ANDERSON MILL LIMITED DISTRICT

Transcription

1 ANNUAL FINANCIAL REPORT of the ANDERSON MILL LIMITED DISTRICT For the Year Ended September 30, 2011

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3 ANDERSON MILL, LIMITED DISTRICT TABLE OF CONTENTS September 30, 2011 Page Independent Auditors' Report Management's Discussion and Analysis 1 5 BASIC FINANCIAL STATEMENTS Statement of Net Assets and Governmental Fund Balance Sheet 12 Statement of Activities and Governmental Fund Revenues, 13 Expenditures, and Changes in Fund Balance Notes to Financial Statements 15 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule - General Fund 27 TEXAS SUPPLEMENTARY INFORMATION Schedules Services and Rates TSI-1 31 General Fund Expenditures TSI-2 32 Cash and Temporary Investments TSI-3 33 Analysis of Taxes Levied and Receivable TSI-4 35 Comparative Schedule of Revenues and Expenditures - General Fund TSI-7 36 Board Members, Key Personnel, and Consultants TSI-8 38

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5 To the Board of Directors of the Anderson Mill Limited District: INDEPENDENTAUDITORS' REPORT We have audited the accompanying fmancial statements of the governmental activities and each major fund of Anderson Mill Limited District (the "District") as of and for the year ended September 30, 2011, which collectively comprise the District's basic financial statements as listed in the table of contents. These fmancial statements are the responsibility of the District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of September 30, 2011, and the respective changes in financial position, thereof for the year then ended, in conformity with generally accepted accounting principles in the United States of America. The Management's Discussion and Analysis and the budgetary comparison information are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 1 Partners Houston Bellville Austin All Offices Robert Belt, CPA 3210 Bingle Rd., Ste Windy Hill Lane 100 Congress Ave., Ste Governmental Stephanie E. Harris, CPA Houston, TX Bellville,TX Austin, TX info@txauditors.com Audit Quality Center Nathan Krupke, CPA fax

6 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic fmancial statements. The Texas Supplementary Information ("TSI") and other supplementary information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The TSI and other supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. A Rt ', ECH CEK, u;_lp Belt Harris Pechacek, LLLP Certified Public Accountants Houston, Texas February 3,

7 MANAGEMENT'S DISCUSSION AND ANALYSIS

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9 ANDERSON MILL LIMITED DISTRICT MANA GEMENT'S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2011 The purpose of the Management's Discussion and Analysis (the "MD&A") is to give the readers an objective and easily readable analysis of the financial activities of Anderson Mill Limited District (the "District") for the year ended September 30, The analysis is based on currently known facts, decisions, or economic conditions. It presents a short and long-term analysis of the District's activities, compares current year results with those of the prior year, and discusses the positive and negative aspects of that comparison. Governmental Accounting Standards Board (GASB) Statement No. 34 establishes the content of the minimum requirements for MD&A. Please read the MD&A in conjunction with the District's financial statements, which follow this section. THE STRUCTURE OF OUR ANNUAL REPORT Components of the Financial Section... Management's Discussion and Analysis Financial Statements Required Supplementary Information Independent Auditors' Report Government- Wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary C Detail The annual financial report is presented as compliant with the financial reporting model in effect pursuant to GASB Statement No. 34. The financial reporting model requires governments to present certain basic financial statements as well as the MD&A and certain other Required Supplementary Information (RSI). The basic financial statements include (1) government-wide financial statements, (2) individual fund financial statements, and (3) notes to the financial statements. Government-Wide Statements The government-wide statements report information for the District as a whole. These statements include transactions and balances relating to all assets, including infrastructure capital assets. These statements are designed to provide information about the cost of services, operating results, and financial position of the District as an economic entity. The Statement of Net Assets and the Statement of Activities, which appear first in the District's financial statements, report information on the District's activities that enable the reader to understand the financial condition of the District. These statements are prepared using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account even if cash has not yet changed hands. 5

