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Home My WebLink About2019 Final Financial Statement Report BUCKHORN VALLEY METROPOLITAN DISTRICT NO . 1 Eagle County, Colorado FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2019 BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2019 INDEPENDENT AUDITORS’ REPORT I BASIC FINANCIAL STAT EMENTS GOVERNMENT -WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION 1 STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS BALANCE SHEET – GOVERNMENTAL FUNDS 3 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) – GOVERNMENTAL FUNDS 4 RECONCILIATION OF THE STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 5 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL – GENERAL FUND 6 STATEMENT OF NET POSITION – ENTERPRISE FUND 7 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – ENTERPRISE FUND 8 STATEMENT OF CASH FLOWS – ENTERPRISE FUND 9 NOTES TO BASIC FINANCIAL STATEMENTS 10 SUPPLEMENTARY INFORMATION CAPITAL PROJECTS FUND – STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 27 CAPITAL PROJECTS FUND – ABRAMS CREEK – STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE (DEFICIT) – BUDGET AND ACTUAL 28 ENTERPRISE FUND – STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUNDS AVAILABLE – BUDGET AND ACTUAL 29 ENTERPRISE FUND – RECONCILIATION OF BUDGETARY BASIS (ACTUAL) TO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION 30 Fiscal Focus Partners, LLC 5555 DTC Parkway, Suite 375, Greenwood Village, CO 80111 303.202.1800 Office 303.237.0155 Fax www.ffpcpa.com INDEPENDENT AUDITOR’S REPORT To the Board of Directors Buckhorn Valley Metropolitan District No. 1 Eagle County, Colorado We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of Buckhorn Valley Metropolitan District No. 1 (the District) as of and for the year ended December 31, 2019, 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, the business-type activities, and each major fund of Buckhorn Valley Metropolitan District No. 1, as of December 31, 2019, and the respective changes in financial position thereof and, where applicable, cash flows thereof and the budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. I Other Matters Required Supplementary Information Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic financial statements is not affected by this missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements as a whole. The supplementary information as listed in the table of contents is presented for purposes of legal compliance and additional analysis and is not a required part of the basic financial statements. The information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the 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 financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. Greenwood Village, Colorado September 29, 2020 II BASIC FINANCIAL STATEMENTS BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF NET POSITION DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (1) Governmental Business-Type Activities Activities Total ASSETS Cash and Investments 16,935$ 16,781$ 33,716$ Cash and Investments - Restricted 5,294 - 5,294 Accounts Receivable - Services - 27,357 27,357 Receivable from Buckhorn Valley Metropolitan District No. 2 150 - 150 Due from Other Funds - 104,688 104,688 Capital Assets, Net of Accumulated Depreciation 1,577,029 1,756,064 3,333,093 Long-Term Receivable: Capital Obligation - Buckhorn Valley Metropolitan District No. 2 3,478,750 - 3,478,750 Total Assets 5,078,158 1,904,890 6,983,048 LIABILITIES Accounts Payable 18,553 20,683 39,236 Due to other Funds 104,688 - 104,688 Unearned Revenue - 4,212 4,212 Noncurrent Liabilities: Due in More Than One Year 3,501,819 - 3,501,819 Total Liabilities 3,625,060 24,895 3,649,955 NET POSITION Net Investment in Capital Assets 1,577,029 1,756,064 3,333,093 Restricted for: Emergency Reserve 2,000 - 2,000 Unrestricted (125,931) 123,931 (2,000) Total Net Position 1,453,098$ 1,879,995$ 3,333,093$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (2) Program Revenues Charges Operating Capital for Grants and Grants and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total FUNCTIONS/PROGRAMS Government Activities: General Government 157,946$ 2,880$ -$ 16,507$ (138,559)$ -$ (138,559)$ Intergovernmental Agreement - - - 331,502 331,502 - 331,502 Interest on Long-Term Obligations 229,091 - - - (229,091) - (229,091) Total Governmental Activities 387,037$ 2,880$ -$ 348,009$ (36,148) - (36,148) Business-Type Activities: Enterprise, Including Depreciation 335,971$ 382,585$ -$ -$ - 46,614 46,614 Total Business-Type Activities 335,971$ 382,585$ -$ -$ - 46,614 46,614 GENERAL REVENUES Other Income 11,195 4,690 15,885 Transfer of Capital Assets, Net (7,101) 7,101 - Other Transfers 197,722 (197,722) - Total General Revenues 201,816 (185,931) 15,885 CHANGE IN NET POSITION 165,668 (139,317) 26,351 Net Position - Beginning 1,287,430 2,019,312 3,306,742 NET POSITION - END OF YEAR 1,453,098$ 1,879,995$ 3,333,093$ Net Revenue (Expenses) and Change in Net Position BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (3) Total Capital Capital Projects -Governmental General Projects Abrams Creek Funds ASSETS Cash and Investments 6,016$ 10,919$ -$ 16,935$ Cash and Investments - Restricted 2,000 - 3,294 5,294 Receivable from Buckhorn Valley Metropolitan District No. 2 150 - - 150 Total Assets 8,166$ 10,919$ 3,294$ 22,379$ LIABILITIES AND FUND BALANCES (DEFICITS) LIABILITIES Accounts Payable 7,634$ 10,919$ -$ 18,553$ Due to Other Funds - - 104,688 104,688 Total Liabilities 7,634 10,919 104,688 123,241 FUND BALANCES (DEFICITS) Restricted For: Emergency Reserves 2,000 - - 2,000 Unassigned: General Government (1,468) - (101,394) (102,862) Total Fund Balances (Deficits)532 - (101,394) (100,862) Total Liabilities and Fund Balances (Deficits)8,166$ 10,919$ 3,294$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.1,577,029 Other long-term assets held by the District toward payment for infrastructure built on behalf of another district do not represent current financial resources and, therefore, are not reported in the funds.3,478,750 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.