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HomeMy WebLinkAbout11/30/2024 - Report: FINANCIAL REPORT - Brazos County Municipal Utility District No. 1HOUSTON 3200 Southwest Freeway, Suite 2600 Houston, TX 77027 (713) 860-6400 Jane H. Miller Legal Assistant jmiller@abhr.com (713) 86o-6489 March 31, 2025 VIA EMAIL & U.S. MAIL Texas Commission on Environmental Quality Districts Creation Review Team Attn: Stephanie DeSouza MC-152 P.O. Box 13087 Austin, TX 78711-3087 disti-ict-fin@tceq.texas.gov Re: Brazos County Municipal Utility District No.1 (the "District") Dear Sir or Madam: Pursuant to Section 49.194, Texas Water Code, please find enclosed for filing with the Executive Director of the Texas Commission on Environmental Quality the District's audit report for the fiscal year ended November 30, 2024, and filing Affidavit. Copies of these documents are being sent by email and regular mail. Please acknowledge your receipt of the enclosed documents by email confirmation. If you have any questions, please call me at (713) 860-6489. Thank you. Sincerely, Jane H. Miller Legal Assistant Enclosures Cc: Build America Mutual via email notices@buildamerica.com CENTRAL TEXAS NORTH TEXAS 9j 9 Congress Avenue, Suite 15oo 4514 Cole Avenue, Suite 1450 abhr.com Aus tin, TX 78701 Dallas, TX 75205 (512) 518-24421r (972) 823-o800 March 31, 2025 Page 2 of 3 Standard & Poors Via email pubfin statelocalirovt@sp�7-lobal.com Municipal Advisory Council of Texas Via email mac@mactexas.com City of College Station via City Secretary's office Via email cso@cstx.Rov March 31, 2025 Page 3 of 3 bcc: uvdates@offcinco.com avik.b@bamunitax.com ANNUAL FILING AFFIDAVIT TCF STATE OF TEXAS COUNTY OF BRAZOS �� 1' �!�- 1A�,.1 n,. i I of the (Name of Duly Authorized District Representative) Brazos County Municipal Utility District No. 1 (Name of District) hereby swear, or affirm, that the district named above has reviewed and approved at a meeting of the Board of the Directors of the District on the 7th day of March, 2026 its annual audit report for the fiscal year or period ended 11 /30/2024 and those copies of the annual audit report have been filed in the district office, located at: 3200 Southwest Freeway, Suite 2600, Houston,Texas 77027 (Address of District) The annual filing affidavit and the attached copy of the audit report are being submitted to the Texas Commission on Environmental Quality in satisfaction of the annual filing requirements of Texas Water Code Section 49.194. Date: By: (Si ature Dist ' Representative) %% "t%-Agw I , - (Typed Name & Title of above District Representative) Sworn to and Subscribed to before me by this v day of (SEAL) 7 •`` ■ JANE HAWKE MILLER n�Notary public, St a of e 'sT •' `•'r= Comm. E to T xas Xpires 02-14-2027 NOia.,y ID 2654537 My Commission Expires On: Notary Public in the State of Texas. (Signature of Notary) TCEQ 0723 (Rev. 07/2012) Page 1 of 2 BRAZOS COUNTY MUNICIPAL UTILITY DISTRICT NO. 1 BRAZOS COUNTY, TEXAS FINANCIAL REPORT November 30, 2024 Table of Contents Independent Auditor's Report Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS Statement of Net Position and Governmental Funds Balance Sheet Statement of Activities and Governmental Funds Revenues, Expenditures and Changes in Fund Balances Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule — General Fund Notes to Required Supplementary Information TEXAS SUPPLEMENTARY INFORMATION Services and Rates General Fund Expenditures Investments Taxes Levied and Receivable Long -Term Debt Service Requirements by Years Change in Long -Term Bonded Debt Comparative Schedule of Revenues and Expenditures — General Fund Comparative Schedule of Revenues and Expenditures — Debt Service Fund Board Members, Key Personnel and Consultants Schedule PWe 1 7 16 17 19 36 37 TSI-1 40 TSI-2 42 TSI-3 43 TSI-4 44 TSI-5 45 TSI-6 50 TSI-7a 52 TSI-7b 54 TSI-8 56 McGRATH & CO., PLLC Certified Public Accountants 2900 North Loop West, Suite 880 Houston, Texas 77092 Independent Auditor's Report Board of Directors Brazos County Municipal Utility District No Brazos County, Texas Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of Brazos County Municipal Utility District No. 1 (the "District', as of and for the year ended November 30, 2024, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Brazos County Municipal Utility District No. 1, as of November 30, 2024, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Board ofDirectors Brazos County Municipal Utility District No. 1 Brazos County, Texas 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 generally accepted auditing standards 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 generally accepted auditing standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control - related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied 2 Board ofDirectors Brazos County Municipal Utility District No. 1 Brazos County, Texas 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. 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 Texas Supplementary Information schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such 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, the Texas Supplementary Information schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. Houston, Texas March 7, 2025 (Phis paSe inientionalll left blank) Management's Discussion and Analysis (This pag intentio nai�v l ft blank) Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November 30, 2024 Using this Annual Report Within this section of the financial report of Brazos County Municipal Utility District No. 1 (the "District"), the District's Board of Directors provides a narrative discussion and analysis of the financial activities of the District for the fiscal year ended November 30, 2024. This analysis should be read in conjunction with the independent auditor's report and the basic financial statements that follow this section. In addition to this discussion and analysis, this annual report consists of: • The District's basic financial statements; • Notes to the basic financial statements, which provide additional information essential to a full understanding of the data provided in the financial statements; • Supplementary information required by the Governmental Accounting Standards Board (GASB) concerning the District's budget; and • Other Texas supplementary information required by the District's state oversight agency, the Texas Commission on Environmental Quality (TCEQ. Overview of the Financial Statements The District prepares its basic financial statements using a format that combines fund financial statements and government -wide statements onto one financial statement. The combined statements are the Statement of Net Position and Governmental Funds Balance Sheet and the Statement of Aabilies and Governmental Funds Revenues, Expenditures and Changes in Fund Balances. Each statement contains an adjustments column which quantifies the differences between the government -wide and fund level statements. Additional details of the adjustments are provided in Note 2 to the basic financial statements. Government -Wide Financial Statements The focus of government -wide financial statements is on the overall financial position and activities of the District, both long-term and short-term. The District's government -wide financial statements consist of the Statement ofNet Position and the Statement ofActivities, which are prepared using the accrual basis of accounting. The Statement of Net Position includes all of the District's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the residual reported as net position. Over time, changes in net position may provide a useful indicator of whether the financial position of the District as a whole is improving or deteriorating. Accounting standards establish three components of net position. The net investment in capital assets component represents the District's investments in capital assets, less any outstanding debt or other borrowings used to acquire those assets. Resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The restricted component of net position consists of financial resources that are restricted for a specific purpose by enabling legislation or external parties. The unrestricted component of net position represents resources not included in the other components. 