payment to Solaris 450,000 Repayment to Developer 136,883 Interest expense - Total expenditures 1,266,683 Excess of revenues over expenditures before other financing sources (uses)(498,700) Other financing sources (uses) Developer advances 543,739 Total other financing sources (uses) 543,739 Excess of revenues and other financing sources and (uses) over expenditures 45,039 Fund balance - beginning of year 108,736 Fund balance - end of year 153,775$ The accompanying notes are an integral part of these statements. For the year ended December 31, 2020 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Solaris Metropolitan District No. 1 Town of Vail, Colorado - 10 - Amounts reported for governmental activities in the Statement of Activities are different because: Net Change in Fund Balances - Governmental Funds 45,039$ Long term capital assets are expensed as capital outlay in the funds but are capitalized in the government wide statements and amortized over their useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current year: (703,919) Accrued interest on long term obligations are not due and payable in the current period and, therefore, are not recognized in the funds. This is the amount by which the liability changed between the current and prior year. (65,315) Long-term receivables are not recorded in the funds but are recorded in the government wide financial statements. This is the amount by which the receivables changed between current year and prior year. (18,304) Changes in long term obligations are recognized as other financing sources and payments of principal in the funds but as additions and reductions of long term liabilities in the government wide statements. Changes in developer advance 6,481 Change in net position of governmental activities (736,018)$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 1 Town of Vail, Colorado RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended December 31, 2020 - 11 - Original and Positive Final (Negative) Budget Actual Variance Revenues Skate shop income 225,000$ 179,565$ (45,435)$ Rent income 22,248 22,248 - Special event fee 40,000 21,829 (18,171) Interest income 2,500 1,488 (1,012) Intergovernmental revenue 532,998 542,853 9,855 Total revenues 822,746 767,983 (54,763) Expenditures Accounting 28,250 33,036 (4,786) Audit 9,275 9,275 - Elections - 450 (450) Insurance 13,354 12,034 1,320 Legal 15,000 16,479 (1,479) Contribution to Solaris Metropolitan District No. 2 7,925 9,229 (1,304) Contribution to Solaris Metropolitan District No. 3 6,899 7,956 (1,057) Operations 658,860 590,852 68,008 Miscellaneous 750 489 261 Repayment to Solaris 559,737 450,000 109,737 Repayments to Developer 13,172 136,883 (123,711) Interest expense 109,019 - 109,019 Contingency 10,000 - 10,000 Total expenditures 1,432,241 1,266,683 165,558 Other financing sources (uses) Developer advances 535,780 543,739 7,959 Total other financing sources (uses) 535,780 543,739 7,959 Excess of revenues and other financing sources and (uses) over expenditures (73,715) 45,039 118,754 Fund balance - beginning of year 123,080 108,736 (14,344) Fund balance - end of year 49,365$ 153,775$ 104,410$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 1 Town of Vail, Colorado STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - GENERAL FUND For the year ended December 31, 2020 - 12 - Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 13 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Solaris Metropolitan District No. 1, (the District), located in the Town of Vail, Colorado (the Town), conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies consistently applied in the preparation of the financial statements. Reporting entity The District was organized in 2006 concurrently with Solaris Metropolitan District No. 2 (District 2) and Solaris Metropolitan District No. 3 (District 3) and is governed by a five-member elected Board of Directors. On September 19, 2006, a Consolidated Service Plan ("Service Plan") for the Districts was approved. On April 3, 2007, the first amendment to the Service Plan was approved. As required by GAAP, these financial statements present the activities of the District, which is legally separate and financially independent of other state and local governments. The Districts were organized to provide various public improvements necessary and appropriate for the development of the Solaris Vail project. The public improvements, which include sanitation, water, streets, traffic and safety controls, and parks and recreation, will be constructed for the benefit of the taxpayers and service users within the Districts' boundaries. The District serves as the "Operating District" while District 2 and District 3 serve as the "Taxing Districts." The Operating District is responsible for providing the day-to-day operations and administrative management for all three 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 component units as defined by GASB and is not a component unit of any other primary government. The District has no employees and all services are contracted. Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 14 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Government-wide 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. For the most part, the effect of interfund activity has been removed from these statements. The statement of activities demonstrates the degree to which the direct 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 the related cash flow. 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 sixty days of the end of the current fiscal period. The District reports the following governmental fund: The General fund is the general operating fund of the District. It accounts for all the financial resources of the general government except those required to be accounted for in another fund. The Capital fund accounts for the financial resources and costs associated with acquiring capital assets. Fair value of financial statements The District's financial instruments include cash and investments, accounts receivable, accounts payable, and accrued expenses. The District estimates that the fair value of all financial instruments at December 31, 2020, does not differ materially from the aggregate carrying values of its financial instruments recorded in Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 15 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED the accompanying balance sheet. The carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. Use of estimates The preparation of financial statements in accordance with GAAP 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Deferred outflows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. 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 will not be recognized as an inflow of resources (revenue) until that time. The District does not have any items that qualify for reporting in this category. Capital assets Capital assets defined by the District as infrastructure assets are recorded at historical cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset lives are not capitalized. Infrastructure assets are depreciated using the straight-line method over the estimated useful life of between 5 and 40 years. As discussed in the Service Plan, the District intends to dedicate a portion of the infrastructure assets to the Town of Vail or other governmental agencies. Fund equity 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: Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 16 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fund equity – continued 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 is legally or contractually required to be maintained intact. Restricted fund balance – The portion of fund balance that is constrained to be used for 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 though 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 policy to use the most restrictive classification first. NOTE B – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary information The District conforms to the following procedures in compliance with Colorado Revised Statutes in establishing the budgetary data reflected in the financial statements: In the fall of each year, the District’s Board of Directors prepares a proposed operating budget for the fiscal year commencing the following January 1. The operating budget for the funds includes proposed expenses and the means of financing them. A public hearing is held at a Board of Directors meeting to obtain taxpayer input. Prior to December 15, the budget is legally enacted through passage of a budget resolution. The 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. Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 17 - NOTE C – CASH AND INVESTMENTS Cash and investments As of December 31, 2020, cash and investments are classified in the accompanying financial statements as follows: Statement of net position: Deposits $ 584 CSAFE 136,609 Cash and investments $ 137,193 Custodial and concentration of credit risk 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 equal to 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 reporting of the uninsured deposits and assets maintained in the collateral pools. As of December 31, 2020, all of the District deposits were either insured by the Federal Deposit Insurance Corporation or held in eligible public depositories as required by PDPA. The District has not adopted a formal investment policy; however, the District follows Colorado Revised Statutes regarding its investments. Colorado Revised Statutes specify the types of investments meeting defined rating and risk criteria in which local governments may invest. These investments include obligations of the United States and U.S. government agency entities, certain money market funds, guaranteed investment contracts and local government investment pools. During 2020, the District was invested in the Colorado Surplus Asset Fund Trust (CSAFE), which is an investment vehicle established by State statutes for local government entities to pool surplus funds. CSAFE adheres to the guidelines outlined in GASB 79, Certain External Investment Pools and Pool Participants, regarding liquidity, maturity, quality, diversification and shadow NAV pricing. CSAFE measures its investments at amortized cost for financial reporting purposes and has been rated AAAm by Standard & Poor’s. The financial statements of CSAFE are available for public view at Csafe.org. CSAFE operates similarly to a money market fund and each share is equal in value to $1.00, though this is not guaranteed. Investment objectives focus on safety, liquidity, transparency, and competitive yields through investment in a diversified portfolio of short-term marketable securities. CSAFE may invest in U.S. Treasury securities, U.S. governmental agency securities, commercial paper, corporate fixed notes, and repurchase agreement collateralized with securities valued in excess of the repurchase agreement amount. Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 18 - NOTE C – CASH AND INVESTMENTS – CONTINUED All securities owned by CSAFE are held by the Federal Reserve Bank in the account maintained for the custodian. There are no limits or restrictions on participant withdrawals. NOTE D – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2020, was as follows: Balance Balance December 31, December 31, 2019 Additions Retirements 2020 Governmental Activities: Capital assets, depreciable: Parks and recreation $ 15,870,171 $ – $ – $ 15,870,171 Street facilities 10,462,576 – – 10,462,576 Water facilities 433,263 – – 433,263 Sanitation facilities 559,210 – – 559,210 Total capital assets being depreciated 27,325,220 – – 27,325,220 Less accumulated depreciation (5,848,205) (703,919) – (6,552,124) Depreciable capital assets, net $ 21,477,015 $ (703,919) $ – $ 20,773,096 NOTE E – 2010 OPERATIONS/DEBT SERVICE AGREEMENT The District entered into a 2010 Operations/Debt Service Funding Agreement on December 17, 2009, with Solaris Property Owner, LLC, the Developer, whereby the Developer agreed to loan the District one or more sums of money not to exceed the aggregate of $500,000. The maximum loan amounts for O&M Costs and Debt Service Costs were to be set at $350,000 and $150,000, respectively. The funds shall be loaned to the District in one or a series of installments and shall be available to the District through December 31, 2010, and the Developer's obligation to fund these amounts may be renewed on an annual basis thereafter. The loan advances, pursuant to both agreements stated above, bear simple interest at a rate of 8% per annum from the date advances were made to the date of repayment of such amount. The District will repay the developer advances with any revenues made available to the District by Districts 2 and 3. The District's obligation to the Developer shall terminate at the earlier of full repayment or December 15, 2049. This agreement was terminated via the Omnibus Funding and Reimbursement Agreement. On October 13, 2016, Solaris Metropolitan District No. 1 entered into a Limited Tax Revenue Note with Solaris Property Owner, LLC in the amount of $1,262,427 for capital, debt service, and operating advances. The Note bears an interest rate of 8%. Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 19 - NOTE E – 2010 OPERATIONS/DEBT SERVICE AGREEMENT - CONTINUED The following is an analysis of the change in developer obligations for the year ended December 31, 2020: Balance Balance December 31, December 31, 2019 Additions Retirements 2020 Due to developer: Developer advances $ 310,748 $ 543,739 $ 550,220 $ 304,267 Limited tax revenue note 871,106 – – 871,106 Accrued interest 43,895 90,180 24,865 109,210 Total $ 1,225,749 $ 633,919 $ 575,085 $ 1,284,583 NOTE F – SIGNIFICANT AGREEMENTS District Operating Agreement The Districts entered into an Amended and Restated District Operating (the "Agreement") dated March 19, 2013, amending and restating the District Operating Agreement dated April 26, 2007. The Agreement generally provides that the District will perform operations services including administration, financial management, election management, budget preparation, and insurance administration for the Taxing Districts and the Taxing Districts have pledged to levy taxes to provide for payment of the operations costs. The District has incurred operations costs in the amount of $5,352,306 since inception of the Agreement in 2007 through December 31, 2019, providing services to the Taxing Districts and the Taxing Districts have paid $5,104,176 toward these costs leaving a balance of $248,131 at December 31, 2019. Similar to the agreement between the District and the Taxing Districts for operations, the District has an obligation to provide certain public facilities for the benefit of the Taxing Districts and the Taxing Districts have an obligation to reimburse the District for the cost of providing these capital facilities. Pursuant to this obligation, the District has incurred capital costs in the amount of $27,275,488 through December 31, 2020, and the Taxing Districts have paid $26,438,554 toward these costs leaving a balance of $906,812 at December 31, 2020. This balance has been combined with the obligation for operating costs and is shown as a capital and service obligation receivable on the statement of net position. Capital Pledge Agreement The District entered into a Capital Pledge Agreement (the "Pledge Agreement) between the District and the Taxing Districts dated March 1, 2008, in conjunction with the District's issuance of bonds in 2008. In March 2013, Solaris Metropolitan District No. 2 issued $29,550,000 Property Tax Revenue Multi-Modal Bonds Series 2013. The proceeds from this bond issuance were transferred to the District and the Series 2008 bonds were paid in full and the Capital Pledge Agreement was terminated. Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 20 - NOTE F – SIGNIFICANT AGREEMENTS – CONTINUED Intergovernmental Agreement with Town of Vail General Improvement District No. 1, Town of Vail, Colorado The District and the Town of Vail General Improvement District No. 1 (GID) entered into an Intergovernmental Agreement, dated March 22, 2007, that gives the GID the authority to control the use of the public plaza area (the "Plaza") constructed within the District. Any party holding a public event in the Plaza will be required to obtain a license agreement from the GID and the District. The District is responsible for the cost of ordinary maintenance of the Plaza. The GID is responsible for repairing any damage from Plaza events in excess of normal wear and tear. Intergovernmental Agreement with Town of Vail, Colorado On March 22, 2007 the District, along with District 2 and District 3 entered into an Intergovernmental Agreement (IGA) with the Town of Vail, Colorado, as required by the Consolidated Service Plan. Under this Agreement, the Districts must obtain the approval of the Vail Town Council prior to any inclusion of property located outside of the service area as defined in the Service Plan. Prior to the issuance of any privately placed debt, the Districts shall obtain a certificate from an External Financial Advisor certifying to the reasonableness of the interest rate and the structure. The IGA was amended on March 4, 2008, increasing the debt authorization limit from $20,000,000 to $40,000,000. The Consolidated Service Plan of the Districts anticipates the dedication of the public improvements to the Town of Vail or other appropriate jurisdiction for ownership and maintenance. The Districts are authorized to operate or maintain any improvements not dedicated to other jurisdictions, including those improvements known as the "Plaza". Lease Agreement During 2010 the District entered into a lease agreement with Solaris Property Owner, LLC (Landlord) whereby the District agreed to lease 891 square feet of space from Landlord to be used for the rental of ice skates and other uses approved by Landlord. The lease provides for payment of $75,735 in rent per annum in the initial year, escalating 3% per year thereafter, plus real estate taxes and all costs payable by Landlord attributable to the ownership, operation, management, maintenance and repair of the leased premises. The lease expires the earlier of November 30, 2040, or cessation of Special Development District No. 39. Omnibus Funding and Reimbursement Agreement On October 13, 2016, the District, along with District 2 and District 3, entered into an agreement with Solaris Property Owner, LCC. This agreement consolidated several prior agreements and commitments between the parties. The following agreements were terminated: The Integrated Project Delivery Agreement, The Original Funding and Reimbursement Agreement, The Joint Resolution Agreement, and the 2010 Costs Agreement. Furthermore, this agreement included an amendment to the Capital Pledge and Mill Levy Policy Agreement, Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 21 - NOTE F – SIGNIFICANT AGREEMENTS – CONTINUED Omnibus Funding and Reimbursement Agreement (continued) whereby the Taxing Districts will impose the Capital levies and pledge the levies to the issuer of the 2016 series bonds (District 3). The General Obligation Refunding Bonds, Series 2016A and the Subordinate Limited Tax General Obligation Refunding Bonds, Series 2016B, in the amounts of $29,330,000 and $4,000,000 respectively, were issued for the purpose of: (i) repaying the Solaris Property Owner, LLC debt; (ii) refunding the Series 2013 bonds; (iii) funding the reserve funds; (iv) paying the bond issue costs. NOTE G – RELATED PARTIES The District's Board of Directors are either officers or employees of or have business or professional relationships with the Developer. The District and the Taxing Districts share the same Board of Directors for the year ended December 31, 2020. NOTE H – 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 nature. The District has elected to participate in the Colorado Special Districts Property and Liability Pool (the Pool) which is sponsored by the Special District Association of Colorado. The Pool is an organization created by intergovernmental agreement to provide property, liability, public official liability, and 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 property, general liability and public official's liability, coverage. Members of the Pool may be required to make additional surplus contributions in the event aggregated losses incurred by the Pool exceed amounts recoverable from reinsurance contracts and funds accumulated by the Pool. 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. No distributions were made during the year ended December 31, 2020. NOTE I – 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, and 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 Solaris Metropolitan District No. 1 Town of Vail, Colorado NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 - 22 - NOTE I – TAX, SPENDING AND DEBT LIMITATIONS – CONTINUED allowable increases based upon inflation and local growth. "Fiscal year spending" is generally defined as expenditures plus reserve increase with certain exceptions. Revenue in excess of the "fiscal year spending" limit must be refunded unless the voters approve retention of such revenue. 