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HomeMy WebLinkAbout2021 Final Financial Statement Report THE VILLAGE METROPOLITAN DISTRICT Eagle County, Colorado FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2021 THE VILLAGE METROPOLITAN DISTRICT TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2021 INDEPENDENT AUDITOR’S REPORT I BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION 1 STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS BALANCE SHEET – GOVERNMENTAL FUNDS 3 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS 4 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 5 GENERAL FUND – STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 6 NOTES TO BASIC FINANCIAL STATEMENTS 7 SUPPLEMENTARY INFORMATION DEBT SERVICE FUND – SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 19 CAPITAL PROJECTS FUND – SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 20 OTHER INFORMATION SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY 22 SCHEDULE OF ASSESSED VALUATION, MILL LEVY, AND PROPERTY TAXES COLLECTED 23 14143 Denver W Parkway #450 303 988 1900 Lakewood, CO 80401 wipfli.com I Board of Directors The Village Metropolitan District Eagle County, Colorado Independent Auditor’s Report Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of The Village Metropolitan District (the “District”), as of and for the year ended December 31, 2021, 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 accompanying 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 Village Metropolitan District as of December 31, 2021, and the respective changes in financial position and the respective budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (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. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America (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 twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. II 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 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 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. III Other Matters Required Supplemental Information Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The supplementary information as listed in the table of contents is presented for the purposes of legal compliance and additional analysis and is not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, such information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Information The other information, as listed in the table of contents, has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Wipfli LLP Lakewood, Colorado July 27, 2022 BASIC FINANCIAL STATEMENTS THE VILLAGE METROPOLITAN DISTRICT STATEMENT OF NET POSITION DECEMBER 31, 2021 See accompanying Notes to Basic Financial Statements. (1) Governmental Activities ASSETS Cash and Investments 21,062$ Cash and Investments - Restricted 11,083,377 Accounts Receivable 2,838,533 Receivable - County Treasurer 799 Property Taxes Receivable 249,539 Prepaid expenses 4,092 Total Assets 14,197,402 LIABILITIES Accounts Payable 2,008 Accrued Interest Payable - Bonds 181,329 Noncurrent Liabilities: Due Within One Year 385,000 Due in More Than One Year 44,969,451 Total Liabilities 45,537,788 DEFERRED INFLOWS OF RESOURCES Property Tax Revenue 249,539 Total Deferred Inflows of Resources 249,539 NET POSITION Restricted for: Emergency Reserves 1,600 Unrestricted (31,591,525) Total Net Position (31,589,925)$ THE VILLAGE METROPOLITAN DISTRICT STATEMENT ACTIVITIES YEAR ENDED DECEMBER 31, 2021 See accompanying Notes to Basic Financial Statements. (2) Net Revenues (Expenses) and Change in Program Revenues Net Position Charges Operating Capital for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities FUNCTIONS/PROGRAMS Primary Government: Government Activities: General Government 42,792$ -$ 52,483$ -$ 9,691$ Interest and Related Costs on Long Term-Term Debt 2,163,750 4,381,265 - 2,217,515 Intergovernmental Expenditure 1,793,777 - - - (1,793,777) Total Governmental Activities 4,000,319$ -$ 4,433,748$ -$ 433,429 GENERAL REVENUES Property Taxes 222,571 Specific Ownership Taxes 12,268 Net Investment Income 1,437 Total General Revenues 236,276 CHANGE IN NET POSITION 669,705 Net Position - Beginning of Year (32,259,630) NET POSITION - END OF YEAR (31,589,925)$ THE VILLAGE METROPOLITAN DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2021 See accompanying Notes to Basic Financial Statements. (3) Total Debt Capital Governmental General Service Projects Funds ASSETS Cash and Investments 21,062$ -$ -$ 21,062$ Cash and Investments - Restricted 1,600 6,481,365 4,600,412 11,083,377 Accounts Receivable - 2,838,533 2,838,533 Receivable - County Treasurer - 799 - 799 Prepaid Expenses 4,092 - - 4,092 Property Taxes Receivable - 249,539 - 249,539 Total Assets 26,754$ 9,570,236$ 4,600,412$ 14,197,402$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts Payable 2,008$ -$ -$ 2,008$ Total Liabilities 2,008 - - 2,008 DEFERRED INFLOWS OF RESOURCES Property Tax Revenue - 249,539 - 249,539 Total Deferred Inflows of Resources - 249,539 - 249,539 FUND BALANCES Nonspendable for: Prepaid Expenses 4,092 - - 4,092 Restricted for: Emergency Reserves 1,600 - - 1,600 Debt Service - 9,320,697 - 9,320,697 Capital Projects - - 4,600,412 4,600,412 Unassigned 19,054 - - 19,054 Total Fund Balances 24,746 9,320,697 4,600,412 13,945,855 Total Liabilities, Deferred Inflows of Resources and Fund Balances 26,754$ 9,570,236$ 4,600,412$ Amounts reported for governmental activities in the statement of net position are different because: Long-term liabilities, including loans payable and interest payable, are due and payable in the current period and, therefore, are not reported in the funds. Bonds Payable (44,810,000) Bonds Premium (544,451) Accrued Interest Payable - Bond (181,329) Net Position of Governmental Activities (31,589,925)$ THE VILLAGE METROPOLITAN DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2021 See accompanying Notes to Basic Financial Statements. (4) Total Debt Capital Governmental General Service Projects Funds REVENUES Property Taxes -$ 222,571$ -$ 222,571$ Specific Ownership Taxes - 12,268 - 12,268 Transfers from Traer Creek Metropolitan District 52,483 4,381,265 - 4,433,748 Net Investment Income 15 746 676 1,437 Total Revenues 52,498 4,616,850 676 4,670,024 EXPENDITURES General and Administrative: Accounting 23,567 - - 23,567 Audit 4,300 - - 4,300 District Management 4,561 - - 4,561 Dues and Membership 306 - - 306 Insurance and Bonds 4,104 - - 4,104 Legal 5,016 - - 5,016 Miscellaneous Expense 938 - - 938 Debt Service:- County Treasurer's Fee - 6,677 - 6,677 Bond Interest - Series 2020 - 2,183,828 - 2,183,828 Bond Principal - Series 2020 - 190,000 - 190,000 Paying Agent Fees - 3,750 - 3,750 Transfers to Traer Creek Metropolitan District - - 1,793,777 1,793,777 Total Expenditures 42,792 2,384,255 1,793,777 4,220,824 NET CHANGE IN FUND BALANCES 9,706 2,232,595 (1,793,101) 449,200 Fund Balances - Beginning of Year 15,040 7,088,102 6,393,513 13,496,655 FUND BALANCES - END OF YEAR 24,746$ 9,320,697$ 4,600,412$ 13,945,855$ THE VILLAGE METROPOLITAN DISTRICT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2021 See accompanying Notes to Basic Financial Statements. (5) Net Change in Fund Balance - Total Governmental Funds 449,200$ Amounts reported for governmental activities in the statement of activities are different because: The issuance of long-term debt (e.g., loans, Developer advances) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Principal Payment 190,000 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Accrued Interest - Change in Liability 657 Amortization of Bond Premium 29,848 Change in Net Position of Governmental Activities 669,705$ THE VILLAGE METROPOLITAN DISTRICT GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2021 See accompanying Notes to Basic Financial Statements. (6) Variance with Original Final Budget and Final Actuals Positive Budget Amounts (Negative) REVENUES Transfers from Traer Creek Metropolitan District 56,000$ 52,483$ (3,517)$ Net Investment Income - 15 15 Total Revenues 56,000 52,498 (3,502) EXPENDITURES Accounting 25,000 23,567 1,433 Audit 4,200 4,300 (100) District Management 10,000 4,561 5,439 Dues and Membership 1,000 306 694 Insurance and Bonds 5,000 4,104 896 Legal 10,000 5,016 4,984 Miscellaneous Expense 800 938 (138) Total Expenditures 56,000 42,792 13,208 NET CHANGE IN FUND BALANCE - 9,706 9,706 Fund Balance - Beginning of Year 9,906 15,040 5,134 FUND BALANCE - END OF YEAR 9,906$ 24,746$ 14,840$ THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (7) NOTE 1 DEFINITION OF REPORTING ENTITY The Village Metropolitan District (the District), a quasi-municipal corporation and political subdivision of the state of Colorado, was organized by order and decree of the District Court on November 30, 1998, concurrently with Traer Creek Metropolitan District (Traer Creek), and is governed pursuant to provisions of the Colorado Special Districts Act (Title 32, Article 1, Colorado Revised Statutes). The District’s service area is located entirely within the town of Avon (the Town) in Eagle County, Colorado. The District operates under a Service Plan approved by the Town on August 25, 1998. The District was established to provide financing for the construction of streets and safety control, water systems, sewer