7 Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November 30, 2024 The Slatearent ofActivilies reports how the District's net position has changed during the fiscal year. All revenues and expenses are included on this statement, regardless of whether cash has been received or paid. Fund Financial Statements The fund financial statements include the Governmental Funds Balance Sheet and the Governmental Funds Revenues, Expenditures and Changes in Fund Balances. The focus of fund financial statements is on specific activities of the District rather than the District as a whole, reported using modified accrual accounting. These statements report on the District's use of available financial resources and the balances of available financial resources at the end of the year. Except for the General Fund, a specific fund is established to satis6T managerial control over resources or to satisfy finance -related legal requirements established by external parties, governmental statutes or regulations. For further discussion on the government -wide and fund financial statements, please refer to Note 1 in the financial statements. Financial Analysis of the District as a Whole The District's net position at November 30, 2024, was negative $31,744,617. The District's net position is negative because the District incurs debt to construct water and sewer facilities which it conveys to the City of College Station and roads which it conveys to Brazos County. A comparative summary of the District's overall financial position, as of November 30, 2024 and 2023, is as follows: 2024 2023 Current and other assets $ 2,735,304 $ 1,792,639 Capital assets 18,565,239 15,713,646 Total assets 21,300,543 17,506,285 Current liabilities 752,597 450,394 Long-term liabilities 50,521,685 40,293,989 Total liabilities 51,274,282 40,744,383 Total deferred inflows of resources 1,770,878 1,273,821 Net position Net investment in capital assets (1,994,513) (1,284,024) Restricted 144,194 201,421 Unrestricted (29,894,298) (23,429,316) Total net position $ (31,744,617) $ (24,511,919) Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November 30, 2024 The total net position of the District decreased during the current fiscal year by $7,232,698. A comparative summary of the District's Statement of Aetinilies for the past two fiscal years is as follows: 2024 2023 Revenues Property taxes, penalties and interest $ 1,287,625 $ 641,728 Other 86,906 35,505 Total revenues 1,374,531 677,233 Expenses Operating and administrative 409,774 358,951 Debt interest and fees 570,441 227,162 Developer interest 826,654 601,797 Debt issuance costs 697,097 339,454 Depreciation 170,218 132,711 Total expenses 2,674,184 1,660,075 Change in net position before other item (1,299,653) (982,842) Other item Transfers to other governments (5,933,045) (6,325,304) Change in net position (7,232,698) (7,308,146) Net position, beginning of year (24,511,919) (17,203,773) Net position, end of year $ (31,744,617) $ (24,511,919) Financial Analysis of the District's Funds The District's combined fund balances, as of November 30, 2024, were $709,273, which consists of $416,936 in the General Fund, $284,385 in the Debt Service Fund and $7,952 in the Capital Projects Fund. General Fund A comparative summary of the General Fund's financial position as of November 30, 2024 and 2023, is as follows: 2024 2023 Total assets $ 1,090,512 $ 1,044,351 Total liabilities $ 230,570 $ 183,404 Total deferred inflows 443,006 765,077 Total fund balance 416,936 95,870 Total liabilities, deferred inflows and fund balance $ 1,090,512 $ 1,044,351 9 Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November30, 2024 A comparative summary of the General Fund's activities for the current and prior fiscal year is as follows: 2024 2023 Total revenues $ 791,437 $ 417,517 Total expenditures (470,371) (331,250) Revenues over expenditures $ 321,066 $ 86,267 The District manages its activities with the objectives of ensuring that expenditures will be adequately covered by revenues each year and that an adequate fund balance is maintained. The District's primary financial resources in the General Fund are from a property tax levy, which is dependent upon assessed values in the District and the maintenance tax rate set by the District. The 2023 levy was recognized as revenues in the 2024 fiscal year, while the 2022 levy was recognized in the 2023 fiscal year (to the extent that these amounts were collected). While the District decreased its maintenance tax levy, property tax revenues increased because assessed values in the District increased from the prior year. Debt Sen ice Fund A comparative summary of the Debt Service Fund's financial position as of November 30, 2024 and 2023, is as follows: 2024 2023 Total assets $ 1,612,728 $ 748,288 Total liabilities $ - $ 14,063 Total deferred inflows 1,328,343 509,989 Total fund balance 284,385 224,236 Total liabilities, deferred inflows and fund balance $ 1,612,728 $ 748,288 A comparative summary of the Debt Service Fund's activities for the current and prior fiscal year is as follows: 2024 2023 Total revenues $ 568,939 $ 257,064 Total expenditures (700,296) (294,122) Revenues under expenditures (131,357) (37,058) Other changes in fund balance 191,506 181,063 Net change in fund balance $ 60,149 $ 144,005 The District's financial resources in the Debt Service Fund in both the current and prior fiscal year are from property tax revenues and capitalized interest from the sale of bonds. The difference between these financial resources and debt service requirements resulted in an increase in fund balance each year. It is important to note that the District sets its annual debt service tax rate as recommended by its financial advisor, who monitors projected cash flows in the Debt Service Fund to ensure that the District will be able to meet its future debt service requirements. 10 Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November 30, 2024 Capital Projeds Fund A comparative summary of the Capital Projects Fund's financial position as of November 30, 2024 and 2023, is as follows: 2024 2023 Total assets $ 32,064 $ - Total liabilities $ 24,112 $ 24,112 Total fund balance 7,952 (24,112) Total liabilities and fund balance $ 32,064 $ - A comparative summary of activities in the Capital Projects Fund for the current and prior fiscal year is as follows: 2024 2023 Total revenues $ 14,930 $ 1,407 Total expenditures (8,506,360) (3,684,051) Revenues under expenditures (8,491,430) (3,682,644) Other changes in fund balance 8,523,494 3,683,087 Net change in fund balance $ 32,064 $ 443 The District has had considerable capital asset activity in the last two fiscal years, which was financed with proceeds from the issuance of its Series 2024 Unlimited Tax Road Bonds in the current fiscal year and issuance of its Series 2023 Unlimited Tax Bonds in the prior fiscal year. General Fund Budgetary Highlights The Board of Directors adopts an annual unappropriated budget for the General Fund prior to the beginning of each fiscal year. The Board did not amend the budget during the fiscal year. Since the District's budget is primarily a planning tool, actual results varied from the budgeted amounts. Actual net change in fund balance was $83,052 less than budgeted. The Budgetary Comparison Scbedule on page 36 of this report provides variance information per financial statement line item. Capital Assets The District has entered into financing agreements with its developers for the financing of the construction of capital assets within the District. Developers will be reimbursed from proceeds of future bond issues or other lawfully available funds. These developer funded capital assets are recorded on the District's financial statements upon completion of construction. 11 Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November 30, 2024 Capital assets held by the District at November 30, 2024 and 2023, are summarized as follows: 2024 2023 Capital assets not being depreciated Land and improvements $ 11,375,313 $ 10,041,308 Capital assets being depreciated Drainage facilities 7,713,467 6,025,661 Landscaping improvements 22,560 22,560 7,736,027 6,048,221 Less accumulated depreciation Drainage facilities (540,461) (371,371) Landscaping improvements (5,640) (4,512) (546,101) (375,883) Depreciable capital assets, net 7,189,926 5,672,338 Capital assets, net $ 18,565,239 $ 15,713,646 Capital asset additions during the current fiscal year include the following: • Clearing, grubbing and mass grading no. 4 • Southern Pointe Sections 105, 109, 202 and 403 — drainage • Southern Pointe — storm sewer modification • Southern Pointe — sanitary sewer improvements The District and the City of College Station (the "City") have entered into an agreement which obligates the District to construct water and wastewater facilities to serve the District and, when completed, to convey title to the facilities to the City. Additional information is presented in Note 11. Additionally, the District and Brazos County (the "County") have entered into an agreement for the construction of road facilities within the boundaries of the District and, when completed, to convey title to the facilities to the County for acceptance into the County system. Additional information is presented in Note 12. Accordingly, these public water, sewer, and road facilities are not considered assets of the District. The estimated value of these assets is recorded as transfers to other governments upon completion of construction. This estimated cost is trued -up when the developers are reimbursed. For the year ended November 30, 2024, capital assets in the amount of $5,933,045 have been completed and recorded as transfers to other governments in the government -wide statements. Additional information is presented in Note 10, Long -Term Debt and Related Liabilities As of November 30, 2024, the District owes approximately $34,876,685 to its developers for completed projects and operating advances. The initial cost of the completed project and