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Home My WebLink AboutSupplement to 2023 Consolidated Annual Report SQMD 1-31 SUPPLEMENT TO SOLARIS METROPOLITAN DISTRICT NOS. 1-3 2023 CONSOLIDATED ANNUAL REPORT Pursuant to the Service Plan for Solaris Metropolitan District Nos. 1-3 (the “Districts”) and Pursuant to §32-1-207(3)(c), Colorado Revised Statutes, the Districts provide the following supplemental information to the 2023 annual report on the service plan for the year ended December 31, 2023: §32-1-207(3) Statutory Requirements 1. A copy of the audited financial statements, if required by the “Colorado Local Government Audit Law”, part 6 of article 1 of title 29, or the application for exemption from audit, as applicable. The 2023 audits for the fiscal year ending December 31, 2023 (“2023 Audits”) are attached as Exhibits A, B and C. Service Plan Requirements 1. Audit of the Districts’ 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. The 2023 audits for the fiscal year ending December 31, 2023 (“2023 Audits”) are attached as Exhibits A, B and C. 2 EXHIBIT A Solaris Metropolitan District No. 1 2023 Audit Vail Square Metropolitan District No. 1 Financial Statements December 31, 2023 Vail Square Metropolitan District No. 1 Financial Statements December 31, 2023 Table of Contents Page INDEPENDENT AUDITOR'S REPORT A1 –A3 Management’s Discussion and Analysis B1 –B3 Government-wide Financial Statements: Statement of Net Position C1 Statement of Activities C2 Fund Financial Statements: Balance Sheet -Governmental Funds C3 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position C4 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds C5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities C6 Notes to the Financial Statements D1 –D15 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -Governmental Funds: General Fund E1 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -Governmental Funds: Debt Service Fund F1 McMahan and Associates, l.l.c. Certified Public Accountants and Consultants Web Site: www.mcmahancpa.com Chapel Square, Bldg C Main Office: (970) 845-8800 245 Chapel Place, Suite 300 Facsimile: (970) 845-8108 P.O. Box 5850, Avon, CO 81620 E-mail: mcmahan@mcmahancpa.com Member: American Institute of Certified Public Accountants Paul J. Backes, CPA, CGMA Avon: (970) 845-8800 Michael N. Jenkins, CA, CPA, CGMA Aspen: (970) 544-3996 Matthew D. Miller, CPA Frisco: (970) 668-3481 A1 M & A INDEPENDENT AUDITOR'S REPORT To the Board of Directors Vail Square Metropolitan District No. 1 Vail, Colorado Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of Vail Square Metropolitan District No. 1 (the “District”), as of and for the year ended December 31, 2023,and the related notes to the financial statements,which collectively comprise the District’s basic financial statements as listed in the Table of Contents. 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 the District, as of December 31, 2023 and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“U.S. GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As discussed in note VII, the District’s fund balance was restated for the correction of an error in the previous year. Our opinion is not modified as a result of this. Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for one year after the date that the financial statements are issued. INDEPENDENT AUDITOR’S REPORT To the Board of Directors Vail Square Metropolitan District No. 1 A2 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with U.S. GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with U.S. GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis in Section B be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with 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. The budgetary comparison information in section E is not a required part of the basic financial statements but is supplementary information required by U.S. GAAP. The budgetary comparison 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with U.S. GAAS. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. INDEPENDENT AUDITOR’S REPORT To the Board of Directors Vail Square Metropolitan District No. 1 A3 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s financial statements as a whole. The individual fund budgetary comparison in Section F is presented for purposes of additional analysis and are not a required part of the basic financial statements. The budgetary comparison found in Section F is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 financial statements as a whole. McMahan and Associates, L.L.C. Avon, Colorado September 30, 2024 MANAGEMENT’S DISCUSSION AND ANALYSIS B1 Vail Square Metropolitan District No. 1 Management’s Discussion and Analysis December 31, 2023 As management of Vail Square 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, 2023. 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 a broad overview of the District’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the District’s assets, deferred outflows, liabilities, and deferred inflows with the difference 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 the construction, operation, and maintenance of the basic public infrastructure within the District. There are no business-type activities within the District. The government-wide financial statements can be found on pages C1 and C2 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 B2 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. The fund financial statements are contained on pages C3 through C6 of the report. 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 D1 through D15of this report. Condensed Financial Information A condensed comparative summary of the District’s government-wide assets, deferred outflows, liabilities, deferred inflows, net position, revenues and expenditures follows: 2023 2022 AS SETS & D EFER RED OUTFLOWS: Current assets 1,274,729$ 2,079,684$ Non-current assets 627,749 8,134,182 Total Assets 1,902,478 10,213,866 De fe rred outflo ws of resources - 10,131 LIAB ILITIES: Current lia bilit ie s 135,797 535,035 Non-current lia bilit ie s 1,138,932 8,995,131 Total Liabilitie s 1,274,729 9,530,166 NET POSITION : Net Inve stment in capital assets 627,749 693,830 Restricted for emergencies 7,580 5,231 Unrestricted (7,580) (5 ,230) Total Net Pos itio n 627,749$ 693,831$ REVEN UES : Operatin g gr ants and contributions 178,657$ 1,556,058$ Inte rest and other revenue 495,346 40,384 Total R evenue s 674,003 1,596,442 EXPEN SES: Ge ne ra l go ve rnme nt 370,195 1,019,389 Public works 229,364 128,443 Inte rest on long-te rm debt 140,526 514,688 Total Expenses 740,085 1,662,520 Cha ng e in Net Pos ition (6 6,082) (66,078) Net Pos itio n - B eginning 693,831 759,909 Net Pos itio n - Ending 627,749$ 693,831$ Go ve rnme nt al Activitie s B3 The District is the operating district in a triple district structure whereby the District is coordinating the financing and constructing public infrastructure for Vail Square Metropolitan District Nos. 2 and 3. Such functions are furnished through a District Coordinating Services Agreement among the District and Vail Square Metropolitan District Nos. 2 and 3. Vail Square Metropolitan District Nos. 2 & 3 are the “financing districts” and as such, have and will continue to pay “capital and service obligations” to the District for construction and operation of the infrastructure in the Districts. The District’s revenues consisted primarily of funds received from the financing Districts and the Vail Reinvestment Authority, as defined in agreements between the District and those entities. Government-wide Financial Analysis. The District’s primary activity has been the construction,acquisition and operation of infrastructure and the issuance of debt to pay for the infrastructure. The debt was originally issued by the District in 2008 but was refinanced in 2023 and transferred to Vail Square Metropolitan District No. 3. 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, unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The District restated its 2022 ending fund balance to report the prepaid service obligation from District No. 2 and 3 as a unearned service obligation revenue. As a result the District is not showing any fund balance. The unearned service obligation revenue is held by the District for spending in future years. The District adopts budgets for each fund on an annual basis. Budgetary comparisons have been provided on page E1 for the General Fund, page E2 for the Debt Service Fund. Capital assets. The District’s capital assets consist primarily of infrastructure in the Districts. During 2023 the District recognized depreciation expense of $66,079. Details can be seen in Note III B on page D11 of this report. Long-term debts.The outstanding balance of the District’s debt for the tax-exempt loan taken out in 2008 was moved from the District to Vail Square Metropolitan District No. 3 and accordingly, the District has no remaining long-term debt. Additional information can be found in the Notes to the Financial Statement in Note III C on page D12 of this report. 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. GOVERNMENT-WIDE FINANCIAL STATEMENTS Assets: Cash and investm ents 1,093,679 Amounts due from VSMD No. 2 & 3 173,487 Prepaid expenses 7,563 Capital assets, net 627,749 Total Assets 1,902,478 Liabilities: Current liabilities due in less than one year: Accounts payable 135,797 Unearned Service Obligation Revenue from VSMD No. 2 & 3 1,138,932 Total Liabilities 1,274,729 Net Position: Net investment in capital assets 627,749 Restricted for emergencies 7,580 Unrestricted (7,580) Total Net Position 627,749 December 31, 2023 Statement of Net Position Vail Square Metropolitan District No. 1 The accompanying notes are an integral part of these financial statements. C1 Net (Expense) Revenue and Changes in Net Position Operating Capital Charges for Grants and Grants and Net (Expense) Expenses Services Contributions Contributions Revenue Functions/Programs: Governmental activities: General government 370,195 - 178,657 415,598 224,060 Public works 229,364 - - - (229,364) Interest 140,526 - - - (140,526) Total primary government 740,085 - 178,657 415,598 (145,830) General revenues: Interest income 79,748 Total General Revenues 79,748 Change in Net Position (66,082) Net Position - Beginning 693,831 Net Position - Ending 627,749 Vail Square Metropolitan District No. 1 Statement of Activities For the Year Ended December 31, 2023 Program Revenues The accompanying notes are an integral part of these financial statements. C2 FUND FINANCIAL STATEMENTS Total Governmental General Debt Service Funds As sets: Cash and investments 1,093,679 - 1,093,679 Am ounts due from VSMD No. 2 & 3 173,487 - 173,487 Prepaid expenses 7,563 - 7,563 Total Assets 1,274,729 - 1,274,729 Liabilities, Deferred Inflow of Resources, Liabilities: Accounts payable 135,797 - 135,797 Unearned service obligation revenue from VSMD No. 2 & 3 1,138,932 - 1,138,932 Total Liabilities 1,274,729 - 1,274,729 Fund Balances: Nonspendable 7,563 - 7,563 Restricted for emergencies 7,580 - 7,580 Assigned for capital reserves 920,000 - 920,000 Unassigned (935,143) - (935,143) Total Fund Balances - - - Total Liabilities, Deferred Inflow of Resources, and Fund Balances 1,274,729 - 1,274,729 December 31, 2023 Governmental Funds Balance Sheet Vail Square Metropolitan District No. 1 The accompanying notes are an integral part of these financial statements. C3 Governmental Funds Total Fund Balance - Capital assets used in governmental activities are not considered current financial resources and, therefore, are not reported in the funds. Details of these amounts are as follows: Capital assets 1,863,895 Accumulated depreciation (1,236,146) 627,749 Net Position of Governmental Activities 627,749 Vail Square Metropolitan District No. 1 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position December 31, 2023 The accompanying notes are an integral part of these financial statements. C4 Total Governmental General Debt Service Funds Revenues: Intergovernmental agreem ent 178,657 9,087,077 9,265,734 Interest 73,984 5,764 79,748 Total Revenues 252,641 9,092,841 9,345,482 Expenditures: General government 89,356 280,838 370,194 Public works 163,285 - 163,285 Debt service Principal - 9,440,000 9,440,000 Interest - 178,539 178,539 Total Expenditures 252,641 9,899,377 10,152,018 Net Change in Fund Balances - (806,536) (806,536) Fund Balances - Beginning (restated)- 806,536 806,536 Fund Balances - Ending - - - Vail Square Metropolitan District No. 1 Statement of Revenues, Expenditures For the Year Ended December 31, 2023 Governmental Funds and Changes in Fund Balances The accompanying notes are an integral part of these financial statements. C5 Net change in fund balances for total governmental funds (806,536) Governmental funds report capital outlays as expenditures. However, in the Statem ent of Activities, the cost of the assets is allocated over their estimated useful lives as depreciation expense. This is the net difference between depreciation and capital additions during the year. Details of these differences are as follows: Depreciation and amortization expense (66,079) (66,079) Amounts due from Vail Square Metropolitan District No. 2 and No. 3 for capital and service costs are not currently available financial resources and, therefore, are not reported in the funds. (8,671,480) The repayment of the principal of long-term debt consumes current financial resources of governmental funds. This transaction, however, has no effect on net position. This amount is the net effect of these differences in the treatement of long-term debt repayments. Principal repayments - Bonds payable 9,440,000 9,440,000 The change in accrued interest reported in the Statement of Activities does not require the use of current financial resources and, therefore, is not reported as an expenditure in governmental funds.38,013 Change in Net Position of Governmental Activities (66,082) Changes in Fund Balances of Governmental Funds to the Reconciliation of the Statement of Revenues, Expenditures, and Vail Square Metropolitan District No. 1 For the Year Ended December 31, 2023 Statement of Activities The accompanying notes are an integral part of these financial statements. C6 NOTES TO THE FINANCIAL STATEMENTS Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 D1 I.Summary of Significant Accounting Policies The Vail Square Metropolitan District No. 1 (the “District”) was established December 5, 2005, as a quasi-municipal corporation and political subdivision of the State of Colorado. The District was established as part of a triple district structure with Vail Square Metropolitan District Nos. 2 and 3. The District is considered the Operating District, and was formed to coordinate the financing and construction of all public improvements which will be constructed for the use and benefit of all anticipated inhabitants and taxpayers of Vail Square Metropolitan District Nos. 1-3. Vail Square Metropolitan District Nos. 2 and 3 are the Financing Districts and as such have paid and will continue to pay capital and service obligations to the District for the infrastructure in the Districts. The District’s financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”). The Governmental Accounting Standards Board (“GASB”) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The more significant accounting policies established by GAAP used by the District are discussed below. A.Reporting Entity The reporting entity consists of (a) the primary government; i.e., the District, and (b) organizations for which the District is financially accountable. The District is considered financially accountable for legally separate organizations if it is able to appoint a voting majority of an organization's governing body and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits, to, or to impose specific financial burdens on, the District. Consideration is also given to other organizations which are fiscally dependent; i.e., unable to adopt a budget, levy taxes, or issue debt without approval by the District. Organizations for which the nature and significance of their relationship with the District are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete are also included in the reporting entity. Based on the criteria discussed above, the District is not financially accountable for any other entity, nor is the District a component unit of any other government. B.Government-wide and Fund Financial Statements The District’s basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District’s major funds). Both the government-wide and fund financial statements categorize primary activities as governmental type. 1.Government-wide Financial Statements In the government-wide Statement of Net Position, all balances are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The government-wide focus is on the sustainability of the District as an entity and the change in the District’s net position resulting from the current year’s activities. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D2 I.Summary of Significant Accounting Policies (continued) B.Government-wide and Fund Financial Statements (continued) 2.Fund Financial Statements The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The fund focus is on current available resources and budget compliance. 