systems, park and recreation facilities, safety protection, fire protection, transportation systems, television relay, mosquito control and the operation and maintenance of the District. Under its Service Plan, the District is intended to be the Financing District related to Traer Creek as the Service District for the development of the service area, which encompasses the area of both Districts. The District follows the Governmental Accounting Standards Board (GASB) accounting pronouncements which provide guidance for determining which governmental activities, organizations and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, a potential for the organization to provide specific financial benefits or burdens and fiscal dependency. The District has no employees, and all operations and administrative functions are contracted. The District is not financially accountable for any other organization, nor is the District a component unit of any other primary governmental entity, including the Town and Traer Creek. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The more significant accounting policies of the District are described as follows: Government-Wide and Fund Financial Statements The government-wide financial statements include the statement of net position and the statement of activities. These financial statements include all of the activities of the District. Governmental activities are normally supported by taxes and intergovernmental revenues. The statement of net position reports all financial and capital resources of the District. The difference between the sum of assets and deferred outflows and the sum of liabilities and deferred inflows is reported as net position. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (8) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. The major sources of revenue susceptible to accrual are property taxes. All other revenue items are considered to be measurable and available only when cash is received by the District. The District determined that Developer advances are not considered as revenue susceptible to accrual. Expenditures, other than interest on long-term obligations are recorded when the liability is incurred or the long-term obligation is due. The District reports the following major governmental funds: The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term debt of the governmental funds. The Capital Projects Fund is used to account for financial resources to be used for the acquisition and construction of capital equipment and facilities. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (9) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budgets In accordance with the State Budget Law, the District’s Board of Directors holds public hearings in the fall of each year to approve the budget and appropriate the funds for the ensuing year. The appropriation is at the total fund expenditures level and lapses at year- end. The District’s Board of Directors can modify the budget by line item within the total appropriation without notification. The appropriation can only be modified upon completion of notification and publication requirements. The budget includes each fund on its basis of accounting unless otherwise indicated. Property Taxes Property taxes are levied by the District’s Board of Directors. The levy is based on assessed valuations determined by the County Assessor generally as of January 1 of each year. The levy is normally set by December 15 by certification to the County Commissioners to put the tax lien on the individual properties as of January 1 of the following year. The County Treasurer collects the determined taxes during the ensuing calendar year. The taxes are payable by April or if in equal installments, at the taxpayer’s election, in February and June. Delinquent taxpayers are notified in August and generally sales of the tax liens on delinquent properties are held in November or December. The County Treasurer remits the taxes collected monthly to the District. Property taxes, net of estimated uncollectible taxes, are recorded initially as deferred inflow of resources in the year they are levied and measurable. The unearned property tax revenues are recorded as revenue in the year they are available or collected. Amortization – Original Issue Premium In the government-wide financial statements, bond premiums are deferred and amortized over the life of the bonds using the effective interest method. In the fund financial statements, governmental fund types recognize bond premiums during the current period. The face amount of the debt issued and premiums received on debt issuances are reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Inflows of Resources In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies for reporting in this category. Accordingly, the item, deferred property tax revenue, is deferred and recognized as an inflow of resources in the period that the amount becomes available. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (10) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Equity Net Position For government-wide presentation purposes when both restricted and unrestricted resources are available for use, it is the government’s practice to use restricted resources first, then unrestricted resources as they are needed. Fund Balance Fund balance for governmental funds should be reported in classifications that comprise a hierarchy based on the extent to which the government is bound to honor constraints on the specific purposes for which spending can occur. Governmental funds report up to five classifications of fund balance: nonspendable, restricted, committed, assigned, and unassigned. Because circumstances differ among governments, not every government or every governmental fund will present all of these components. The following classifications describe the relative strength of the spending constraints: Nonspendable Fund Balance – The portion of fund balance that cannot be spent because it is either not in spendable form (such as prepaid amounts or inventory) or legally or contractually required to be maintained intact. Restricted Fund Balance – The portion of fund balance that is constrained to being used for a specific purpose by external parties (such as bondholders), constitutional provisions, or enabling legislation. Committed Fund Balance – The portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority, the Board of Directors. The constraint may be removed or changed only through formal action of the Board of Directors. Assigned Fund Balance – The portion of fund balance that is constrained by the government’s intent to be used for specific purposes, but is neither restricted nor committed. Intent is expressed by the Board of Directors to be used for a specific purpose. Constraints imposed on the use of assigned amounts are more easily removed or modified than those imposed on amounts that are classified as committed. Unassigned Fund Balance – The residual portion of fund balance that does not meet any of the criteria described above. If more than one classification of fund balance is available for use when an expenditure is incurred, it is the District’s practice to use the most restrictive classification first. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (11) NOTE 3 CASH AND INVESTMENTS Deposits with Financial Institutions Cash and investments as of December 31, 2021 are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and Investments 21,062$ Cash and Investments - Restricted 11,083,377 Total Cash and Investments 11,104,439$ Cash and investments as of December 31, 2021 consist of the following: Deposits with Financial Institutions 1,264$ Investments 11,103,175 Total Cash and Investments 11,104,439$ The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is determined by the PDPA. PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least 102% of the aggregate uninsured deposits. The State Commissioners for banks and financial services are required by statute to monitor the naming of eligible depositories and for the reporting of the uninsured deposits and assets maintained in the collateral pools. At December 31, 2021, the District’s cash deposits had a bank and a carrying balance of $1,264. Investments The District has not adopted a formal investment policy; however, the District follows state statutes regarding investments. The District generally limits its concentration of investments to those noted with an asterisk (*) below, which are believed to have minimal credit risk, minimal interest rate risk, and no foreign currency risk. Additionally, the District is not subject to concentration risk or investment custodial risk disclosure requirements for investments that are in the possession of another party. Colorado revised statutes limit investment maturities to three to five years or less unless formally approved by the Board of Directors. Such actions are generally associated with a debt service reserve or sinking fund requirements. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (12) NOTE 3 CASH AND INVESTMENTS (CONTINUED) Investments (Continued) Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments may invest which include: . Obligations of the United States, certain U.S. government agency securities, and securities of the World Bank . General obligation and revenue bonds of U.S. local government entities . Certain certificates of participation . Certain securities lending agreements . Bankers’ acceptances of certain banks . Commercial paper . Written repurchase agreements and certain reverse repurchase agreements collateralized by certain authorized securities * Certain money market funds . Guaranteed investment contracts * Local government investment pools As of December 31, 2021, the District had the following investments: Investment Maturity Amount Colorado Liquid Asset Trust Plus Weighted-Average (COLOTRUST PLUS) Under 60 Days 245,647$ U.S. Treasury Money Market Fund Weighted-Average Under 60 Days 10,857,528 Total 11,103,175$ COLOTRUST The District invested in the Colorado Local Government Liquid Asset Trust (COLOTRUST) (the Trust), an investment vehicle established for local government entities in Colorado to pool surplus funds. The State Securities Commissioner administers and enforces all state statutes governing the Trust. The Trust operates similarly to a money market fund and each share is equal in value to $1.00. The Trust offers shares in two portfolios, COLOTRUST PRIME and COLOTRUST PLUS+. Both portfolios may invest in U.S. treasury securities and repurchase agreements collateralized by U.S. treasury securities. COLOTRUST PLUS+ may also invest in certain obligations of U.S. government agencies, highest rated commercial paper and any security allowed under CRS 24-75-601. A designated custodial bank serves as custodian for the Trust’s portfolios pursuant to a custodian agreement. The custodian acts as safekeeping agent for the Trust’s investment portfolios and provides services as the depository in connection with direct investments and withdrawals. The custodian’s internal records segregate investments owned by the Trust. COLOTRUST is rated AAAm by Standard & Poor’s. COLOTRUST records its investments at fair value and the District records its investment in COLOTRUST at net asset value as determined by fair value. There are no unfunded commitments, the redemption frequency is daily and there is no redemption notice period. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (13) NOTE 3 CASH AND INVESTMENTS (CONTINUED) U.S. Treasury Money Market Fund The money at US Bank is invested in the Fidelity Governmental Fund 57 (Class 1). The Fidelity Governmental Fund is a money market fund that is managed by Fidelity Investments and each share is equal in value to $1.00. The fund is AAAm rated and invests in high quality short-term obligations, with approximately 80% of assets invested in government securities. The average maturity of the underlying securities is 60 days or less. NOTE 4 LONG-TERM OBLIGATIONS The following is an analysis of the changes in the District’s long-term obligations for the year ended December 31, 2021: Balance at Balance at Due December 31,December 31,Within 2020 Additions Reductions 2021 One Year Special Revenue and Limited Property Tax Refunding and Improve Bonds,45,000,000$ -$ 190,000$ 44,810,000$ 385,000$ Series 2020 Bond Premium, Series 2020 574,299 - 29,848 544,451 - Total 45,574,299$ -$ 219,848$ 45,354,451$ 385,000$ The details of the District’s long-term obligations are as follows: $45,000,000 Special Revenue and Limited Property Tax Refunding and Improvement Bonds, Series 2020, dated August 21, 2020 The Series 2020 Bonds consist of three term bonds that bear interest at 4.150%, 5.000% and 5.000% per annum, respectively, and mature on December 1, 2030, December 1, 2040 and December 1, 2049, respectively. Interest on the Series 2020 Bonds is payable semiannually on June 1 and December 1, beginning on December 1, 2020 with principal payment due on December 1 each year, beginning in 2021. Proceeds from the sale of the Series 2020 Bonds were used for the purpose of: (a) Paying the Project Costs; (b) refunding the Series 2014 Bonds (Issued by Traer Creek); (c) prepaying and canceling the 2015 Loan; (d) funding the Debt Service Reserve Fund in the amount of the Required Reserve; and (e) paying certain costs of issuance. The Series 2020 Bonds are subject to redemption prior to maturity, at the option of the District, as a whole or in integral multiples of $1,000, in any order of maturity, and in whole of partial maturities, (and if in part in such order of maturities as the District shall determine and by lot within maturities), on December 1, 2025 and on any date thereafter, upon payment of the principal amount so redeemed plus accrued interest thereon to the date of redemption, together with a redemption premium of a percentage of the principal amount so redeemed, as follows: Date of Redemption Redemption Premium December 1, 2025 through November 30, 2026 