10 ANDERSON MILL LIMITED DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 The Statement of Net Assets presents information on all of the District's assets and liabilities. The difference between the two is reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. Other non-financial factors, such as the District's property tax base and the condition of the District's infrastructure, need to be considered to assess the overall health of the District. The Statement of Activities presents information showing how the District's net assets changed during the most recent year. All changes in the net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows - the accrual method rather than modified accrual that is used in the fund level statements. The Statement of Net Assets and the Statement of Activities present the District using one class of activity: 1. Governmental Activities - The District's parks and recreation operations are reported within this class. FUND FINANCIAL STATEMENTS Funds may be considered as operating companies of the parent corporation, which is the District. They are usually segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal reporting requirements. The District's operations are reported using 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 ofspendable resources, as well as balances ofspendable resources available at the end of the year. Such information may be useful in evaluating the District'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. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains one individual governmental fund. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the general fund. The District adopts an annual unappropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. 6

11 Notes to Financial Statements ANDERSON MILL LIMITED DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. See the table of contents in the front of this report to find the notes to the financial statements. Other Information In addition to basic financial statements, the MD&A, and accompanying notes, this report also presents certain RSI. The RSI that GASB Statement No. 34 requires includes budgetary comparison schedules for the general fund. See the table of contents in the front of this report to find the RSI. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of the District's financial position. District's assets exceeded liabilities by $13,250,896 as of year end. The A portion of the District's net assets reflects its investments in capital assets (e.g., land, equipment, and infrastructure) less any debt used to acquire those assets that are still outstanding. The District uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the District's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the assets themselves cannot be used to liquidate these liabilities. Statement of Net Assets: The following table reflects the condensed Statement of Net Assets: Governmental Activities 9/30/2011 9/30/2010 Current and other assets $ 10,926,328 $ 11,553,777 Capital assets, net 2,400,712 2,549,845 Total Assets 13,327,040 14,103,622 Other liabilities 76, ,680 Total Liabilities 76, ,680 Net assets: Invested in capital assets 2,400,712 2,549,845 Unrestricted 10,850,184 11,438,097 Total Net Assets $ 13,250,896 $ 13,987,942 The balance of unrestricted net assets may be used to meet the District's ongoing obligation to citizens and creditors. Net assets of the District declined as planned due to the use of resources for the operations of the District. 7

12 Statement of Activities: ANDERSON MILL, LIMITED DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 The following table provides a summary of the District's changes in net assets: Governmental Activities 9/30/2011 9/30/2010 Revenues Property taxes $ 716,858 $ 718,206 Charges for services 316, ,088 Other revenues 88, ,658 Total Revenues 1,121,592 1,114,952 Expenses Administrative 603, ,046 Parks and recreation 1,044, ,434 Depreciation 210, ,679 Total Expenses 1,858,638 1,865,159 Change in Net Assets (737,046) (750,207) Beginning net assets 13,987,942 14,738,149 Ending Net Assets $ 13,250,896 $ 13,987,942 Total revenues for the District increased slightly by $6,640, due to normal governmental activity. FINANCIAL ANALYSIS OF THE DISTRICT'S FUNDS As noted earlier, fund accounting is used to demonstrate and ensure 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 spendable resources. Such information is useful in assessing the District's financing requirements. In particular, the unreserved fund balance may serve as a useful measure of the District's net resources available for spending at the end of the year. The District's governmental fund reflects a total fund balance of $10,926,328. GENERAL FUND BUDGETARY HIGHLIGHTS Actual general fund revenues were greater than final budgeted revenues by $170,812 during the year primarily due to an increase in charges for services and more than anticipated property tax revenue. CAPITAL ASSETS At the end of the year, the District's governmental activities funds had invested $2,400,712 in a variety of capital assets net of accumulated depreciation. Depreciation is included with the governmental capital assets as required by GASB Statement No. 34. More detailed information about the District's capital assets is presented in the notes to the financial statements. 8