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 District, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of the governmental funds. C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation Measurement focus refers to whether financial statements measure changes in current resources only (current financial focus) or changes in both current and long-term resources (long-term economic focus). Basis of accounting refers to the point at which revenues, expenditures, or expenses are recognized in the accounts and reported in the financial statements. Financial statement presentation refers to classification of revenues by source and expenses by function. 1.Long-term Economic Focus and Accrual Basis Governmental activities in the government-wide financial statements use the long-term economic focus and are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred, regardless of the timing of the related cash flows. 2.Current Financial Focus and Modified Accrual Basis The governmental fund financial statements use the current financial focus and are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or soon enough thereafter (60 days)to be used to pay liabilities of the current period. Expenditures are generally recognized when the related liability is incurred. The exception to this general rule is that principal and interest on general long-term debt, if any, is recognized when due. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D3 I.Summary of Significant Accounting Policies (continued) C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) 3.Financial Statement Presentation Amounts reported as program revenues include capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes and interest income. D.Financial Statement Accounts 1.Cash and Cash Equivalents Cash and equivalents are defined as deposits that can be withdrawn at any time without notice or penalty and investments with maturities of three months or less. Investments are stated at net asset value or amortized cost. The change in fair value, net asset value, and amortized cost of investments is recognized as an increase or decrease to investment assets and investment income. The District’s investment policy is detailed in note III.A. 2.Receivables Receivables are reported net of an allowance for uncollectible accounts.There was no allowance as of December 31, 2023. 3.Capital Assets Capital assets, which include land, buildings, equipment, vehicles, and infrastructure assets, are reported in the governmental activity columns in the government-wide financial statements. The District defines capital assets as assets with an initial cost of $5,000 or more and an estimated useful life in excess of five years. Such assets are recorded at historical cost. Donated capital assets are recorded at estimated fair value at the date of donation. Infrastructure, buildings, and equipment are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and improvements 20 to 40 Infrastructure 25 to 40 Equipment and machinery 5 to 15 Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D4 I.Summary of Significant Accounting Policies (continued) D.Financial Statement Accounts (continued) 4.Long-term Debt In the government-wide financial statements, in the fund financial statements, long-term debt is reported as a liability in the applicable governmental activities, in the statement of net position. 5.Deferred Outflows and Inflows of Resources In addition to assets, the Statement of Net 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 assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any items to report under this category. In addition to liabilities, the Statement of Net 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 assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.The District does not have any items to report under this category. 6.Fund Balance The District classifies governmental fund balances as follows: Nonspendable -includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual requirements. Restricted –includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation. Committed –includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority which is the Board of Directors. Assigned –includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balance may be assigned by the Board of Directors or its management designee. Unassigned -includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D5 I.Summary of Significant Accounting Policies (continued) D.Financial Statement Accounts (continued) 6.Fund Balance (continued) The District uses restricted amounts first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the District first uses committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The District does not have a formal minimum fund balance policy. However, the District’s budget includes a calculation of targeted reserve positions and management reports the targeted amounts annually to Board of Directors. E.Use of Estimates The preparation of financial statements in conformity with GAAP requires the District’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenditures or expenses during the reporting period. Actual results could differ from those estimates. II. Stewardship, Compliance, and Accountability A.Budgetary Information In the fall of each year, the District's Board of Directors formally adopts a budget with appropriations by fund for the ensuing year pursuant to the Local Government Budget Law of Colorado. The budgets for the funds are adopted on a basis consistent with generally accepted accounting principles (“GAAP”). As required by Colorado statutes, the District followed the following timetable in approving and enacting a budget for 2023: (1)For the 2023 budget year, prior to August 25, 2022, the County Assessor sent to the District the certified assessed valuation of all taxable property within the District’s boundaries and prior to December 10, 2022, the County Assessor sent the final recertified assessed valuation to the District. (2)On or before October 15, 2022, the District’s accountant submitted to the District’s Board of Directors a recommended budget which detailed the necessary property taxes needed along with other available revenues to meet the District’s operating requirements. (3)A public hearing on the proposed budget and capital program was held by the Board no later than 45 days prior to the close of the fiscal year. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D6 II. Stewardship, Compliance, and Accountability (continued) A.Budgetary Information (continued) (4)For the 2023 budget, prior to December 15, 2022, the District computed and certified to the County Commissioners a rate of levy that derived the necessary property taxes as computed in the proposed budget. (5)For the 2023 budget, the final budget and appropriating resolution was adopted prior to December 31, 2022. After adoption of the budget resolution, the District may make the following changes: a) it may transfer appropriated monies between funds or between spending agencies within a fund, as determined by the original appropriation level; b) it may approve supplemental appropriations to the extent of revenues in excess of the estimated in the budget; c) it may approve emergency appropriations; and d) it may reduce appropriations for which originally estimated revenues are insufficient. Taxes levied in one year are collected in the succeeding year. Thus, taxes certified in 2022 were collected in 2023 and taxes certified in 2023 will be collected in 2024. Taxes are due on January 1st in the year of collection; however, they may be paid in either one installment (no later than April 30th) or two equal installments (not later than February 28th and June 15th) without interest or penalty. Taxes which are not paid within the prescribed time bear interest at the rate of one percent (1%) per month until paid. Unpaid amounts and the accrued interest thereon become delinquent on June 15th. The level of control in the budget at which expenditures exceed appropriations is at the fund level. All appropriations lapse at year end.The District’s General Fund exceeded appropriations by $7,591 for 2023, which may be a violation of Colorado State Statute. B.TABOR Amendment In November 1992, Colorado voters amended Article X of the Colorado Constitution by adding Section 20, commonly known as the Taxpayer's Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax and debt limitations that apply to the State of Colorado and local governments. TABOR requires, with certain exceptions, advance voter approval for any new tax, tax rate increase, mill levy above that for the prior year, extension of any expiring tax, or tax policy change directly causing a net tax revenue gain to any local government. Any revenues earned in excess of the fiscal year spending limit must be refunded in the next fiscal year, unless voters approve retention of such excess revenue. Except for refinancing bonded debt at a lower interest rate or adding new employees to existing pension plans, TABOR requires advance voter approval for the creation of any multiple-fiscal year debt or other financial obligation unless adequate present cash reserves are pledged irrevocably and held for payments in all future fiscal years. TABOR also requires local governments to establish an emergency reserve to be used for declared emergencies only. The reserve is calculated at 3% of fiscal year spending. Fiscal year spending excludes bonded debt service and enterprise spending. The District has reserved $7,580, which is the approximate required reserve, at December 31, 2023. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D7 II.Stewardship, Compliance, and Accountability (continued) B.TABOR Amendment (continued) Under TABOR, the initial base for local government spending and revenue limits is December 31, 1992 fiscal year spending. The District’s first year of operations ended December 31, 1995. Future spending and revenue limits are determined based on the prior year’s fiscal year spending adjusted for inflation in the prior calendar year plus annual local growth. Fiscal year spending is generally defined as expenditures and reserve increases with certain exceptions. Revenue, if any, in excess of the fiscal year spending limit must be refunded in the next fiscal year unless voters approve retention of such revenue. The electorate of the District authorized property taxes to be increased up to $1,500,000 in 2005, plus up to an additional $3,000,000 in 2007, and each year thereafter to pay the Districts operations, maintenance, and other expenses, such amounts to increase annually in an amount not to exceed the applicable limitations of Article X, Section 20 of the Colorado Constitution and Colorado Law. The District’s electorate further approved that the District’s taxes be increased $120,000,000 annually, or by such lesser annual amount as may be necessary to pay the District’s general or special obligation bonds,revenue bonds or other multiple fiscal year financial obligations, including contracts, issued for the purpose of refunding, paying or defeasing, in whole or in part, bonds, notes or other financial obligations of the District. Such taxes may consist of an ad valorem property tax mill levy imposed without limitation of rate and in amounts sufficient to produce the annual increase set forth above or such lesser amount as may be necessary. The revenue from such taxes and any other monies used to pay such general or special obligation bonds, revenue bonds or other multiple fiscal year financial obligations costs, and investment income thereon, may be collected and spent by the District without regard to any expenditure, revenue raising, or other limitation contained within Article X, Section 20 of the Colorado Constitution. The District’s management believes it is in compliance with the financial provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of its provisions, including the interpretation of how to calculate fiscal year spending limits, will require judicial interpretation. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D8 II.Stewardship, Compliance, and Accountability (continued) C.Authorized But Unissued Debt Pursuant to C.R.S. 32-1-1101(2) a District is authorized to issue bonds for a period up to twenty years following the date of the election at which such bonds were authorized by the District’s voters. The District has the following remaining authorizations at December 31, 2023: Da te of Au th orization Au th orization Auth orization Am ount Used Re maining Street Fac ilities 11/1/2005 20,000,000 8,785,393 11,214,607 Drai nage Facilities 11/1/2005 2,000,000 - 2,000,000 Securi ty Fac ilities 11/1/2005 1,000,000 - 1,000,000 Tr affi c/Safe ty Prot ec tion Fac ilities 11/1/2005 2,000,000 851,532 1,148,468 Operat ions and Adminis trat ion 11/1/2005 20,000,000 - 20,000,000 Cos ts of Acqui ring/Cons truc ting Fac ilities 11/1/2005 20,000,000 - 20,000,000 Cos ts of Acqui ring/Cons truc ting Fac ilities 11/1/2005 20,000,000 - 20,000,000 Water Fac ilities 11/6/2007 5,000,000 1,795,410 3,204,590 Sani tary Sewer Facilities 11/6/2007 5,000,000 1,795,410 3,204,590 Park s and Rec reat ion 11/6/2007 5,000,000 2,532,490 2,467,510 Publ ic Trans port at ion 11/6/2007 5,000,000 - 5,000,000 Mosqui to Cont rol 11/6/2007 1,000,000 - 1,000,000 Fire Protec tion 11/6/2007 5,000,000 - 5,000,000 Te levis ion Rel ay 11/6/2007 1,000,000 239,765 760,235 Operat ions and Adminis trat ion 11/6/2007 5,000,000 - 5,000,000 Refunding 11/1/2005 40,000,000 - 40,000,000 157,000,000 16,000,000 141,000,000 Purpose III.Detailed Notes on all Funds A.Deposits and Investments The District’s deposits are entirely covered by federal depository insurance (“FDIC”) or by collateral held under Colorado’s Public Deposit Protection Act (“PDPA”). The FDIC insures the first $250,000 of the District’s deposits at each financial institution. Deposit balances over $250,000 are collateralized as required by PDPA. The carrying amount of the District’s demand deposits was $9,390 at year end. Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments, and entities such as the District, may invest which include: Obligations of the United States and certain U.S. government agency securities Certain international agency securities General obligation and revenue bonds of U.S. local government entities Bankers’acceptances of certain banks Commercial paper Written repurchase agreements collateralized by certain authorized securities Certain money market mutual funds Guaranteed investment contract Local government investment pools Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D9 III.Detailed Notes on all Funds (continued) A.Deposits and Investments (continued) Interest Rate Risk.As a means of limiting its exposure to interest rate risk, the District diversifies its investments by security type and institution, and limits holdings in any one type of investment with any one issuer and type of issuer. The District coordinates its investment maturities to closely match cash flow needs and restricts the maximum investment term to less than five years (less in some cases) from the purchase date. As a result of the limited length of maturities the District has limited its interest rate risk. Credit Risk.District investment policy limits investments to those authorized by State statutes. The District’s general investment policy is to apply the prudent-person rule: investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and, in general, avoid speculative investments. Concentration of Credit Risk.The District diversifies its investments by security type and institution. Financial institutions holding District funds must provide the District a copy of the certificate from the Banking Authority that states that the institution is an eligible public depository. At year end, the District had the following deposits and investments with the following maturities: Standa rd Te rm to Ma tu rity & Poors Ca rrying Le ss than More tha n Ra ti ng Am ounts one year one year Depos its: Chec king and savi ngs Not rat ed 9,390 9,390 - Investment s: Inve stment pool AAAm 1,084,289 1,084,289 - 1,093,679 1,093,679 - At December 31, 2023, the District had the following recurring fair value measurements. Total CS AFE 1,084,289 1,084,289 Inve st ments Me asure d at Amorti zed Cost Fair Value of Investments.The District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D10 III.Detailed Notes on all Funds (continued) A.Deposits and Investments (continued) Investments classified in Level 1 are valued using prices quoted in active markets for those securities. Investments classified in Level 2 are valued using the following approaches: U.S. Treasuries, U.S. Agencies, and Commercial Paper: quoted prices for identical securities in markets that are not active; Repurchase Agreements, Negotiable Certificates of Deposit, and Collateralized Debt Obligations: matrix pricing based on the securities’ relationship to benchmark quoted prices; Money Market, Bond, and Equity Mutual Funds: published fair value per share (unit) for each fund. The Investment Pool represents investments in CSAFE. The net asset value of the pool is determined by the pool’s share price. The District has no regulatory oversight for the pool. At December 31, 2023, the District’s investments in CSAFE were 100%of the District’s investment portfolio. The District had invested $1,084,289 in the Colorado Surplus Asset Fund (“CSAFE”). The Trust is an investment vehicle established for local government entities in Colorado to pool surplus funds. The State Securities Commissioner administers and enforces all State statutes governing the