related liability is estimated based on actual construction costs plus 10-15% for engineering and other fees and is recorded on the District's financial statements upon completion of construction. As discussed 12 Brazos County Municipal Utility District No. 1 Management's Discussion and Analysis November 30, 2024 in Note 7, the District has an additional commitment in the amount of $14,817,789 for projects under construction by the developers. As noted, the District will owe its developers for these projects upon completion of construction. The District intends to reimburse the developers from proceeds of future bond issues or other lawfully available funds. The estimated cost of amounts owed to the developers are trued up when the developers are reimbursed. At November 30, 2024 and 2023, the District had total bonded debt outstanding as shown below: Series 2024 2023 2020 Road $ 1,825,000 $ 1,870,000 2022 1,510,000 1,550,000 2023 3,930,000 4,005,000 2024 Road 8,715,000 $ 15,980,000 $ 7,425,000 During the current fiscal year, the District issued $8,715,000 in unlimited tax road bonds. At November 30, 2024, the District had $230,005,000 unlimited tax bonds authorized, but unissued for the purposes of acquiring, constructing and improving the water, sanitary sewer and drainage systems within the District and the refunding of such bonds; and $93,345,000 for road improvements and the refunding of such bonds. Next Year's Budget In establishing the budget for the next fiscal year, the Board considered various economic factors that may affect the District, most notably projected revenues from property taxes and the projected cost of operating the District. A comparison of next fiscal year's budget to current fiscal year actual amounts for the General Fund is as follows: 2024 Actual Total revenues $ 791,437 Total expenditures (470,371) Revenues over expenditures 321,066 Beginning fund balance 95,870 Ending fund balance $ 416,936 13 2025 Budget $ 474,500 (430,820) 43,680 416,936 $ 460,616 (This p gr intextional# left hlagk) 14 Basic Financial Statements 15 Brazos County Municipal Utility District No. 1 Statement ofNet Position and Governmental Funds Balance Sheet November30, 2024 Debt Capital General Service Projects Statement of Fund Fund Fund Total Adjustments Net Position Assets Cash $ 99,985 $ 138,908 $ - $ 238,893 $ - $ 238,893 Investments 490,933 297,825 32,064 820,822 820,822 Taxes receivable, net 408,880 1,225,952 1,634,832 1,634,832 Internal balances 49,957 (49,957) Prepaid items 4,298 4,298 4,298 Restricted assets: Road maintenance fund 36,459 36,459 36,459 Capital assets not being depreciated 11,375,313 11,375,313 Capital assets, net 7,189,926 7,189,926 Total Assets $ 1,090,512 $ 1,612,728 $ 32,064 $ 2,735,304 18,565,239 21,300,543 Liabilities Accounts payable $ 112,227 $ - $ - $ 112,227 112,227 Other payables 203 203 203 .accrued legal expenses 104,220 24,112 128,332 128,332 Road maintenance fund advance 13,920 13,920 13,920 Accrued interest payable 162,915 162,915 Due to developers 34,876,685 34,876,685 Long-term debt Due within one year 335,000 335,000 Due after one year 15,645,000 15,645,000 Total Liabilities 230,570 24,112 254,682 51,019,600 51,274,282 Deferred Inflows of Resources Deferred property taxes 443,006 1,328,343 1,771,349 ! 1-1 1,770,878 Fund Balances/Net Position Fund Balances Nonspendable 4,298 4,298 (4,298) Restricted 22,539 284,385 7,952 314,876 (314,876) Unassigned 390,099 390,099 (390,099) Total Fund Balances 416,936 284,385 7,952 709,273 (709,273) Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 1,090,512 $ 1,612,728 $ 32,064 $ 2,735,304 Net Position Net investment in capital assets (1,994.513) (1,994,513) Restricted for debt service 121,655 121,655 Restricted for other purposes 22,539 22,539 Unrestricted (29,894,298) (29,894,298) Total Net Position S (31,744,617) $ (31,744,617) See notes to basic financial statements. 16 Brazos County Municipal Utility District No. 1 Statement ofActivides and Governmental Funds Revenues, Expenditures and Cbanges in Fund Balances For the Year Ended November 30, 2024 Debt Capital General Service Projects Statement of Fund Fund Fund Total Adjustments Activities Revenues Property taxes $ 759,850 $ 521,249 $ - $ 1,281,099 $ (775) $ 1,280,324 Penalties and interest 7,301 7,301 7,301 iVliscellaneous 10,867 10,867 10,867 Investment earnings 31,587 29,522 14,930 76,039 76,039 Total Revenues 791,437 568,939 14,930 1,375,306 (775) 1,374,531 Expenditures /Expense s Operating and administrative Professional fees 231,792 231,792 231,792 Contracted services 40,406 53,019 93,425 93,425 Repairs and maintenance 48,825 48,825 48,825 Administrative 22,531 3,903 26,434 26,434 Other 2,266 7,032 9,298 9,298 Capital outlay 124,551 6,982,609 7,107,160 (7,107,160) Debt service Principal 160,000 160,000 (160,000) Interest and fees 476,342 476,342 94,099 570,441 Developer interest 826,654 826,654 826,654 Debt issuance costs 697,097 697,097 697,097 Depreciation 170,218 170,218 Total Expenditures/Expenses 470,371 700,296 8,506,360 9,677,027 (7,002,843) 2,674,184 Revenues Over (Under) Expenditures/Expenses 321,066 (131,357) (8,491,430) (8,301,721) 7,002,068 (1,299,653) Other Financing Sources Proceeds from sale of bonds 191,506 8,523,494 8,715,000 (8,715,000) Other Item Transfers to other governments (5,933,045) (5,933,045) Net Change in Fund Balances 321,066 60,149 32,064 413,279 (413,279) Change in Net Position (7,232,698) (7,232,698) Fund Balance/Net Position Beginning of the year 95,870 224,236 (24,112) 295,994 (24,807,913) (24,511,919) End of the year $ 416,936 $ 284,385 $ 7,952 $ 709,273 $ (32,453,890) $ (31,744,617) See notes to basic financial statements. 17 (This page intentionally left blank) 18 Brazos County jVfunicipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Note 1— Summary of Significant Accounting Policies The accounting policies of Brazos County Municipal Utility District No. 1 (the "District' conform with accounting principles generally accepted in the United States of America as promulgated by the Governmental Accounting Standards Board ("GASB"). The following is a summary of the most significant policies: Creation The District was organized, created and established pursuant to an order of the Texas Commission on Environmental Quality, dated January 14, 2015, and operates in accordance with the Texas Water Code, Chapters 49 and 54. The Board of Directors held its first meeting on January 29, 2015, and the first bonds were issued on September 24, 2020. The District's primary activities include construction of water, sewer, drainage, and road facilities within the District. As further discussed in Note 11 and 12, the District transfers its water and sewer facilities to the City of College Station for operation and maintenance upon completion of construction and road facilities to Brazos County for acceptance into the public road system. The District has contracted with various consultants to provide services to operate and administer the affairs of the District. The District has no employees, related payroll or pension costs. Reporting Entity The District is a political subdivision of the State of Texas governed by an elected five -member board. The GASB has established the criteria for determining the reporting entity for financial statement reporting purposes. To qualify as a primary government, a government must have a separately elected governing body, be legally separate, and be fiscally independent of other state and local governments, while a component unit is a legally separate government for which the elected officials of a primary government are financially accountable. Fiscal independence implies that the government has the authority to adopt a budget, levy taxes, set rates, and/or issue bonds without approval from other governments. Under these criteria, the District is considered a primary government and is not a component unit of any other government. Additionallj,, no other entities meet the criteria for inclusion in the District's financial statements as component units. Government -Wide and Fund Financial Statements Government -wide financial statements display information about the District as a whole. These statements focus on the sustainability of the District as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. Interfund activity, if any, has been removed from these statements. These aggregated statements consist of the Statement of Net Position and the Statement ofActiuities. Fund financial statements display information at the individual fund level. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for a specific purpose. Each fund is considered to be a separate accounting entity. Most governments typically have many funds; however, governmental financial statements focus on the most important or "major" 19 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 funds with non -major funds aggregated in a single column. The District has three governmental funds, which are all considered major funds. The following is a description of the various funds used by the District: • The General Fund is used to account for the operations of the District's and all other financial transactions not reported in other funds. The principal sources of revenue are property taxes. Expenditures include costs associated with the daily operations of the District. • The Debt Service Fund is used to account for the payment of interest and principal on the District's general long-term debt. The primary source of revenue for debt service is property taxes. During the current fiscal year, financial resources also included capitalized interest from the sale of bonds. Expenditures include costs incurred in assessing and collecting these taxes. • The Capital Proiects Fund is used to account for the expenditures of bond proceeds for the construction of the District's water, sewer and drainage facilities and road improvements. As a special-purpose government engaged in a single governmental program, the District has opted to combine its government -wide and fund financial statements in a columnar format showing an adjustments column for reconciling items between the two. Measurement Focus and Basis of Accounting The government -wide financial statements use the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenue in the year for which they are levied. The fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized in the accounting period in which it becomes both available and measurable to finance expenditures of the current period. For this purpose, the government considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Revenues susceptible to accrual include property taxes and interest earned on investments. Property taxes receivable at the end of the fiscal year are treated as deferred inflows because they are not considered available to pay liabilities of the current period. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable, except for unmatured interest on long-term debt, which is recognized when due. Note 2 further details the adjustments from the governmental fund presentation to the government - wide presentation. Use of Restricted Resources W'hen both restricted and unrestricted resources are available for use, the District uses restricted resources first, then unrestricted resources as they are needed. NE Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Prepaid Items Certain payments made by the District reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government -wide and fund financial statements. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Receivables from and payables to external parties are reported separately and are not offset, unless a legal right of offset exists. At November 30, 2024, an allowance of $1,900 was provided for possible uncollectible property taxes. An allowance for uncollectible water/sewer accounts was not considered necessary. Interfund Activity During the course of operations, transactions occur between individual funds. This can include internal transfers, payables and receivables. This activity is combined as internal balances and is eliminated in both the government -wide and fund financial statement presentation. Capital Assets Capital assets do not provide financial resources at the fund level, and, therefore, are reported only in the government -wide statements. The District defines capital assets as assets with an initial cost that exceeds the capitalization threshold for the asset class and an estimated useful life in excess of one year. Capital assets that individually are below the capitalization threshold but, in the aggregate, are above the threshold are capitalized. Subsequent replacements of these assets that do not exceed the threshold are not capitalized. The District's capitalization threshold for infrastructure assets is $50,000. Capital assets are recorded at historical cost or estimated historical cost. Donated capital assets are recorded at acquisition value, which is the price that would be paid to acquire the asset on the acquisition date. The District has not capitalized interest incurred during the construction of its capital assets. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized. Depreciable capital assets, which primarily consist of drainage facilities, are depreciated using the straight-line method as follows: Assets Useful Life Infrastructure 45 years Landscaping improvements 20 years The District's detention facilities and drainage channels are considered improvements to land and are non -depreciable. 21 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Deferred Inflows and Outflows of Financial Resources A deferred inflow of financial resources is the acquisition of resources in one period that is applicable to a future period, while a deferred outflow of financial resources is the consumption of financial resources in one period that is applicable to a future period. A deferred inflow results from the acquisition of an asset without a corresponding revenue or assumption of a liability. A deferred outflow results from the use of an asset without a corresponding expenditure or reduction of a liability. At the fund level, property taxes receivable not collected within 60 days of fiscal year end do not meet the availability criteria required for revenue recognition and are recorded as deferred inflows of financial resources. Additionally, collections of the 2024 property tax levy are not considered current year revenues and, consequently, are also reported as deferred property taxes. Deferred inflows of financial resources at the government -wide level consist of the 2024 property tax levy, which was levied to finance the 2025 fiscal year. Net Position — Governmental Activities Governmental accounting standards establish the following three components of net position: Net investment in capital assets — represents the District's investments in capital assets, less any outstanding debt or other borrowings used to acquire those assets. Restricted — consists of financial resources that are restricted for a specific purpose by enabling legislation or external parties. Unrestricted — resources not included in the other components. Fund Balances — Governmental Funds Governmental accounting standards establish the following fund balance classifications: Nonspendable - amounts that cannot be spent either because they are in nonspendable form or because they are legally or contractually required to be maintained intact. The District's nonspendable fund balance consists of prepaid items. Restricted - amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments. The District's restricted fund balances consist of cash held in escrow for road maintenance in the General Fund, property taxes levied for debt service in the Debt Service Fund, and unspent bond proceeds in the Capital Projects Fund. Committed - amounts that can be used only for specific purposes determined by a formal action of the Board of Directors. The Board is the highest level of decision -making authority for the District. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Board. Committed fund balance also incorporates contractual obligations to the 22 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. The District does not have any committed fund balances. Assigned - amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. The District has not adopted a formal policy regarding the assignment of fund balances and does not have any assigned fund balances. Unassigned - all other spendable amounts in the General Fund. 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 funds, then assigned funds, and finally unassigned funds. Use of Estimates 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, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses/expenditures during the period reported. These estimates include, among others, the collectability of receivables; the useful lives and impairment of capital assets; the value of amounts due to developers; the value of capital assets transferred to the City of College Station and Brazos County and the value of capital assets for which the developers have not been fully reimbursed. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results could differ from the estimates. 