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 emergency reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The District has made certain interpretations of the amendment's language in order to determine its compliance. SOLARIS METROPOLITAN DISTRICT NO. 2 TOWN OF VAIL, COLORADO FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS December 31, 2020 CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Position 6 Statement of Activities 7 Fund Financial Statements: Balance Sheet – Governmental Funds 8 Reconciliation of the Governmental Funds Balances Sheet to the Statement of Net Position 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 10 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities 11 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 12 Notes to the Financial Statements 13 SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Debt Service Fund 21 2499 Hwy. 6&50 www.csdcpa.com 970-245-3000 Grand Junction, CO 81505 e-mail info @ csdcpa.com FAX 970-242-4716 TOLL FREE 877-245-8080 INDEPENDENT AUDITOR’S REPORT July 21, 2021 To the Board of Directors Solaris Metropolitan District No. 2 Town of Vail, Colorado We have audited the accompanying financial statements of the governmental activities and each major fund of the Solaris Metropolitan District No. 2 (the “District”), Town of Vail, Colorado, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as 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 opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund, of Solaris Metropolitan District No. 2, Town of Vail, Colorado, as of December 31, 2020, and the respective changes in financial position and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. To the Board of Directors Solaris Metropolitan District No. 2 Page Two Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3-5 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 Solaris Metropolitan District No. 2’s basic financial statements. The Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual 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 Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Chadwick, Steinkirchner, Davis & Co., P.C. - 3 - Solaris Metropolitan District No. 2 Management’s Discussion and Analysis December 31, 2020 As management of Solaris Metropolitan District No. 2 (the “District”), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended December 31, 2020. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’s basic financial statements are composed of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains additional supplementary information after the notes to the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with an overview of the District’s finances, from both a short-term fund perspective and a long-term economic perspective. The Statement of Net Position presents information on all the District’s assets, deferred outflows, liabilities, and deferred inflows with the difference between the amounts 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 District is improving or deteriorating. The Statement of Activities presents information showing how the government’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 in this statement for some items that will only result in cash flows in future fiscal periods. The governmental activity of the District is primarily financing construction, operation, and maintenance of the basic public infrastructure that is performed by Solaris Metropolitan District No. 1. There are no business-type activities within the District. The District’s government-wide financial statements can both be found on pages 6 & 7 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 District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District currently has two funds, the General Fund and the Debt Service Fund, both of which are governmental 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 expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. A reconciliation of the fund balance as reported in the governmental funds to the net position reported in the government-wide financial statements and a reconciliation of the net change in fund balance to the change in net position has been provided to facilitate the comparison between governmental funds and governmental activities. - 4 - Notes to the financial statements. The notes provide additional information that is essential to 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 13-21 of this report. Condensed Financial Information A condensed comparative summary of the District’s government-wide assets, liabilities, deferred inflows, net position, revenues and expenses follows: Statement of Net Position Governmental Activities 2020 2019 Assets: Cash $ 131,533 $ 131,953 Other current assets 1,718,866 2,103,857 Total Assets 1,850,399 2,235,810 Liabilities: Current liabilities 8,432 9,809 Long-term obligations 29,070,273 29,354,049 Total Liabilities 29,078,705 29,363,858 Deferred Inflows Property Taxes 1,718,866 2,103,857 Total Deferred Inflows 1,718,866 2,103,857 Net Position: Restricted for TABOR 13,507 13,303 Unrestricted (28,960,679) (29,226,308) Total Net Position $ (28,947,172) $ (29,213,005) Statement of Activities Revenue: Operating Grants and Contributions $ 9,229 $ 7,613 General revenue: Property taxes 2,208,366 2,159,018 Interest and other revenue 3,032 5,347 Total Revenue 2,220,627 2,171,978 Expenses: General government 1,954,794 2,426,183 Total Expenses 1,954,794 2,426,183 Change in Net Position 265,833 (254,205) Net Position- Beginning (29,213,005) (28,958,800) Net Position- Ending $ (28,947,172) $ (29,213,005) - 5 - The District is one of the “taxing districts” in a triple district structure whereby the District is supporting the financing of the construction and operations of the infrastructure provided by Solaris Metropolitan District No. 1. The District consists of residential properties. Solaris Metropolitan District No. 1 is the “operating district” and as such, has and will continue to receive capital and service obligation payments from the District and District No. 3 to fund the construction and operation of infrastructure in the Districts. District No. 2 funds such costs with property taxes and debt. Government-wide Financial Analysis. During 2020 the District’s primary activity was to collect property taxes to pay capital and service obligations to District No. 1 for the infrastructure in the Districts. Financial Analysis of the District’s Funds As mentioned earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District’s governmental funds reported a combined ending fund balance of $123,101. The $123,101 ending fund balance primarily consists of a bond reserve fund and general fund balance. The District adopts budgets for each fund on an annual basis. A budgetary comparison has been provided on page 12 for the General Fund and on page 21 for the debt service fund. Capital assets. All public infrastructure capital assets utilized by the Solaris districts are constructed and operated by District No.1. Therefore, no capital assets are reported by the District. Long-term debts. In October 2016, District No. 3 issued $29,330,000 General Obligation Refunding Bonds Series 2016A and $4,000,000 Subordinate Limited Tax General Obligation Bond Series 2016B. A portion of the proceeds from this bond issuance was transferred to the District to fully repay the Series 2013 bonds. This transaction is more fully described in the Notes to the Financial Statement on pages 18 and 19 of this report. Economic Factors and Next Year’s Budget. It is anticipated COVID-19 will have impacts on the economy as a whole which will include financial impacts to the District, however the extent of such impacts continues to be unknown at this time. Request for Information This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Marchetti & Weaver, LLC, 28 Second Street, Suite 213, Edwards, CO 81632 or you may call (970) 926-6060. Governmental Activities Assets Cash and investments 123,101$ Cash with County Treasurer 8,432 Property tax receivable 1,718,866 Total assets 1,850,399 Liabilities Due to Solaris Metropolitan District No. 1 1,679 Due to Solaris Metropolitan District No. 3 6,753 Total current liabilities 8,432 Long-term liabilities: Capital and service obligations payable to SMD No.1 864,076 Capital obligations payable to SMD No.3 28,206,197 Total liabilities 29,078,705 Deferred Inflows of Resources Property tax 1,718,866 Total deferred inflows 1,718,866 Net position Restricted for TABOR 13,507 Unrestricted (28,960,679) Total net position (28,947,172)$ Solaris Metropolitan District No. 2 Town of Vail, Colorado STATEMENT OF NET POSITION December 31, 2020 The accompanying notes are an integral part of these statements. - 6 - OperatingCapitalTotalCharges for Grants and Grants and GovernmentalFunction/ProgramsExpenses Services Contributions Contributions ActivitiesGovernmental activities:General government1,954,794$ -$ 9,229$ -$ (1,945,565)$ 1,954,794$ -$ 9,229$ -$ (1,945,565)General Revenues:Property tax 2,208,366 Interest income3,032 Total general revenue2,211,398 Change in net position265,833 Net position - beginning(29,213,005) Net position - ending (28,947,172)$ The accompanying notes are an integral part of these statements.Solaris Metropolitan District No. 2Town of Vail, ColoradoSTATEMENT OF ACTIVITIESFor the year ended December 31, 2020Program revenue- 7 - Debt General Service Fund Fund Total Assets Cash and investments 47,602$ 75,499$ 123,101$ Cash with County Treasurer 1,679 6,753 8,432 Property tax receivable 35,781 1,683,085 1,718,866 Total assets 85,062 1,765,337 1,850,399 Liabilities Due to Solaris Metropolitan District 1 1,679 - 1,679 Due to Solaris Metropolitan District 3 - 6,753 6,753 Total liabilities 1,679 6,753 8,432 Deferred Inflows of Resources Property tax 35,781 1,683,085 1,718,866 Total deferred inflows 35,781 1,683,085 1,718,866 Fund Balances Restricted for debt service - 75,499 75,499 Restricted for TABOR 13,507 - 13,507 Unassigned 34,095 - 34,095 Total fund balances 47,602$ 75,499$ 123,101$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 2 Town of Vail, Colorado BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2020 - 8 - Amounts reported for governmental activities in the statement of net position are different because: Total fund balance - governmental funds 123,101$ Capital and service obligations payable are not due and payable in the current period and therefore are not recognized in the funds. (29,070,273) Net Position of Governmental Activities (28,947,172)$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 2 Town of Vail, Colorado RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS - TO THE STATEMENT OF NET POSITION December 31, 2020 - 9 - Debt General Service Fund Fund Total General Revenues: Property and specific ownership tax 439,644$ 1,768,722$ 2,208,366$ Interest income 1,371 1,661 3,032 Intergovernmental Payment from SMD No. 1 9,229 - 9,229 Total revenues 450,244 1,770,383 2,220,627 Expenditures Audit 5,600 - 5,600 Insurance 3,629 - 3,629 Treasurer's fee 12,578 50,600 63,178 Intergovernmental payments 427,480 1,719,783 2,147,263 Total expenditures 449,287 1,770,383 2,219,670 Excess of revenues over (under) expenditures 957 - 957 Fund balance - beginning of year 46,645 75,499 122,144 Fund balance - end of year 47,602$ 75,499$ 123,101$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 2 Town of Vail, Colorado STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the year ended December 31, 2020 - 10 - Amounts reported for governmental activities in the Statement of Activities are different because: Net Change in Fund Balances - Governmental Funds 957$ Changes in capital and service obligations payable to Solaris District No. 1 and and Solaris District No. 3 are recognized as expenditures in the funds but as additions and reductions of long term liabilities in the government wide statements. Change in capital obligation payable 193,448$ Change in service obligation payable 71,428 264,876 Change in net position of governmental activities 265,833$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 2 Town of Vail, Colorado RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE For the year ended December 31, 2020 STATEMENT OF ACTIVITIES - 11 - Positive Original & Final (Negative) Budget Actual Variance Revenues Property and specific ownership tax 439,781$ 439,644$ (137)$ Intergovernmental payment from SMD No. 1 7,924 9,229 1,305 Interest income 3,500 1,371 (2,129) Total revenues 451,205 450,244 (961) Expenditures Audit 5,600 5,600 - Insurance 2,324 3,629 (1,305) Treasurer's fees 12,566 12,578 (12) Contingency 7,500 - 7,500 Intergovernmental payments 422,338 427,480 (5,142) Total expenditures 450,328 449,287 1,041 Excess of revenues over (under) expenditures 877 957 80 Fund balance - beginning of year 50,812 46,645 (4,167) Fund balance - end of year 51,689$ 47,602$ (4,087)$ The accompanying notes are an integral part of these statements. Solaris Metropolitan District No. 2 Town of Vail, Colorado SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - GENERAL FUND For the year ended December 31, 2020 - 12 - Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 13 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Solaris Metropolitan District No. 2, (the District), located in the Town of Vail, Colorado (the Town), conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies consistently applied in the preparation of the financial statements. Reporting entity The District was organized in 2006 concurrently with Solaris Metropolitan District No. 1 (District 1) and Solaris Metropolitan District No. 3 (District 3) and is governed by a five-member elected Board of Directors. On September 19, 2006, a Consolidated Service Plan ("Service Plan") for the Districts was approved. On April 3, 2007, the first amendment to the Service Plan was approved. As required by GAAP, these financial statements present the activities of the District which is legally separate and financially independent of other state and local governments. The Districts were organized to provide various public improvements necessary and appropriate for the development of the Solaris Vail project. The public improvements, which include sanitation, water, streets, traffic and safety controls, and parks and recreation, are constructed for the benefit of the taxpayers and service users within the Districts' boundaries. The District along with District 3 serves as the "Taxing Districts," whereas the District levies tax on residential property and District 3 levies tax on commercial property. District 1 serves as the "Operating District". The Operating District is responsible for providing the day-to-day operations and administrative management for all three Districts. The District has no component units as defined by GASB and is not financially accountable for any other organization. The District is not a component unit of any other primary governmental entity. The District has no employees and all services are contracted. 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. For the most part, the effect of interfund activity has been removed from these statements. The statement of net position reports all financial and capital resources of the District. The difference between the (a) assets and deferred outflows of resources and the (b) liabilities and deferred inflows of resources of the District is reported as net position. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 14 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Government-wide and Fund Financial Statements - continued The statement of activities demonstrates the degree to which the direct 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 revenue 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 the related cash flow. 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 sixty days of the end of the current fiscal period. The District reports the following governmental funds: 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. The debt service fund accounts for the accumulation of resources for general long-term debt repayment. Property taxes Property taxes are levied on December 15, of each year and attach as an enforceable lien on property as of January 1. Taxes are due as of January 1, of the following year and are payable in two equal installments due February 28 and June 15, if paid in installments, or April 30, with a single payment. Taxes are delinquent as of August 1. If the taxes are not paid within subsequent statutory periods, the tax lien will be sold at public auction. Eagle County bills and collects the property taxes and remits collections, on a monthly basis. No provision has been made for uncollected taxes, as all taxes are deemed collectible. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 15 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fair value of financial instruments The District estimates that the fair value of all financial instruments at December 31, 2020, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. Use of estimates The preparation of financial statements in accordance with GAAP 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Deferred outflows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. 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 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. Property taxes are deferred and recognized as an inflow of resources in the period that the amounts become available. Fund equity 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 is legally or contractually required to be maintained intact. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 16 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fund equity - continued Restricted fund balance – The portion of fund balance that is constrained to be used for 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 though 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 policy to use the most restrictive classification first. Budget The District conforms to the following procedures in compliance with Colorado Revised Statutes in establishing the budgetary data reflected in the financial statements: In the fall of each year, the District Board of Directors prepares a proposed operating budget for the fiscal year commencing the following January 1. The operating budget for the funds includes proposed expenses and the means of financing them. A public hearing is held at a Board of Directors meeting to obtain taxpayer input. Prior to December 15, the budget is legally enacted through passage of a budget resolution. The 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. NOTE B – CASH AND INVESTMENTS 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 equal to 102% of the aggregate uninsured deposits. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 17 - NOTE B – CASH AND INVESTMENTS – CONTINUED The State Commissioners for banks and financial services are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of December 31, 2020, the District had no cash deposits. Investments The District has not adopted a formal investment policy, however, the District follows Colorado Revised Statutes regarding its investments. Colorado Revised Statutes specify the types of investments meeting defined rating and risk criteria in which local governments may invest. These investments include obligations of the United States and U.S. government agency entities, certain money market funds, guaranteed investment contracts and local government investment pools. CSAFE During 2020, the District was invested in the Colorado Surplus Asset Fund Trust (CSAFE), which is an investment vehicle established by State statutes for local government entities to pool surplus funds. At December 31, 2020, the total amount invested was $123,101. CSAFE adheres to the guidelines outlined in GASB Statement No. 79, Certain External Investment Pools and Pool Participants, regarding liquidity, maturity, quality, diversification and shadow NAV pricing. CSAFE measures its investments at amortized cost for financial reporting purposes and has been rated AAAm by Standard and Poor’s. CSAFE’s financial statements can be found at Csafe.org. CSAFE operates similarly to a money market fund and each share is equal in value to $1.00, though this is not guaranteed. Investment objectives focus on safety, liquidity, transparency, and competitive yields through investment in a diversified portfolio of short-term marketable securities. CSAFE may invest in U.S. Treasury securities, U.S. governmental agency securities, commercial paper, corporate fixed notes and repurchase agreements collateralized with securities valued in excess of the repurchase agreement amount. All securities owned by CSAFE are held by the Federal Reserve Bank in the account maintained for the custodian. There are no limitations or restrictions on participant withdrawals. NOTE C – SIGNIFICANT AGREEMENTS District Operating Reimbursement Agreement The Districts entered into an Amended and Restated District Operating Agreement (the "Agreement") dated March 19, 2013, amending and restating the District Operating Agreement dated April 26, 2007. The Agreement generally provides that the Operating District will perform operations services including administration, financial management, election management, budget preparation, and insurance administration for the Taxing Districts and the Taxing Districts have pledged to levy taxes to provide for payment of the operations. District No. 1 has incurred operations costs in the amount of $6,032,106 since inception of the agreement in 2007 through December 31, 2020, providing operating services to the Taxing Districts and the Taxing Districts have paid $5,872,159 toward these costs leaving a balance of $159,948. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 18 - NOTE C – SIGNIFICANT AGREEMENTS - CONTINUED District Operating Reimbursement Agreement - continued Similar to the agreement between District 1 and the Taxing Districts for operations, District 1 has an obligation to provide certain public facilities for the benefit of the Taxing Districts and the Taxing Districts have an obligation to reimburse District 1 for the cost of providing these capital facilities. Pursuant to this obligation, District 1 has incurred capital costs in the amount of $27,275,488 from inception through December 31, 2020, and the Taxing Districts have paid $26,368,675 toward these costs leaving a balance of $906,812 at December 31, 2020. The balance has been combined with the obligation for operating costs and is shown as a capital and service obligation payable on the statement of net position. The obligation between the Taxing Districts has been allocated proportionately based on the Districts' current assessed value which attributes 81% to the District and 19% to District No.3. Capital Pledge Agreement The District entered into a Capital Pledge Agreement (the "Pledge Agreement") between the Taxing Districts and the Operating District dated March 1, 2008 in conjunction with the Operating District's bond issuance. In March 2013, Solaris Metropolitan District No. 2 issued $29,550,000 Property Tax Revenue Multi-Modal Bonds Series 2013.The proceeds from this bond issuance were transferred to the Operating District and used by the Operating District to fully repay the Operating District's Series 2008 bonds and the 2008 Capital Pledge Agreement was terminated. The Districts then entered into a Capital Pledge and Mill Levy Policy Agreement dated March 19, 2013 whereby District No. 2 and District No. 3 pledged to levy taxes to provide for payment of the annual debt requirements for the Series 2013 bonds. In October 2016, District No. 3 issued $29,330,000 General Obligation Refunding Bonds Series 2016A and Subordinate Limited Tax General Obligation Refunding Bonds Series 2016B. A portion of the proceeds from this bond issuance were transferred to District No. 2 to fully repay the Series 2013 bonds and the 2013 Capital Pledge and Mill Levy Policy Agreement was terminated. The Districts then entered into a Capital Pledge and Mill Levy Policy Agreement dated October 13, 2016, whereby District No. 2 and District No. 3 pledged to levy taxes to provide for payment of the annual debt requirements for the Series 2016 bonds. The Capital Pledge Agreement provides that the Taxing Districts will each levy a debt service mill levy not to exceed a maximum of 50 mills in either District (subject to certain adjustments) and which will not be less than a minimum of 41.67 mills in District No. 2 and 25 mills in District No. 3. The portion of the annual bond costs to be paid by each Taxing District has been allocated proportionately based on the Districts' current assessed value which attributes 81% to the District and 19% to District No.3. The District has recorded an amount payable to Solaris Metropolitan District No. 3 as of December 31, 2020, in the amount of $28,206,197 which represents the District’s capital pledge toward repayment of the Series 2016A and Series 2016B bonds. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 19 - NOTE C – SIGNIFICANT AGREEMENTS – CONTINUED Intergovernmental Agreement with Town of Vail, Colorado On March 22, 2007, the District, along with District No. 1 and District No. 3 entered into an Intergovernmental Agreement (IGA) with the Town of Vail, Colorado, as required by the Consolidated Service Plan. Under this Agreement, the Districts must obtain the approval of the Vail Town Council prior to any inclusion of property located outside of the service area as defined in the Service Plan. Prior to the issuance of any privately placed Debt, the Districts shall obtain a certificate from an External Financial Advisor certifying to the reasonableness of the interest rate and the structure. The IGA was amended on March 4, 2008, increasing the debt authorization limit from $20,000,000 to $40,000,000. The Consolidated Service Plan of the Districts anticipates the dedication of the public improvements to the Town of Vail or other appropriate jurisdiction for ownership and maintenance. The Districts are authorized to operate or maintain any improvements not dedicated to other jurisdictions, including those improvements known as the "Plaza". Omnibus Funding and Reimbursement Agreement On October 13, 2016, the District, along with District 1 and District 3, entered into an agreement with Solaris Property Owner, LCC. This agreement consolidated several prior agreements and commitments between the parties. The following agreements were terminated: The Integrated Project Delivery Agreement, The Original Funding and Reimbursement Agreement, The Joint Resolution Agreement, and the 2010 Costs Agreement. Furthermore, this agreement included an amendment to the Capital Pledge and Mill Levy Policy Agreement, whereby the Taxing Districts will impose the Capital levies and pledge the levies to the issuer of the 2016 series bonds (District 3). The General Obligation Refunding Bonds, Series 2016A and the Subordinate Limited Tax General Obligation Refunding Bonds, Series 2016B, in the amounts of $29,330,000 and $4,000,000 respectively, were issued for the purpose of: repaying the Solaris Property Owner, LLC debt; refunding the Series 2013 bonds; funding the reserve funds; paying the bond issue costs. NOTE D – RELATED PARTIES The District's Board of Directors are either officers or employees of or have business or professional relationships with the Developer. The Districts share the same Board of Directors for the year ended December 31, 2020. NOTE E – 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 nature. Solaris Metropolitan District No. 2 Town of Vail, Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 20 - NOTE E – RISK MANAGEMENT - CONTINUED The District has elected to participate in the Colorado Special Districts Property and Liability Pool (the Pool) which is sponsored by the Special District Association of Colorado. The Pool is an organization created by intergovernmental agreement to provide property, liability, public official liability, and 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 property, general liability and public official's liability, coverage. Members of the Pool may be required to make additional surplus contributions in the event aggregated losses incurred by the Pool exceed amounts recoverable from reinsurance contracts and funds accumulated by the Pool. 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. No distributions were made during the year ended December 31, 2020. NOTE F – 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, and 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 increase with certain exceptions. Revenue in excess of the "fiscal year spending" limit must be refunded unless the voters approve retention of such revenue. 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 emergency reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The District's management believes it is in compliance with the requirements of the amendment. However, the District has made certain interpretations of the amendment's language in order to determine its compliance. Positive Original & Final (Negative) Budget Actual Variance Revenues Property and specific ownership tax 1,769,270$ 1,768,722$ (548)$ Interest income 2,500 1,661 (839) Total revenues 1,771,770 1,770,383 (1,387) Expenditures Treasurer's fees 50,551 50,600 (49) Intergovernmental payments 1,721,219 1,719,783 1,436 Contingency 10,000 - 10,000 Total expenditures 1,781,770 1,770,383 11,387 Excess of revenues over expenditures (10,000) - 10,000 Fund balance - beginning of year 75,499 75,499 - Fund balance - end of year 65,499$ 75,499$ 10,000$ Solaris Metropolitan District No. 2 Town of Vail, Colorado SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - DEBT SERVICE FUND For the year ended December 31, 2020 - 21 - SOLARIS METROPOLITAN DISTRICT NO. 3 TOWN OF VAIL, COLORADO FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS December 31, 2020 CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Position 6 Statement of Activities 7 Fund Financial Statements: Balance Sheet – Governmental Funds 8 Reconciliation of the Balance Sheet of Governmental Funds to the Statement Of Net Position 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Funds to the Statement of Activities 11 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 12 Notes to the Financial Statements 13 SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Debt Service Fund 24 2499 Hwy. 6&50 www.csdcpa.com 970-245-3000 Grand Junction, CO 81505 e-mail info @ csdcpa.com FAX 970-242-4716 TOLL FREE 877-245-8080 INDEPENDENT AUDITOR’S REPORT July 21, 2021 To the Board of Directors Solaris Metropolitan District No. 3 Town of Vail, Colorado We have audited the accompanying financial statements of the governmental activities and each major fund of Solaris Metropolitan District No. 3 (the “District”), Town of Vail, Colorado as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as 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 opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Solaris Metropolitan District No. 3, Town of Vail, Colorado, as of December 31, 2020, and the respective changes in financial position and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. To the Board of Directors Solaris Metropolitan District No. 3 Page Two Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3-5 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 Solaris Metropolitan District No. 3’s basic financial statements. The Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual 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 Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Grand Junction, Colorado - 3 - Solaris Metropolitan District No. 3 Management’s Discussion and Analysis December 31, 2020 As management of Solaris Metropolitan District No. 3 (the “District”), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended December 31, 2020. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’s basic financial statements are composed of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains additional supplementary information after the notes to the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with an overview of the District’s finances, from both a short-term fund perspective and a long-term economic perspective. The Statement of Net Position presents information on all the District’s assets, deferred outflows, liabilities, and deferred inflows with the difference between the amounts 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 District is improving or deteriorating. The Statement of Activities presents information showing how the government’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 in this statement for some items that will only result in cash flows in future fiscal periods. The governmental activity of the District is primarily financing construction, operation, and maintenance of the basic public infrastructure that is performed by Solaris Metropolitan District No. 1. There are no business-type activities within the District. The District’s government-wide and fund financial statements can both be found on pages 6 & 7 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 District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District currently has two funds, the General Fund and the Debt Service Fund, both of which are governmental 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 expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. A reconciliation of the fund balance as reported in the governmental funds to the net position reported in the government-wide financial statements and a reconciliation of the net change in fund balance to the change in net position has been provided to facilitate the comparison between governmental funds and governmental activities. - 4 - Notes to the financial statements. The notes provide additional information that is essential to 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 13-23 of this report. Condensed Financial Information A condensed comparative summary of the District’s government-wide assets, liabilities, deferred inflows, net position, revenues and expenses follows: Statement of Net Position Governmental Activities 2020 2019 Assets: Cash $ 2,922,860 $ 2,867,830 Current and other assets 28,732,894 28,978,252 Total Assets 31,655,754 31,846,082 Liabilities: Current Liabilities 960,603 1,104,502 Long-term obligations 34,051,909 34,253,242 Total Liabilities 35,012,512 35,357,744 Deferred Inflows Property Taxes 510,997 510,737 Total Deferred Inflows 510,997 510,737 Net Position: Restricted for Debt Service 2,923,342 2,864,428 Restricted for TABOR 3,733 3,518 Unrestricted (6,794,830) (6,890,345) Total Net Position $ (3,867,755) $ (4,022,399) Statement of Activities Revenue: Operating Grants and Contributions $ 1,481,168 $ 1,863,417 General revenue: Property taxes 536,104 507,513 Interest and other revenue 24,522 71,923 Total Revenue 2,041,794 2,442,853 Expenses: General government 144,558 139,839 Interest on long-term debt 1,742,592 1,723,764 Total Expenses 1,887,150 1,863,603 Change in Net Position 154,644 579,250 Net Position – Beginning (4,022,399) (4,601,649) Net Position – Ending $ (3,867,755) $ (4,022,399) - 5 - The District is one of the “taxing districts” in a triple district structure whereby the District is supporting the financing of the infrastructure provided by Solaris Metropolitan District No. 1. The District consists of commercial properties. Solaris Metropolitan District No. 1 is the “operating district” and as such, has and will continue to receive capital and service obligation payments from the District and District No. 2 to fund the construction and operation of infrastructure in the Districts. District No. 3 funds such costs with property taxes. Government-wide Financial Analysis. During 2020 the District’s primary activity was to collect property taxes to pay capital and service costs to District No. 1 for the infrastructure in the Districts and to pay outstanding debt service. Financial Analysis of the District’s Funds As mentioned earlier, the District uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District’s governmental funds reported a combined ending fund balance of $2,938,241. The $2,938,241 ending fund balance is the result of a cumulative surplus of revenues in excess of expenditures. The District adopts budgets for each fund on an annual basis. A budgetary comparison has been provided on page 12 for the General Fund and on page 24 for the debt service fund. Capital assets. All public infrastructure capital assets utilized by the Solaris districts are constructed and operated by District No.1. Therefore, no capital assets are reported by the District. Long-term debts. In October 2016, the District issued $29,330,000 General Obligation Refunding Bonds Series 2016A and $4,000,000 Subordinate Limited Tax General Obligation Bond Series 2016B. A portion of the proceeds from this bond issuance was transferred to District No. 2 to fully repay the Series 2013 bonds. This transaction is more fully described in the Notes to the Financial Statement on pages 18 and 19 of this report. Economic Factors and Next Year’s Budget. It is anticipated COVID-19 will have impacts on the economy as a whole which will include financial impacts to the District, however the extent of such impacts continues to be unknown at this time. Request for Information This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Marchetti & Weaver, LLC, 28 Second Street, Suite 213, Edwards, CO 81632 or you may call (970) 926-6060. Governmental Activities Assets Cash and investments 2,922,860$ Due from Treasurer 8,948 Property taxes receivable 510,997 Due from Solaris Metroplitan District No. 2 6,753 Capital obligation receivable from Solaris Metropolitan District No. 2 28,206,196 Total assets 31,655,754 Liabilities Accrued interest payable 960,283 Due to Solaris Metropolitan District No. 1 320 Long-term liabilities: Obligation payable to Solaris Metropolitan District No. 1 202,684 Bonds payable, due within one year 272,856 Bonds payable, due after a year 33,576,369 Total liabilities 35,012,512 Deferred inflows of resources Deferred property tax 510,997 Total deferred inflows of resources 510,997 Net position Restricted for Debt Service 2,923,342 Restricted for TABOR 3,733 Unrestricted (6,794,830) Total net position (3,867,755)$ Solaris Metropolitan District No. 3 Town of Vail, Colorado STATEMENT OF NET POSITION December 31, 2020 The accompanying notes are an integral part of these statements. - 6 - Operating Capital TotalCharges for Grants and Grants and GovernmentalFunction/Programs Expenses Services Contributions Contributions ActivitiesGovernmental activities:General government 144,558$ -$ 1,481,168$ -$ 1,336,610$ Interest on long-term debt 1,742,592 - - - (1,742,592) 1,887,150$ -$ 1,481,168$ -$ (405,982) General Revenues:Property and specific ownership tax 536,104 Interest income 24,522 Total general revenues 560,626 Change in net position 154,644 Net position, beginning (4,022,399) Net position, ending (3,867,755)$ Solaris Metropolitan District No. 3Town of Vail, ColoradoSTATEMENT OF ACTIVITIESFor the year ended December 31, 2020Program RevenuesThe accompanying notes are an integral part of these statements.- 7 - Debt General Service Fund Fund Total Assets Cash and investments 13,280$ 2,909,580$ 2,922,860$ Due from Treasurer 1,939 7,009 8,948 Due from Solaris Metropolitan District No. 2 - 6,753 6,753 Property tax receivable 110,716 400,281 510,997 Total assets 125,935 3,323,623 3,449,558 Liabilities Due to Solaris Metropolitan District No. 1 320 - 320 Total liabilities 320 - 320 Deferred Inflows of Resources Deferred property tax 110,716 400,281 510,997 Total deferred inflows of resources 110,716 400,281 510,997 Fund balance Restricted for debt service - 2,923,342 2,923,342 Restricted for TABOR 3,733 - 3,733 Unassigned 11,166 - 11,166 Total fund balances 14,899$ 2,923,342$ 2,938,241$ Solaris Metropolitan District No. 3 Town of Vail, Colorado BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2020 The accompanying notes are an integral part of these statements. - 8 - Amounts reported for governmental activities in the statement of net position are different because: Total fund balance - governmental funds 2,938,241$ Long-term debt is recognized in the funds as other financing sources and expenditures for principal payments but is recognized as a long term liability in the government wide statements. (32,995,000) Premiums on bonds issued are recognized as other financing sources in the funds in the year bonds are issued buy in the government wide statements they are amortized over the life of the bonds or the to the call date. (854,225) Accrued interest and fees are not due and payable in the current period and, therefore, are not reported in the funds. (960,283) Capital obligations receivable are not due and receivable in the current period and therefore are not recognized in the funds. 28,206,196 Capital and Service obligations payable are not due and payable in the current period and therefore are not recognized in the funds. (202,684) Net Position of Governmental Activities (3,867,755)$ Solaris Metropolitan District No. 3 Town of Vail, Colorado RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2020 The accompanying notes are an integral part of these statements. - 9 - Debt General Service Fund Fund Total General revenues: Property and specific ownership tax 116,156$ 419,948$ 536,104$ Interest income 305 24,217 24,522 Contribution from Solaris Metropolitan District No. 1 7,956 - 7,956 Contribution from Solaris Metropolitan District No. 2 - 1,719,784 1,719,784 Total revenues 124,417 2,163,949 2,288,366 Expenditures Audit 4,575 - 4,575 Insurance 3,381 - 3,381 Treasurer's fee 3,322 12,011 15,333 Bank fees - 2,358 2,358 Annual surveillance fee - 6,000 6,000 Capital and service costs 112,911 - 112,911 Debt Service: Principle - 165,000 165,000 Interest - 1,919,666 1,919,666 124,189 2,105,035 2,229,224 Excess of revenues over expenditures 228 58,914 59,142 Fund balance - beginning of year 14,671 2,864,428 2,879,099 Fund balance - end of year 14,899$ 2,923,342$ 2,938,241$ Solaris Metropolitan District No. 3 Town of Vail, Colorado SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the year ended December 31, 2020 The accompanying notes are an integral part of these statements. - 10 - Amounts reported for governmental activities in the Statement of Activities are different because: Net Change in Fund Balances - Governmental Funds 59,142$ Governmental funds do not record the amount of interest on long-term debt that has accrued since the end of the year. However, these liabilities are reported in the Statement of Net Position and the related expense is reported in the Statement of Activities. This is the amount by which accrued interest increased over the prior year.144,219 Premiums on bonds are recognized as other financing sources in the funds in the year the bonds are issued but in the government wide statements they are amortized and recognized as a component of interest expense. 32,855 Principal payments on long-term debt are recognized as expenditures in the funds but as reduction of long-term liabilities in the government-wide statements. 