13 ECONOMIC FACTORS ANDERSON MILL LIMITED DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 The property tax base for the District decreased from $531,429,000 to $526,874,000 for the 2009 and 2010 tax year respectively. The tax rate for the current tax year is $ on each $100 of taxable value. CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide a general overview of the District's finances and to demonstrate the District's accountability for the funds it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the District in care of Mark Maxwell, General Manager, Anderson Mill Limited District, El Salido Parkway, Austin, Texas

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15 BASIC FINANCIAL STATEMENTS 11

16 ANDERSON MILL LIMITED DISTRICT STATEMENT OF NET ASSETS AND GOVERNMENTAL FUND BALANCE SHEET September 30, 2011 Governmental Fund Balance Sheet General Fund Statement of Net Assets Adjustments Assets Cash and cash equivalents $ 1,699,948 $ $ 1,699,948 Investments 9,180,128-9,180,128 Receivables 44,151 44,151 Interest receivable 2,101-2,101 Capital assets Land - non depreciable 626, ,424 Net depreciable capital assets 1,774,288 1,774,288 Total Assets $ 10,926,328 $ 2,400,712 $ 13,327,040 Liabilities Accounts payable $ 31,990 $ $ 31,990 Deferred revenue 44,154 44,154 Total Liabilities 76,144 76,144 Fund Balances/Net Assets Fund Balances: Unassigned 10,850,184 (10,850,184) - Total Fund Balances 10,850,184 (10,850,184) - Total Liabilities and Fund Balances $ 10,926,328 Net Assets: Invested in capital assets 2,400,712 2,400,712 Unrestricted 10,850,184 10,850,184 Total Net Assets $ 13,250,896 $ 13,250,896 See Notes to Financial Statements. 12

17 ANDERSON MILL. LIMITED DISTRICT STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Year Ended September 30, 2011 Statement of Revenues, Expenditures, and Changes in Fund Balance Statement of Activities General Fund Adjustments Revenues Property taxes $ 716,858 $ $ 716,858 Charges for services 316, ,327 Investment earnings 30,608 30,608 Other income 57,799 57,799 Total Revenues 1,121,592 1,121,592 Expenditures/Expenses Service operations: Administrative 603, ,575 Pools 453, ,996 Parks 439, ,779 Programs and events 151, ,133 Capital outlay 61,022 (61,022) Depreciation 210, ,155 Total Expenditures/Expenses 1,709, ,133 1,858,638 Net Change in Fund Balance (587,913) 587,913 Change in Net Assets (737,046) (737,046) Beginning Fund Balances/Net Assets 11,438,097 2,549,845 13,987,942 Ending Fund Balances/Net Assets $ 10,850,184 $ 2,400,712 $ 13,250,896 See Notes to Financial Statements. 13

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19 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS For the Year Ended September 30, 2011 NOTE 1- CREATION OF DISTRICT Anderson Mill Municipal Utility District was created, organized and established on April 29, 1974, by the Texas Commission on Environmental Quality (formerly the Texas Natural Resource Conservation Commission) pursuant to the provisions of Chapter 54 of the Texas Water Code. The District formally changed its name to Anderson Mill Limited District (the "District") as of January 1, The reporting entity of the District encompasses those activities and functions over which the District's elected officials exercise significant oversight or control. The District is empowered, among other things, to purchase, construct, operate and maintain all works, improvements, facilities, and plants necessary for the parks and recreation of the District. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements and accounting policies of the District are prepared in conformity with generally accepted accounting principles for local governmental units as prescribed by the Governmental Accounting Standards Board (GASB), which is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District's significant accounting policies are described below. Reporting Entity The District has adopted GASB Statements No. 14, The Financial Reporting Entity, and No. 39, Determining Whether Certain Organizations Are Component Units. In accordance with these statements, a financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. There are no component units that are legally separate for which the District is considered financially accountable. The District is governed by a board of directors consisting of five individuals who are residents or owners of property within the District and are elected by voters within the District. As required by generally accepted accounting principles, these financial statements present the activities of the District, which is considered to be the primary government as well as the reporting entity. There are no other organizations which meet the criteria for inclusion herein as part of the financial reporting entity. Financial Statement Presentation These financial statements include implementation of GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. Certain requirements of the statement include: A Management's Discussion and Analysis (MD&A) section providing an analysis of the District's overall financial position and results of operations. 15