23 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Note 2 — Adjustment from Governmental to Government -wide Basis Reconciliation of the Governmental Funds Balance Sheet to the Statement ofNet Position Total fund balance, governmental funds $ 709,273 Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. Historical cost $ 19,111,340 Less accumulated depreciation (546,101) 18,565,239 Long-term liabilities are not due and payable in the current period and, therefore, are not reported as liabilities in the governmental funds. The difference consists of: Accrued interest payable (162,915) Due to developers (34,876,685) Bonds payable (15,980,000) (51,019,600) Deferred inflows in the fund statements consist of the unavailable portion of property taxes receivable, as well as collections of the District's 2024 property tax levy. In the Statement of Net Position, deferred inflows consist of the entire 2024 property tax levy. Fund level deferred property taxes 1,771,349 Government -wide level deferred property taxes (1,770,878) 471 Total net position - governmental activities $ (31,744,617) 24 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement ofActivities Net change in fund balances - total governmental funds $ 413,279 Governmental funds do not report revenues that are not available to pay current obligations. In contrast, such revenues are reported in the Statement ofAah)ities when earned. The difference is for property taxes. (775) Financial reporting for capital assets varies significantly between the fund statements and the government -wide statements. Reporting at the fund level focuses on the impact of transactions on financial resources (i.e., cash), while reporting at the government -wide level seeks to allocate the cost of the acquisition of capital assets over their useful lives and to measure the economic impact of developer financing of capital assets used by the District or conveyed to other governmental entities. Differences during the current fiscal ,year are for the following: Capital outlays $ 7,107,160 Transfers to other governments (5,933,045) Depreciation expense (170,218) 1,003,897 Financial reporting for certain obligations varies between the fund statements and the government -wide statements. At the fund level, the focus is on increases and decreases of financial resources as debt is issued and repaid. At the government -wide level, the focus is on measuring and reporting on changes in the District's obligation to repay liabilities in the future. Differences during the current fiscal year are for the following: Issuance of long-term debt (8,715,000) Principal payments 160,000 Interest expense accrual (94,099) (8,649,099) Change in net position of governmental activities $ (7,232,698) Note 3 — Implementation of New Accounting Guidance During the current fiscal year, the District implemented GASB Implementation Guide ("GASBIG") 2021-1, Question 5.1, which requires the capitalization of the acquisition of a group of individual capital assets whose individual acquisition costs are less than the capitalization threshold when the cost of the acquisition of the assets in the aggregate is significant. This new guidance had no effect on the District's financial statements during the current fiscal year. 25 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Note 4 — Deposits and Investments Deposit Custodial Credit Risk Custodial credit risk as it applies to deposits (i.e. cash) is the risk that, in the event of the failure of the depository institution, a government will not be able to recover its deposits or will not be able to recover collateral securities. The Public Funds Collateral Act (Chapter 2257, Texas Government Code) requires that all of the District's deposits with financial institutions be covered by federal depository insurance and, if necessary, pledged collateral held by a third -party custodian. The act further specifies the types of securities that can be used as collateral. The District's written investment policy establishes additional requirements for collateralization of deposits. Restricted Cash As discussed in Note 12, the District entered into that First Supplement to Interlocal and Funding Agreement for the Maintenance of Roads between Brazos County and the District, as well as a related escrow agreement with Central Bank, the Escrow Agent. Pursuant to the agreement, the District has $36,459 in an escrow account, which is reported as restricted cash in the General Fund. Investments The District is authorized by the Public Funds Investment Act (Chapter 2256, Texas Government Code) to invest in the following: (1) obligations, including letters of credit, of the United States or its agencies and instrumentalities, including Federal Home Loan Banks, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) certain collateralized mortgage obligations, (4) other obligations, which are unconditionally guaranteed or insured by the State of Texas or the United States or its agencies or instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States, (5) certain A rated or higher obligations of states and political subdivisions of any state, (6) bonds issued, assumed or guaranteed by the State of Israel, (7) certain insured or collateralized certificates of deposit and share certificates, (8) certain fully collateralized repurchase agreements, (9) bankers' acceptances with limitations, (10) commercial paper rated A-1 or P-1 or higher and a maturity of 270 days or less, (11) no-load money market mutual funds and no-load mutual funds, with limitations, (12) certain guaranteed investment contracts, (13) certain qualified governmental investment pools and (14) a qualified securities lending program. The District has adopted a written investment policy to establish the principles by which the District's investment program should be managed. This policy further restricts the types of investments in which the District may invest. 26 Brazos County Municipal Ua kty District No. 1 Notes to Financial Statements November 30, 2024 As of November 30, 2024, the District's investments consist of the following: Weighted Carrying Average Type Fund Value Rating Maturity TexPool General $ 490,933 Debt Service 297,825 Capital Projects 32,064 $ 820,822 A.�—Am 40 days TexPool The District participates in TexPool, the Texas Local Government Investment Pool. The State Comptroller of Public Accounts exercises oversight responsibility of TexPool, which includes (1) the ability to significantly influence operations, (2) designation of management and (3) 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. As permitted by GAAP, TexPool uses amortized cost (which excludes unrealized gains and losses) rather than market value to compute share price and seeks to maintain a constant dollar value per share. Accordingly, the fair value of the District's position in TexPool is the same as the value of TexPool shares. Investments in TexPool may be withdrawn on a same day basis, as long as the transaction is executed by 3:30 p.m. Investment Credit and Interest Rate Risk Investment credit risk is the risk that the investor may not recover the value of an investment from the issuer, while interest rate risk is the risk that the value of an investment will be adversely affected by changes in interest rates. The District's investment policies do not address investment credit and interest rate risk beyond the rating and maturity restrictions established by state statutes. Note 5 — Interfund Balances and Transactions Amounts due to/from other funds at November 30, 2024, consist of the following: Receivable Fund Payable Fund Amounts Purpose General Fund Debt Service Fund $ 49,957 Maintenance and road maintenance tax collections not remitted as of year end Amounts reported as internal balances between funds are considered temporary balances and will be paid during the following fiscal year. 27 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 Note 6 — Capital Assets A summary of changes in capital assets, for the year ended November 30, 2024, is as follows: Capital assets not being depreciated Land and improvements Capital assets being depreciated Drainage facilities Landscaping improvements Less accumulated depreciation Drainage facilities Landscaping improvements Subtotal depreciable capital assets, net Capital assets, net Beginning Addtions/ Ending Balances Adjustments Balances $ 10,041,308 $ 1,334,005 $ 11,375,313 6,025,661 1,687,806 7,713,467 22,560 22,560 6,048,221 1,687,806 7,736,027 (371,371) (169,090) (540,461) (4,512) (1,128) (5,640) (375,883) (170,218) (546,101) 5,672,338 1,517,588 7,189,926 $ 15,713,646 $ 2,851,593 $ 18,565,239 Depreciation expense for the current fiscal year was $170,218. Note 7 — Due to Developers The District has entered into financing agreements with its developers for the financing of the construction of water, sewer and drainage facilities and road improvements. Under the agreements, the developers will advance funds for the construction of facilities to serve the District. The developers will be reimbursed from proceeds of future bond issues or other lawfully available funds, subject to approval by TCEQ, as applicable. The District does not record the capital asset and related liability on the government -wide statements until construction of the facilities is complete. The initial cost is estimated based on construction costs plus 10-15% for engineering and other fees. Estimates are trued up when the developers are reimbursed. Changes in the estimated amounts due to developers during the fiscal year are as follows: Due to developers, beginning of year $ 33,028,989 Developer reimbursements (6,982,609) Developer funded construction and adjustments 8,830,305 Due to developers, end of year $ 34,876,685 In addition, the District will owe the developers approximately $14,817,789, which is included in the following schedule of contractual commitments. The exact amount is not known until approved by W Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 the TCEQ and verified by the District's auditor. As previously noted, these projects will be reported in the government -wide financial statements upon completion of construction. Contract Percent Amount Complete Southern Pointe: Lift station upgrade $ 