Trust. The Trust operates similarly to a money market fund, measured at net asset value, and each share is equal in value to $1.00. Investments consist of U.S. Treasury bills, notes and note strips and repurchase agreements collateralized by U.S. Treasury securities. A designated custodial bank provides safekeeping and depository services in connection with the direct investment and withdrawal functions. Substantially all securities owned are held by the Federal Reserve Bank in the account maintained for the custodial bank. THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D11 III.Detailed Notes on all Funds (continued) B. Capital Assets An analysis of the changes in capital assets for the year ended December 31, 2023, follows: Be ginning En ding Ba lance Incre ases De cre ases Ba lance Capital assets, being deprec iated: Land imrpovements 1,428,437 - - 1,428,437 Signage 211,913 - - 211,913 Ut ility improvement s 223,545 - - 223,545 To tal capital assets 1,863,895 - - 1,863,895 Less accumulat ed deprec iation for: Land imrpovement s (828,496) (57,137) - (885,633) Signage (211,913) - - (211,913) Ut ility improvement s (129,658) (8,942) - (138,600) To tal ac cumulat ed deprec iation (1,170,067) (66,079) - (1,236,146) Ne t Ca pita l Asse ts 693,828 (66,079) - 627,749 Depreciation expense and capital outlay expenditures are classified by function as follows: Ca pi ta l De pre ciation Outl ay Ex pe nse Publ ic work s - 66,079 - 66,079 Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D12 III.Detailed Notes on all Funds (continued) C.Long-term Obligations 2008B Tax-Exempt Loan The District obtained a $14,000,000 tax-exempt loan on July 23, 2008. Interest is payable semiannually on June 1 and December 1, commencing December 1, 2008. The loan matures in various amounts through 2023 and bears interest equal to 65% of the 1-month LIBOR rate plus 125 basis points. The loan is a general obligation of the District and supported by a Joint Funding Agreement between the District and the Financing Districts. The Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property taxes which will be paid to the District to be used to pay the principal and interest payments required by the loans and interest rate swaps. The loan was obtained to finance the design, acquisition, construction, relocation, installation, completion and provision of public improvements and facilities. The District also used loan proceeds to repay a portion of the long-term obligation to the Developer. The 2008B loan may be prepaid, in whole or in part, on any date prior to July 23, 2013 upon payment of the principal amount so prepaid plus accrued interest thereon to the date of prepayment, together with a prepayment penalty in an amount equal to three percent of the principal amount prepaid. The District entered into a $14,000,000 interest rate swap to effectively convert the 2008B loan from a variable-rate loan to a hedged loan with a synthetic fixed interest rate of 4.61%. The loan was fully repaid during 2023. 1.Change in Long-term Obligations Be gi nning En ding Due Within Ba lance Ad diti ons Re ductions Ba la nce One Year 2008B Tax -E xempt Loan 9,440,000 - (9,440,000) - - 9,440,000 - (9,440,000) - - IV.Other Information A.Risk Management Colorado Special Districts Property and Liability Pool The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; and general liability. The District is a member of the Colorado Special District Property and Liability Pool (“Pool”) for property and liability insurance. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D13 IV.Other Information (continued) A.Risk Management (continued) Colorado Special Districts Property and Liability Pool (continued) The Pool was formed by an intergovernmental agreement to provide public officials, property, general and automobile liability coverage for claims up to $1,000,000, except if the claim falls within the government immunity statute, then the coverage is $150,000 per person and a $600,000 aggregate claim. The Pool is reinsured for 80% of the first $250,000 of all claims and 100% for claims in excess of $250,000. The District may be required to make additional contributions in the event aggregate losses incurred by the Pool exceed amounts recoverable from reinsurance contracts. 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. Any settled claims are not expected to exceed coverage. A summary of audited statutory basis financial information for the Pool as of and for the year ended December 31, 2023 (the latest available information) is as follows: Asse ts 81,143,798 Liabilities 58,670,068 Capital and surpl us 22,473,730 Tota l 81,143,798 Revenue 29,593,851 Underwrit ing ex pens es 31,416,477 Underwriting gain (los s)(1,822,626) Ot her inc ome 1,695,393 Ne t income (loss)(127,233) B.Commitments and Contingencies During the normal course of business, the District may incur claims and other assertions against it from various agencies and individuals. Management of the District and their legal representatives have disclosed that they are not aware of any material outstanding claims against the District at December 31, 2023. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D14 V.Intergovernmental Agreements A.Joint Funding Agreement The Operating District obtained two loans in the aggregate principal amount of $16,000,000 on July 23, 2008 for the purpose of constructing certain public infrastructure (the “Facilities”) for the benefit of the Districts. Concurrent with obtaining the loans the Operating District entered into a Joint Funding Agreement with the Financing Districts to provide funding to the Operating District for the repayment of the loans. The Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property tax revenues which will be paid to and used by the Operating District to pay Financing Costs related to the loans. Financing Costs are defined as the principal and interest payments required by debt and interest rate swaps obtained or entered into by the Districts, including replenishment of debt reserve funds. Concurrent with District No. 3 obtaining the refunding loan in the principal amount of $9,400,000 on April 1, 2023 (the “2023 Loan”), the Joint Funding Agreement described above was replaced with the Amended and Restated Joint Funding Agreement, dated as of April 1, 2023, among the Operating District and Financing Districts. The Amended and Restated Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property tax revenues which will be paid to and used by the District No. 3 to pay Financing Costs related to the 2023 Loan. Financing Costs are defined as the principal and interest payments required by debt entered into by the Districts, including replenishment of debt reserve funds. In 2023, the mill levy assessed for collection in 2024 was 23.000 mills in Vail Square Metropolitan District No. 2, with 20.000 mills allocated for the Amended and Restated Joint Funding Agreement and 3.000 mills for the District Coordinating Services Agreement; and, 14.797 mills in Vail Square Metropolitan District No. 3, with 11.797 mills allocated for the Amended and Restated Joint Funding Agreement and 3.000 mills for the District Coordinating Services Agreement. B.District Facilities Joint Financing, Construction and Service Agreement The Agreement generally provides an obligation for the Financing Districts to pay for the acquisition and construction of the Facilities (defined above), to the extent not funded by the Joint Funding Agreement (the Capital Obligation), and operation and maintenance of the Facilities and administrative expenses incurred by the Operating District (the Service Obligation). The Financing Districts are obligated to generate and pay to the Operating District certain tax and other revenues to fund the Capital Obligation and the Service Obligation. In any given year the Financing Districts are obligated to fund such portion of the Capital and Service Obligations as may be funded with the District taxes available from imposition of a subordinate mill levy, together with other charges imposed by the Financing Districts. The Agreement specifies certain termination rights on the part of the Districts. Various limitations and conditions to such termination rights exist and reference to the text of the Agreement should be made for specific terms. This agreement was terminated and replaced by the District Coordinating Services Agreement on November 13, 2023. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D15 V.Intergovernmental Agreements (continued) C.District Coordinating Services Agreement The Operating District and Financing Districts entered into the District Coordinating Service Agreement on November 13, 2023. The Agreement terminated the District Facilities Joint Financing, Construction and Service Agreement. The Agreement generally provides an obligation for the Districts to pay for the operation and maintenance of the Facilities and administrative expenses incurred by the Operating District (the “Service Obligation”). The Financing Districts are obligated to generate and pay to the Operating District certain tax and other revenues to fund the Service Obligation.The Operating District is responsible for preparing annual preliminary budget proposals to the Financing Districts for their consideration. The Financing Districts are required to deposit 1/12th of the annual costs from the budget with the Coordinating District on a monthly basis. The Operating District has recorded deferred service obligation revenue from the Financing Districts as of December 31, 2023 in the amounts of $842,809 and $296,122 which represents prepaid service obligations. The capital costs incurred for infrastructure construction and costs related to issuance of and debt service on the loans in the Operating District have been fully repaid and not Capital Obligations is outstanding to the Operations District. The Agreement specifies certain termination rights on the part of the Districts. Various limitations and conditions to such termination rights exist and reference to the text of the Agreement should be made for specific terms. D.Pledge Agreements The Districts have entered into an Intergovernmental Agreement and Amended and Restated Pledge Agreement with the Vail Reinvestment Authority. Under these agreements and in consideration for the Districts’ commitment to undertake construction of certain public improvements, the Vail Reinvestment Authority agrees to transfer to the Districts the District Tax Increment Revenues, to which the Authority would otherwise be entitled under an Urban Renewal Plan relating to the project. Under the second agreement the Authority pledged the Tax Incremental Revenue to the 2008 Loan. The Districts entered into an Amended and Restated Pledge Agreement on April 1, 2023 with Vail Reinvestment Authority. The agreement replaces the previous pledge agreement and pledges the Authority’s Debt Service District Tax Increment Revenues to District No. 3 to assist with repayment of the 2023 Loan and Operations District Tax Increment Revenues to District No. 1 to assist with paying the Financing Districts operation and maintenance costs. Vail Square Metropolitan District No. 1 Notes to the Financial Statements December 31, 2023 (continued) D16 VI.Other Information The District's Board of Directors are either officers or employees of or have business or professional relationships with the Developer. The District had the following payments to related parties via certain agreements within Note V for the year ended December 31, 2023: Purpose Am ount Operations 28,348 Snowm elt 134,937 163,285 VII.Restatement of Fund Balance The District’s Fund Balance was restated and reduced by $1,231,126 for a change in the calculation of the Service Obligation as described in note V.B. REQUIRED SUPPLEMENTARY INFORMATION Final Budget Variance Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental agreement 151,600 54,387 178,657 124,270 Interest 36,282 72,000 73,984 1,984 Total Revenues 187,882 126,387 252,641 126,254 Expenditures: General government: Accounting and auditing 26,650 43,600 50,544 (6,944) Insurance 4,100 3,400 3,397 3 Legal 17,750 25,000 27,444 (2,444) Administration - Other 8,000 1,630 1,553 77 Intergovernmental agreement 3,254 6,420 6,418 2 Public works: Operations expense 19,950 18,000 28,348 (10,348) Snowmelt 57,000 137,000 134,937 2,063 Contingency 10,000 10,000 - 10,000 Total General Government Expenditures 146,704 245,050 252,641 (7,591) Net Change in Fund Balance 41,178 (118,663) - 118,663 Fund Balance - Beginning (restated)1,209,391 1,231,126 - (1,231,126) Fund Balance - Ending 1,250,569 1,112,463 - (1,112,463) Vail Square Metropolitan District No. 1 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Governmental Funds - General Fund For the Year Ended December 31, 2023 E1 SUPPLEMENTARY INFORMATION Final Budget Variance Original Final Positive Budget Budget Ac tual (Negative) Revenues: Intergovernmental agreement 757,062 9,087,080 9,087,077 (3) Interest 10,000 17,100 5,764 (11,336) Total Revenues 767,062 9,104,180 9,092,841 (11,339) Expenditures: General government: Intergovernmental agreement - 282,176 280,838 1,338 Treasurer fees - - - - Debt service: Principal 557,000 9,440,000 9,440,000 - Interest 509,921 178,540 178,539 1 Paying agent fees 1,000 - - - Bond issuance costs 300,000 - - - Contigency - 10,000 - 10,000 Total Expenditures 1,367,921 9,910,716 9,899,377 11,339 Excess of Revenues Over (Under) Expenditures (600,859) (806,536) (806,536) - Other Financing Sources (Uses): Bond proceeds 9,906,000 - - - Refunding payment to escrow agent (9,440,000) - - - Total Other Financing (Uses)466,000 - - - Net Change in Fund Balance (134,859) (806,536) (806,536) - Fund Balance - Beginning 787,128 806,536 806,536 - Fund Balance - Ending 652,269 - - - Schedule of Revenues, Expenditures and Changes in Fund Balance Vail Square Metropolitan District No. 1 For the Year Ended December 31, 2023 Governmental Funds - Debt Service Fund Budget and Actual F1 3 EXHIBIT B Solaris Metropolitan District No. 2 2023 Audit Vail Square Metropolitan District No. 2 Financial Statements December 31, 2023 Vail Square Metropolitan District No. 2 Financial Statements December 31, 2023 Table of Contents Page INDEPENDENT AUDITOR'S REPORT A1 – A3 Management’s Discussion and Analysis B1 – B4 Government-wide Financial Statements: Statement of Net Position C1 Statement of Activities C2 Fund Financial Statements: Balance Sheet -Governmental Funds C3 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position C4 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds C5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities C6 Notes to the Financial Statements D1 – D14 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -Governmental Funds: General Fund E1 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -Governmental Funds: Debt Service Fund F1 McMahan and Associates, l.l.c. Certified Public Accountants and Consultants Web Site: www.mcmahancpa.com Chapel Square, Bldg C Main Office: (970) 845-8800 245 Chapel Place, Suite 300 Facsimile: (970) 845-8108 P.O. Box 5850, Avon, CO 81620 E-mail: mcmahan@mcmahancpa.com Member: American Institute of Certified Public Accountants Paul J. Backes, CPA, CGMA Avon: (970) 845-8800 Michael N. Jenkins, CA, CPA, CGMA Aspen: (970) 544-3996 Matthew D. Miller, CPA Frisco: (970) 668-3481 A1 M & A INDEPENDENT AUDITOR'S REPORT To the Board of Directors Vail Square Metropolitan District No. 2 Vail, Colorado Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of Vail Square Metropolitan District No. 2 (the “District”), as of and for the year ended December 31, 2023,and the related notes to the financial statements,which collectively comprise the District’s basic financial statements as listed in the Table of Contents. 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 the District, as of December 31, 2023 and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“U.S. GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As discussed in note VI, the District’s fund balance and net position were restated for the correction of an error in the previous year. Our opinion is not modified as a result of this. Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for one year after the date that the financial statements are issued. INDEPENDENT AUDITOR’S REPORT To the Board of Directors Vail Square Metropolitan District No. 2 A2 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with U.S. GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with U.S. GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis in Section B be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with 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. The budgetary comparison information in section E is not a required part of the basic financial statements but is supplementary information required by U.S. GAAP. The budgetary comparison 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with U.S. GAAS. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. INDEPENDENT AUDITOR’S REPORT To the Board of Directors Vail Square Metropolitan District No. 2 A3 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s financial statements as a whole. The individual fund budgetary comparison in Section F is presented for purposes of additional analysis and are not a required part of the basic financial statements. The budgetary comparison found in Section F is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 financial statements as a whole. McMahan and Associates, L.L.C. Avon, Colorado September 30, 2024 MANAGEMENT’S DISCUSSION AND ANALYSIS - B1 - Vail Square Metropolitan District No. 2 Management’s Discussion and Analysis December 31, 2023 As management of Vail Square 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, 2023. 