HomeMy WebLinkAbout20122529.tiff RECEIVED
SEP 1 3 2012
WELD COUNTY
COMMISSIONERS
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
Weld County, Colorado
FINANCIAL STATEMENTS
December 31, 2011
2012-2529
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TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Governmental Funds Balance Sheet/Statement of Net Assets 2-3
Statement of Governmental Fund Revenues, Expenditures,
and Changes in Fund Balances/Statement of Activities 4-5
General Fund - Statement of Revenues, Expenditures,
And Changes in Fund Balance — Budget and Actual 6
Notes to Financial Statements 7-17
Supplemental Information
Conservation Trust - Schedule of Revenues, Expenditures,
And Changes in Fund Balance—Budget and Actual 18
Debt Service Fund - Schedule of Revenues, Expenditures,
And Changes in Fund Balance — Budget and Actual 19
Schedule of Debt Service Requirements to Maturity 20
L. PAUL GOEDECKE RC.
CERTIFIED PUBLIC ACCOUNTANTS
950 WADSWORTH BLVD
SUITE 204
LAKEWOOD. COLORADO 80214
TELEPHONE 13031 232 2858
FAX (3031 232-9452
I pgcpattgwestgfflce.net
Independent Auditor's Report
Board of Directors
Beebe Draw Farms Metropolitan District No. 1
We have audited the accompanying financial statements of the governmental activities and each major fund of
Beebe Draw Farms Metropolitan District No. l as of and for the year ended December 31,2011, which collectively
comprise the District's basic financial statements,as listed in the table of contents.These financial statements are the
responsibility of the District. Our responsibility is to express opinions on these financial statements based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free cf 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 the District, as well as evaluating the overall financial statement
presentation.We believe that our audit provides reasonable basis for our opinions.
Management has omitted the management's discussion and analysis that accounting principles generally accepted in
the United States of America require to be presented to supplement the basic financial statements. Such missing
information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial
statements are not affected by this missing information.
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 Beebe Draw Farms Metropolitan
District No. 1 as of December 31, 2011, and the respective changes in financial position and the respective
budgetary comparison for the general fund for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the District's financial statements as a whole. The supplementary information as listed in the table of contents is
presented for purposes of legal compliance and additional analysis and is not a required part of the financial
statements. The supplementary information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the financial statements.The information has
been subjected to the auditing procedures applied in the audit of the financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion,the information is fairly stated in all material respects in relation to the financial statements as a whole.
�v., .65'1 c e. e
L.Paul Goedecke,P.C.
July 10, 2012
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND COLORADO SOCIETY Or CERTIFIED PUBLIC ACCOUNTANTS
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
Governmental Funds Balance Sheet/Statement of Net Assets
December 31, 2011
General Conservation Debt
Fund Trust Service Fund
ASSETS:
Cash and investments $ 33,496 $ — S —
Cash and investments - restricted 9,000 4,036 32,842
Accounts receivable: 1,177
Cash with county treasurer 1,571
Prepaid expenses 3,684 — —
Deferred property taxes 235,846 — 222,096
Total assets $ 283,597 $ 4,036 S 256,115
LIABILITIES:
Accounts payable S 1,087 $ — 5
Deferred property taxes 235,846 — 222,096
Accrued bond interest payable — — —
Due to Authority 46,664 — —
Bonds payable:
Bonds due within one year — — —
Bonds due in greater than one year — —
Total liabilities 283,597 — 222,096
FUND BALANCE/NET ASSETS:
Nonspendable
Prepaids 3,684 — —
Restricted
Emergencies 9,000 — —
Conservation Trust — 4,036 —
Debt service — — 34,019
Unassigned (12,684) — —
Total fund balances — 4,036 34,019
Total liabilities and fund balance $ 283,597 $ 4,036 $ 256,115
Restricted for:
Emergencies
Conservation Trust
Debt service
Unrestricted
Total net assets
,
Adjustments Statement of
Total Note 9 Net Assets
S 33,496 $ - S 33,496
45,878 - 45,878
2.748 - 2.748
3,684 - 3,684
457,942 - 457,942
S 543,748 - 543,748
S 1,087 - 1,087
457,942 - 457,942
19,050 19,050
46,664 - 46,664
135,000 135,000
990,000 990,000
505.693 1,144,050 1,649,743
3,684 (3,684) -
9,000 (9,000) -
4,036 (4,036) -
34,019 (34,019) -
(12,684) 12,684 -
38,055 (38.055) -
S 543,748
9,000 9,000
4,036 4,036
34,019 34,019
(1,153,050) (1,153,050)
$ (1.105.995) S (1,105,995)
NOTE: The accompanying notes are an integral part of the financial statements.