20 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 Financial statements prepared using full accrual accounting for all of the District's activities. A change in the fund financial statements to focus on the major funds. GASB Statement No. 34 established standards for external financial reporting for all state and local governmental entities, which includes a Statement of Net Assets and a Statement of Activities. It requires the classification of net assets into three components - invested in capital assets, net of related debt; restricted; and unrestricted. These classifications are defined as follows: Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation, and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted - This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Unrestricted - This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) report information about the District as a whole. These statements include all activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities are normally supported by taxes and intergovernmental revenues. The Statement of Activities presents a comparison between direct expenses and program revenues of each function of the District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs and grants that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, such as taxes and investment earnings, are presented 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. In the fund financial statements, the accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. 16

21 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 Following is a description of the various funds: Governmental Funds Governmental funds are those funds through which most governmental functions are typically financed. General Fund The general fund is used to account for the operations of the District's parks and recreation and all other financial transactions not properly recorded included in other funds. The principal sources of revenue are related to property taxes. Expenditures include all costs associated with the daily operations of the District. Measurement Focus and Basis of Accounting The government-wide statements of net assets and statements of activities are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operations of these activities are included on the balance sheet. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing resources) and decreases (i.e., expenditures and other financing uses) in net current assets. The District utilizes the modified accrual basis of accounting in the governmental fund type. Under the modified accrual basis of accounting, revenues are recognized in the accounting period when they are susceptible to accrual (i.e., when they are measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues available if they are collected within 60 days of the end of the current period. Revenues susceptible to accrual include charges for services and interest on temporary investments. Under modified accrual accounting, expenditures are recognized in the accounting period in which the liability is incurred, if measurable, except for interest on general long-term debt, which is recognized when due. The Statements of Net Assets and Statements of Activities are presented on the accrual basis of accounting. Under this method of accounting, revenues are recognized in the accounting period in which they are earned and expenses are recognized in the accounting period in which they are incurred. 17

22 Budget ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 An unappropriated budget is adopted for the general fund. The budget is prepared using the same method of accounting as for financial reporting and serves as a planning tool. Encumbrance accounting is not utilized. Cash and Cash Equivalents Cash and cash equivalents include cash on deposit as well as investments with maturities of three months or less. The investments, consisting of common trust funds, money market funds, and obligations in the State Treasurer's investment pool are recorded at cost, which approximates fair market value. Investments Temporary investments consist of certificates of deposit and time deposits and are stated at cost, which approximates market value. Fund Equity In the fund financial statements, fund balances in governmental funds are classified as follows: Nonspendable - Represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid items) or legally required to remain intact (such as principal of a permanent fund). Restricted - Represents amounts that are constrained by external parties, constitutional provisions, or enabling legislation. Committed - Represents amounts that can only be used for a specific purpose because of a formal action by the District's Board of Trustees (the "Board"). Committed amounts cannot be used for any other purpose unless the Board removes those constraints by taking the same type of formal action. Commitments are approved through the adoption and amendment of the District's budget or a formal resolution stating the commitment. The commitment must be made prior to year end. Assigned - Represents amounts which the District intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. Intent may be stipulated by the Board or by an official or body to which the Board delegates the authority. The Board has retained this authority. Specific amounts that are not restricted or committed in a special revenue, capital projects, debt service, or permanent fund are assigned for purposes in accordance with the nature of their fund type or the fund's primary purpose. Assignments within the general fund convey that the intended use of those amounts is for a specific purpose that is narrower than the general purposes of the District itself. Assignments can be made at any time. Unassigned - Represents amounts which are unconstrained in that they may be spent for any purpose. Only the general fund reports a positive unassigned fund balance. Other governmental funds might report a negative balance in this classification because of overspending for specific purposes for which amounts had been restricted, committed, or assigned. 18