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 other information after the notes to the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the District’s assets, liabilities, and deferred inflows with the difference 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 the Intergovernmental Service Costs and Capital Costs due to Vail Square Metropolitan District No. 1. There are no business-type activities within the District. The government-wide financial statements can be found on pages C1 and C2 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. - B2 - 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. The fund financial statements are contained on pages C2 through C6 of the report. 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 starting on page D1 of this report. (Table shown on following page; remainder of page intentionally left blank to accommodate table.) - B3 - Condensed Financial Information A condensed comparative summary of the District’s government-wide assets, liabilities, deferred inflows, net position, revenues and expenditures follows: 2023 2022 ASSETS: Current assets 759,987$ 585,762$ Non-current assets 842,809$ -$ Total Assets 1,602,796 585,762 LIABILITIES & DEFERRED INFLOWS: Current liabilities 242,535 27,597 Non-current liabilities 6,202,395 6,175,492 Total Liabilities 6,444,930 6,203,089 Deferred inflows of resources 463,098 513,936 NET POSITION: Restricted 25,730 25,061 Unrestricted (5,330,962) (6,156,324) Total Net Position (5,305,232)$ (6,131,263)$ REVENUES: Property and other taxes 1,014,665$ 1,041,004$ Interest and other revenue 12,976 2,423 Total Revenues 1,027,641 1,043,427 EXPENSES: General government 1,547,835 237,514 Total Expenses 1,547,835 237,514 Change in Net Position (520,194) 805,913 Net Position - Beginning (4,785,038) (6,937,176) 2022 Restatement -1,346,225 Net Position - Ending (5,305,232)$ (4,785,038)$ Governmental Activities - B4 - The District is one of the “financing districts” in a triple district structure whereby the District is supporting financing the construction of infrastructure being coordinated by Vail Square Metropolitan District No. 1. The District consists of residential properties whereas the commercial properties are in District No. 3. Financing, constructing and operating the infrastructure was initially furnished through a District Facilities Joint Financing Construction and Service Agreement which has now been replaced with a District Coordinating Services Agreement among the District and Vail Square Metropolitan District Nos. 1 and 3. During 2023 District No. 3 assumed the loan that was initially taken out by District No. 1 to finance the infrastructure. In conjunction with District No. 3 assuming the obligation for the loan, District No. 2 moved its capital pledge from No. 1 to No. 3. Government-wide Financial Analysis. During 2023 the District’s primary activity was to collect property taxes to pay the debt service payments and to pay the service obligation 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, unassigned 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 $897,163. Of this fund balance, $842,809 is nonspendable as it has been prepaid to District No. 1 to be used to provide future services to the District’s constituents and $25,500 is restricted for future debt service. The District adopts budgets for each fund on an annual basis. A budgetary comparison has been provided on page E1 for the General Fund and on page F1 for the Debt Service Fund. Capital assets. All capital assets inside of the District boundaries are constructed and operated by District No. 1. Therefore, no capital assets are reported by the District. Long-term debts. District No. 2 is an additional obligor for the annual financing costs related to District No. 3 2023 Unlimited Tax General Obligation Refunding Loan as more fully described in the Amended and Restated Joint Funding Agreement between the Districts dated April 1, 2023. More details and information related to the District’s obligation under the Amended and Restated Joint Funding Agreement can be found in the Notes to the Financial Statement in Note V. A. on page D12 of this report. 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. GOVERNMENT-WIDE FINANCIAL STATEMENTS Assets: Cash and investm ents 292,834 Amounts due from Treasurer 4,055 Property taxes receivable 463,098 Prepaid service obligation to VSMD No. 1 842,809 Total Assets 1,602,796 Liabilities: Current liabilities due in less than one year: Amounts due to VMD No. 1 & 3 216,660 Amounts due to Vail Reinvestm ent Authority 25,875 Non-current liabilities due in excess of one year: Capital obligation to VSMD No. 3 6,202,395 Total Liabilities 6,444,930 Deferred Inflow of Resources: Property tax revenue 463,098 Total Deferred Inflow of Resources 463,098 Net Position: Restricted for debt service 25,500 Restricted for emergencies 230 Unrestricted (5,330,962) Total Net Position (5,305,232) December 31, 2023 Statement of Net Position Vail Square Metropolitan District No. 2 The accompanying notes are an integral part of these financial statements. C1 Net (Expense) Revenue and Changes in Net Position Operating Capital Charges for Grants and Grants and Net (Expense) Expenses Services Contributions Contributions Revenue Functions/Programs: Governmental activities: General government 1,547,835 - - - (1,547,835) Total primary government 1,547,835 - - - (1,547,835) General revenues: Taxes: Property tax 959,121 Specific ownership tax 55,544 Interest income 12,976 Total General Revenues 1,027,641 Change in Net Position (520,194) Net Position - Beginning (restated)(4,785,038) Net Position - Ending (5,305,232) Vail Square Metropolitan District No. 2 Statement of Activities For the Year Ended December 31, 2023 Program Revenues The accompanying notes are an integral part of these financial statements. C2 FUND FINANCIAL STATEMENTS Total Governmental General Debt Service Funds Assets: Cash and investm ents 28,854 263,980 292,834 Amounts due from Treasurer - 4,055 4,055 Property taxes receivable 60,404 402,694 463,098 Prepaid service obligation to VSMD No. 1 - 842,809 842,809 Total Assets 89,258 1,513,538 1,602,796 Liabilities, Deferred Inflow of Resources, and Liabilities: Amounts due to VMD No. 1 & 3 - 216,660 216,660 Amounts due to Vail Reinvestment Authority - 25,875 25,875 Total Liabilities - 242,535 242,535 Deferred Inflow of Resources: Unavailable property tax revenue 60,404 402,694 463,098 Total Deferred Inflow of Resources 60,404 402,694 463,098 Fund Balances: Nonspendable - 842,809 842,809 Restricted for debt service - 25,500 25,500 Restricted for emergencies 230 - 230 Unassigned 28,624 - 28,624 Total Fund Balances 28,854 868,309 897,163 Total Liabilities, Deferred Inflow of Resources, and Fund Balances 89,258 1,513,538 1,602,796 December 31, 2023 Governmental Funds Balance Sheet Vail Square Metropolitan District No. 2 The accompanying notes are an integral part of these financial statements. C3 Governmental Funds Total Fund Balance 897,163 Long-term liabilities, including bonds payable and leases payable, are not due and payable in the current period and, therefore, are not reported in the funds. This is the amount of District long-term liabilities. Details of these amounts are as follows: Capital obligation to VSMD No. 3 (6,202,395) (6,202,395) Net Position of Governmental Activities (5,305,232) Vail Square Metropolitan District No. 2 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position December 31, 2023 The accompanying notes are an integral part of these financial statements. C4 Total Governmental General Debt Service Funds Revenues: Property taxes - 959,121 959,121 Specific ownership taxes - 55,544 55,544 Interest income - 12,976 12,976 Total Revenues - 1,027,641 1,027,641 Expenditures: General government 7,611 1,071,974 1,079,585 Total Expenditures 7,611 1,071,974 1,079,585 Excess (Deficiency) of Revenues over Expenditures (7,611) (44,333) (51,944) Other Financial Sources (Uses): Transfers in 17,236 - 17,236 Transfers (out)- (17,236) (17,236) Total Other Financing Sources (Uses)17,236 (17,236) - Net Change in Fund Balances 9,625 (61,569) (51,944) Fund Balances - Beginning (restated)19,229 929,878 949,107 Fund Balances - Ending 28,854 868,309 897,163 Vail Square Metropolitan District No. 2 Statement of Revenues, Expenditures For the Year Ended December 31, 2023 Governmental Funds and Changes in Fund Balances The accompanying notes are an integral part of these financial statements. C5 Net change in fund balances for total governmental funds (51,944) Amounts due to Vail Square Metropolitan District No. 3 for capital costs does not require a use of current financial resources and, therefore, are not reported as an expenditure in the governmental funds. (468,250) Change in Net Position of Governmental Activities (520,194) Changes in Fund Balances of Governmental Funds to the Reconciliation of the Statement of Revenues, Expenditures, and Vail Square Metropolitan District No. 2 For the Year Ended December 31, 2023 Statement of Activities The accompanying notes are an integral part of these financial statements. C6 NOTES TO THE FINANCIAL STATEMENTS Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 D1 I.Summary of Significant Accounting Policies The Vail Square Metropolitan District No. 1 (the “District”) was established December 5, 2005, as a quasi-municipal corporation and political subdivision of the State of Colorado. The District was established as part of a triple district structure with Vail Square Metropolitan District Nos. 2 and 3. The District is considered the Operating District, and was formed to coordinate the financing and construction of all public improvements which will be constructed for the use and benefit of all anticipated inhabitants and taxpayers of Vail Square Metropolitan District Nos. 1-3. Vail Square Metropolitan District Nos. 2 and 3 are the Financing Districts and as such have paid and will continue to pay capital and service obligations to the District for the infrastructure in the Districts. The District’s financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”). The Governmental Accounting Standards Board (“GASB”) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The more significant accounting policies established by GAAP used by the District are discussed below. A.Reporting Entity The reporting entity consists of (a) the primary government; i.e., the District, and (b) organizations for which the District is financially accountable. The District is considered financially accountable for legally separate organizations if it is able to appoint a voting majority of an organization's governing body and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits, to, or to impose specific financial burdens on, the District. Consideration is also given to other organizations which are fiscally dependent; i.e., unable to adopt a budget, levy taxes, or issue debt without approval by the District. Organizations for which the nature and significance of their relationship with the District are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete are also included in the reporting entity. Based on the criteria discussed above, the District is not financially accountable for any other entity, nor is the District a component unit of any other government. B.Government-wide and Fund Financial Statements The District’s basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District’s major funds). Both the government-wide and fund financial statements categorize primary activities as governmental type. 1.Government-wide Financial Statements In the government-wide Statement of Net Position, all balances are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The government-wide focus is on the sustainability of the District as an entity and the change in the District’s net position resulting from the current year’s activities. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D2 I.Summary of Significant Accounting Policies (continued) B.Government-wide and Fund Financial Statements (continued) 2.Fund Financial Statements The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The fund focus is on current available resources and budget compliance. 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 District, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of the governmental funds. C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation Measurement focus refers to whether financial statements measure changes in current resources only (current financial focus) or changes in both current and long-term resources (long-term economic focus). Basis of accounting refers to the point at which revenues, expenditures, or expenses are recognized in the accounts and reported in the financial statements. Financial statement presentation refers to classification of revenues by source and expenses by function. 1.Long-term Economic Focus and Accrual Basis Governmental activities in the government-wide financial statements use the long-term economic focus and are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred, regardless of the timing of the related cash flows. 2.Current Financial Focus and Modified Accrual Basis The governmental fund financial statements use the current financial focus and are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or soon enough thereafter (60 days)to be used to pay liabilities of the current period. Expenditures are generally recognized when the related liability is incurred. The exception to this general rule is that principal and interest on general long-term debt, if any, is recognized when due. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D3 I.Summary of Significant Accounting Policies (continued) C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) 3.Financial Statement Presentation Amounts reported as program revenues include capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes and interest income. D.Financial Statement Accounts 1.Cash and Cash Equivalents Cash and equivalents are defined as deposits that can be withdrawn at any time without notice or penalty and investments with maturities of three months or less. Investments are stated at net asset value or amortized cost. The change in fair value, net asset value, and amortized cost of investments is recognized as an increase or decrease to investment assets and investment income. The District’s investment policy is detailed in note III.A. 2.Receivables Receivables are reported net of an allowance for uncollectible accounts.There was no allowance as of December 31, 2023. 3.Prepaid Expenses and Service Obligations Certain payments reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as an expenditure/expense when consumed. 4.Long-term Debt and Capital Obligations In the government-wide financial statements, in the fund financial statements, long-term debt is reported as a liability in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D4 I.Summary of Significant Accounting Policies (continued) D.Financial Statement Accounts (continued) 5.Deferred Outflows and Inflows of Resources In addition to assets, the Statement of Net 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 assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any items to report under this category. In addition to liabilities, the Statement of Net 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 assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.Unavailable property tax revenue is deferred and recognized as an inflow of resources in the period that the amounts become available and earned. 6.Fund Balance The District classifies governmental fund balances as follows: Nonspendable -includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual requirements. Restricted –includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation. Committed –includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority which is the Board of Directors. Assigned –includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balance may be assigned by the Board of Directors or its management designee. Unassigned -includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D5 I.Summary of Significant Accounting Policies (continued) D.Financial Statement Accounts (continued) 6.Fund Balance (continued) The District uses restricted amounts first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the District first uses committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The District does not have a formal minimum fund balance policy. However, the District’s budget includes a calculation of targeted reserve positions and management reports the targeted amounts annually to Board of Directors. E.Use of Estimates The preparation of financial statements in conformity with GAAP requires the District’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenditures or expenses during the reporting period. Actual results could differ from those estimates. II. Stewardship, Compliance, and Accountability A.Budgetary Information In the fall of each year, the District's Board of Directors formally adopts a budget with appropriations by fund for the ensuing year pursuant to the Local Government Budget Law of Colorado. The budgets for the funds are adopted on a basis consistent with generally accepted accounting principles (“GAAP”). As required by Colorado statutes, the District followed the following timetable in approving and enacting a budget for 2023: (1)For the 2023 budget year, prior to August 25, 2022, the County Assessor sent to the District the certified assessed valuation of all taxable property within the District’s boundaries and prior to December 10, 2022, the County Assessor sent the final recertified assessed valuation to the District. (2)On or before October 15, 2022, the District’s accountant submitted to the District’s Board of Directors a recommended budget which detailed the necessary property taxes needed along with other available revenues to meet the District’s operating requirements. (3)A public hearing on the proposed budget and capital program was held by the Board no later than 45 days prior to the close of the fiscal year. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D6 II. Stewardship, Compliance, and Accountability (continued) A.Budgetary Information (continued) (4)For the 2023 budget, prior to December 15, 2022, the District computed and certified to the County Commissioners a rate of levy that derived the necessary property taxes as computed in the proposed budget. (5)For the 2023 budget, the final budget and appropriating resolution was adopted prior to December 31, 2022. After adoption of the budget resolution, the District may make the following changes: a) it may transfer appropriated monies between funds or between spending agencies within a fund, as determined by the original appropriation level; b) it may approve supplemental appropriations to the extent of revenues in excess of the estimated in the budget; c) it may approve emergency appropriations; and d) it may reduce appropriations for which originally estimated revenues are insufficient. Taxes levied in one year are collected in the succeeding year. Thus, taxes certified in 2022 were collected in 2023 and taxes certified in 2023 will be collected in 2024. Taxes are due on January 1st in the year of collection; however, they may be paid in either one installment (no later than April 30th) or two equal installments (not later than February 28th and June 15th) without interest or penalty. Taxes which are not paid within the prescribed time bear interest at the rate of one percent (1%) per month until paid. Unpaid amounts and the accrued interest thereon become delinquent on June 15th. The level of control in the budget at which expenditures exceed appropriations is at the fund level. All appropriations lapse at year end.The District’s Debt Service Fund exceeded appropriations by $59,217 for 2023, which may be a violation of Statute. B.TABOR Amendment In November 1992, Colorado voters amended Article X of the Colorado Constitution by adding Section 20, commonly known as the Taxpayer's Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax and debt limitations that apply to the State of Colorado and local governments. TABOR requires, with certain exceptions, advance voter approval for any new tax, tax rate increase, mill levy above that for the prior year, extension of any expiring tax, or tax policy change directly causing a net tax revenue gain to any local government. Any revenues earned in excess of the fiscal year spending limit must be refunded in the next fiscal year, unless voters approve retention of such excess revenue. Except for refinancing bonded debt at a lower interest rate or adding new employees to existing pension plans, TABOR requires advance voter approval for the creation of any multiple-fiscal year debt or other financial obligation unless adequate present cash reserves are pledged irrevocably and held for payments in all future fiscal years. TABOR also requires local governments to establish an emergency reserve to be used for declared emergencies only. The reserve is calculated at 3% of fiscal year spending. Fiscal year spending excludes bonded debt service and enterprise spending. The District has reserved $230, which is the approximate required reserve, at December 31, 2023. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D7 II.Stewardship, Compliance, and Accountability (continued) B.TABOR Amendment (continued) Under TABOR, the initial base for local government spending and revenue limits is December 31, 1992 fiscal year spending. The District’s first year of operations ended December 31, 1995. Future spending and revenue limits are determined based on the prior year’s fiscal year spending adjusted for inflation in the prior calendar year plus annual local growth. Fiscal year spending is generally defined as expenditures and reserve increases with certain exceptions. Revenue, if any, in excess of the fiscal year spending limit must be refunded in the next fiscal year unless voters approve retention of such revenue. The electorate of the District authorized property taxes to be increased up to $1,500,000 in 2005, plus up to an additional $3,000,000 in 2007, and each year thereafter to pay the Districts operations, maintenance, and other expenses, such amounts to increase annually in an amount not to exceed the applicable limitations of Article X, Section 20 of the Colorado Constitution and Colorado Law. The District’s electorate further approved that the District’s taxes be increased $120,000,000 annually, or by such lesser annual amount as may be necessary to pay the District’s general or special obligation bonds, revenue bonds or other multiple fiscal year financial obligations, including contracts, issued for the purpose of refunding, paying or defeasing, in whole or in part, bonds, notes or other financial obligations of the District. Such taxes may consist of an ad valorem property tax mill levy imposed without limitation of rate and in amounts sufficient to produce the annual increase set forth above or such lesser amount as may be necessary. The revenue from such taxes and any other monies used to pay such general or special obligation bonds, revenue bonds or other multiple fiscal year financial obligations costs, and investment income thereon, may be collected and spent by the District without regard to any expenditure, revenue raising, or other limitation contained within Article X, Section 20 of the Colorado Constitution. The District’s management believes it is in compliance with the financial provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of its provisions, including the interpretation of how to calculate fiscal year spending limits, will require judicial interpretation. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D8 II.Stewardship, Compliance, and Accountability (continued) C.Authorized But Unissued Debt Pursuant to C.R.S. 32-1-1101(2) a District is only authorized to issue bonds for a period up to twenty years following the date of the election at which such bonds were authorized by the District’s voters.The District has the following remaining authorizations at December 31, 2023: Da te of Au thorization Au thorization Authorization Am ount Used Re maining Street Fac ilities 11/1/2005 20,000,000 5,446,944 14,553,056 Drai nage Facilities 11/1/2005 2,000,000 - 2,000,000 Securi ty Fac ilities 11/1/2005 1,000,000 - 1,000,000 Traffi c/Safety Protec tion Fac ilities 11/1/2005 2,000,000 527,950 1,472,050 Operat ions and Administrat ion 11/1/2005 20,000,000 - 20,000,000 Cos ts of Acquiring/Cons truc ting Fac ilities 11/1/2005 20,000,000 - 20,000,000 Cos ts of Acquiring/Cons truc ting Fac ilities 11/1/2005 20,000,000 - 20,000,000 Water Fac ilities 11/6/2007 5,000,000 1,113,154 3,886,846 Sanitary Sewer Facilities 11/6/2007 5,000,000 1,113,154 3,886,846 Park s and Rec reat ion 11/6/2007 5,000,000 1,570,144 3,429,856 Public Trans port at ion 11/6/2007 5,000,000 - 5,000,000 Mosquito Cont rol 11/6/2007 1,000,000 - 1,000,000 Fire Protec tion 11/6/2007 5,000,000 - 5,000,000 Te levis ion Relay 11/6/2007 1,000,000 148,654 851,346 Operat ions and Administrat ion 11/6/2007 5,000,000 - 5,000,000 Refunding 11/1/2005 40,000,000 - 40,000,000 157,000,000 9,920,000 147,080,000 Purpose III.Detailed Notes on all Funds A.Deposits and Investments The District’s deposits are entirely covered by federal depository insurance (“FDIC”) or by collateral held under Colorado’s Public Deposit Protection Act (“PDPA”). The FDIC insures the first $250,000 of the District’s deposits at each financial institution. Deposit balances over $250,000 are collateralized as required by PDPA. The carrying amount of the District’s demand deposits was $0 at year end. Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments, and entities such as the District, may invest which include: Obligations of the United States and certain U.S. government agency securities Certain international agency securities General obligation and revenue bonds of U.S. local government entities Bankers’acceptances of certain banks Commercial paper Written repurchase agreements collateralized by certain authorized securities Certain money market mutual funds Guaranteed investment contract Local government investment pools Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D9 III.Detailed Notes on all Funds (continued) A.Deposits and Investments (continued) Interest Rate Risk.As a means of limiting its exposure to interest rate risk, the District diversifies its investments by security type and institution, and limits holdings in any one type of investment with any one issuer and type of issuer. The District coordinates its investment maturities to closely match cash flow needs and restricts the maximum investment term to less than five years (less in some cases) from the purchase date. As a result of the limited length of maturities the District has limited its interest rate risk. Credit Risk.District investment policy limits investments to those authorized by State statutes. The District’s general investment policy is to apply the prudent-person rule: investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and, in general, avoid speculative investments. Concentration of Credit Risk.The District diversifies its investments by security type and institution. Financial institutions holding District funds must provide the District a copy of the certificate from the Banking Authority that states that the institution is an eligible public depository. At year end, the District had the following deposits and investments with the following maturities: Standa rd Te rm to Ma tu rity & Poors Ca rrying Le ss than More tha n Ra ti ng Am ounts one year one year Depos its: Chec king and savi ngs Not rat ed - - - Investment s: Inve stment pool AAAm 292,834 292,834 - 292,834 292,834 - At December 31, 2023, the District had the following recurring fair value measurements. Total CS AFE 292,834 292,834 Inve st ments Measure d at Amortized Cost Fair Value of Investments.The District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D10 III.Detailed Notes on all Funds (continued) A.Deposits and Investments (continued) Investments classified in Level 1 are valued using prices quoted in active markets for those securities. Investments classified in Level 2 are valued using the following approaches: U.S. Treasuries, U.S. Agencies, and Commercial Paper: quoted prices for identical securities in markets that are not active; Repurchase Agreements, Negotiable Certificates of Deposit, and Collateralized Debt Obligations: matrix pricing based on the securities’ relationship to benchmark quoted prices; Money Market, Bond, and Equity Mutual Funds: published fair value per share (unit) for each fund. The Investment Pool represents investments in CSAFE. The net asset value of the pool is determined by the pool’s share price. The District has no regulatory oversight for the pool. At December 31, 2023, the District’s investments in CSAFE were 100%of the District’s investment portfolio. The District had invested $292,834 in the Colorado Surplus Asset Fund (“CSAFE”). The Trust is an investment vehicle established for local government entities in Colorado to pool surplus funds. The State Securities Commissioner administers and enforces all State statutes governing the Trust. The Trust operates similarly to a money market fund, measured at net asset value, and each share is equal in value to $1.00. Investments consist of U.S. Treasury bills, notes and note strips and repurchase agreements collateralized by U.S. Treasury securities. A designated custodial bank provides safekeeping and depository services in connection with the direct investment and withdrawal functions. Substantially all securities owned are held by the Federal Reserve Bank in the account maintained for the custodial bank. THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D11 IV.Other Information A.Risk Management Colorado Special Districts Property and Liability Pool The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; and general liability. The District is a member of the Colorado Special District Property and Liability Pool (“Pool”) for property and liability insurance. The Pool was formed by an intergovernmental agreement to provide public officials, property, general and automobile liability coverage for claims up to $1,000,000, except if the claim falls within the government immunity statute, then the coverage is $150,000 per person and a $600,000 aggregate claim. The Pool is reinsured for 80% of the first $250,000 of all claims and 100% for claims in excess of $250,000. The District may be required to make additional contributions in the event aggregate losses incurred by the Pool exceed amounts recoverable from reinsurance contracts. 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. Any settled claims are not expected to exceed coverage. A summary of audited statutory basis financial information for the Pool as of and for the year ended December 31, 2023 (the latest available information) is as follows: Asse ts 81,143,798 Liabilities 58,670,068 Capital and surpl us 22,473,730 Tota l 81,143,798 Revenue 29,593,851 Underwrit ing ex pens es 31,416,477 Underwriting gain (los s)(1,822,626) Ot her inc ome 1,695,393 Ne t income (loss)(127,233) B.Commitments and Contingencies During the normal course of business, the District may incur claims and other assertions against it from various agencies and individuals. Management of the District and their legal representatives have disclosed that they are not aware of any material outstanding claims against the District at December 31, 2023. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D12 V.Intergovernmental Agreements A.Joint Funding Agreement The Operating District obtained two loans in the aggregate principal amount of $16,000,000 on July 23, 2008 for the purpose of constructing certain public infrastructure (the “Facilities”) for the benefit of the Districts. Concurrent with obtaining the loans the Operating District entered into a Joint Funding Agreement with the Financing Districts to provide funding to the Operating District for the repayment of the loans. The Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property tax revenues which will be paid to and used by the Operating District to pay Financing Costs related to the loans. Financing Costs are defined as the principal and interest payments required by debt and interest rate swaps obtained or entered into by the Districts, including replenishment of debt reserve funds. Concurrent with District No. 3 obtaining the refunding loan in the principal amount of $9,400,000 on April 1, 2023 (the “2023 Loan”), the Joint Funding Agreement described above was replaced with the Amended and Restated Joint Funding Agreement, dated as of April 1, 2023, among the Operating District and Financing Districts. The Amended and Restated Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property tax revenues which will be paid to and used by the District No. 3 to pay Financing Costs related to the 2023 Loan. Financing Costs are defined as the principal and interest payments required by debt entered into by the Districts, including replenishment of debt reserve funds. In 2023, the mill levy assessed for collection in 2024 was 23.000 mills in Vail Square Metropolitan District No. 2, with 20.000 mills allocated for the Amended and Restated Joint Funding Agreement and 3.000 mills for the District Coordinating Services Agreement; and, 14.797 mills in Vail Square Metropolitan District No. 3, with 11.797 mills allocated for the Amended and Restated Joint Funding Agreement and 3.000 mills for the District Coordinating Services Agreement. The District has recorded a capital obligation payable to Financing District No. 3 as of December 31, 2023 in the amount of $6,202,395 which represents unreimbursed costs incurred through that date for the refunding of debt originally issued to pay infrastructure construction and costs related to issuance of and debt service on the loans. This amount has been allocated between the Financing Districts based on the District’s forecast of the future annual bond costs to be paid by each Financing District. However, each Financing District is responsible to pay Financing Costs until the District’s loans have been fully repaid and the ultimate allocation of the Financing Costs between the Financing Districts will be dependent on the assessed value and mill levy of each Financing District over the life of the District’s loans. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D13 V.Intergovernmental Agreements (continued) B.District Facilities Joint Financing, Construction and Service Agreement The Agreement generally provides an obligation for the Financing Districts to pay for the acquisition and construction of the Facilities (defined above), to the extent not funded by the Joint Funding Agreement (the Capital Obligation), and operation and maintenance of the Facilities and administrative expenses incurred by the Operating District (the Service Obligation). The Financing Districts are obligated to generate and pay to the Operating District certain tax and other revenues to fund the Capital Obligation and the Service Obligation. In any given year the Financing Districts are obligated to fund such portion of the Capital and Service Obligations as may be funded with the District taxes available from imposition of a subordinate mill levy, together with other charges imposed by the Financing Districts. The Agreement specifies certain termination rights on the part of the Districts. Various limitations and conditions to such termination rights exist and reference to the text of the Agreement should be made for specific terms. This agreement was terminated and replaced by the District Coordinating Services Agreement on November 13, 2023. C.District Coordinating Services Agreement The Operating District and Financing Districts entered into the District Coordinating Service Agreement on November 13, 2023. The Agreement terminated the District Facilities Joint Financing, Construction and Service Agreement. The Agreement generally provides an obligation for the Districts to pay for the operation and maintenance of the Facilities and administrative expenses incurred by the Operating District (the “Service Obligation”). The Financing Districts are obligated to generate and pay to the Operating District certain tax and other revenues to fund the Service Obligation.The Operating District is responsible for preparing annual preliminary budget proposals to the Financing Districts for their consideration. The Financing Districts are required to deposit 1/12th of the annual costs from the budget with the Coordinating District on a monthly basis. The District has recorded a prepaid service obligation with the Operating District as of December 31, 2023 in the amount of $842,809. The Agreement specifies certain termination rights on the part of the Districts. Various limitations and conditions to such termination rights exist and reference to the text of the Agreement should be made for specific terms. Vail Square Metropolitan District No. 2 Notes to the Financial Statements December 31, 2023 (continued) D14 V.Intergovernmental Agreements (continued) D.Pledge Agreements The Districts have entered into an Intergovernmental Agreement and Amended and Restated Pledge Agreement with the Vail Reinvestment Authority. Under these agreements and in consideration for the Districts’ commitment to undertake construction of certain public improvements, the Vail Reinvestment Authority agrees to transfer to the Districts the District Tax Increment Revenues, to which the Authority would otherwise be entitled under an Urban Renewal Plan relating to the project. Under the second agreement the Authority pledged the Tax Incremental Revenue to the 2008 Loan. The Districts entered into an Amended and Restated Pledge Agreement on April 1, 2023 with Vail Reinvestment Authority. The agreement replaces the previous pledge agreement and pledges the Authority’s Debt Service District Tax Increment Revenues to District No. 3 to assist with repayment of the 2023 Loan and Operations District Tax Increment Revenues to District No. 1 to assist with paying the Financing Districts operation and maintenance costs. VI.Restatement of Fund Balance and Net Position The District’s Fund Balance was restated and increased by $904,878 for a change in the calculation of the Service Obligation as described in Note V.B. The District’s Net Position was restated and increased by $1,346,225 for a change in the calculation of the Capital Obligation as described in Note V.B. REQUIRED SUPPLEMENTARY INFORMATION Final Budget Original Variance & Final Positive Budget Ac tual (Negative) Revenues: Interest income - - - Total Revenues - - - Expenditures: General government: Accounting and auditing 3,200 3,311 (111) Insurance 4,500 4,300 200 Contingecny 1,000 - 1,000 Total General Government Expenditures 8,700 7,611 1,089 Excess of Revenues Over (Under) Expenditures (8,700) (7,611) 1,089 Other Financing Sources (Uses): Transfers in 17,367 17,236 (131) Total Other Financing Sources (Uses)17,367 17,236 (131) Net Change in Fund Balance 8,667 9,625 958 Fund Balance - Beginning 19,229 19,229 - Fund Balance - Ending 27,896 28,854 958 Vail Square Metropolitan District No. 2 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Governmental Funds - General Fund For the Year Ended December 31, 2023 E1 SUPPLEMENTARY INFORMATION Final Budget Variance Original Final Positive Budget Budget Actual (Negative) Revenues: Property taxes 954,846 968,483 959,121 (9,362) Specific ownership taxes 47,742 48,424 55,544 7,120 Interest income 2,000 13,217 12,976 (241) Total Revenues 1,004,588 1,030,124 1,027,641 (2,483) Expenditures: General government: Intergovernmental agreement 983,078 983,702 1,056,424 (72,722) Treasurer fees 15,418 29,055 15,550 13,505 Total Expenditures 998,496 1,012,757 1,071,974 (59,217) Excess of Revenues Over (Under) Expenditures 6,092 17,367 (44,333) (61,700) Other Financing Sources (Uses): Transfers (out)(6,092) (17,367) (17,236) 131 Total Other Financing (Uses)(6,092) (17,367) (17,236) 131 Net Change in Fund Balance - - (61,569) (61,569) Fund Balance - Beginning (restated)20,000 25,000 929,878 904,878 Fund Balance - Ending 20,000 25,000 868,309 843,309 Schedule of Revenues, Expenditures and Changes in Fund Balance Vail Square Metropolitan District No. 2 For the Year Ended December 31, 2023 Governmental Funds - Debt Service Fund Budget and Actual F1 4 EXHIBIT C Solaris Metropolitan District No. 3 2023 Audit Vail Square Metropolitan District No. 3 Financial Statements December 31, 2023 Vail Square Metropolitan District No. 3 Financial Statements December 31, 2023 Table of Contents Page INDEPENDENT AUDITOR'S REPORT A1 – A3 Management’s Discussion and Analysis B1 – B4 Government-wide Financial Statements: Statement of Net Position C1 Statement of Activities C2 Fund Financial Statements: Balance Sheet -Governmental Funds C3 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position C4 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds C5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities C6 Notes to the Financial Statements D1 – D14 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -Governmental Funds: General Fund E1 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -Governmental Funds: Debt Service Fund F1 McMahan and Associates, l.l.c. Certified Public Accountants and Consultants Web Site: www.mcmahancpa.com Chapel Square, Bldg C Main Office: (970) 845-8800 245 Chapel Place, Suite 300 Facsimile: (970) 845-8108 P.O. Box 5850, Avon, CO 81620 E-mail: mcmahan@mcmahancpa.com Member: American Institute of Certified Public Accountants Paul J. Backes, CPA, CGMA Avon: (970) 845-8800 Michael N. Jenkins, CA, CPA, CGMA Aspen: (970) 544-3996 Matthew D. Miller, CPA Frisco: (970) 668-3481 A1 M & A INDEPENDENT AUDITOR'S REPORT To the Board of Directors Vail Square Metropolitan District No. 3 Vail, Colorado Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of Vail Square Metropolitan District No. 3 (the “District”), as of and for the year ended December 31, 2023,and the related notes to the financial statements,which collectively comprise the District’s basic financial statements as listed in the Table of Contents. 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 the District, as of December 31, 2023 and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“U.S. GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As discussed in note VI, the District’s fund balance and net position were restated for the correction of an error in the previous year. Our opinion is not modified as a result of this. Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for one year after the date that the financial statements are issued. INDEPENDENT AUDITOR’S REPORT To the Board of Directors Vail Square Metropolitan District No. 3 A2 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with U.S. GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with U.S. GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis in Section B be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with 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. The budgetary comparison information in section E is not a required part of the basic financial statements but is supplementary information required by U.S. GAAP. The budgetary comparison 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with U.S. GAAS. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. INDEPENDENT AUDITOR’S REPORT To the Board of Directors Vail Square Metropolitan District No. 3 A3 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s financial statements as a whole. The individual fund budgetary comparison in Section F is presented for purposes of additional analysis and are not a required part of the basic financial statements. The budgetary comparison found in Section F is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 financial statements as a whole. McMahan and Associates, L.L.C. Avon, Colorado September 30, 2024 MANAGEMENT’S DISCUSSION AND ANALYSIS - B1 - Vail Square Metropolitan District No. 3 Management’s Discussion and Analysis December 31, 2023 As management of Vail Square 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, 2023. 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 other information after the notes to the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all the District’s assets, liabilities, and deferred inflows with the difference 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 the Intergovernmental Service Costs and Capital Costs due to Vail Square Metropolitan District No. 1. There are no business- type activities within the District. The government-wide financial statements can be found on pages C1 and C2 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. - B2 - 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. The fund financial statements are contained on pages C3 through C6 of the report. 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 starting on page D1 of this report. (Table shown on following page; remainder of page intentionally left blank to accommodate table.) - B3 - Condensed Financial Information A condensed comparative summary of the District’s government-wide assets, liabilities, deferred inflows, net position, revenues and expenditures follows: 2023 2022 ASSETS: Current assets 1,091,449$ 289,688$ Non-current assets 6,498,517$ -$ Total Assets 7,589,966 289,688 LIABILITIES & DEFERRED INFLOWS: Current liabilities 863,692 10,531 Non-current liabilities 8,305,000 1,264,860 Total Liabilities 9,168,692 1,275,391 Deferred inflows of resources 206,777 278,957 NET POSITION: Restricted 727,549 177 Unrestricted (2,513,052) (1,264,837) Total Net Position (1,785,503)$ (1,264,660)$ REVENUES: Program Revenues Operating contributions 7,403,127$ 1,023$ General Revenues Property and other taxes 143,638 547,966 Interest and other revenue 21,906 979 Total Revenues 7,568,671 549,968 EXPENSES: General government 9,680,622 384,929 Total Expenses 9,680,622 384,929 Change in Net Position (2,111,951) 165,039 Net Position - Beginning (2,610,885) (1,429,699) 2022 Restatement - (1,346,225) Net Position - Ending (4,722,836)$ (2,610,885)$ Governmental Activities - B4 - The District is one of the “financing districts” in a triple district structure whereby the District is supporting financing the construction of infrastructure being coordinated by Vail Square Metropolitan District No. 1. The District consists of commercial properties whereas the residential properties are in District No. 2. Financing, constructing and operating the infrastructure was initially furnished through a District Facilities Joint Financing Construction and Service Agreement which has now been replaced with a District Coordinating Services Agreement among the District and Vail Square Metropolitan District Nos. 1 and 2. During 2023 the District assumed the loan that was initially taken out by District No. 1 to finance the infrastructure. In conjunction with assuming the obligation for the loan, the District was relieved of its obligation for the debt to District No. 1 and received a repayment pledge for a portion of debt service payments from Vail Square Metropolitan District No. 2. Government-wide Financial Analysis. During 2023 the District’s primary activity was to collect property taxes to pay the debt service payments and to pay the service obligation 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, unassigned 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 $1,023,681. Of this fund balance, $727,359 is restricted for future debt service and $296,122 is nonspendable as it has been prepaid to District No. 1 to be used to provide future services to the District’s constituents. The District adopts budgets for each fund on an annual basis. A budgetary comparison has been provided on page E1 for the General Fund and on page F1for the Debt Service Fund. Capital assets. All capital assets inside of the District boundaries are constructed and operated by District No.1. Therefore, no capital assets are reported by the District. Long-term debts. Early in 2023 the District assumed the obligation of $9,400,000 for the joint debt of District Nos. 1, 2 and 3 from District No. 1 and subsequently repaid $404,000 of that debt leaving an outstanding balance of $8,996,000 at the end of 2023. More details and information related to the District’s long-term debts can be found in the Notes to the Financial Statement in Note III B on page D10 of this report. 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. GOVERNMENT-WIDE FINANCIAL STATEMENTS Net (Expense) Revenue and Changes in Net Position Operating Capital Charges for Grants and Grants and Net (Expense) Expenses Services Contributions Contributions Revenue Functions/Programs: Governmental activities: General government 9,201,978 - 6,418 10,334,041 1,138,481 Debt service 276,122 - - - (276,122) Interest 202,522 - - - (202,522) Total primary government 9,680,622 - 6,418 10,334,041 659,837 General revenues: Taxes: Property tax 113,497 Specific ownership tax 30,141 Interest income 21,906 Total General Revenues 165,544 Change in Net Position 825,381 Net Position - Beginning (restated)(2,610,884) Net Position - Ending (1,785,503) Vail Square Metropolitan District No. 3 Statement of Activities For the Year Ended December 31, 2023 Program Revenues The accompanying notes are an integral part of these financial statements. C2 Total Governmental General Debt Service Funds As sets: Cash and investments 200 681,984 682,184 Am ounts due from Treasurer - 2,200 2,200 Am ounts due from VSMD No. 1 & 2 - 200,288 200,288 Property taxes receivable 34,856 171,921 206,777 Prepaid service obligation to VSMD No. 1 - 296,122 296,122 Total Assets 35,056 1,352,515 1,387,571 Liabilities, Deferred Inflow of Resources, Liabilities: Amounts due to VSMD No. 1 & 2 - 157,113 157,113 Total Liabilities - 157,113 157,113 Deferred Inflow of Resources: Unavailable property tax revenue 34,856 171,921 206,777 Total Deferred Inflow of Resources 34,856 171,921 206,777 Fund Balances: Nonspendable - 296,122 296,122 Restricted for debt service - 727,359 727,359 Restricted for emergencies 190 - 190 Unassigned 10 - 10 Total Fund Balances 200 1,023,481 1,023,681 Total Liabilities, Deferred Inflow of Resources, and Fund Balances 35,056 1,352,515 1,387,571 December 31, 2023 Governmental Funds Balance Sheet Vail Square Metropolitan District No. 3 The accompanying notes are an integral part of these financial statements. C3 FUND FINANCIAL STATEMENTS Assets: Cash and cash equivalents 682,184 Amounts due from Treasurer 2,200 Property taxes receivable 206,777 Amounts due from VSMD No. 1 & 2 200,288 Prepaid service obligation to VSMD No. 1 296,122 Capital obligation from VSMD No. 2 6,202,395 Total Assets 7,589,966 Liabilities: Current liabilities due in less than one year: Amounts due to VSMD No. 1 & 2 157,113 Accrued interest payable 15,579 Bonds payable 691,000 Non-current liabilities due in excess of one year: Bonds payable 8,305,000 Total Liabilities 9,168,692 Deferred Inflow of Resources: Property tax revenue 206,777 Deferred gain on refunding - Total Deferred Inflow of Resources 206,777 Net Position: Restricted for debt service 727,359 Restricted for emergencies 190 Unrestricted (2,513,052) Total Net Position (1,785,503) December 31, 2023 Statement of Net Position Vail Square Metropolitan District No. 3 The accompanying notes are an integral part of these financial statements. C1 Governmental Funds Total Fund Balance 1,023,681 Amounts due from other Districts for capital obligations are not considered current financial resources and, therefore, are not reported in the funds. 