3
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
STATEMENT OF GOVERNMENTAL FUND REVENUES,EXPENDITURES, AND
CHANGES IN FUND BALANCES/STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2011
Government Fund Types
Conservation Debt
General Fund Trust Service Fund
EXPENDITURES/EXPENSES
Audit and accounting S 9.820 S S
Management fees 3.104
Legal 10.286 — —
Directors fees and taxes 1.076 — —
Treasurer's fees
3.902 — 5.584
Transfer to Authority—infrastructure 154.636 — —
Transfer to Authority—amenities 38.659 — —
Transfer to Authority—general funds 29.690 — —
Transfer to District No. 2 39.200 —
Miscellaneous 462 — —
Debt Service 84 200
Bond interest —
Bond principal — — 125,000
Paying agent — — 150
Loan repayment — — 125.000
Total expenditures/expenses 290.835 — 339.934
REVENUES
Program revenues —Lottery funds 406 — —
General revenues —Property tax 260,141 - 372.274
-Specific ownership taxes 32,740 — -
-Interest income 73 — 73
—Other revenue 1,511 — —
Total revenues
294.871 — 372,347
EXCESS (DEFICIENCY)OF REVENUES
OVER EXPENDITURES 4.036 - 32,413
OTHER FINANCING SOURCES(USES)
Transfers from(to)other funds (4.036) 4,036 —
Total other financing sources(uses) (4.036) 4,036 -
NET CHANGES IN FUND BALANCES/NET
ASSETS - 4,036 32,413
FUND BALANCE/NET ASSETS:
BEGINNING OF YEAR - - 1.606
END OF YEAR S - $ 4,036 S 34,019
4
Adjustments Statement of
Total Note 9 Activities
S 9,820 $ — 5 9.820
3,104 — 3.104
10.286 — 10.286
1,076 — 1.076
9,486 — 9.486
154.636 - 154.636
38,659 - 38,659
29.690 - 29.690
39.200 - 39.200
462 - 462
84.200 (2.000) 82.200
125.000 (125,000) -
150 - 150
125,000 (125.000) -
630,769 (252.000) 378.769
406 - 406
632,415 (179.877) 452.538
32,740 - 32.740
146 - 146
1,511 _ - 1.511
667,218 (179.877) 487.341
36.449 72,123 108.572
36.449 72.123 108.572
1.606 (1,216.173) (1.214.567)
5 38,055 $ (1.144.050) $ (1.105.995)
NOTE: The accompanying notes are an integral part of the financial.statements.
5
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND
BALANCES —BUDGET AND ACTUAL
Year Ended December 31, 2011
Variance with
Final Budget
Actual Positive
Original Budget Final Budget Amounts (Negative)
REVENUES
Property taxes S 260.158 $ 260.158 $ 260.141 $ (17)
Specific ownership taxes 15.609 33.000 32,740 (260)
Interest income 250 100 73 (27)
Lottery funds — 505 406 (99)
Other income 1.000 1,930 1.511 (419)
Total revenues 277,017 295.693 294,871 (822)
EXPENDITURES
General government
Accounting and audit — 8.000 9.820 (1.820)
Management fees — 1.500 3.104 (1,604)
Legal 5,000 9.347 10.286 (939)
Directors' fees — 2.153 1.076 1.077
Treasurer's fees 3,902 3.902 3.902 —
Miscellaneous — — 462 (462)
Transfer to Authority—Infrastructure — 178.176 154.636 23,540
Transfer to Authority—Amenities — 44.544 38.659 5.885
Transfer to Authority—General Fund — — 29.690 (29,690)
Transfer to District No. 2 259.299 39.200 39.200 —
Emergency reserve 8.311 8.871 — 8.871
Total expenditures 276.512 295.693 290.835 4.858
EXCESS (DEFICIENCY) OF
REVENUES OVER
EXPENDITURES 505 - 4.036 4.036
OTHER FINANCING SOURCES
(USES)
Transfers(to) from other funds (505) — (4.036) (4,036)
Total other financing sources
(uses) (505) — (4.036) (4.036)
EXCESS (DEFICIENCY)OF
REVENUES OVER
EXPENDITURES AND OTHER
FINANCINGS SOURCES(USES) - - -
FUND BALANCE-BEGINNING OF
YEAR
-
FUND BALANCE-END OF
YEAR S - $ - $ $
NOTE: The accompanying notes are an integral part of the financial statements.
6
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 -DEFINITION OF REPORTING ENTITY
Definition of Reporting Entity
Beebe Draw Farms Metropolitan District No. I (The District), a quasi-municipal corporation, is
governed pursuant to provisions of the Colorado Special District Act. The District's service area
is located in Weld County, Colorado. The District was established to provide water, parks and
recreational facilities, street and drainage improvements, safety protection and related services.
During 1999, the District's service plan was amended. A new district, Beebe Draw Farms
Metropolitan District No. 2 (District No. 2) was created (see Note 9) and the District's name was
changed from Beebe Draw Farms Metropolitan District to Beebe Draw Farms Metropolitan
District No. 1.
The District has no employees and all operation and administrative functions are contracted.
The District follows the Governmental Accounting Standards Boards (GASB) accounting
pronouncements which provide guidance for determining which governmental activities,
organizations and functions should be included within the financial reporting entity. GASB
pronouncements set forth the financial accountability of a governmental organization's elected
governing body as the basic criterion for including a possible component governmental
organization in a primary government's legal entity. Financial accountability includes, but is not
limited to, appointment of a voting majority of the organization's governing body, ability to
impose its will on the organization, a potential for the organization to provide specific financial
benefits or burdens and fiscal dependency.