430,597 89% Section 203 - utilities 2,933,006 68% Section 700 - utilities 3,460,571 9% Section 401 - replat 3,249,336 0% Detention and mass grading no. 5 3,076,658 29% Offsite drainage for mass grading no. 5 1,667,621 0% $ 14,817,789 Note 8 — Long -Term Debt Long-term debt is comprised of the following: Bonds payable $ 15,980,000 Due within one year $ 335,000 The District's bonds payable at November 30, 2024, consists of unlimited tax bonds as follows: Maturity Date, Serially, Interest Amounts Original Interest Beginning/ Payment can Series Outstanding Issue Rates Ending Dates Dates 2020 S 1,825,000 $ 2,000,000 1.50% - 3.15% September 1, March 1, September 1, Road 2021/2050 September 1 2026 2022 1,510,000 1,590,000 2.00% - 3.00% September 1, March 1, September 1, 2023/2046 September 1 2027 2023 3,930,000 4,005,000 4.125% - 6.625% September 1, March 1, September 1, 2024/2050 September 1 2028 2024 8,715,000 8,715,000 4.00% - 6.50% September 1, March 1, September 1, Road 2025/2050 September 1 2030 $ 15,980,000 Payments of principal and interest on all series of bonds are to be provided from taxes levied on all properties within the District. Investment income realized by the Debt Service Fund from investment of idle funds will be used to pay outstanding bond principal and interest. The District is in compliance with the terms of its bond resolutions. PA Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 At November 30, 2024, the District had authorized but unissued bonds in the amount of $230,005,000 for water, sewer and drainage facilities and the refunding of such bonds; and $93,345,000 road improvements and the refunding of such bonds. On February 22, 2024, the District issued its $8,715,000 Series 2024 Unlimited Tax Road Bonds at a net effective interest rate of 4.362468%. Proceeds of the bonds were used (1) to reimburse developers for the following: the construction of capital assets within the District; engineering and other costs associated with the construction of capital assets; the acquisition of land for certain District facilities; (2) to pay developer interest at the net effective interest rate of the bonds and (3) to pay capitalized interest into the Debt Service Fund. The change in the District's long-term debt during the fiscal year is as follows: Bonds payable, beginning of year $ 7,425,000 Bonds issued 8,715,000 Bonds retired (160,000) Bonds payable, end of year $ 15,980,000 30 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 As of November 30, 2024, annual debt service requirements on bonds outstanding are as follows: Year Principal Interest Totals 2025 $ 335,000 $ 651,661 $ 986,661 2026 350,000 634,067 984,067 2027 365,000 615,492 980,492 2028 385,000 596,105 981,105 2029 400,000 575,583 975,583 2030 425,000 556,400 981,400 2031 445,000 536,015 981,015 2032 470,000 519,946 989,946 2033 490,000 502,819 992,819 2034 515,000 484,820 999,820 2035 535,000 465,722 1,000,722 2036 550,000 445,819 995,819 2037 575,000 425,131 1,000,131 2038 605,000 403,432 1,008,432 2039 625,000 380,638 1,005,638 2040 665,000 356,850 1,021,850 2041 690,000 331,350 1,021,350 2042 725,000 304,838 1,029,838 2043 765,000 276,926 1,041,926 2044 805,000 246,919 1,051,919 2045 845,000 215,113 1,060,113 2046 880,000 181,685 1,061,685 2047 820,000 146,843 966,843 2048 865,000 113,379 978,379 2049 900,000 77,742 977,742 2050 950,000 39,925 989,925 $ 15,980,000 $ 10,085,220 $ 26,065,220 Note 9 - Property Taxes On November 3, 2015, the voters of the District authorized the District's Board of Directors to levy taxes annually for use in financing general operations limited to $1.00 per $100 of assessed value. In addition, the voters authorized the District's Board of Directors to levy a road maintenance tax limited to $0.25 per $100 of assessed value. The District's bond resolutions require that property taxes be levied for use in paying interest and principal on long-term debt and for use in paying the cost of assessing and collecting taxes. Taxes levied to finance debt service requirements on long-term debt are without limitation as to rate or amount. All property values and exempt status, if any, are determined by the Brazos Central Appraisal District. Assessed values are determined as of January 1 of each year, at which time a tax lien attaches to the related property. Taxes are levied around October/November, are due upon receipt and are delinquent the following February 1. Penalty and interest attach thereafter. 31 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November30, 2024 Property taxes are collected based on rates adopted in the year of the levy. The District's 2024 fiscal year was financed through the 2023 tax levy, pursuant to which the District levied property taxes of $1.00 per $100 of assessed value, of which $0.585 was allocated to maintenance and operations, $0.015 was allocated to road maintenance and operations, $0.355 was allocated to debt service, and $0.045 was allocated to road debt service. The resulting tax levy was $1,265,615 on the adjusted taxable value of $126,561,450. Property taxes levied each October are intended to finance the next fiscal year and are, therefore, not considered available for the District's use during the current fiscal year. Consequently, 2024 levy collections in the amount of $136,518 have been included with deferred property taxes and are recorded as deferred inflows of resources on the Governmental Funds Balance Sheet. On the government - wide Statement of Net Position, the full 2024 tax levy of $1,770,878 is reported as deferred inflows. These amounts will be recognized as revenue in 2025. Net property taxes receivable, at November 30, 2024, consisted of the following: Current year taxes receivable $ 1,634,360 Prior years taxes receivable 2,372 Less allowance for uncollectible accounts (1,900) Net property taxes receivable $ 1,634,832 Note 10 — Transfers to Other Governments In accordance with an agreement between the District and the City of College Station (the "City"), the District transfers its water and sewer facilities to the City for operation and maintenance upon completion of construction. See Note 11 for additional information. Additionally, the District and Brazos County (the "County") have entered into that First Supplement to Interlocal and Funding Agreement for the Maintenance of Roads for the construction of road facilities within the boundaries of the District and, when completed, to convey title to the facilities to the County for acceptance into the County public road system. See Note 12 for additional information. Accordingly, the District does not record these capital assets in the Statement of Net Position, but instead reports the completed projects as transfers to other governments on the Statement of Activities. The estimated cost of each project is trued -up when the developers are subsequently reimbursed. For the year ended November 30, 2024, the District reported transfers to other governments in the amount of $5,933,045 for projects completed and transferred. Note 11— Agreements with the City of College Station Utility Agreement On May 31, 2016, subsequently amended December 2, 2016, the District entered into a Utility Agreement (the "Agreement") with the City of College Station (the "City") for construction and extension of water distribution lines and sanitary sewer collection systems to serve the District. As the system is acquired or constructed, the District shall transfer the system to the City but will reserve a 32 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November30, 2024 security interest in the system and provide service to all users in the District. The term of the Agreement is for 30 years. Water and sewer rates charged by the City (before surcharges below are added) to users in the District, shall be the same rates charged to similar classifications of users in non -municipal utility district areas and within the City. All revenue derived from these charges belongs to the City. In lieu of impact fees, the City may levy a surcharge of up to fifty percent on then -current water rates for each customer in the District to recover the capital costs of providing such services. The Agreement further states that the City will participate on construction costs of certain off -site infrastructure that is required to provide services for the District. Strategic Partnership Agreement On May 31, 2016, the District entered into a Strategic Partnership Agreement (the "SPA Agreement") with the City of College Station (the "City"). The SPA Agreement provides for a limited purpose annexation of certain areas of the District that have been developed for retail and commercial purposes. The City agrees not to annex the District for full purposes during the 30-year term of the SPA Agreement. The District will continue to provide drainage services to all properties within its boundaries until full annexation. Note 12 — Interlocal and Funding Agreement for the Maintenance of Roads On December 27, 2016, the District entered into an Interlocal and Funding Agreement for the Maintenance of Roads (the "Interlocal Agreement") with Brazos County and its developer, Southern Pointe LLC, ("the "Developer"). On March 5, 2024, the District and Brazos County entered into that First Supplement to Interlocal and Funding Agreement for the Maintenance of Roads. The District and/or the Developer shall construct or improve new or existing roads to serve the District to standards required by the City. Subject to such standards, the County agrees to accept the roads into the County system. On January 5, 2024, the District entered into an Escrow Agreement with Central Bank (the "Escrow Agreement") as required by the Interlocal Agreement for the maintenance of roads. Pursuant to the Escrow Agreement, Central Bank will hold the funds required for the maintenance of roads. The District has agreed to be responsible for all costs of maintenance of the roads and to pay for maintenance costs by keeping a maintenance bond or surety in place until either the District is annexed into the City or the District maintains a separate account with a sufficient balance for road maintenance, whichever is earlier. As of November 30, 2024, the District has $36,459 held in escrow for the maintenance of roads, which is reported as restricted cash. Note 13 — 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 personal injuries. The risk of loss is covered by commercial insurance. 