165,000 Changes in capital and service obligations payable to Solaris District No. 1 and and Solaris District No. 2 are recognized as expenses in the funds but as additions and reductions of long term liabilities in the government-wide statements Change in Capital Obligation (263,327) Change in Service Obligation 16,755 (246,572) Change in net position of governmental activities 154,644$ Solaris Metropolitan District No. 3 Town of Vail, Colorado RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended December 31, 2020 The accompanying notes are an integral part of these statements. - 11 - Original and Positive Final (Negative) Budget Actual Variance Revenues Property and specific ownership tax 116,193$ 116,156$ (37)$ Contribution from Solaris MD No. 1 6,899 7,956 1,057 Interest income 750 305 (445) Total revenues 123,842 124,417 575 Expenditures Audit 4,575 4,575 - Insurance 2,324 3,381 (1,057) Treasurer's fees 3,320 3,322 (2) Capital and service costs 110,660 112,911 (2,251) Contingency 5,000 - 5,000 Total expenditures 125,879 124,189 1,690 Excess of revenues over expenditures (2,037) 228 2,265 Fund balance - beginning of year 14,672 14,671 (1) Fund balance - end of year 12,635$ 14,899$ 2,264$ Solaris Metropolitan District No. 3 Town of Vail, Colorado STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND For the year ended December 31, 2020 The accompanying notes are an integral part of these statements. - 12 - Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 13 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Solaris Metropolitan District No. 3, (the District), located in the Town of Vail, Colorado (the Town), conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies consistently applied in the preparation of the financial statements. Reporting entity The District was organized in 2006 concurrently with Solaris Metropolitan District No. 1 (District 1) and Solaris Metropolitan District No. 2 (District 2) and is governed by a five-member elected Board of Directors. On September 19, 2006, a Consolidated Service Plan ("Service Plan") for the Districts was approved. On April 3, 2007, the first amendment to the Service Plan was approved. As required by GAAP, these financial statements present the activities of the District, which is legally separate and financially independent of other state and local governments. The Districts were organized to provide various public improvements necessary and appropriate for the development of the Solaris Vail project. The public improvements, which include sanitation, water, streets, traffic and safety controls, and parks and recreation, are constructed for the benefit of the taxpayers and service users within the Districts' boundaries. The District serves as one of the "Taxing Districts," along with District 2, whereas the District levies tax on commercial property and District 2 levies tax on residential property. District 1 serves as the "Operating District". The Operating District is responsible for providing the day-to-day operations and administrative management for all three Districts. The District has no component units as defined by GASB and is not financially accountable for any other organization. The District is not a component unit of any other primary governmental entity. The District has no employees and all services are contracted. 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. For the most part, the effect of interfund activity has been removed from these statements. The statement of net position reports all financial and capital resources of the District. The difference between the (a) assets and deferred outflows of resources and the (b) liabilities and deferred inflows of resources of the District is reported as net position. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 14 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Government-wide and Fund Financial Statements - continued The statement of activities demonstrates the degree to which the direct 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. 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 the related cash flow. 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 sixty days of the end of the current fiscal period. The District reports the following governmental funds: 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. The debt service fund accounts for the accumulation of resources for general long-term debt repayment. Property taxes Property taxes are levied on December 15, of each year and attach as an enforceable lien on property as of January 1. Taxes are due as of January 1 of the following year and are payable in two equal installments due February 28 and June 15, if paid in installments, or April 30, with a single payment. Taxes are delinquent as of August 1. If the taxes are not paid within subsequent statutory periods, the tax lien will be sold at public auction. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 15 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Property taxes - continued Eagle County bills and collects the property taxes and remits collections, on a monthly basis. No provision has been made for uncollected taxes, as all taxes are deemed collectible. Fair value of financial instruments The District's financial instruments include property taxes receivable. The District estimates that the fair value of all financial instruments at December 31, 2020 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. Estimates The preparation of financial statements in accordance with GAAP requires District management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Deferred outflows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any items that qualify for reporting in this category. 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 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. Deferred property taxes are deferred and recognized as an inflow of resources in the period that the amounts become available. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 16 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Budgets The District conforms to the following procedures in compliance with Colorado Revised Statutes in establishing the budgetary data reflected in the financial statements: In the fall of each year, the District Board of Directors prepares a proposed operating budget for the fiscal year commencing the following January 1. The operating budget for the funds includes proposed expenses and the means of financing them. A public hearing is held at a Board of Directors meeting to obtain taxpayer input. Prior to December 15, the budget is legally enacted through passage of a budget resolution. The 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. Fund equity 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: non-spendable, 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: Non-spendable 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 is legally or contractually required to be maintained intact. Restricted fund balance – The portion of fund balance that is constrained to be used for 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 though 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. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 17 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Fund equity - continued 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 policy to use the most restrictive classification first. NOTE B – CASH AND INVESTMENTS As of December 31, 2020 all cash and investments of the District are invested as follows: CSAFE $ 24,293 ColoTrust 2,898,567 Total $ 2,922,860 Custodial and Concentration of Credit Risk The District has not adopted a formal investment policy, however, the District follows Colorado Revised Statutes regarding its investment. Colorado Revised Statutes specify the types of investments meeting defined rating and risk criteria in which local governments may invest. These investments include obligations of the United States and U.S. government agency entities, certain money market funds, guaranteed investment contracts and local government investment pools. Colorado Surplus Asset Fund Trust (CSAFE) has been rated AAAm by Standard & Poor’s at December 31, 2020. CSAFE has a weighted average maturity of less than 60 days. ColoTrust is rated AAAm by Standard & Poor’s. Local Government Investment Pools During 2020, the District was invested in the Colorado Surplus Asset Fund Trust (CSAFE) and the Colorado Government Liquid Asset Trust Plus (COLOTRUST Plus), which are investment vehicles established for local government entities to pool surplus funds. The State Securities Commission administers and enforces all State statutes governing the pools. These pools operate similarly to a money market fund with each share valued at $1.00. Investments of the pools consist of U.S. Treasury bills, notes and note strips, commercial paper allowed by state statute and repurchase agreements collateralized by U.S. Treasury securities and or U.S. Instrumentalities. A designated custodial bank provides safekeeping and depository services to the pools in connection with the direct investment and withdrawal functions of the pools. Securities owned by the pools are held by the Federal Reserve Bank in the account maintained for Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 18 - NOTE B – CASH AND INVESTMENTS – CONTINUED Local Government Investment Pools (continued) the custodial bank. All securities owned by CSAFE are held by the Federal Reserve Bank in the account maintained for the U.S. Bank Trust Department. In accordance with GASB 79, Certain External Investment Pools and Pool Participants, CSAFE meets the criteria to be considered a qualifying external investment pool that elects to measure all of their investments at amortized cost and adheres to the guidelines regarding liquidity, maturity, quality, diversification and shadow NAV pricing. There are no limitations on withdrawals from CSAFE at December 31, 2020. NOTE C – LONG–TERM DEBT The following is an analysis of the change in long-term obligations for the year ended December 31, 2020: Balance Balance Due December 31, December 31, Within 2019 Additions Retirements 2020 One Year 2016 A Bonds $ 29,160,000 $ – $ (165,000) $ 28,995,000 $ 240,000 2016 B Bonds 4,000,000 – – 4,000,000 – 2016 A Premium 887,080 – (32,855) 854,225 32,856 Total $ 34,047,080 $ – $ (197,855) $ 33,849,225 $ 272,856 Series 2016A General Obligation Refunding Bonds (Series 2016A) On October 13, 2016, the District issued $29,330,000 General Obligation Refunding Bonds Series 2016A. The Series 2016A bonds were issued for the purpose of refunding the 2013 bonds issued by District No. 2, repaying Solaris Property Owner, LLC, funding the reserve fund and paying the costs of issuing the bonds. The bonds have three separate components. The first component bond is a term bond maturing December 1, 2026 with a principal amount of $2,590,000. This bond bears annual interest of 3.75% payable semiannually on June 1 and December 1 of each year commencing on December 1, 2016. Principal payments are due December 1 of each year commencing December 1, 2020. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 19 - NOTE C – LONG–TERM DEBT - CONTINUED The second component bond is a term bond maturing December 1, 2036 with a principal amount of $8,185,000. This bond bears annual interest of 5% payable semiannually on June 1 and December 1 of each year commencing on December 1, 2016. Principal payments are due December 1 of each year commencing December 1, 2027. The third component bond is a term bond maturing December 1, 2046 with a principal amount of $18,555,000. This bond bears annual interest of 5% payable semiannually on June 1 and December 1 of each year commencing on December 1, 2016. Principal payments are due December 1 of each year commencing December 1, 2037. The Series 2016A bond obligations mature as follows: Principal Interest Total 2021 $ 240,000 $ 1,421,563 $ 1,661,563 2022 320,000 1,412,563 1,732,563 2023 350,000 1,400,563 1,750,563 2024 415,000 1,387,438 1,802,438 2025 430,000 1,371,875 1,801,875 2026-2030 2,970,000 6,534,250 9,504,250 2031-2035 4,550,000 5,649,500 10,199,500 2036-2040 6,715,000 4,307,250 11,022,250 2041-2045 9,475,000 2,367,000 11,842,000 2046 3,530,000 176,500 3,706,500 Total $ 28,995,000 $ 26,028,502 $ 55,023,502 Series 2016B Subordinate Limited Tax General Obligation Refunding Bonds (Series 2016B) On October 13, 2016, the District issued $4,000,000 Subordinate Limited Tax General Obligation Refunding Bonds Series 2016B. The Series 2016B bonds were issued for the purpose of repaying Solaris Property Owner, LLC, and paying the costs of issuing the bonds. This bond bears annual interest of 7% payable annually on December 15 of each year commencing on December 15, 2016. This bond matures on December 15, 2046, and the full principal amount is due on the maturity date. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 20 - NOTE C – LONG–TERM DEBT - CONTINUED The Series 2016B bond obligations mature as follows: Principal Interest Total 2021 $ – $ 280,000 $ 280,000 2022 – 280,000 280,000 2023 – 280,000 280,000 2024 – 280,000 280,000 2025 – 280,000 280,000 2026-2030 – 1,400,000 1,400,000 2031-2035 – 1,400,000 1,400,000 2036-2040 – 1,400,000 1,400,000 2041-2045 – 1,400,000 1,400,000 2046 4,000,000 280,000 4,560,000 Total $ 4,000,000 $ 7,280,000 $ 11,280,000 NOTE D – SIGNIFICANT AGREEMENTS District Operating Reimbursement Agreement The Districts entered into an Amended and Restated District Operating Agreement (the "Agreement") dated March 19, 2013 amending and restating the District Operating Agreement dated April 26, 2007. The Agreement generally provides that the Operating District will perform operations services including administration, financial management, election management, budget preparation, and insurance administration for the Taxing Districts and the Taxing Districts have pledged to levy taxes to provide for payment of the operations. District No. 1 has incurred operations costs in the amount of $6,032,106 since inception of the agreement in 2007 through December 31, 2020 providing operating services to the Taxing Districts, and the Taxing Districts have paid $5,872,159 toward these costs leaving a balance of $159,948. Similar to the agreement between District 1 and the Taxing Districts for operations, District 1 has an obligation to provide certain public facilities for the benefit of the Taxing Districts and the Taxing Districts have an obligation to reimburse District 1 for the cost of providing these capital facilities. Pursuant to this obligation, District 1 has incurred capital costs in the amount of $27,275,488 from inception through December 31, 2020 and the Taxing Districts have paid $26,368,675 toward these costs leaving a balance of $906,812 at December 31, 2020. The balance has been combined with the obligation for operating costs and is shown as a capital and service obligation payable on the statement of net position. The obligation between the Taxing Districts has been allocated proportionately based on the Districts' current assessed value which attributes 81% to District No. 2 and 19% to the District. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 21 - NOTE D – SIGNIFICANT AGREEMENTS – CONTINUED Capital Pledge Agreement The District entered into a Capital Pledge Agreement (the "Pledge Agreement") between the Taxing Districts and the Operating District dated March 1, 2008 in conjunction with the Operating District's bond issuance. In March 2013, Solaris Metropolitan District No. 2 issued $29,550,000 Property Tax Revenue Multi-Modal Bonds Series 2013. The proceeds from this bond issuance were transferred to the Operating District and used by the Operating District to fully repay the Operating District's Series 2008 bonds and the 2008 Capital Pledge Agreement was terminated. The Districts then entered into a Capital Pledge and Mill Levy Policy Agreement dated March 19, 2013 whereby District No. 2 and District No. 3 pledged to levy taxes to provide for payment of the annual debt requirements for the Series 2013 bonds. In October 2016, District No. 3 issued $29,330,000 General Obligation Refunding Bonds Series 2016A and Subordinate Limited Tax General Obligation Refunding Bonds Series 2016B. A portion of the proceeds from this bond issuance were transferred to District No. 2 to fully repay the Series 2013 bonds and the 2013 Capital Pledge Agreement was terminated. The Districts then entered into a Capital Pledge and Mill Levy Policy Agreement dated October 13, 2016 whereby District No. 2 and District No. 3 pledged to levy taxes to provide for payment of the annual debt requirements for the Series 2016 bonds. The Capital Pledge Agreement provides that the Taxing Districts will each levy a debt service mill levy not to exceed a maximum of 50 mills in either District (subject to certain adjustments) and which will not be less than a minimum of 41.67 mills in District No. 2 and 25.00 mills in District No. 3. The portion of the annual bond costs to be paid by each Taxing District has been allocated proportionately based on the Districts' current assessed value which attributes 81% to the District No. 2 and 19% to the District. The District has recorded an amount receivable from Solaris Metropolitan District No. 2 as of December 31, 2020 in the amount of $28,206,196 which represents District No. 2’s capital pledge toward repayment of the Series 2016A and Series 2016B bonds. Intergovernmental Agreement with Town of Vail, Colorado On March 22, 2007 the District, along with District No. 1 and District No. 3 entered into an Intergovernmental Agreement (IGA) with the Town of Vail, Colorado, as required by the Consolidated Service Plan. Under this Agreement, the Districts must obtain the approval of the Vail Town Council prior to any inclusion of property located outside of the service area as defined in the Service Plan. Prior to the issuance of any privately placed Debt, the Districts shall obtain a certificate from an External Financial Advisor certifying to the reasonableness of the interest rate and the structure. The IGA was amended on March 4, 2008 increasing the debt authorization limit from $20,000,000 to $40,000,000. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 22 - NOTE D – SIGNIFICANT AGREEMENTS – CONTINUED The Consolidated Service Plan of the Districts anticipates the dedication of the public improvements to the Town of Vail or other appropriate jurisdiction for ownership and maintenance. The Districts are authorized to operate or maintain any improvements not dedicated to other jurisdictions, including those improvements known as the "Plaza". Omnibus Funding and Reimbursement Agreement On October 13, 2016, the District, along with District 1 and District 2, entered into an agreement with Solaris Property Owner, LCC. This agreement consolidated several prior agreements and commitments between the parties. The following agreements were terminated: the Integrated Project Delivery Agreement, the Original Funding and Reimbursement Agreement, the Joint Resolution Agreement, and the 2010 Costs Agreement. Furthermore, this agreement included an amendment to the Capital Pledge and Mill Levy Policy Agreement, whereby the Taxing Districts will impose the Capital levies and pledge the levies to the issuer of the 2016 series bonds (District 3). The General Obligation Refunding Bonds, Series 2016A and the Subordinate Limited Tax General Obligation Refunding Bonds, Series 2016B, in the amounts of $29,330,000 and $4,000,000 respectively, were issued for the purpose of: (i) repaying the Solaris Property Owner, LLC debt; (ii) refunding the Series 2013 bonds; (iii) funding the reserve funds; (iv) paying the bond issue costs. NOTE E – RELATED PARTIES The District's members Board of Directors are either officers or employees of or have business or professional relationships with the Developer. The Districts share the same Board of Directors for the year ended December 31, 2020. NOTE F – 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 nature. The District has elected to participate in the Colorado Special Districts Property and Liability Pool (the Pool) which is sponsored by the Special District Association of Colorado. The Pool is an organization created by intergovernmental agreement to provide property, liability, public official liability, and 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. Solaris Metropolitan District No. 3 Town of Vail Colorado NOTES TO FINANCIAL STATEMENTS December 31, 2020 - 23 - NOTE F – RISK MANAGEMENT – CONTINUED The District pays annual premiums to the Pool for property, general liability, and public official's liability coverage. Members of the Pool may be required to make additional surplus contributions in the event aggregated losses incurred by the Pool exceed amounts recoverable from reinsurance contracts and funds accumulated by the Pool. 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. No distributions were made during the year ended December 31, 2020. NOTE G – 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, and 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 increase with certain exceptions. Revenue in excess of the "fiscal year spending" limit must be refunded unless the voters approve retention of such revenue. 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 emergency reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The District's management believes it is in compliance with the requirements of the amendment. However, the District has made certain interpretations of the amendment's language in order to determine its compliance. Positive Original Final (Negative) Budget Budget Actual Variance Revenues Property and specific ownership tax 420,081$ 420,081$ 419,948$ (133)$ Property tax transfer from SMD No.2 1,721,219 1,726,342 1,719,784 (6,558) Interest income 56,714 56,714 24,217 (32,497) Total revenues 2,198,014 2,203,137 2,163,949 (39,188) Expenditures Interest 1,427,750 1,920,411 1,919,666 745 Principal 165,000 165,000 165,000 - Treasurer's fees 12,002 12,002 12,011 (9) Annual surveillance fee 6,000 6,000 6,000 - Bank fees 6,000 6,000 2,358 3,642 Contingency 10,000 10,000 - 10,000 Total expenditures 1,626,752 2,119,413 2,105,035 14,378 Excess of revenues over expenditures 571,262 83,724 58,914 (24,810) Fund balance - beginning of year 2,835,721 2,864,429 2,864,428 (1) Fund balance - end of year 3,406,983$ 2,948,153$ 2,923,342$ (24,811)$ Solaris Metropolitan District No. 3 Town of Vail, Colorado SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - DEBT SERVICE FUND For the year ended December 31, 2020 - 24 -