6,202,395 Long-term liabilities, including bonds payable and leases payable, are not due and payable in the current period and, therefore, are not reported in the funds. This is the amount of District long-term liabilities. Details of these amounts are as follows: Bonds payable (8,996,000) Accrued interest payable (15,579) (9,011,579) Net Position of Governmental Activities (1,785,503) Vail Square Metropolitan District No. 3 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position December 31, 2023 The accompanying notes are an integral part of these financial statements. C4 Total Governmental General Debt Service Funds Revenues: Property taxes - 113,497 113,497 Specific ownership taxes - 30,141 30,141 Other income - - - Intergovernmental agreem ent 6,418 1,194,314 Interest income - 21,906 21,906 Total Revenues 6,418 1,359,858 165,544 Expenditures: General government 6,418 9,195,560 9,201,978 Debt service: Principal - 404,000 404,000 Interest - 186,943 186,943 Bond issuance costs - 276,122 276,122 Total Expenditures 6,418 10,062,625 10,069,043 Excess (Deficiency) of Revenues over Expenditures - (8,702,767) (9,903,499) Other Financial Sources (Uses): Bond proceeds - 9,400,000 9,400,000 Total Other Financing Sources (Uses)- 9,400,000 9,400,000 Net Change in Fund Balances - 697,233 697,233 Fund Balances - Beginning (restated)200 326,248 326,448 Fund Balances - Ending 200 1,023,481 1,023,681 Vail Square Metropolitan District No. 3 Statement of Revenues, Expenditures For the Year Ended December 31, 2023 Governmental Funds and Changes in Fund Balances The accompanying notes are an integral part of these financial statements. C5 Net change in fund balances for total governmental funds 697,233 Changes in am ounts due from Vail Square Metropolitan District No. 2 for capital costs are not currently available financial resources and, therefore, are not reported in the funds. 6,202,395 The repayment of the principal of long-term debt consumes current financial resources of governmental funds. This transaction, however, has no effect on net position. This amount is the net effect of these differences in the treatement of long-term debt repayments. Principal repayments - Bonds payable 404,000 Bond proceeds (9,400,000) (8,996,000) The change in accrued interest reported in the Statement of Activities does not require the use of current financial resources and, therefore, is not reported as an expenditure in governmental funds.(15,579) Change in Net Position of Governmental Activities (2,111,951) Changes in Fund Balances of Governmental Funds to the Reconciliation of the Statement of Revenues, Expenditures, and Vail Square Metropolitan District No. 3 For the Year Ended December 31, 2023 Statement of Activities The accompanying notes are an integral part of these financial statements. C6 NOTES TO THE FINANCIAL STATEMENTS Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 D1 I.Summary of Significant Accounting Policies The Vail Square Metropolitan District No. 1 (the “District”) was established December 5, 2005, as a quasi-municipal corporation and political subdivision of the State of Colorado. The District was established as part of a triple district structure with Vail Square Metropolitan District Nos. 2 and 3. The District is considered the Operating District, and was formed to coordinate the financing and construction of all public improvements which will be constructed for the use and benefit of all anticipated inhabitants and taxpayers of Vail Square Metropolitan District Nos. 1-3. Vail Square Metropolitan District Nos. 2 and 3 are the Financing Districts and as such have paid and will continue to pay capital and service obligations to the District for the infrastructure in the Districts. The District’s financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”). The Governmental Accounting Standards Board (“GASB”) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The more significant accounting policies established by GAAP used by the District are discussed below. A.Reporting Entity The reporting entity consists of (a) the primary government; i.e., the District, and (b) organizations for which the District is financially accountable. The District is considered financially accountable for legally separate organizations if it is able to appoint a voting majority of an organization's governing body and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits, to, or to impose specific financial burdens on, the District. Consideration is also given to other organizations which are fiscally dependent; i.e., unable to adopt a budget, levy taxes, or issue debt without approval by the District. Organizations for which the nature and significance of their relationship with the District are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete are also included in the reporting entity. Based on the criteria discussed above, the District is not financially accountable for any other entity, nor is the District a component unit of any other government. B.Government-wide and Fund Financial Statements The District’s basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District’s major funds). Both the government-wide and fund financial statements categorize primary activities as governmental type. 1.Government-wide Financial Statements In the government-wide Statement of Net Position, all balances are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The government-wide focus is on the sustainability of the District as an entity and the change in the District’s net position resulting from the current year’s activities. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D2 I.Summary of Significant Accounting Policies (continued) B.Government-wide and Fund Financial Statements (continued) 2.Fund Financial Statements The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The fund focus is on current available resources and budget compliance. 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 District, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of the governmental funds. C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation Measurement focus refers to whether financial statements measure changes in current resources only (current financial focus) or changes in both current and long-term resources (long-term economic focus). Basis of accounting refers to the point at which revenues, expenditures, or expenses are recognized in the accounts and reported in the financial statements. Financial statement presentation refers to classification of revenues by source and expenses by function. 1.Long-term Economic Focus and Accrual Basis Governmental activities in the government-wide financial statements use the long-term economic focus and are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred, regardless of the timing of the related cash flows. 2.Current Financial Focus and Modified Accrual Basis The governmental fund financial statements use the current financial focus and are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or soon enough thereafter (60 days)to be used to pay liabilities of the current period. Expenditures are generally recognized when the related liability is incurred. The exception to this general rule is that principal and interest on general long-term debt, if any, is recognized when due. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D3 I.Summary of Significant Accounting Policies (continued) C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) 3.Financial Statement Presentation Amounts reported as program revenues include capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes and interest income. D.Financial Statement Accounts 1.Cash and Cash Equivalents Cash and equivalents are defined as deposits that can be withdrawn at any time without notice or penalty and investments with maturities of three months or less. Investments are stated at net asset value or amortized cost. The change in fair value, net asset value, and amortized cost of investments is recognized as an increase or decrease to investment assets and investment income. The District’s investment policy is detailed in note III.A. 2.Receivables Receivables are reported net of an allowance for uncollectible accounts.There was no allowance as of December 31, 2023. 3.Prepaid Expenses and Service Obligations Certain payments reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as an expenditure/expense when consumed. 4.Long-term Debt In the government-wide financial statements, in the fund financial statements, long-term debt is reported as a liability in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. 5.Deferred Outflows and Inflows of Resources In addition to assets, the Statement of Net 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 assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any items to report under this category. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D4 I.Summary of Significant Accounting Policies (continued) D.Financial Statement Accounts (continued) 5.Deferred Outflows and Inflows of Resources (continued) In addition to liabilities, the Statement of Net 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 assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Unavailable property tax revenue is deferred and recognized as an inflow of resources in the period that the amounts become available and earned. 6.Fund Balance The District classifies governmental fund balances as follows: Nonspendable -includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual requirements. Restricted –includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation. Committed –includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority which is the Board of Directors. Assigned –includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balance may be assigned by the Board of Directors or its management designee. Unassigned -includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. The District uses restricted amounts first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the District first uses committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The District does not have a formal minimum fund balance policy. However, the District’s budget includes a calculation of targeted reserve positions and management reports the targeted amounts annually to Board of Directors. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D5 I.Summary of Significant Accounting Policies (continued) E.Use of Estimates The preparation of financial statements in conformity with GAAP requires the District’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenditures or expenses during the reporting period. Actual results could differ from those estimates. II. Stewardship, Compliance, and Accountability A.Budgetary Information In the fall of each year, the District's Board of Directors formally adopts a budget with appropriations by fund for the ensuing year pursuant to the Local Government Budget Law of Colorado. The budgets for the funds are adopted on a basis consistent with generally accepted accounting principles (“GAAP”). As required by Colorado statutes, the District followed the following timetable in approving and enacting a budget for 2023: (1)For the 2023 budget year, prior to August 25, 2022, the County Assessor sent to the District the certified assessed valuation of all taxable property within the District’s boundaries and prior to December 10, 2022, the County Assessor sent the final recertified assessed valuation to the District. (2)On or before October 15, 2022, the District’s accountant submitted to the District’s Board of Directors a recommended budget which detailed the necessary property taxes needed along with other available revenues to meet the District’s operating requirements. (3)A public hearing on the proposed budget and capital program was held by the Board no later than 45 days prior to the close of the fiscal year. (4)For the 2023 budget, prior to December 15, 2022, the District computed and certified to the County Commissioners a rate of levy that derived the necessary property taxes as computed in the proposed budget. (5)For the 2023 budget, the final budget and appropriating resolution was adopted prior to December 31, 2022. After adoption of the budget resolution, the District may make the following changes: a) it may transfer appropriated monies between funds or between spending agencies within a fund, as determined by the original appropriation level; b) it may approve supplemental appropriations to the extent of revenues in excess of the estimated in the budget; c) it may approve emergency appropriations; and d) it may reduce appropriations for which originally estimated revenues are insufficient. Taxes levied in one year are collected in the succeeding year. Thus, taxes certified in 2022 were collected in 2023 and taxes certified in 2023 will be collected in 2024. Taxes are due on January 1st in the year of collection; however, they may be paid in either one installment (no later than April 30th) or two equal installments (not later than February 28th and June 15th) without interest or penalty. Taxes which are not paid within the prescribed time bear interest at the rate of one percent (1%) per month until paid. Unpaid amounts and the accrued interest thereon become delinquent on June 15th. The level of control in the budget at which expenditures exceed appropriations is at the fund level. All appropriations lapse at year end. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D6 II. Stewardship, Compliance, and Accountability (continued) B.TABOR Amendment In November 1992, Colorado voters amended Article X of the Colorado Constitution by adding Section 20, commonly known as the Taxpayer's Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax and debt limitations that apply to the State of Colorado and local governments. TABOR requires, with certain exceptions, advance voter approval for any new tax, tax rate increase, mill levy above that for the prior year, extension of any expiring tax, or tax policy change directly causing a net tax revenue gain to any local government. Any revenues earned in excess of the fiscal year spending limit must be refunded in the next fiscal year, unless voters approve retention of such excess revenue. Except for refinancing bonded debt at a lower interest rate or adding new employees to existing pension plans, TABOR requires advance voter approval for the creation of any multiple-fiscal year debt or other financial obligation unless adequate present cash reserves are pledged irrevocably and held for payments in all future fiscal years. TABOR also requires local governments to establish an emergency reserve to be used for declared emergencies only. The reserve is calculated at 3% of fiscal year spending. Fiscal year spending excludes bonded debt service and enterprise spending. The District has reserved $190, which is the approximate required reserve, at December 31, 2023. Under TABOR, the initial base for local government spending and revenue limits is December 31, 1992 fiscal year spending. The District’s first year of operations ended December 31, 1995. Future spending and revenue limits are determined based on the prior year’s fiscal year spending adjusted for inflation in the prior calendar year plus annual local growth. Fiscal year spending is generally defined as expenditures and reserve increases with certain exceptions. Revenue, if any, in excess of the fiscal year spending limit must be refunded in the next fiscal year unless voters approve retention of such revenue. The electorate of the District authorized property taxes to be increased up to $1,500,000 in 2005, plus up to an additional $3,000,000 in 2007, and each year thereafter to pay the Districts operations, maintenance, and other expenses, such amounts to increase annually in an amount not to exceed the applicable limitations of Article X, Section 20 of the Colorado Constitution and Colorado Law. The District’s electorate further approved that the District’s taxes be increased $120,000,000 annually, or by such lesser annual amount as may be necessary to pay the District’s general or special obligation bonds, revenue bonds or other multiple fiscal year financial obligations, including contracts, issued for the purpose of refunding, paying or defeasing, in whole or in part, bonds, notes or other financial obligations of the District. Such taxes may consist of an ad valorem property tax mill levy imposed without limitation of rate and in amounts sufficient to produce the annual increase set forth above or such lesser amount as may be necessary. The revenue from such taxes and any other monies used to pay such general or special obligation bonds, revenue bonds or other multiple fiscal year financial obligations costs, and investment income thereon, may be collected and spent by the District without regard to any expenditure, revenue raising, or other limitation contained within Article X, Section 20 of the Colorado Constitution. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D7 II.Stewardship, Compliance, and Accountability (continued) B.TABOR Amendment (continued) The District’s management believes it is in compliance with the financial provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of its provisions, including the interpretation of how to calculate fiscal year spending limits, will require judicial interpretation. C.Authorized But Unissued Debt Pursuant to C.R.S. 32-1-1101(2) a District is only authorized to issue bonds for a period up to twenty years following the date of the election at which such bonds were authorized by the District’s voters. The District has to following authorizations remaining as of December 31, 2023: Da te of Authori zation Au thorization Authorizati on Am ount Used Re maining Street Fac ilities 11/1/2005 20,000,000 3,338,449 16,661,551 Drainage Facilities 11/1/2005 2,000,000 - 2,000,000 Security Fac ilities 11/1/2005 1,000,000 - 1,000,000 Traffi c/Safety Prot ec tion Fac ilities 11/1/2005 2,000,000 323,582 1,676,418 Operat ions and Administration 11/1/2005 20,000,000 - 20,000,000 Cos ts of Acquiring/Cons truc ting Fac ilities 11/1/2005 20,000,000 - 20,000,000 Cos ts of Acquiring/Cons truc ting Fac ilities 11/1/2005 20,000,000 - 20,000,000 Water Facilities 11/6/2007 5,000,000 682,256 4,317,744 Sani tary Sewer Facilities 11/6/2007 5,000,000 682,256 4,317,744 Park s and Rec reat ion 11/6/2007 5,000,000 962,346 4,037,654 Publ ic Trans port at ion 11/6/2007 5,000,000 - 5,000,000 Mosqui to Control 11/6/2007 1,000,000 - 1,000,000 Fire Prot ec tion 11/6/2007 5,000,000 - 5,000,000 Televi sion Relay 11/6/2007 1,000,000 91,111 908,889 Operat ions and Administration 11/6/2007 5,000,000 - 5,000,000 Refunding 11/1/2005 40,000,000 9,400,000 30,600,000 157,000,000 15,480,000 141,520,000 Purpose Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D8 III.Detailed Notes on all Funds A.Deposits and Investments The District’s deposits are entirely covered by federal depository insurance (“FDIC”) or by collateral held under Colorado’s Public Deposit Protection Act (“PDPA”). The FDIC insures the first $250,000 of the District’s deposits at each financial institution. Deposit balances over $250,000 are collateralized as required by PDPA. The carrying amount of the District’s demand deposits was $0 at year end. Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments, and entities such as the District, may invest which include: Obligations of the United States and certain U.S. government agency securities Certain international agency securities General obligation and revenue bonds of U.S. local government entities Bankers’acceptances of certain banks Commercial paper Written repurchase agreements collateralized by certain authorized securities Certain money market mutual funds Guaranteed investment contract Local government investment pools Interest Rate Risk.As a means of limiting its exposure to interest rate risk, the District diversifies its investments by security type and institution, and limits holdings in any one type of investment with any one issuer and type of issuer. The District coordinates its investment maturities to closely match cash flow needs and restricts the maximum investment term to less than five years (less in some cases) from the purchase date. As a result of the limited length of maturities the District has limited its interest rate risk. Credit Risk.District investment policy limits investments to those authorized by State statutes. The District’s general investment policy is to apply the prudent-person rule: investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and, in general, avoid speculative investments. Concentration of Credit Risk.The District diversifies its investments by security type and institution. Financial institutions holding District funds must provide the District a copy of the certificate from the Banking Authority that states that the institution is an eligible public depository. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D9 III.Detailed Notes on all Funds (continued) A.Deposits and Investments (continued) At year end, the District had the following deposits and investments with the following maturities: Standa rd Te rm to Ma turity & Poors Ca rrying Le ss tha n More tha n Ra ti ng Am ounts one year one year Deposits: Chec king and savi ngs Not rat ed - - - Investment s: Inve sco Treasury Port folio AAAm 424,669 424,669 - Inve stment pool AAAm 257,515 257,515 - 682,184 682,184 - At December 31, 2023, the District had the following recurring fair value measurements: Total Inves co Treas ury Port fo lio 424,669 424,669 Total CS AFE 257,515 257,515 Inve st ments Me asure d at Net Asse t Va lue Inve st ments Me asure d at Amorti zed Cost Fair Value of Investments.The District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs. Investments classified in Level 1 are valued using prices quoted in active markets for those securities. Investments classified in Level 2 are valued using the following approaches: U.S. Treasuries, U.S. Agencies, and Commercial Paper: quoted prices for identical securities in markets that are not active; Repurchase Agreements, Negotiable Certificates of Deposit, and Collateralized Debt Obligations: matrix pricing based on the securities’ relationship to benchmark quoted prices; Money Market, Bond, and Equity Mutual Funds: published fair value per share (unit) for each fund. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D10 III.Detailed Notes on all Funds (continued) A.Deposits and Investments (continued) The District had invested $257,515 in the Colorado Surplus Asset Fund (“CSAFE”). The Trust is an investment vehicle established for local government entities in Colorado to pool surplus funds. The State Securities Commissioner administers and enforces all State statutes governing the Trust. The Trust operates similarly to a money market fund, measured at net asset value, and each share is equal in value to $1.00. Investments consist of U.S. Treasury bills, notes and note strips and repurchase agreements collateralized by U.S. Treasury securities. A designated custodial bank provides safekeeping and depository services in connection with the direct investment and withdrawal functions. Substantially all securities owned are held by the Federal Reserve Bank in the account maintained for the custodial bank. B.Long-term Obligations 1.2023 Unlimited Tax General Obligation Loan The District obtained a $9,400,000 unlimited tax general obligation loan on April 26, 2023. Interest is payable semiannually on June 1 and December 1, commencing December 1, 2008. The loan matures in various amounts through 2034 and bears interest equal to 3.330%. The loan is a general obligation of the District and supported by a Joint Funding Agreement between the Operating District and the Financing Districts. The Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property taxes which will be paid to the District to be used to pay the principal and interest payments required by the loan. The loan was obtained to refund the 2008B Tax-Exempt Loan that originally financed the design, acquisition, construction, relocation, installation, completion and provision of public improvements and facilities. The District also used loan proceeds to repay a portion of the long-term obligation to the Developer. 2.Long-term Obligation Activity The District had the following activity related to long-term obligations during the year ended December 31, 2023: Be ginning En ding Due Withi n Ba lance Addi ti ons Re ducti ons Ba la nce One Year Bonds pay able: G.O. Refunding Loan, Seri es 2023 - 9,400,000 (404,000) 8,996,000 691,000 - 9,400,000 (404,000) 8,996,000 691,000 Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D11 IV.Other Information A.Risk Management Colorado Special Districts Property and Liability Pool The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; and general liability. The District is a member of the Colorado Special District Property and Liability Pool (“Pool”) for property and liability insurance. The Pool was formed by an intergovernmental agreement to provide public officials, property, general and automobile liability coverage for claims up to $1,000,000, except if the claim falls within the government immunity statute, then the coverage is $150,000 per person and a $600,000 aggregate claim. The Pool is reinsured for 80% of the first $250,000 of all claims and 100% for claims in excess of $250,000. The District may be required to make additional contributions in the event aggregate losses incurred by the Pool exceed amounts recoverable from reinsurance contracts. 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. Any settled claims are not expected to exceed coverage. A summary of audited statutory basis financial information for the Pool as of and for the year ended December 31, 2023 (the latest available information) is as follows: Asse ts 81,143,798 Liabilities 58,670,068 Capi tal and surplus 22,473,730 Total 81,143,798 Revenue 29,593,851 Underwri ting ex pens es 31,416,477 Underwriting gain (l os s)(1,822,626) Other inc ome 1,695,393 Ne t incom e (l oss)(127,233) B.Commitments and Contingencies During the normal course of business, the District may incur claims and other assertions against it from various agencies and individuals. Management of the District and their legal representatives have disclosed that they are not aware of any material outstanding claims against the District at December 31, 2023. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D12 V.Intergovernmental Agreements A.Joint Funding Agreement The Operating District obtained two loans in the aggregate principal amount of $16,000,000 on July 23, 2008 for the purpose of constructing certain public infrastructure (the “Facilities”) for the benefit of the Districts. Concurrent with obtaining the loans the Operating District entered into a Joint Funding Agreement with the Financing Districts to provide funding to the Operating District for the repayment of the loans. The Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property tax revenues which will be paid to and used by the Operating District to pay Financing Costs related to the loans. Financing Costs are defined as the principal and interest payments required by debt and interest rate swaps obtained or entered into by the Districts, including replenishment of debt reserve funds. Concurrent with District No. 3 obtaining the refunding loan in the principal amount of $9,400,000 on April 1, 2023 (the “2023 Loan”), the Joint Funding Agreement described above was replaced with the Amended and Restated Joint Funding Agreement, dated as of April 1, 2023, among the Operating District and Financing Districts. The Amended and Restated Joint Funding Agreement generally provides that the Financing Districts will assess mill levies to collect property tax revenues which will be paid to and used by the District No. 3 to pay Financing Costs related to the 2023 Loan. Financing Costs are defined as the principal and interest payments required by debt entered into by the Districts, including replenishment of debt reserve funds. In 2023, the mill levy assessed for collection in 2024 was 23.000 mills in Vail Square Metropolitan District No. 2, with 20.000 mills allocated for the Amended and Restated Joint Funding Agreement and 3.000 mills for the District Coordinating Services Agreement; and, 14.797 mills in Vail Square Metropolitan District No. 3, with 11.797 mills allocated for the Amended and Restated Joint Funding Agreement and 3.000 mills for the District Coordinating Services Agreement. The District has recorded a capital obligation receivable from the Financing District No. 2 as of December 31, 2023 in the amount of $6,202,395 which represents unreimbursed costs incurred through that date for the refunding of debt originally issued to pay infrastructure construction and costs related to issuance of and debt service on the loans. This amount has been allocated between the Financing Districts based on the District’s forecast of the future annual bond costs to be paid by each Financing District. However, each Financing District is responsible to pay Financing Costs until the District’s loans have been fully repaid and the ultimate allocation of the Financing Costs between the Financing Districts will be dependent on the assessed value and mill levy of each Financing District over the life of the District’s loans. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D13 V.Intergovernmental Agreements (continued) B.District Facilities Joint Financing, Construction and Service Agreement The Agreement generally provides an obligation for the Financing Districts to pay for the acquisition and construction of the Facilities (defined above), to the extent not funded by the Joint Funding Agreement (the Capital Obligation), and operation and maintenance of the Facilities and administrative expenses incurred by the Operating District (the Service Obligation). The Financing Districts are obligated to generate and pay to the Operating District certain tax and other revenues to fund the Capital Obligation and the Service Obligation. In any given year the Financing Districts are obligated to fund such portion of the Capital and Service Obligations as may be funded with the District taxes available from imposition of a subordinate mill levy, together with other charges imposed by the Financing Districts. The Agreement specifies certain termination rights on the part of the Districts. Various limitations and conditions to such termination rights exist and reference to the text of the Agreement should be made for specific terms. C.District Coordinating Services Agreement The Operating District and Financing Districts entered into the District Coordinating Service Agreement on November 13, 2023. The Agreement terminated the District Facilities Joint Financing, Construction and Service Agreement. The Agreement generally provides an obligation for the Districts to pay for the operation and maintenance of the Facilities and administrative expenses incurred by the Operating District (the “Service Obligation”). The Financing Districts are obligated to generate and pay to the Operating District certain tax and other revenues to fund the Service Obligation.The Operating District is responsible for preparing annual preliminary budget proposals to the Financing Districts for their consideration. The Financing Districts are required to deposit 1/12th of the annual costs from the budget with the Coordinating District on a monthly basis. The District has recorded a prepaid service obligation with the Operating District as of December 31, 2023 in the amount of $296,122. The Agreement specifies certain termination rights on the part of the Districts. Various limitations and conditions to such termination rights exist and reference to the text of the Agreement should be made for specific terms. Vail Square Metropolitan District No. 3 Notes to the Financial Statements December 31, 2023 (continued) D14 V.Intergovernmental Agreements D.Pledge Agreements The Districts have entered into an Intergovernmental Agreement and Amended and Restated Pledge Agreement with the Vail Reinvestment Authority. Under these agreements and in consideration for the Districts’ commitment to undertake construction of certain public improvements, the Vail Reinvestment Authority agrees to transfer to the Districts the District Tax Increment Revenues, to which the Authority would otherwise be entitled under an Urban Renewal Plan relating to the project. Under the second agreement the Authority pledged the Tax Incremental Revenue to the 2008 Loan. The Districts entered into an Amended and Restated Pledge Agreement on April 1, 2023 with Vail Reinvestment Authority. The agreement replaces the previous pledge agreement and pledges the Authority’s Debt Service District Tax Increment Revenues to District No. 3 to assist with repayment of the 2023 Loan and Operations District Tax Increment Revenues to District No. 1 to assist with paying the Financing Districts operation and maintenance costs. VI.Restatement of Fund Balance and Net Position The District’s Fund Balance was restated and increased by $326,248 for a change in the calculation of the Service Obligation as described in Note V.B. The District’s Net Position was restated and decreased $1,346,225 for a change in the calculation of the Capital Obligation as described in Note V.B. REQUIRED SUPPLEMENTARY INFORMATION Final Budget Variance Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental agreement 3,254 3,846 6,418 2,572 Total Revenues 3,254 3,846 6,418 2,572 Expenditures: General government: Accounting and auditing 3,200 3,200 3,118 82 Insurance 3,200 3,200 3,300 (100) Total General Government Expenditures 6,400 6,400 6,418 (18) Other Financing Sources: Transfers in 6,146 5,554 - (5,554) Total Other Financing Sources 6,146 5,554 - (5,554) Net Change in Fund Balance 3,000 3,000 - (3,000) Fund Balance - Beginning 200 200 200 - Fund Balance - Ending 3,200 3,200 200 (3,000) Vail Square Metropolitan District No. 3 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Governmental Funds - General Fund For the Year Ended December 31, 2023 E1 SUPPLEMENTARY INFORMATION Final Budget Variance Original Final Positive Budget Budget Ac tual (Negative) Revenues: Property taxes 518,276 518,276 113,497 (404,779) Specific ownership taxes 25,914 25,914 30,141 4,227 Intergovernmental agreement - 902,556 1,194,314 291,758 Interest income 2,000 2,000 21,906 19,906 Total Revenues 546,190 1,448,746 1,359,858 (88,888) Expenditures: General government: Intergovernmental agreement 531,675 9,073,930 9,187,180 (113,250) Treasurer fees 8,369 8,369 8,380 (11) Debt service: Principal - 422,000 404,000 18,000 Interest - 313,020 186,943 126,077 Contingency - 10,000 - 10,000 Bond issuance costs - 406,000 276,122 129,878 Total Expenditures 540,044 10,233,319 10,062,625 170,694 Excess of Revenues Over (Under) Expenditures 6,146 (8,784,573) (8,702,767) 81,806 Other Financing Sources (Uses): Bond proceeds - 9,400,000 9,400,000 - Transfers (out)(6,146) (5,554) - 5,554 Total Other Financing (Uses)(6,146) 9,394,446 9,400,000 5,554 Net Change in Fund Balance - 609,873 697,233 87,360 Fund Balance - Beginning (restated)- - 326,248 326,248 Fund Balance - Ending - 609,873 1,023,481 413,608 Schedule of Revenues, Expenditures and Changes in Fund Balance Vail Square Metropolitan District No. 3 For the Year Ended December 31, 2023 Governmental Funds - Debt Service Fund Budget and Actual F1