33 Brazos County Municipal Utility District No. 1 Notes to Financial Statements November 30, 2024 There have been no significant reductions in insurance coverage from the prior year. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. 34 Required Supplementary Information 35 Brazos County Municipal Utility District No. 1 Required Supplementary Information -Budgetary Comparison Schedule -General Fund For the Year Ended November 30, 2024 Variance Original and Positive Final Budget Actual (Negative) Revenues Property taxes $ 753,872 $ 759,850 $ 5,978 Investment earnings 18,346 31,587 13,241 Total Revenues 772,218 791,437 19,219 Expenditures Operating and administrative Professional fees 214,000 231,792 (17,792) Contracted services 41,500 40,406 1,094 Repairs and maintenance 29,000 48,825 (19,825) Administrative 20,800 22,531 (1,731) Other 2,800 2,266 534 Capital outlay 60,000 124,551 (64,551) Total Expenditures 368,100 470,371 (102,271) Revenues Over Expenditures 404,118 321,066 (83,052) Fund Balance Beginning of the year 95,870 95,870 End of the year $ 499,988 $ 416,936 $ (83,052) 36 Brazos County Municipal Utility District No. 1 Notes to Required Supplementarylnformation November 30, 2024 Budgets and Budgetary Accounting An annual unappropriated budget is adopted for the General Fund by the District's Board of Directors. The budget is prepared using the same method of accounting as for financial reporting. There were no amendments to the budget during the fiscal year. 37 (Ibir pale intentionally left blank) 38 Texas Supplementary Information 39 Brazos County Municipal Utility District No. 1 TSI-L Services and Rates November 30, 2024 1. Services provided by the District During the Fiscal Year: Retail Water Wholesale Water 11 Solid Waste / Garbage ❑X Drainage Retail Wastewater Wholesale Wastewater Flood Control Irrigation Parks / Recreation Fire Protection r-xl Roads 11 Security Participates in joint venture, regional system and/or wastewater service (other than emergency interconnect) Other (Specify): Water and sewer services provided by the City of College Station 2. Retail Service Providers a. Retail Rates for a 5/8" meter (or equivalent): Rate per 1,000 Minimum Minimum Flat Rate Gallons Over Charge Usage (Y / N) Minimum Usage Usage Levels Water: to Wastewater: to Surcharge: to District employs winter averaging for wastewater usage? Yes No Total charges per 10,000 gallons usage: Water Wastewater b. Water and Wastewater Retail Connections: Total Active Active Meter Size Connections Connections ESFC Factor ESFC'S Unmetered x 1.0 less than 3/4" x 1.0 1" x 2.5 1.5" x 5.0 2" x 8.0 3" x 15.0 4" x 25.0 6" x 50.0 8" x 80.0 10" x 115.0 Total Water Total Wastewater x 1.0 See accompanying auditor's report 40 Brazos County Nfurucipal Utility District No. 1 TH-L Services and Rates November30, 2024 3. Total Water Consumption during the fiscal year (rounded to the nearest thousand): Gallons pumped into system: N/A Water Accountability Ratio: (Gallons billed / Gallons pumped) Gallons billed to customers: N/A N/A 4. Standby Fees (authorized only under T`VVC Section 49.231): Does the District have Debt Service standby fees? Yes No If yes, Date of the most recent commission Order: Does the District have Operation and Maintenance standby fees? Yes1-1 No If yes, Date of the most recent commission Order: 5. Location of District: Is the District located entirely within one county? County(ies) in which the District is located: Is the District located within a city? Yes[ —XI NoEl Brazos County Entirely E]Partlp Not at all EX City(ies) in which the District is located: Is the District located within a city's extra territorial jurisdiction (ETJ)? Entirely X Partly Not at all ETJs in which the District is located: City of College Station Are Board members appointed by an office outside the district? Yes No I X] If Yes, by whom? See accompanying auditor's report. 41 Brazos County Municipal Utility District No. 1 TH--2. General Fund Expenditures For the Year Ended November 30, 2024 Professional fees Legal $ 151,420 Audit 14,500 Engineering 65,872 231,792 Contracted services Bookkeeping 35,906 Tax assessor 4,500 40,406 Repairs and maintenance 48,825 Administrative Directors fees 11,539 Printing and office supplies 1,492 Insurance 2,948 Other 6,552 22,531 Other 2,266 Capital outlay 124,551 Total expenditures $ 470,371 See accompanying auditor's report. 42 Brazos County Municipal Utility Distract No. I TSI-3. Investments November 30, 2024 Interest Maturity Balance at End Fund Rate Date of Year General TexPool Variable N/A $ 490,933 Debt Service TexPool Variable N/A 115,695 TexPool Variable N/A 182,130 297,825 Capital Projects TexPool Variable N/A 32,064 Total - All Funds $ 820,822 See accompanying auditor's report. 43 Brazos County Municipal Utility District No. 1 TSI-4. Taxes Levied and Receivable November30, 2024 Road Maintenance Maintenance WSD Debt Road Debt Taxes Taxes Service Taxes Service Taxes Totals Beginning Taxes Receivable $ 719,654 $ 18,432 $ 436,357 $ 55,640 $ 1,230,083 Adjustments (4,819) (123) (2,916) (377) (8,235) Adjusted Receivable 714,835 18,309 433,441 55,263 1,221,848 2024 Original Tax Levy 423,378 27,024 414,370 936,836 1,801,608 Adjustments (7,222) (461) (7,068) (15,979) (30,730) 2024 Adjusted Tax Levy 416,156 26,563 407,302 920,857 1,770,878 Total to be accounted for 1,130,991 44,872 840,743 976,120 2,992,726 Tax collections: Current year 32,082 2,048 31,399 70,989 136,518 Prior years 714,549 18,305 433,335 55,187 1,221,376 Total Collections 746,631 20,353 464,734 126,176 1,357,894 Ending Taxes Receivable $ 384,360 $ 24,519 $ 376,009 $ 849,944 $ 1,634,832 Taxes Receivable, By Years 2024 $ 384,074 $ 24,515 $ 375,903 $ 849,868 $ 1,634,360 2023 138 4 84 11 237 2022 148 22 65 235 Ending Taxes Receivable $ 384,360 $ 24,519 $ 376,009 $ 849,944 $ 1,634,832 2024 2023 2022 2021 Property Valuations Land $ 46,511,148 5 39,029,995 $ 20,779,758 $ 15,672,564 Improvements 135,804,682 91,307,412 43,912,475 19,587,478 Personal Property 184,058 112,464 92,689 51,668 Exemptions (5,412,080) (3,888,421) (1,023,730) (292,204) Total Property Valuations $ 177,087,808 $ 126,561,450 $ 63,761,192 $ 35,019,506 Tax Rates per $100 Valuation: Maintenance tax rates $ 0.235 $ 0.585 $ 0.630 $ Road maintenance tax rates 0.015 0.015 Debt service tax rates 0.230 0.355 0.095 Road debt service tax rates 0.520 0.045 0.275 Total Tax Rates per $100 Valuation $ 1.000 $ 1.000 $ 1.000 $ Adjusted Tax Levy: $ 1,770,878 $ 1,265,615 $ 637,612 $ Percentage of Taxes Collected to Taxes Levied ** 7.71% 99.98% 99.96% * Maximum Maintenance Tax Rate Approved by Voters: 31.00 on November 3. 2015 * Maximum Road Maintenance Tax Rate Approved by Voters: $0.25 on November 3.2015 ** Calculated as taxes collected for a tax year divided by taxes levied for that tax year. See accompanying auditor's report. 44 0.71 0.29 1.00 350,195 100.00% Brazos County Municipal Utility District No. 1 TH-5. Long -Term Debt Service Requirements Series 2020 Road --by Years November 30, 2024 Interest Due Due During Fiscal Principal Due March 1, Years Ending September 1 September 1 Total 2025 $ 50,000 $ 51,960 $ 101,960 2026 50,000 50,960 100,960 2027 55,000 49,960 104,960 2028 55,000 48,805 103,805 2029 55,000 47,595 102,595 2030 60,000 46,330 106,330 2031 60,000 44,890 104,890 2032 65,000 43,390 108,390 2033 65,000 41,700 106,700 2034 70,000 39,945 109,945 2035 70,000 37,985 107,985 2036 60,000 36,025 96,025 2037 60,000 34,225 94,225 2038 65,000 32,425 97,425 2039 65,000 30,475 95,475 2040 70,000 28,525 98,525 2041 70,000 26,425 96,425 2042 75,000 24,325 99,325 2043 75,000 22,000 97,000 2044 80,000 19,675 99,675 2045 85,000 17,195 102,195 2046 85,000 14,560 99,560 2047 90,000 11,925 101,925 2048 95,000 9,135 104,135 2049 95,000 6,143 101,143 2050 100,000 3,150 103,150 $ 1,825,000 $ 819,728 $ 2,644,728 See accompanying auditors report. 