3.00% December 1, 2026 through November 30, 2027 2.00 December 1, 2027 through November 30, 2028 1.00 December 1, 2028 and thereafter 0.00 THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (14) NOTE 4 LONG-TERM OBLIGATIONS (CONTINUED) Mandatory Redemption The Series 2020 Bonds are also subject to mandatory sinking fund redemption by lot on December 1 of each year and in the principal amounts at a redemption price equal to the principal amount thereof (with no redemption premium), plus accrued interest to the redemption date. Pledged Revenue The Series 2020 Bonds are special revenue and limited property tax obligations of the District secured by and payable from and to the extent of the District Pledged Revenue and Traer Creek Pledged Revenue. The District Pledged Revenue consists of the following, net of any costs of collection and any tax refunds or abatements authorized by or on behalf of the Town and/or County (to the extent not previously deducted by definition): (a) all moneys derived from imposition by the District of the Required Mill Levy; (b) all Tap Fees and Surcharges; (c) all Specific Ownership Tax Revenues; (d) all Assigned Revenues received from Traer Creek; and (e) any other legally available moneys which the District determines, in its sole and absolute discretion, to credit to the Bond Fund. The Traer Creek Pledged Revenue consists of the money derived by Traer Creek from the following sources being pledged pursuant to the Pledge Agreement, net of any costs of collection and any tax refunds or abatements authorized by or on behalf of the Town and/or County (to the extent not previously deducted by definition): (a) all moneys derived from imposition by Traer Creek of the Traer Creek Required Mill Levy; (b) all Tap Fees and Surcharges; (c) all Traer Creek Specific Ownership Tax Revenues; (d) all Assigned Revenues received from the Commercial PIC and/or the Mixed-Use PIC, less the Annual Operations Funding Allocation; and (e) any other legally available moneys which Traer Creek determines, in its sole and absolute discretion, to transfer to the District for credit to the Bond Fund. The Annual Operations Funding Allocation is defined in the Pledge Agreement as $450,000 per year. The Series 2020 Bonds are also secured by amounts on deposit in the Debt Service Reserve Fund, which is to be funded from proceeds of the Bonds in the amount of $3,081,250. The balance of the Debt Service Reserve Fund at December 31, 2021 is $3,081,250. In addition, the Series 2020 Bonds are secured by amounts on deposit in the Surplus Fund, which is be funded from excess Pledged Revenue, if any, up to $2,000,000. The balance of the Surplus Fund at December 31, 2021 is $2,000,000. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (15) NOTE 4 LONG-TERM OBLIGATIONS (CONTINUED) The District’s long-term obligations will mature as follows: Year Ending December 31,Principal Interest Total 2022 385,000$ 2,175,942$ 2,560,942$ 2023 580,000 2,159,965 2,739,965 2024 740,000 2,135,895 2,875,895 2025 800,000 2,105,185 2,905,185 2026 875,000 2,071,985 2,946,985 2027-2031 5,435,000 9,756,930 15,191,930 2032-2036 7,070,000 8,326,000 15,396,000 2037-2041 9,025,000 6,372,500 15,397,500 2042-2046 11,520,000 3,879,000 15,399,000 2047-2049 8,380,000 851,500 9,231,500 Total 44,810,000$ 39,834,902$ 84,644,902$ NOTE 5 DEBT AUTHORIZATION On November 3, 1998, the District’s electors authorized the issuance of indebtedness in an amount not to exceed $52,250,000 at an interest rate not to exceed 18%. On November 6, 2001, the District’s electors authorized the issuance of additional indebtedness in an amount not to exceed $1,763,000,000 at an interest rate not to exceed 18%. The total authorized indebtedness is allocated for the following purposes: Amount Amount Authorization Authorization Remaining Authorized on Authorized on Used for Series Used for Series Electoral 11/3/1998 11/6/2001 2015 Loan 2020 Bonds Authorization Street and Street Improvements $ 18,750,000 158,000,000$ $ - $ 10,350,000 $ 166,400,000 Water 2,850,000 158,000,000 7,460,000 - 153,390,000 Sanitary or Storm Sewer 16,500,000 158,000,000 - - 174,500,000 Parks and Recreation 4,050,000 158,000,000 - - 162,050,000 Traffic and Safety 300,000 158,000,000 - - 158,300,000 Mosquito Control 150,000 10,000,000 - - 10,150,000 Public Transportation 2,700,000 158,000,000 - - 160,700,000 Fire Protection and Ambulance 300,000 158,000,000 - - 158,300,000 Television Relay and Translation 150,000 158,000,000 - - 158,150,000 Operations and Maintenance - 15,000,000 - - 15,000,000 Debt Refunding - 158,000,000 - - 158,000,000 Intergovernmental Agreements - General 6,500,000 158,000,000 - 6,300,000 158,200,000 Intergovernmental Agreements - Traer Creek - 158,000,000 - - 158,000,000 Total 52,250,000$ 1,763,000,000$ 7,460,000$ 16,650,000$ 1,791,140,000$ Per the Service Plan dated August 25, 1998, the District, combined with Traer Creek Metropolitan District, is limited to issuing $158,000,000 in debt. Traer Creek Metropolitan District’s authorization used is $52,100,000. In addition, the maximum debt service mill levy for the District is 50 mills, as adjusted for changes in the ratio of actual value to assessed value of property within the District. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (16) NOTE 6 NET POSITION The District has net position consisting of two components - restricted and unrestricted. Restricted assets include net position that are restricted for use either externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The District has restricted net assets as of December 31, 2021 as follows: Governmental Activities Restricted Net Position: Emergency Reserves 1,600$ Total Restricted Net Position 1,600$ The District’s unrestricted net position as of December 31, 2021 is $(31,591,525). This deficit is a result of the District being responsible for the repayment of the bonds issued for public improvement which were conveyed to other governmental entities. NOTE 7 RELATED PARTIES The developer of the property within the District and Traer Creek is Traer Creek LLC and several affiliated limited liability companies (the Developer). The members of the Board of Directors are employees, owners or associated with the Developer and may have conflicts of interest in dealing with the District. The members of the Board also serve as the Board members of Traer Creek. NOTE 8 AGREEMENTS The District entered into a Facilities Funding, Construction and Operations Agreement on July 31, 2001, and later amended on March 4, 2002, with Traer Creek to provide funding in exchange for certain services and facilities, as described in the District’s Service Plan, to current and future residents and property owners of both the District and Traer Creek. Additionally, the District will provide funding to Traer Creek in exchange for the operations, maintenance and administrative service functions. The District pledges all revenue it receives from ad valorem property taxes, specific ownership taxes and other rates, fees, tolls and charges that may be imposed and collected to Traer Creek, if such revenue is not otherwise pledged, to assist in financing the facilities and services. In 2021, the District received $52,483 from Traer Creek to pay general and administrative expenses. In addition, the District received $4,381,265 from Traer Creek to pay debt service of which $2,838,533 of this amount was due from Traer Creek at December 31, 2021. THE VILLAGE METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 (17) NOTE 9 RISK MANAGEMENT The District is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; or acts of God. The District is a member of the Colorado Special Districts Property and Liability Pool (the Pool) as of December 31, 2021. The Pool is an organization created by intergovernmental agreement to provide property, liability, public officials’ liability, boiler and machinery and workers’ compensation coverage to its members. Settled claims have not exceeded this coverage in any of the past three fiscal years. The District pays annual premiums to the Pool for liability, property and public officials’ liability coverage. In the event aggregated losses incurred by the Pool exceed amounts recoverable from reinsurance contracts and funds accumulated by the Pool, the Pool may require additional contributions from the Pool members. Any excess funds which the Pool determines are not needed for purposes of the Pool may be returned to the members pursuant to a distribution formula. NOTE 10 TAX, SPENDING, AND DEBT LIMITATIONS Article X, Section 20 of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (TABOR), contains tax, spending, revenue and debt limitations which apply to the state of Colorado and all local governments. Spending and revenue limits are determined based on the prior year’s Fiscal Year Spending adjusted for allowable increases based upon inflation and local growth. Fiscal Year Spending is generally defined as expenditures plus reserve increases with certain exceptions. Revenue in excess of the Fiscal Year Spending limit must be refunded unless the voters approve retention of such revenue. The District voters approved an election question in 2001 to remove limits on the amount of revenue, excluding revenues generated from ad valorem taxes, the District is allowed to retain. On November 6, 2001, District voters passed