23 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed, then assigned funds, and finally unassigned funds. Capital Assets Capital assets, which include property, plant, and equipment assets, are reported in the applicable governmental activities columns in the government-wide financial statements. In accordance with GASB Statement No. 34, any infrastructure has been capitalized retroactively. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of five years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest costs incurred in connection with the construction of governmental fund capital assets are capitalized when the effects of capitalization materially impact the financial statements. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's life are not capitalized. Property, plant, and equipment of the primary government are depreciated using the straightline method over the following estimated useful years: Estimates Estimated Asset Description Useful Life Building 7-30 years Machinery and equipment 5-7 years Furniture and fixtures 5-7 years Parks and recreation years The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 19

24 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 NOTE 3 - CASH AND TEMPORARY INVESTMENTS As of September 30, 2011, the District had the following investments: Investment Type Fair Value Weighted Average Maturity(Years) Certificates of deposit $ 490, Texpool 49, US gov. securities 6,495, Municipal bonds 2,194, Total fair value $ 9,229,243 Portfolio weighted average maturity 1.59 In accordance with GASB Statement No. 31, Accounting and Reporting for Certain Investments and External Investment Pools, the District reports all investments at fair value except for "money market investments" and "2a7-like pools." Money market investments, which are short-term highly liquid debt instruments that may include U.S. Treasury and agency obligations, are reported at amortized costs. Investment positions in external investment pools that are operated in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940, such as TexPool, are reported using the pools' share price. The District invests in TexPool. TexPool was established as a trust company with the Treasurer of the State of Texas as trustee, segregated from all other trustees, investments, and activities of the trust company. The State Comptroller of Public Accounts exercises oversight responsibility over TexPool. Oversight includes the ability to significantly influence operations, designation of management, and accountability for fiscal matters. Additionally, the State Comptroller has established an advisory board composed of both participants in TexPool and other persons who do not have a business relationship with TexPool. The advisory board members review the investment policy and management fee structure. Finally, Standard & Poor's rate TexPool AAArn. As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor's as well as to the office of the Comptroller of Public Accounts for review. TexPool operates in a manner consistent with the SEC's rule 2a7 of the Investment Company Act of TexPool uses amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in TexPool is the same as the value of their shares. Investment Policies Applicable state laws and regulations allow the District to invest its funds in obligations of the United States, the State of Texas and their agencies or any state, county, city, or any other political subdivision of any state rated by a nationally recognized investment rating firm with a rating not less than A or its equivalent. Funds may also be placed in certificates of deposit of state or national banks or savings and loan associations (depository institutions) domiciled within the State, prime domestic bankers' acceptances, commercial paper with a stated maturity of 270 days or less from the date of issuance, fully collateralized repurchase agreements, noload money market mutual funds regulated by the United States Securities and Exchange Commission and eligible public funds investment pools. 20