(3,501,819) 1,453,098$ Net Position of Governmental Activities BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (4) Capital Total Capital Projects -Governmental General Projects Abrams Creek Funds REVENUES Service Obligation from Buckhorn Valley Metropolitan District No. 2 63,218$ -$ -$ 63,218$ Utility Lot Rental Fees 2,880 - - 2,880 Other Revenue 11,195 - - 11,195 Grant Revenue - Trout Unlimited - - 16,507 16,507 Total Revenues 77,293 - 16,507 93,800 EXPENDITURES General Government: Accounting 18,748 650 - 19,398 Audit Fees 11,900 - - 11,900 District Management 26,550 16,200 - 42,750 Dues and Subscriptions 898 - - 898 Insurance and Bonds 9,207 - - 9,207 Legal 13,315 4,095 - 17,410 Miscellaneous 5,524 - - 5,524 Storage Lot 27,854 - - 27,854 Repairs and Maintenance - 9,716 - 9,716 Capital Outlay: Parks and Recreation - 58,941 - 58,941 Water Line - - 25,196 25,196 Total Expenditures 113,996 89,602 25,196 228,794 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (36,703) (89,602) (8,689) (134,994) OTHER FINANCING SOURCES (USES) Transfer from Other Funds 85,818 111,904 - 197,722 Transfer to Other Funds - (7,101) - (7,101) Total Other Financing Sources (Uses) 85,818 104,803 - 190,621 NET CHANGE IN FUND BALANCES 49,115 15,201 (8,689) 55,627 Fund Balances (Deficits) - Beginning of Year - Restated (48,583) (15,201) (92,705) (156,489) FUND BALANCES (DEFICITS) - END OF YEAR 532$ -$ (101,394)$ (100,862)$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 RECONCILIATION OF THE STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE S (DEFICITS) OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (5) Net Change in Fund Balances - Governmental Funds 55,627$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. In the statement of activities, capital outlay is not reported as an expenditure. However, the statement of activities will report as depreciation expense the allocation of the cost of any depreciable asset over the estimated useful life of the asset. This is the amount of capital outlay-related items in the current period: Depreciation (13,289) Capital Outlay 84,137 Costs incurred to construct and operate infrastructure in the District are uses of currently available resources. However, Buckhorn Valley Metropolitan District No. 2 has and will continue to reimburse the District for these costs, net of revenues collected. Therefore, the net amount is recorded as an increase or decrease in long-term receivables.268,284 Some expenses reported in the statement of activities do not require the use of current financial resource and, therefore, are not reported as expenditures in the governmental funds: Accrued interest on Developer Advances - Change in liability (229,091) Change in Net Position of Governmental Activities 165,668$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BAL ANCE BUDGET AND ACTUAL – GENERAL FUND YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (6) Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) REVENUES Service Obligation from Buckhorn Valley Metropolitan District No. 2 63,182$ 63,182$ 63,218$ 36$ Utility Lot Rental Fees 6,500 3,000 2,880 (120) Other Income 49,000 12,000 11,195 (805) Total Revenues 118,682 78,182 77,293 (889) EXPENDITURES General Government: Accounting 18,000 18,000 18,748 (748) Audit Fees 11,000 11,000 11,900 (900) Management/Operations/Supervision 40,000 28,000 26,550 1,450 Dues and Subscriptions 500 1,000 898 102 Insurance and Bonds 11,000 11,000 9,207 1,793 Legal 25,000 15,000 13,315 1,685 Miscellaneous 1,500 6,000 5,524 476 Storage Lot - 30,000 27,854 2,146 Contingency 4,000 3,000 - 3,000 Total Expenditures 111,000 123,000 113,996 9,004 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 7,682 (44,818) (36,703) 8,115 OTHER FINANCING SOURCES (USES) Transfer from Other Funds 116,841 95,000 85,818 (9,182) Total Other Financing Sources (Uses) 116,841 95,000 85,818 (9,182) NET CHANGE IN FUND BALANCES 124,523 50,182 49,115 (1,067) Fund Balance (Deficit) - Beginning of Year (122,323) (48,583) (48,583) - FUND BALANCE - END OF YEAR 2,200$ 1,599$ 532$ (1,067)$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF NET POSITION ENTERPRISE FUND YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (7) Enterprise Fund ASSETS Cash and Investments 16,781$ Due from Other Funds 104,688 Accounts Receivable 27,357 Capital Assets, Not Being Depreciated: Water Rights 770,654 Capital Assets, Net: Irrigation Water System 985,410 Total Assets 1,904,890 LIABILITIES Accounts Payable 20,683 Deferred Revenue 4,212 Total Liabilities 24,895 NET POSITION Net Investment in Capital Assets 1,756,064 Unrestricted 123,931 Total Net Position 1,879,995$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION ENTERPRISE FUND YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (8) Enterprise Fund OPERATING REVENUES Water Usage Fees 382,585$ Total Operating Revenues 382,585 OPERATING EXPENSES General and administrative Accounting 18,748 Billing 15,134 Management/Operations/Supervision 67,480 Insurance 9,207 Legal 1,615 Office Expenses 1,758 Miscellaneous 4,340 Operations and Maintenance Water System Operations and Maintenance 53,206 Repairs and Maintenance 18,479 Utilities 8,509 Vehicle Expense 347 Depreciation 137,148 Total Operating Expenses 335,971 OPERATING INCOME (LOSS)46,614 OTHER REVENUES AND EXPENDITURES Other Income 4,690 Capital Assets Transferred from CP Fund 7,101 Transfer to Other Funds (197,722) Total Other Revenues and Expenditures (185,931) CHANGE IN NET POSITION (139,317) Net Position - Beginning of Year 2,019,312 NET POSITION - END OF YEAR 1,879,995$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 STATEMENT OF CASH FLOWS ENTERPRISE FUND YEAR ENDED DECEMBER 31, 2019 See accompanying Notes to Basic Financial Statements. (9) CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers 401,646$ Payments to Suppliers (221,686) Net Cash Provided by Operating Activities 179,960 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Other Income 4,690 Net Transfers from (to) Governmental Funds (171,742) Net Cash Used by Noncapital Financing Activities (167,052) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of Capital Assets (10,495) Net Cash (Required) by Capital and Related Financing Activities (10,495) NET INCREASE IN CASH AND INVESTMENTS 2,413 Cash and Investments - Beginning of Year 14,368 CASH AND INVESTMENTS - END OF YEAR 16,781$ RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income 46,614$ Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities: (Increase) Decrease in Accounts Receivable 19,235 Increase (Decrease) in Accounts Payable (22,863) Increase (Decrease) in Deferred Revenue (174) Depreciation Expense 137,148 Net Cash Provided by Operating Activities 179,960$ SUPPLEMENTAL DISCLOSURE OF NONCASH CAPITAL FINANCING ACTIVITIES Net capital activities in the amount of $7,101 were transferred from governmental activities to business-type activities. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (10) NOTE 1 DEFINITION OF REPORT ING ENTITY Buckhorn Valley Metropolitan District No. 1 (the District), a quasi-municipal corporation and political subdivision of the state of Colorado, was organized by order and decree of the District Court for Eagle County on May 17, 2000, and is governed pursuant to provisions of the Colorado Special District Act (Title 32, Article 1, Colorado Revised Statutes). The District was created in conjunction with Buckhorn Valley Metropolitan District No. 2 (District No. 2). The Districts were organized pursuant to a consolidated service plan approved by the Town Council of Gypsum on January 11, 2000, as amended and restated by the 2009 Consolidated Service Plan for Buckhorn Valley Metropolitan District Nos. 1 and 2, dated July 14, 2009, to provide street, drainage, traffic and safety control, transportation, water, sanitary sewage, television relay and translator, mosquito and pest control, and park and recreation improvements and facilities within and without the Districts. The District’s service area is located in Eagle County, near the Town of Gypsum, Colorado. 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 is not financially accountable for any other organization, nor is the District a component unit of any other primary governmental entity, including District No. 2. The District has no employees, and all operations and administrative functions are contracted. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The more significant accounting policies of the District are described as follows: Government-Wide and Fund Financial Statements The government-wide financial statements include the statement of net position and the statement of activities. These financial statements include all of the activities of the District. Both statements distinguish between governmental activities, which normally are supported by taxes and intergovernmental revenues, and business-type activities, which rely to a significant extent on fees and charges for support. The statement of net position reports all financial and capital resources of the District. The difference between the assets plus deferred outflows of resources and liabilities plus deferred inflows of resources of the District is reported as net position. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (11) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for the governmental and proprietary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days after the end of the current fiscal period. The major sources of revenue susceptible to accrual are property taxes and specific ownership taxes. All other revenue items are considered to be measurable and available only when cash is received by the District. Expenditures, other than interest on long-term obligations, are recorded when the liability is incurred or the long-term obligation is due. The District reports the following major governmental funds: The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government. The Capital Projects Fund is used to account for financial resources to be used for the acquisition and construction of capital equipment and facilities. The Capital Projects Fund – Abrams Creek Fund is used to account for financial resources to be used for the acquisition and construction of capital facilities financed with grant monies. The District reports the following major proprietary fund: The Enterprise Fund accounts for the offering of water services. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (12) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) As a general rule, the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are payments between the government’s enterprise function and other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Operating revenues consist of charges to customers for services provided. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses or capital contributions. Budgets In accordance with the State Budget Law, the District’s Board of Directors holds public hearings in the fall each year to approve the budget and appropriate the funds for the ensuing year. The appropriation is at the total fund expenditures level and lapses at year- end. The District’s Board of Directors can modify the budget by line item within the total appropriation without notification. The appropriation can only be modified upon completion of notification and publication requirements. The budget includes each fund on its basis of accounting unless otherwise indicated. The District amended its annual budget for the year ended December 31, 2019. Pooled Cash and Investments The District follows the practice of pooling cash and investments of all funds to maximize investment earnings. Except when required by trust or other agreements, all cash is deposited to and disbursed from a single bank account. Cash in excess of immediate operating requirements is pooled for deposit and investment flexibility. Investment earnings are allocated periodically to the participating funds based upon each fund’s average equity balance in the total cash. Cash Equivalents For purposes of the statement of cash flows, the District considers cash deposits and highly liquid investments (including restricted assets) with a maturity of three months or less when purchased, to be cash equivalents. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (13) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. Capital assets which are anticipated to be conveyed to other governmental entities are recorded as construction in progress, and are not included in the calculation of the net investment in capital assets component of the District’s net position. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related fixed assets, as applicable. Depreciation expense has been computed using the straight-line method over the following economic useful lives: Water/Irrigation System 20 Years Monuments/Entryways 20 Years Drainage System 20 Years 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; unassigned. Because circumstances differ among governments, not every government or every governmental fund will present all of these components. The following classifications describe the relative strength of the spending constraints: Nonspendable Fund Balance – The portion of fund balance that cannot be spent because it is either not in spendable form (such as prepaid amounts or inventory) or legally or contractually required to be maintained intact. Restricted Fund Balance – The portion of fund balance that is constrained to being used for a specific purpose by external parties (such as bondholders), constitutional provisions, or enabling legislation. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (14) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Equity (Continued) Committed Fund Balance – The portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority, the Board of Directors. The constraint may be removed or changed only through formal action of the Board of Directors. Assigned Fund Balance – The portion of fund balance that is constrained by the government’s intent to be used for specific purposes, but is neither restricted nor committed. Intent is expressed by the Board of Directors to be used for a specific purpose. Constraints imposed on the use of assigned amounts are more easily removed or modified than those imposed on amounts that are classified as committed. Unassigned Fund Balance – The residual portion of fund balance that does not meet any of the criteria described above. If more than one classification of fund balance is available for use when an expenditure is incurred, it is the District’s policy to use the most restrictive classification first. Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities and the reported revenues and expenses. Actual results could vary from the estimates that were used. Deficits The following individual fund had a deficit reported in the fund financial statements as of December 31, 2019: Capital Projects Fund - Abrams Creek (101,394)$ It is anticipated that this deficit will be eliminated with the payment of intergovernmental revenue and possibly additional grant revenue in future years. Restatement of Beginning Fund Balance The beginning fund balance of the Capital Projects Fund – Abrams Creek was adjusted by $20,000 for a capital expenditure not previously accrued in 2018. This adjustment did not affect the beginning net position of the government-wide financial statements. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (15) NOTE 3 CASH AND INVESTMENTS Cash and investments as of December 31, 2019, are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and Investments 33,316$ Cash and Investments - Restricted 5,694 Total Cash and Investments 39,010$ Cash and investments as of December 31, 2019, consist of the following: Deposits with Financial Institutions 39,010$ Total Cash and Investments 39,010$ Deposits with Financial Institutions The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is determined by the PDPA. PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least 102% of the aggregate uninsured deposits. The State Commissioners for banks and financial services are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. At December 31, 2019, the District’s cash deposits had a bank and carrying balance of $39,010. Investments The District practices an investment policy to invest public funds in a manner which will provide the highest investment return with the maximum security, meet daily cash flow demands, and conforms to all federal, state, and local statutes governing the investment of public funds. Colorado revised statutes limit investment maturities to five years or less unless formally approved by the Board of Directors. Such actions are generally associated with a debt service reserve or sinking fund requirements. Revenue bonds of local government securities, corporate and bank securities, and guaranteed investment contracts not purchased with bond proceeds, are limited to maturities of three years or less. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (16) NOTE 3 CASH AND INVE STMENTS (CONTINUED) Investments (Continued) Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments may invest which include: . Obligations of the United States, certain U.S. government agency securities, and securities of the World Bank . General obligation and revenue bonds of U.S. local government entities . Certain certificates of participation . Certain securities lending agreements . Bankers’ acceptances of certain banks . Commercial paper . Written repurchase agreements and certain reverse repurchase agreements collateralized by certain authorized securities . Certain money market funds . Guaranteed investment contracts . Local government investment pools As of December 31, 2019, the District had no investments. NOTE 4 CAPITAL ASSETS An analysis of the changes in capital assets for the year ended December 31, 2019 follows: Balance -Balance - December 31,December 31, 2018 (as restated)Increases Decreases 2019 Governmental Activities Capital Assets, Not Being Depreciated: Land 198,500$ -$ -$ 198,500$ Construction in Process 1,162,607 78,821 - 1,241,428 Total Capital Assets, Not Being Depreciated 1,361,107 78,821 - 1,439,928 Capital Assets, Being Depreciated: Parks Entryway 149,435 5,316 - 154,751 Storm Drainage 113,677 - - 113,677 Total Capital Assets, Being Depreciated 263,112 5,316 - 268,428 Less Accumulated Depreciation For: Parks Entryway (69,725) (7,605) - (77,330) Storm Drainage (48,313) (5,684) - (53,997) Total Accumulated Depreciation (118,038) (13,289) - (131,327) Total Capital Assets Being Depreciated, Net 145,074 (7,973) - 137,101 Governmental Capital Assets, Net 1,506,181$ 70,848$ -$ 1,577,029$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (17) NOTE 4 CAPITAL ASSETS (CONTINUED) Balance -Balance - December 31,December 31, 2018 Increases Decreases 2019 Business-Type Activities Capital Assets, Not Being Depreciated: Water Rights 763,553$ 7,101$ -$ 770,654$ Total Capital Assets, Not Being Depreciated 763,553 7,101 - 770,654 Capital Assets, Being Depreciated: Irrigation Water System 2,724,014 10,495 - 2,734,509 Total Capital Assets, Being Depreciated 2,724,014 10,495 - 2,734,509 Less Accumulated Depreciation For: Irrigation Water System (1,611,951) (137,148) - (1,749,099) Total Accumulated Depreciation (1,611,951) (137,148) - (1,749,099) Total Capital Assets Being Depreciated, Net 1,112,063 (126,653) - 985,410 Business-Type Capital Assets, Net 1,875,616$ (119,552)$ -$ 1,756,064$ Depreciation expense was charged to functions/programs of the District as follows: Governmental Activities: General Government 13,289$ Total Depreciation