an election question to increase property taxes $1,000,000 annually, without limitation of rate, to pay the District’s administration, operational and maintenance costs. TABOR requires local governments to establish Emergency Reserves. These reserves must be at least 3% of Fiscal Year Spending (excluding bonded debt service). Local governments are not allowed to use the Emergency Reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The District’s Emergency Reserves have been calculated based only on the revenues that the District retains. This does not include the revenue used for debt service. Revenues transferred to Traer Creek Metropolitan District will have an Emergency Reserve on those funds shown in Traer Creek Metropolitan District. The District’s management believes it is in compliance with the provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of the provisions, including the interpretation of how to calculate Fiscal Year Spending limits, will require judicial interpretation. (18) SUPPLEMENTARY INFORMATION THE VILLAGE METROPOLITAN DISTRICT DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2021 (19) Variance with Original Final Budget and Final Actual Positive Budget Amounts (Negative) REVENUES Property Taxes 222,572$ 222,571$ (1)$ Specific Ownership Taxes 11,129 12,268 1,139 Net Investment Income 20,500 746 (19,754) Transfers from Traer Creek Metropolitan District 3,906,000 4,381,265 475,265 Total Revenues 4,160,201 4,616,850 456,649 EXPENDITURES County Treasurer's Fee 6,677 6,677 - Bond Interest - Series 2020 2,183,828 2,183,828 - Bond Principal - Series 2020 190,000 190,000 - Paying Agent Fees 5,000 3,750 1,250 Contingency 114,495 - 114,495 Total Expenditures 2,500,000 2,384,255 115,745 NET CHANGE IN FUND BALANCE 1,660,201 2,232,595 572,394 Fund Balances - Beginning of Year 9,598,151 7,088,102 (2,510,049) FUND BALANCES - END OF YEAR 11,258,352$ 9,320,697$ (1,937,655)$ THE VILLAGE METROPOLITAN DISTRICT CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2021 (20) Variance with Original Final Budget and Final Actual Positive Budget Amounts (Negative) REVENUES Net Investment Income -$ 676$ 676$ Total Revenues - 676 676 EXPENDITURES Transfers to Traer Creek Metropolitan District 4,917,706 1,793,777 3,123,929 Total Expenditures 4,917,706 1,793,777 3,123,929 NET CHANGE IN FUND BALANCE (4,917,706) (1,793,101) 3,124,605 Fund Balances - Beginning of Year 4,917,706 6,393,513 1,475,807 FUND BALANCES - END OF YEAR -$ 4,600,412$ 4,600,412$ (21) OTHER INFORMATION THE VILLAGE METROPOLITAN DISTRICT SCHEDULE OF DEBT SERVICE REUIREMENTS TO MATURITY YEAR ENDED DECEMBER 31, 2021 (22) Refunding and Improvement Bonds Year Ending December 31,Principal Interest Total 2022 385,000$ 2,175,942$ 2,560,942$ 2023 580,000 2,159,965 2,739,965 2024 740,000 2,135,895 2,875,895 2025 800,000 2,105,185 2,905,185 2026 875,000 2,071,985 2,946,985 2027 940,000 2,035,673 2,975,673 2028 1,015,000 1,996,662 3,011,662 2029 1,090,000 1,954,540 3,044,540 2030 1,170,000 1,909,305 3,079,305 2031 1,220,000 1,860,750 3,080,750 2032 1,280,000 1,799,750 3,079,750 2033 1,345,000 1,735,750 3,080,750 2034 1,410,000 1,668,500 3,078,500 2035 1,480,000 1,598,000 3,078,000 2036 1,555,000 1,524,000 3,079,000 2037 1,635,000 1,446,250 3,081,250 2038 1,715,000 1,364,500 3,079,500 2039 1,800,000 1,278,750 3,078,750 2040 1,890,000 1,188,750 3,078,750 2041 1,985,000 1,094,250 3,079,250 2042 2,085,000 995,000 3,080,000 2043 2,190,000 890,750 3,080,750 2044 2,300,000 781,250 3,081,250 2045 2,410,000 666,250 3,076,250 2046 2,535,000 545,750 3,080,750 2047 2,660,000 419,000 3,079,000 2048 2,790,000 286,000 3,076,000 2049 2,930,000 146,500 3,076,500 Total 44,810,000$ 39,834,902$ 84,644,902$ Interest Rate 4.15% - 5.00% Payable June 1 and December 1 $45,000,000 Special Revenue and Limited Property Tax Series 2020, Dated September 9, 2020 THE VILLAGE METROPOLITAN DISTRICT SCHEDULE OF ASSESSED VALUATION, MILL LEVY, AND PROPERTY TAXES COLLECTED YEAR ENDED DECEMBER 31, 2021 (23) Prior Year Assessed Valuation for Percent Year Ended Current Year Mills Total Property Taxes Collected December 31,Tax Levy Levied Levied Collected to Levied 2017 14,192,690$ 50.000 709,635$ 709,634$ 100.00 % 2018 13,857,090 50.000 692,855 692,406 99.94 2019 13,857,090 50.000 713,495 713,495 100.00 2020 14,577,780 50.000 728,889 728,917 100.00 2021 14,838,100 15.000 222,572 222,571 100.00 Estimated for the Year Ending December 31, 2022 16,635,960$ 15.000 249,539$ Note: Property taxes shown as collected in any one year include collections of delinquent property taxes or abatements of property taxes assessed in prior years. This presentation does not attempt to identity specific years' assessment.