25 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 Custodial credit risk - deposits. Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The government's investment policy requires that the District's deposits be fully insured by FDIC insurance or its agencies and instrumentalities. As of year end, the District's FDIC coverage and collateral pledged exceeded bank balances. Interest rate risk. In accordance with its investment policy, the District manages its exposure to declines in fair values through investment diversification and limiting investments as follows: Money market mutual funds are required to have weighted average maturities of 90 days or fewer; and Other mutual fund investments are required to have weighted average maturities of less than two years. Credit risk. The District's investment policy requires the application of the prudent person rule: investments are made as a prudent person would be expected to act, with discretion and intelligence, and considering the probable safety of their capital as well as the probable income to be derived. The District's investment policy requires that District funds be invested in: Obligations of the United States Government and/or its agencies and instrumentalities; Money market mutual funds with investment objectives of maintaining a stable net asset value of $1 per share; Mutual funds rated in one of the three highest categories by a nationally recognized rating agency; Securities issued by a State or local government or any instrumentality or agency thereof, in the United States, and rated in one of the three highest categories by a nationally recognized rating agency; and Public funds investment pools rated AAA or AAA-m by a nationally recognized rating agency. Concentration of credit risk. In accordance with the District's investment policy, investments in individual securities are to be limited to ensure that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. NOTE 4 - MAINTENANCE TAXES Property taxes attach as an enforceable lien on January 1. Taxes are levied on or about October 1, are due on November 1, and are past due the following February 1. The Williamson County Appraisal District established appraisal values in accordance with requirements of the Texas Legislature. The District levies taxes based upon the appraised values. The Williamson County Tax Assessor/Collector bills and collects the District's property taxes. The Board of Directors sets current tax rates in September of every year. The property tax rates, established in accordance with state law, were based on 100 percent of the net assessed valuation of real property within the District on the 2009 tax roll. The tax rate, based on total taxable assessed valuation of $531,429,231, was $0.13 on each $100 valuation and was fully allocated to the general fund. The maximum allowable maintenance tax of $1.00 was established by the voters on August 17, Property taxes receivable at September 30, 2011 was $33,687. The District is prohibited from writing off real property taxes without specific authority from the Texas Legislature. 21

26 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 NOTE 5 - CHANGES IN CAPITAL ASSETS A summary of changes in capital assets for the year ended is as follows: Balances September 30, 2010 Additions Deletions Balances September 30, 2011 Capital Assets Non Depreciable Assets Land $ 626,424 $ $ $ 626,424 Depreciable Assets Other capital assets 5,316,986 61,022-5,378,008 Accumulated depreciation (3,386,089) (210,155) 7,476 (3,603,720) Net Depreciable Assets 1,930,897 (149,133) 7,476 1,774,288 Total Capital Assets $ 2,557,321 $ (149,133) $ 7,476 $ 2,400,712 NOTE 6 - RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The District has obtained coverage from commercial insurance companies and the Texas Municipal League Intergovernmental Risk Pool ("TML Pool") to effectively manage its risk. All risk management activities are accounted for in the general fund. Expenditures and claims are recognized when it is probable that a loss has occurred and the amount of loss can be reasonably estimated. In determining claims, events that might create claims, but for which none have been reported, are considered. The TML Pool was established by various political subdivisions in Texas to provide selfinsurance for its members and to obtain lower costs for insurance. TML Pool members pay annual contributions to obtain the insurance. Annual contribution rates are detennined by the TML Pool Board. Rates are estimated to include all claims expected to occur during the policy including claims incurred but not reported. The TML Pool has established claims reserves for each of the types of insurance offered. Although the TML Pool is a self-insured risk pool, members are not contingently liable for claims filed above the amount of the fixed annual contributions. If losses incurred are significantly higher than actuarially estimated, the TML Pool adjusts the contribution rate for subsequent years. Members may receive returns of contributions if actual results are more favorable than estimated. 22