Expense - Governmental Activities 13,289$ Business-Type Activities: Irrigation Water System 137,148$ Total Depreciation Expense - Business-Type Activities 137,148$ NOTE 5 LONG -TERM OBLIGATIONS The following is an analysis of changes in the District’s long-term obligations for the year ended December 31, 2019: Balance at Balance at Amounts December 31,December 31,Due Within 2018 Additions Reductions 2019 One Year Buckhorn Valley Development LLC Accrued Interest 3,272,728$ 229,091$ -$ 3,501,819$ -$ Total 3,272,728$ 229,091$ -$ 3,501,819$ -$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (18) NOTE 5 LONG -TERM OBLIGATIONS (CONTINUED) Construction Loan Agreement On July 22, 2000, the District entered into an agreement with Roark Partners LLLP (Roark), whereby Roark agreed to loan the District a sum not-to -exceed the aggregate of $9,000,000 to provide revenues to the District for capital expenditures. The loan proceeds are received as requested by the District to pay authorized invoices, upon receipt of which the District records the amount received, date received, and the total accumulated principal-to-date as detailed in the loan agreement. Each advance bears interest from the date received at 6% annual simple interest through September 30, 2001, at a rate equal to ⅔ of the rate incurred by Roark from October 1, 2001 through November 4, 2003, and at a rate of 7% thereafter, per the First Amended and Restated Loan Agreement dated November 4, 2003 (and as subsequently amended on March 19, 2007 and December 5, 2007). In February of 2008, the principal obligation to Roark was refunded from proceeds of general obligation bonds issued by Buckhorn Valley Metropolitan District No. 2. On August 29, 2008, the project was sold by Roark to Buckhorn Valley Development LLC (BV Development), whereby the accrued interest on the Roark Loan was assigned to BV Development and the original $9,000,000 construction loan agreement was renewed and extended to BV Development. During the transition period, additional advances were made by Roark under the same terms as the original note agreement, resulting in the segregated note balance and additional accrued interest as reflected in the summary above. The principal balance of the loan was repaid in 2010 and as of December 31, 2019, the remaining unpaid accrued interest was $3,501,819. There is no amortization schedule for the unpaid interest; therefore, a schedule of annual debt service requirement is not presented. The loan agreement is subject to annual renewal and appropriation; however, the loan agreement has not been renewed, and no funds have been appropriated to its repayment. Authorized Debt On the following dates, the District’s electors authorized the incurrence of general obligation indebtedness in the following amounts at an interest rate not to exceed 18% for a maximum term of 20 and 40 years. At December 31, 2019, the District has authorized but unissued indebtedness for the following purposes: Authorized Authorized Authorized Remaining at May 2, 2000 November 7,November 7,December 31, Election 2000 Election 2006 Election 2019 Streets 3,000,000$ 3,000,000$ 6,000,000$ 12,000,000$ Traffic and Safety 1,000,000 1,000,000 - 2,000,000 Water 7,980,000 7,980,000 - 15,960,000 Sanitation 3,325,000 3,325,000 - 6,650,000 Parks and Recreation 3,990,000 3,990,000 - 7,980,000 Television Relay 500,000 500,000 - 1,000,000 Mosquito Control 250,000 250,000 - 500,000 Operations and Maintenance 500,000 5,000,000 - 5,500,000 Refunding 21,280,000 21,280,000 - 42,560,000 Intergovernmental Agreements 21,280,000 21,280,000 - 42,560,000 Total 63,105,000$ 67,605,000$ 6,000,000$ 136,710,000$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (19) NOTE 6 AGREEMENTS District Facilities Construction and Service Agreement The First Amended and Restated District Facilities Construction and Service Agreement (the Agreement), dated March 3, 2003, generally provides that Buckhorn Valley Metropolitan District No. 2 (the Taxing District) will pay to Buckhorn Valley Metropolitan District No. 1 (the Operating District) over a period of years the costs of: 1) the construction, acquisition, and equipping of certain public facilities and services (the Facilities); and 2) the operation and maintenance of the Facilities. The Agreement states that the obligation required thereunder is a general obligation debt of the Taxing District, subject to certain limitations and, as such, the question of whether the Taxing District should enter into and perform the Agreement was submitted at an election held on May 2, 2000, and was approved by the District electorate. Under the Agreement, the Taxing District covenants to levy the taxes necessary, together with other available funds, to meet the payment obligations set forth in the Agreement. In return for the payment of the monies required to be paid under the Agreement, the Operating District agrees to: 1) acquire, construct, and equip the Facilities; 2) thereafter provide for their operation and maintenance; and 3) utilize the Facilities, provide or have others provide to the property within, and the inhabitants of both Districts, all related services (the Services), including but not limited to water and sanitation services, street maintenance, television services, parks and recreation services, and mosquito control services, as well as certain administrative services. As set forth in the Agreement, though the total obligation of the Taxing District represented by the Agreement will be treated for financial disclosure purposes as a $48,060,000 debt obligation, the actual obligations to provide for the construction, acquisition and equipping of the Facilities and for the provision of the Services, are classified as two separate obligations and each is contingent and limited to the extent that the Taxing District is able to meet its obligations through certain limited means. In the case of the Facilities, except as provided below, in any given year the Taxing District is obligated to fund its construction and acquisition only to the extent it would be capable of funding it through the issuance of general obligation debt in an aggregate principal amount not to exceed the greater of $2 million or 50% of the assessed value of the taxable property within the boundaries of the Taxing District as they may, from time to time, be enlarged. Such general obligation debt limitation is subject to automatic increase if applicable Colorado law increases the amount by which such debt may be issued. The Taxing District has the option in any year to pay for the construction, acquisition, and equipping costs of the Facilities on an annual basis pursuant to the provisions of and the schedule set forth in the Agreement. Similarly, in the case of the Services, in any given year the Taxing District is obligated to fund its costs only to the extent it is capable of funding through tax revenues resulting from the certification by the Taxing District against the assessed value of the taxable property lying within its boundaries, as such boundaries may from time to time be enlarged. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (20) NOTE 6 AGREEMENTS (CONTINUED) District Facilities Construction and Service Agreement (Continued) To the extent that in any year the Taxing District does not fund its obligations under the Agreement, the amounts not funded are carried forward as obligations in future years under the Agreement. In addition, the Operating District may supplement the revenues from the Taxing District through the imposition of fees against the properties and inhabitants of the Taxing District for the services that the Operating District provides. In prior years and in the current year, the Taxing District has allowed the Operating District to apply credit balances for Service Obligations to the obligation owing for Capital Obligations. The Agreement may be terminated by either District upon one year’s notice, provided that the Taxing District may terminate the Agreement only if, prior to the time of termination, all remaining payments and financial obligations set forth in the Agreement are paid to the Operating District in full. The Operating District may terminate the Agreement only if, in the context of the termination, the Operating District either: 1) transfers to the Taxing District, free and clear and in its entirety, its interest in the Facilities and in each and every one of the water rights, contracts, leases, easements, properties held in fee, and any other personal, real or intangible property then held or owned by the Operating District and necessary for the continued provision of the Services; or 2) makes the transfer to another governmental entity or entities pursuant to such terms and conditions for the continued provision of the Facilities and Services as may be satisfactory to the Board of Directors of the Taxing District; or 3) in the event the Operating District is dissolved in accordance with Colorado law, makes the transfer pursuant to such terms and conditions for the continued provision of the Facilities and Services as may be held in accordance with that law by an appropriate Colorado Court. The following is an analysis of the changes in the Taxing District’s Capital obligations for the year ended December 31, 2019: Beginning Ending Balance Additions Deletions Balance Capital Obligation Liability 3,210,466$ 268,284$ -$ 3,478,750$ Total 3,210,466$ 268,284$ -$ 3,478,750$ Advance and Reimbursement and Facilities Acquisition Agreement The Advance and Reimbursement and Facilities Acquisition Agreement (ARFAA) entered into between Buckhorn Valley Metropolitan District No. 1 and Buckhorn Valley Metropolitan District No. 2 (the Districts), and Buckhorn Valley Development, LLC (BV Development), generally provides that the advance of funds by BV Development for the organization of the Districts, maintenance and operation costs shall be reimbursed together with an interest rate of 8% annum on such sums advanced. In addition, the advance of funds by BV Development for capital construction of certain public improvements and facilities shall be reimbursed, upon certification and approval by the Districts, from the issuance of Bonds, whereas the Districts are authorized to issue public debt instruments, including general obligation bonds, which the Districts may issue for the purpose of satisfying its obligations to BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (21) NOTE 6 AGREEMENTS (CONTINUED) Advance and Reimbursement and Facilities Acquisition Agreement (Continued) construct or acquire the public infrastructure necessary for the development of the Districts. In the event the Bonds do not issue, the proceeds from such Bonds are not sufficient to repay the advances, or additional advances are made thereunder, the Districts shall make payment for the actual capital construction costs from funds available within any fiscal year and not otherwise required for operations, capital improvements and debt service costs and expenses of the Districts. This reimbursement obligation is and shall be subordinate to any bonded indebtedness of the Districts now in existence or hereafter created, and shall be subject to the limitations of the Districts’ Service Plan. The payment of obligations under the ARFAA are subject to annual appropriation by the Board of Directors of the Districts in their sole discretion, and the terms and conditions of the agreement shall not be construed as a multiple-fiscal year direct or indirect District debt or other financial obligation within the meaning of Article X, Section 20 of the Colorado Constitution. As of December 31, 2019, the District had no outstanding obligations under the ARFAA. Management Services Agreement On September 11, 2010, the District and Buckhorn Valley Metropolitan District No. 2 entered into a Management Services Agreement with Colorado Land Management LLC. The Agreement generally provides that the manager shall conduct all of the Districts’ ordinary operational and business affairs, shall provide general supervision and project administration for all projects, facilities and contracts, and provide property management services. District No. 1 shall direct the manager in the provision of the Management Services under the Agreement, and the manager shall obtain approval from District No. 1 prior to providing any Management Services that vary from the Management Services set forth in the Agreement, whereas District No. 1 is responsible for the management of the affairs of both District No. 1 and District No. 2 pursuant to the Master Intergovernmental Agreement between the Districts. The manager shall be paid a monthly base management fee of $5,000, plus an hourly rate for services not included in the monthly base management fee. During 2019, $244,131 was paid to Colorado Land Management LLC under this agreement. Abrams Creek Flow Improvement Agreement