45 Brazos County Alunicipal UdlityDistrict No. 1 TH-5. Long -Term Debt Service Requirements Series 2022--by Years November30, 2024 Due During Fiscal Principal Due Years Ending September 1 2025 $ 45,000 2026 45,000 2027 45,000 2028 50,000 2029 50,000 2030 55,000 2031 55,000 2032 60,000 2033 60,000 2034 65,000 2035 65,000 2036 70,000 2037 70,000 2038 75,000 2039 75,000 2040 80,000 2041 80,000 2042 85,000 2043 90,000 2044 95,000 2045 95,000 2046 100,000 $ 1,510,000 See accompanying auditor's report. 46 Interest Due March 1, September 1 $ 40,594 $ E W 39,694 38,794 37,894 36,894 35,894 34,725 33,488 31,988 30,488 28,700 26,913 24,988 23,063 21,000 18,750 16,350 13,950 11,400 8,700 5,850 3,000 563,117 Total 85,594 84,694 83,794 87,894 86,894 90,894 89,725 93,488 91,988 95,488 93,700 96,913 94,988 98,063 96,000 98,750 96,350 98,950 101,400 103,700 100,850 103,000 2,073,117 Brazos County Municipal UtrlityDistrict No. 1 TSI-5. Long -Term Debt Service Requirements Series 2023--by Years November30, 2024 Due During Fiscal Principal Due Years Ending September 1 2025 $ 75,000 2026 80,000 2027 85,000 2028 90,000 2029 95,000 2030 100,000 2031 105,000 2032 110,000 2033 115,000 2034 120,000 2035 125,000 2036 130,000 2037 140,000 2038 145,000 2039 150,000 2040 160,000 2041 165,000 2042 175,000 2043 185,000 2044 195,000 2045 205,000 2046 215,000 2047 225,000 2048 235,000 2049 245,000 2050 260,000 $ 3,930,000 See accompanying auditors report. 47 Interest Due March 1, September 1 $ 176,094 $ 171,125 165,825 160,194 154,231 150,313 146,188 141,856 137,319 132,575 127,625 122,469 117,106 111,331 105,350 99,163 92,363 85,350 77,913 70,050 61,518 52,550 43,143 33,300 22,724 11,700 2,769,375 Total 251,094 251,125 250,825 250,194 249,231 250,313 251,188 251,856 252,319 252,575 252,625 252,469 257,106 256,331 255,350 259,163 257,363 260,350 262,913 265,050 266,518 267,550 268,143 268,300 267,724 271,700 6,699,375 Brazos County Municipal Utility District No. 1 TH-5. Long -Term Debt Service Requirements Series 2024 Road --by Years November30, 2024 Interest Due Due During Fiscal Principal Due March 1, Years Ending September 1 September 1 Total 2025 $ 165,000 $ 383,013 $ 548,013 2026 175,000 372,288 547,288 2027 180,000 360,913 540,913 2028 190,000 349,212 539,212 2029 200,000 336,863 536,863 2030 210,000 323,863 533,863 2031 225,000 310,212 535,212 2032 235,000 301,212 536,212 2033 250,000 291,812 541,812 2034 260,000 281,812 541,812 2035 275,000 271,412 546,412 2036 290,000 260,412 550,412 2037 305,000 248,812 553,812 2038 320,000 236,613 556,613 2039 335,000 223,813 558,813 2040 355,000 210,412 565,412 2041 375,000 196,212 571,212 2042 390,000 181,213 571,213 2043 415,000 165,613 580,613 2044 435,000 148,494 583,494 2045 460,000 130,550 590,550 2046 480,000 111,575 591,575 2047 505,000 91,775 596,775 2048 535,000 70,944 605,944 2049 560,000 48,875 608,875 2050 590,000 25,075 615,075 $ 8,715,000 $ 5,933,000 $ 14,648,000 See accompanying auditor's report. 48 Brazos County Alunicipal Utility District No. 1 TSI-5. Long -Term Debt Service Requirements All Bonded Debt Series --by Years November 30, 2024 Interest Due Due During Fiscal Principal Due March 1, Years Ending September 1 September 1 Total 2025 $ 335,000 $ 651,661 $ 986,661 2026 350,000 634,067 984,067 2027 365,000 615,492 980,492 2028 385,000 596,105 981,105 2029 400,000 575,583 975,583 2030 425,000 556,400 981,400 2031 445,000 536,015 981,015 2032 470,000 519,946 989,946 2033 490,000 502,819 992,819 2034 515,000 484,820 999,820 2035 535,000 465,722 1,000,722 2036 550,000 445,819 995,819 2037 575,000 425,131 1,000,131 2038 605,000 403,432 1,008,432 2039 625,000 380,638 1,005,638 2040 665,000 356,850 1,021,850 2041 690,000 331,350 1,021,350 2042 725,000 304,838 1,029,838 2043 765,000 276,926 1,041,926 2044 805,000 246,919 1,051,919 2045 845,000 215,113 1,060,113 2046 880,000 181,685 1,061,685 2047 820,000 146,843 966,843 2048 865,000 113,379 978,379 2049 900,000 77,742 977,742 2050 950,000 39,925 989,925 $ 15,980,000 $ 10,085,220 $ 26,065,220 See accompanying auditors report. 49 Brazos County Municipal Utility District No. 1 TSI-6. Cbange in Long -Term Bonded Debt November30, 2024 Interest rate Dates interest payable Maturity dates Beginning bonds outstanding Bonds issued Bonds retired Ending bonds outstanding Interest paid during fiscal year Paying agent's name and city All Series Bond Issue Series 2020 Series 2024 Road Series 2022 Series 2023 Road 1.50% - 3.15% 2.00% - 3.00% 4.125% - 6.625% 4.00% - 6.50% 3/1; 9/1 3/1; 9/1 3/1; 9/1 3/1; 9/1 9/1/21-9/1/50 9/1/23-9/1/46 9/1/24-9/1/50 9/1/25 - 9/l/50 $ 1,870,000 $ 1,550,000 $ 4,005,000 $ - 8,715,000 (45,000) (40,000) (75,000) $ 1,825,000 $ 1,510,000 $ 3,930,000 $ 8,715,000 S 52,804 $ 41,394 $ 181,063 $ 223,424 Bank of New York Mellon Trust Company, N.A., Dallas, Texas Water, Sewer and Bond Authority: Drainage Bonds Road Bonds Amount Authorized by Voters $ 235,600,000 $ 104,060,000 Amount Issued (5,595,000) (10,715,000) Remaining To Be Issued $ 230,005,000 $ 93,345,000 All bonds are secured with tax revenues. Bonds may also be secured with other revenues in combination with taxes. Debt Service Fund cash and investments balance as of November 30, 2024: $ 436,733 Average annual debt service payment (principal and interest) for remaining term of all debt: $ 1,002,508 See accompanying auditor's report. Gill Totals $ 7,425,000 8,715,000 (160,000) $ 15,980,000 $ 498,685 51 Brazos County Municipal Utility District No. 1 TSI-7a. Comparative Schedule ofRevenues and Expenditures - General Fund For the Last Five Fiscal Years Amounts 2024 2023 2022 2021 2020 Revenues Property taxes $ 759,850 $ 400,930 $ 248,370 $ 132,055 $ 86,325 Penalties and interest 90 Miscellaneous 5,508 Investment earnings 31,587 11,079 726 19 75 Total Revenues 791,437 417,517 249,096 132,074 86,490 Expenditures Operating and administrative Professional fees 231,792 193,658 134,992 191,448 87,332 Contracted services 40,406 47,236 36,094 14,660 34,059 Repairs and maintenance 48,825 18,359 5,240 Administrative 22,531 11,847 8,535 9,943 50,045 Other 2,266 5,500 12,577 1,117 625 Capital outlay 124,551 54,650 Total Expenditures 470,371 331,250 192,198 222,408 172,061 Revenues Over (Under) Expenditures $ 321,066 $ 86,267 $ 56,898 $ (90,334) $ (85,571) *Percentage is negligible See accompanying auditor's report. 52 Percent of Fund Total Revenues 2024 2023 2022 2021 2020 96% 96% 100% 100% 100% 1% 4% 3% 100% 100% 100% 100% 100% 29% 46% 54% 145% 101% 5% 11% 14% 11% 39% 6% 4% 4% 3% 3% 3% 8% 58% * 1% 5% 1% 1% 16% 13% 59% 78% 76% 169% 199% 41% 22% 24% (69%) (99%) 53 Brazos County Municipal Utility District No. I TSI-7b. Comparative Schedule ofRevenues and Expenditures -Debt Service Fund For the Last Five Fiscal Years Amounts 2024 2023 2022 2021 2020 Revenues Property taxes $ 521,249 $ 235,894 $ 101,557 $ 70,989 $ - Penalties and interest 7,301 3,659 872 4,089 Miscellaneous 10,867 2,225 327 Investment earnings 29,522 15,286 1,955 80 12 Total Revenues 568,939 257,064 104,711 75,158 12 Expenditures Tax collection services 56,922 19,668 13,547 16,405 12 Other 7,032 7,161 6,713 Debt service Principal 160,000 85,000 45,000 40,000 Interest and fees 476,342 182,293 77,997 51,414 Total Expenditures 700,296 294,122 143,257 107,819 12 Revenues Over (Under) Expenditures $ (131,357) $ (37,058) $ (38,546) $ (32,661) $ - *Percentage is negligible See accompanying auditor's report. 54 Percent of Fund Total Revenues 2024 2023 2022 2021 2020 92% 92% 97% 95% 1% 1% 1% 5% 2% 1% 5% 6% 2% * 100% 100% 100% 100% 100% 100% 10% 8% 13% 22% 100% 1% 3% 6% 28% 33% 43% 53% 84% 71% 74% 68% 123% 115% 136% 143% 100% (230/.) (15%) (360/.) (43%) 0% 55 Brazos County Municipal Utility District No. 1 T5I-8. Board Members, Key Personnel and Consultants For the Year Ended November 30, 2024 Complete District Mailing Address: 3200 Southwest Freeway, Suite 2600 Houston, TX 77027 District Business Telephone Number: (713) 860-6400 Submission Date of the most recent District Registration Form g WC Sections 36.054 and 49.054): .duly 19, 2022 Limit on Fees of Office that a Director may receive during a fiscal year: $ (Set by Board Resolution -- TWC Section 49.060) 7,200 Term of Office (Elected or Fees of Expense Appointed) or Office Paid Reimburse - Names: Date Hired * ments Title at Year End Board Members Robert Goodwill 05/24 - 05/28 $ 1,326 $ 57 President Charles Moreau 05/22 - 05/26 2,431 74 Vice President Lawrence Hodges 05/24 - 05/28 1,768 Secretary Brian Fisher 05/22 - 05/26 1,547 Assistant Vice President Kyle Davis 05/24 - 05/28 2,210 134 Assistant Secretary Amounts Consultants Paid Allen Boone Humphries Robinson LLP 2015 Attorney General legal fees $ 122,888 Bond counsel 223,228 Municipal Accounts & Consulting, L.P. 2022 45,828 Bookkeeper B&A Municipal Tax Service, LLC 2015 12,147 Tax Collector Brazos Central Appraisal District Legislation 13,508 Property Valuation Perdue, Brandon, Fielder, Collins 2017 5,261 Delinquent Tax & Mott, LLP Attorney Pape -Dawson Engineers, Inc. 2021 114,363 Engineer McGrath & Co., PLLC 2015 24,250 Auditor Post Oak Municipal Advisors LLC 2018 152,790 Financial Advisor * Fees of 01ee are the amounts actually paid to a director during the District's fiscal year. See accompanying auditor's report. 56