27 ANDERSON MILL LIMITED DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 NOTE 7 - COMMITMENTS AND CONTINGENCIES The resolutions of the District authorizing revenue bonds required that a guarantee reserve fund be established. The guarantee reserve fund agreement (the "agreement") required that the balance in the guarantee reserve fund be returned to the original developers or their successors ("depositors") once the reserve fund became fully capitalized. The District has never attempted to capitalize the reserve fund. According to legal interpretation of the agreement, the retirement of the District's indebtedness, which occurred in 2002, or accumulation of sufficient monies in the interest and sinking fund to retire the debt does not trigger a requirement that the balance in the guarantee reserve fund be returned to the developers. On December 1, 2008, the District entered into an agreement and release of guarantee reserve funds with previous depositors to the guarantee reserve fund. The agreement generally describes the terms under which guarantee reserve funds will be disbursed to each of the depositors. As of August 10, 2009, all guarantee reserve funds have been disbursed to previous depositors. Any unclaimed funds still held by the trust on December 31, 2011 shall be released to the State of Texas Comptroller in accordance with applicable state law. Financial Accounting Standards Board Statement No. 5, Accounting for Contingencies, requires a contingency to be accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. No accrual has been made in the financial statements because the event triggering the liability (full capitalization of the reserve fund) has not occurred and the amount of the liability cannot be reasonably estimated. NOTE 8 - STRATEGIC PARTNERSHIP AGREEMENT The 74th Texas Legislature, during the Regular Session in 1995, passed S.B This bill allowed the City of Austin (the "City") and the Anderson Mill Municipal Utility District (the "District") to enter into a Strategic Partnership Agreement (SPA). The SPA, which became effective on November 19, 1998, allows for full purpose and limited purpose annexation for different types of property in the District. Full purpose annexation, among other things, allows the City to collect property tax, as well as sales tax. Limited purpose annexation allows the City to collect sales tax only. The City previously annexed full purpose commercial property as described in the agreement on December 30, The residential property and limited purpose commercial property portion of the agreement commenced on January 1, During the limited purpose annexation, the District paid all outstanding bonds prior to December 31, Any excess funds are kept separate from the District's general fund and placed in a special account reflecting the source of these funds. These funds are the property of the District and are used to fund the District now that the full purpose annexation has occurred. During the previous year, the voters in the District were asked and approved the creation of the Limited District with taxing authority to exist for an initial term of ten years. The City and the District may extend the term upon mutual agreement. The City will not be responsible for any claims or causes of action arising out of the operation and maintenance of the District. The District will assume responsibility for park up-keep, providing solid waste pick-up and disposal, and enforcing deed restrictions. In accordance with the SPA, the District conveyed District water and wastewater facilities to the City effective May 19, On June 28, 2008, the City assumed all responsibilities related to operations, maintenance, customer service, billing, and collections of those facilities. 23

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29 REQUIRED SUPPLEMENTARY INFORMATION 25

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31 ANDERSON MILL LIMITED DISTRICT BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the Year Ended September 30, 2011 Original and Final Budgeted Amounts General Fund Variance Positive (Negative) Actual Revenues Property tax revenue $ 661,980 $ 716,858 $ 54,878 Charges for services 219, ,327 97,227 Investment earnings 50,000 30,608 (19,392) Other income 19,700 57,799 38,099 Total Revenues 950,780 1,121, ,812 Expenditures Service operations: Administrative 641, ,575 38,074 Pools 429, ,996 (24,648) Parks 452, ,779 13,142 Programs and events 164, ,133 13,478 Capital outlay 79,500 61,022 18,478 Total Expenditures 1,768,029 1,709,505 58,524 Change in Fund Balance $ (817,249) (587,913) $ 229,336 Beginning Fund Balance 11,438,097 Ending Fund Balance $ 10,850,184 Notes to Required Supplementary Information 1. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP). 27

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33 TEXAS SUPPLEMENTARY INFORMA HON 29