On June 28, 2016, The District and Trout Unlimited, Inc. (“Trout Unlimited”) entered into an agreement for the purpose of partnering on a Project to improve flows in Abrams Creek for the benefit of its native cutthroat trout fishery while preserving the District’s ability to fully utilize its decreed water rights. The District owns JPO Ditch No. 2 which diverts water from Abrams Creek. Water diverted by JPO Ditch No. 2 is delivered to the District’s irrigated lands. Preliminary estimates are that as much as 40 percent of the water diverted does not reach the irrigated lands due to ditch leakage. The District also diverts water at times from Abrams Creek during free river conditions for storage and plans to continue that practice. The goals of the District and Trout Unlimited are to improve flows in Abrams Creek for the benefit of its native cutthroat fishery by improving the efficiency of the District’s diversion and delivery system. The District and Trout Unlimited propose to pipe portions of the JPO Ditch No. 2 to improve the efficiency of the delivery of water to the District’s irrigated lands and reduce diversions from Abrams Creek for the benefit of the cutthroat fishery. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (22) NOTE 6 AGREE MENTS (CONTINUED) Abrams Creek Flow Improvement Agreement (Continued) Trout Unlimited is responsible for seeking $1.2 million in funding for the Project through application for grants and/or donations. The District will be responsible for seeking funding in addition to the $1.2 million, if any, as may be needed to complete the Project, provided that any financial obligations of the District are subject to annual appropriations. Funding will be used for Project design, permitting, engineering, construction, maintenance, and other costs associated with the design, approval and construction of the Project. Funding may be used to reimburse costs already incurred in the permitting and design of the Project but only if permitted under the terms of the grants and/or donations. The District is responsible for determining the 1) optimal design of the Project, 2) design, plans and specifications to meet the Project goals, and 3) contracting for construction and overseeing the construction of the Project. Once construction of the Project is completed, the District will be the exclusive owner of the Project infrastructure and will be responsible for the operation and maintenance of the Project. In July 2017, the Colorado Water Conservation Board (CWCB) approved a grant for the Project in the amount of $549,700. During 2018, the District received grant monies from CWCB in the amount of $589,700, from the Town of Gypsum in the amount of $100,000, and during 2018 and 2019 from Trout Unlimited in the amount of $291,507. These funds were used for design and construction of the Project, which is anticipated to be completed at a future date. RV Lot Management Agreement On September 1, 2019, the District entered into an agreement with S&C Storage (S&C) whereby S&C will conduct all ordinary operation and management matters of the District’s RV storage lot and the approximately 35 RV storage spaces therein. S&C will collect monthly rental on the RV lots as compensation under the agreement. The District will recognize the monthly lot rental as miscellaneous revenue with an offsetting storage lot expense. The agreement expires on December 31, 2019, with an automatic renewal on January 1, 2020, for five one-year terms, subject to the District’s annual appropriation of funds, or upon notification in writing at least five days prior to the termination date. NOTE 7 NET POSITION The District has net position consisting of three components – net investment in capital assets, restricted, and unrestricted. Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding balance of bonds that are attributable to the acquisition, construction, or improvement of those assets. As of December 31, 2019, the District had net investment in capital assets calculated as follows: BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (23) NOTE 7 NET POSITION (CONTINUED) Governmental Business-Type Activities Activities Net Investment in Capital Assets: Capital Assets, Net 1,577,029$ 1,756,064$ Total 1,577,029$ 1,756,064$ Restricted net position consists of assets that are restricted for use either externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or imposed by law through constitutional provisions or enabling legislation. As of December 31, 2019, the District had restricted net position as follows: Governmental Activities Restricted Net Position: Emergency Reserve 2,000$ Total Restricted Assets 2,000$ The unrestricted component of net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. The District’s unrestricted net position as of December 31, 2019 , is $(2,000 ), which is comprised of $(125,931) for governmental activities and $123,931 for business-type activities. NOTE 8 RELATED PARTIES The prior developer of the property which constitutes the District was Roark Partners, LLLP (Roark). During 2019 , one member of the Board of Directors had a financial interest in Roark. Roark is the owner of Buckhorn Valley Metropolitan District No. 2 Series 2008 subordinate bonds. During 2011, the property owned by BV Development was foreclosed on and acquired by CDDR Properties – OG, LLC, a Texas limited liability company, and a subsidiary of Texas Capital Bank N.A. In December 2013, the development was purchased by BV Firewheel LLC and BV FW Landco LLC, both of which are Texas limited liability companies. One Board member is the registered agent and consultant of Colorado Land Management LLC (see Note 6) and another Board member is the owner of a company that has contracted to provide construction improvements to the District. During 2019, the following amounts were paid to and/or are owed to related parties for services and capital improvements: BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (24) NOTE 8 RELATED PARTIES (CONTINUED) Payments Balance Due at Made December 31, 2019 2019 Colorado Land Management LLC 244,131$ 23,930$ BV Devco LLC 20,000 - Scott Green Excavating, Inc.23,600 - Total 287,731$ 23,930$ NOTE 9 INTERFUND TRANSFERS The Capital Projects Fund conveyed $7,101 of water rights and irrigation improvements to the Enterprise Fund. The Enterprise Fund transferred $197,722 to the General Fund and Capital Projects Fund to pay for administrative and capital expenditures. NOTE 10 RISK MANAGEMENT The District is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; or acts of God. The District maintains commercial insurance for most risks of loss. No claims were made against this policy during 2019. Prior to June 2019, the District participated in the Colorado Special Districts Property and Liability Pool. NOTE 11 TAX, SPENDING, AND DEBT LIMITATIONS Article X, Section 20 of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (TABOR), contains tax, spending, revenue and debt limitations which apply to the state of Colorado and all local governments. Enterprises, defined as government-owned businesses authorized to issue revenue bonds and receiving less than 10% of annual revenue in grants from all state and local governments combined, are excluded from the provisions of TABOR. The District’s management believes a significant portion of its operations in the Enterprise Fund qualifies for this exclusion. Spending and revenue limits are determined based on the prior year’s Fiscal Year Spending adjusted for allowable increases based upon inflation and local growth. Fiscal Year Spending is generally defined as expenditures plus reserve increases with certain exceptions. Revenue in excess of the Fiscal Year Spending limit must be refunded unless the voters approve retention of such revenue. BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 (25) NOTE 11 TAX, SPENDING, AND DEBT LIMITATIONS (CONTINUED) On May 2, 2000, and again on November 7, 2000, a majority of the District’s electors authorized an annual increase of up to $500,000 in property tax collections for operations and maintenance and to collect, retain, and spend up to $250,000 annually from any other revenue source other than ad valorem taxes. TABOR requires local governments to establish Emergency Reserves. These reserves must be at least 3% of Fiscal Year Spending (excluding bonded debt service). Local governments are not allowed to use the Emergency Reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The District’s management believes it is in compliance with the provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of the provisions, including but not limited to the interpretation of how to calculate Fiscal Year Spending and other limits, will require judicial interpretation. (26) SUPPLEMENTARY INFORMATION BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 CAPITAL PROJECTS FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2019 (27) Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) REVENUES Total Revenues -$ -$ -$ -$ EXPENDITURES Accounting - 1,000 650 350 District Management - 16,500 16,200 300 Legal - 5,000 4,095 905 Repairs and Maintenance - 10,000 9,716 284 Water Rights - Legal 25,000 - - - Water Rights - Management 20,000 - - - Parks and Recreation 25,000 60,000 58,941 1,059 Contingency - - - - Total Expenditures 70,000 92,500 89,602 2,898 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (70,000) (92,500) (89,602) 2,898 OTHER FINANCING SOURCES (USES) Transfer from Other Funds 145,000 115,201 111,904 (3,297) Transfer to Other Funds - (7,500) (7,101) 399 Total Other Financing Sources (Uses) 145,000 107,701 104,803 (2,898) NET CHANGE IN FUND BALANCE 75,000 15,201 15,201 - Fund Balance (Deficit) - Beginning of Year - (15,201) (15,201) - FUND BALANCE - END OF YEAR 75,000$ -$ -$ -$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 CAPITAL PROJECTS FUND – ABRAMS CREEK STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE (DEFICIT) – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2019 (28) Variance with Original Final Budget and Final Actual Positive Budget Amounts (Negative) REVENUES Other Grant Revenue 100,000$ -$ (100,000)$ Grant Revenue - Trout Unlimited - 16,507 16,507 Total Revenues 100,000 16,507 (83,493) EXPENDITURES Management and Supervision - 8,600 (8,600) Legal Services - 1,750 (1,750) Miscellaneous - 314 (314) Water Line 60,000 14,532 45,468 Total Expenditures 60,000 25,196 34,804 NET CHANGE IN FUND BALANCE 40,000 (8,689) (48,689) Fund Balance (Deficit) - Beginning of Year - Restated - (92,705) (92,705) FUND BALANCE (DEFICIT) - END OF YEAR 40,000$ (101,394)$ (141,394)$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 ENTERPRISE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUNDS AVAILABLE – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2019 (29) Variance with Original Final Budget and Final Actual Positive Budget Amounts (Negative) REVENUES Water Usage Fees 450,000$ 382,585$ (67,415)$ Other Income 48,000 4,690 (43,310) Reimbursed Expenditures 10,000 - (10,000) Total Revenues 508,000 387,275 (120,725) EXPENDITURES General Admiration: Accounting 18,000 18,748 (748) Dues and Licenses 1,000 - 1,000 Insurance and Bonds 11,000 9,207 1,793 Management/Operations/Supervision 60,000 67,480 (7,480) Legal Services 5,000 1,615 3,385 Miscellaneous 10,000 4,340 5,660 Billing 15,000 15,134 (134) Office Expenses 6,000 1,758 4,242 Contingency 2,159 - 2,159 Operations and Maintenance: Water System Operations/Maintenance 28,000 53,206 (25,206) Repairs and Maintenance 100,000 18,479 81,521 Utilities 15,000 8,509 6,491 Vehicle Expense 5,000 347 4,653 Capital Outlay - 10,495 (10,495) Water Rights - 7,101 (7,101) Total Expenditures 276,159 216,419 59,740 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 231,841 170,856 (60,985) OTHER FINANCING SOURCES (USES) Capital Assets Transferred from CP Fund - 7,101 7,101 Transfer to Other Funds (261,841) (197,722) 64,119 Total Other Financing Sources (Uses) (261,841) (190,621) 71,220 NET CHANGE IN FUNDS AVAILABLE (30,000) (19,765) 10,235 Funds Available - Beginning of Year 68,048 143,696 75,648 FUNDS AVAILABLE - END OF YEAR 38,048$ 123,931$ 85,883$ BUCKHORN VALLEY METROPOLITAN DISTRICT NO. 1 ENTERPRISE FUND RECONCILIATION OF BUDGETARY BASIS (ACTUAL) TO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NE T POSITION DECEMBER 31, 2019 (30) Actual Reconciliation of Budgetary Basis (Actual) to Statement of Revenues, Expenses and Changes in Net Position: Revenues (Budgetary Basis)387,275$ Capital assets transferred from Capital Projects Fund 7,101 Total Revenues per Statement of Revenues, Expenses, and Changes in Net Position 394,376 Expenditures (Budgetary Basis)414,141 Depreciation 137,148 Capital outlay (17,596) Total Expenses per Statement of Revenues, Expenses, and Changes in Net Position 533,693 Changes in Net Position per Statement of Revenues, Expenses and Changes in Net Position (139,317)$