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35 ANDERSON MILL LIMITED DISTRICT TSI-1 SERVICES AND RATES For the Year Ended September. 30, Services provided by the District during the Fiscal Year: Retail Water Wholesale Water X Retail Wastewater Wholesale Wastewater X Parks/Recreation Fire Protection X X Solid Waste/Garbage Flood Control Participates in joint venture, regional system and/or wastewater service (other than emergency interconnect) Other (specify): Drainage Irrigation Security Roads 2. Retail Service Providers - N/A a. Retail rates based on 3/4" meter Flat Rate per 1,000 Minimum Minimum Rate Gallons Over Charge Usage Y/N Minimum Usage Levels Water $ $ - 0 $ - 0 $ - 0 $ - 0 Waste $ $ - 0 Basic Service Fee District employs winter averaging for wastewater usage? Yes_ No Total water and sewer charges per 10,000 gallons usage (including surcharges) b. Water and Wastewater Retail Connections: Meter Total Active ESFC Active Size Connections Connections Factor ESFCs <3/4" x In x /2" x " x " x Total water 0 Total wastewater x * Number of connections relates to water service, if provided. Otherwise, the number of wastewater connections should be provided. 3. Total Water Consumption (In Thousands) During the Fiscal Year - N/A Gallons pumped into system: Water Accountability Ratio: Gallons billed to customers: 31

36 ANDERSON MILL LIMITED DISTRICT TSI-2 GENERAL FUND EXPENDITURES For the Year Ended September 30, 2011 Current Personnel Services: $ 740,618 Purchased Services: Security 43,893 Bookkeeping 8,317 Garbage and recycling 587 Contracted services 174,303 Total 227,100 Professional: Auditing 9,890 Legal 13,262 Total 23,152 Programs and Events: 151,133 Utilities: 133,801 Repairs and Maintenance: 257,970 Capital Outlay: 61,022 Other: Administrative 68,823 Events 1,799 Director fees 11,100 Insurance 8,400 Travel and education 24,587 Total 114,709 Total Expenditures $ 1,709,505 Number of employees employed by the District: Full-time 10 Part-time 44 Note: During the summer, the District will have up to 77 part-time employees. 32

37 ANDERSON MILL LIMITED DISTRICT T S I- 3 CASH AND TEMPORARY INVESTMENTS For the Year Ended September 30, 2011 Funds Identification or Certificate Number Interest Rate (%) Maturity Date Balance Accrued Interest General Fund Cash 1113 $ 200 $ Certificates of deposit /22/ , Certificates of deposit /22/ , Certificates of deposit /22/ , Certificates of deposit /22/ , Checking Various Demand 34,825 Checking Various Demand 5,357 Money market Various Demand 327,449 Money market Various Demand 278,373 Money market Various Demand 12,912 Negotiable order of withdrawal Various Demand 223,713 Money market Various Demand 126,750 Money market Various Demand 684,054 TexPool Various Demand 49,116 US gov. securities 3 134G2SD5 Various 7/26/2013 1,999,336 US gov. securities DK6 Various 9/27/2013 1,497,369 US gov. securities 3134G2NW8 Various 7/18/2013 2,999,187 Municipal bonds 64966JAT3 Various 12/1/2012 1,011,490 Municipal bonds K91 Various 12/15/ ,225 Municipal bonds BN3 Various 8/15/ ,521 Total $ 10,922,875 $ 2,101 33

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39 ANDERSON MILL LIMITED DISTRICT TSI-4 ANALYSIS OF TAXES LEVIED AND RECEIVABLE For the Year Ended September 30, 2011 Taxes receivable - September 30, Adjusted tax roll Current year tax levy Total to be Accounted for Tax Collections Current year Prior years Total Collections Taxes Receivable - September 30, 2010 Taxes Receivable - By Year and prior Maintenance Taxes $ 66, , , ,479 15, ,601 $ 55,189 $ 3,629 51,560 Taxes Receivable - September 30, 2010 $ 55, Land and Improvement $ 526,873,812 $ 531,429,231 $ 569,047,349 $ 516,274,225 $ 472,090,418 Total Valuations $ 526,873,812 $ 531,429,231 $ 569,047,349 $ 516,274,225 $ 472,090,418 Tax Rates (Per $100 Valuation) Maintenance tax rates $ $ $ $ $ Total Tax Rate (per $100 Valuation) $ $ $ $ $ Tax Rolls $ 684,936 $ 2,125,717 $ 2,640,380 $ 2,395,512 $ 2,111,717 Maximum Tax Rate $