The District is not financially accountable for any other organization, nor is the District a
component unit of any other primary governmental entity, including District No. 2.
NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The more significant accounting policies of the District are described as follows:
Basis of Presentation
The accompanying financial statements are presented per GASB Statement No. 34 — Special
Purpose Governments.
7
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Measurement Focus,Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenues in the year for which they are levied.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are measurable and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the District considers revenues to be available if they are collected
within 60 days of the end of the current period. The material sources of revenue subject to
accrual are property taxes and interest. Expenditures, other than interest on long-term
obligations, are recorded when the liability is incurred or the long-term obligation is paid.
The government reports the following major governmental funds:
General Fund — The General Fund is the general operating fund of the District. It is used to
account for all financial resources not accounted for and reported in another fund.
Debt Service Fund—The Debt Service Fund is used to account for the accumulation of resources
that are restricted, committed or assigned to expenditures for principal, interest and other debt
related costs.
Fund Balances
Beginning with fiscal year 2011 the District implemented GASB Statement No. 54, "Fund
Balance Reporting and Governmental Fund Type Definitions." This statement provides more
clearly defined fund balance categories to make the nature and extent of the constraints placed on
a government's fund balances more transparent. In the fund financial statements the following
classifications describe the relative strength of the spending constraints.
Non-spendable fund balance — The portion of fund balance that cannot be spent because it is
either not in spendable form (such as inventory) or is legally or contractually required to be
maintained intact.
Restricted fund balance — The portion of fund balance constrained to being used for a specific
purpose by external parties (such as grantors or bondholders), constitutional provisions or
enabling legislation.
8
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Committed fund balance — The portion of fund balance constrained for specific purposes
according to limitations imposed by the District's highest level of decision making authority, the
Board of Directors prior to the end of the current fiscal year. The constraint may be removed or
changed only through formal action of the Board of Directors.
Assigned fund balance — The portion of fund balance that is constrained by the government's
intent to be used for specific purposes, but is neither restricted nor committed. Intent is expressed
by the Board of Directors to be used for a specific purpose. Constraints imposed on the use of
assigned amounts are more easily removed or modified than those imposed on amounts that are
classified as committed.
Unassigned fund balance — The residual portion of fund balance that does not meet any of the
above criteria.
If more than one classification of fund balance is available for use when an expenditure is
incurred, it is the District's policy to use the most restrictive classification first.
Budgets
In accordance with the State Budget Law, the District's Board of Directors holds public hearings
in the fall of each year to approve the budget and appropriate the funds for the ensuing year. The
appropriation is at the total fund expenditures level and lapses at year end. The District's Board
of Directors can modify the budget by line item within the total appropriation without
notification. The appropriation can only be modified upon completion of notification and
publication requirements. The budget includes each fund on its basis of accounting unless
otherwise indicated.
During the year the District amended its General Fund budget from $277,017 to $295,693 and
the Debt Service Fund from $338,124 to $340,800.
Cash
The District follows the practice of pooling cash of all funds to maximize investment earnings.
Except when required by trust or other agreements, all cash is deposited to and disbursed from a
single hank account. Cash in excess of immediate operating requirements is pooled for deposit
and investment flexibility. Investment earnings are allocated periodically to the participating
funds based upon each fund's average equity balance in the total cash.
9
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property Taxes
Property taxes are levied by the District Board of Directors. The levy is based on assessed
valuations determined by the County Assessor generally as of January 1 of each year. The levy is
normally set by December 15 by certification to the County Commissioners to assess the
property tax obligation of the individual properties as of January I of the following year. The
County Treasurer collects the determined taxes during the ensuing calendar year. The taxes are
payable by April, or at the taxpayers election, in equal installments in February and June.
Delinquent taxpayers are notified in August and the sales of the resultant tax liens on delinquent
properties are generally held in November or December. The County Treasurer remits the taxes
collected monthly to the District.
Property taxes, net of estimated uncollectible taxes, are recorded initially as deferred revenue in
the year they are levied and measurable. The deferred property tax revenues are recorded as
revenue in the year they are available or collected.
Reserved Fund Balance
Emergency Reserves have been provided for as required by Article X, Section 20 of the
Constitution of the State of Colorado. $9,000 of the General Fund balance has been reserved in
compliance with this requirement.
NOTE 3 - CASH AND INVESTMENTS
Cash and investments as of December 31, 2011 are classified in the accompanying financial
statement as follows:
Statement of net assets:
Cash and investments S 33,496
Restricted investments 45,878
S 79,374
Cash and investments as of December 31, 2011 consist of the following:
Deposits with financial institutions S 3,279
Investments 76,095
S 79,374
10
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 3 - CASH AND INVESTMENTS
Cash Deposits
The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government
deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts
on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is
determined by the PDPA. PDPA allows the institution to create a single collateral pool for all
public funds. The pool for all the uninsured public deposits as a group is to be maintained by
another institution or held in trust. The market value of the collateral must be at least 102% of
the aggregate uninsured deposits.
The State Commissioners for banks and financial services are required by Statute to monitor the
naming of eligible depositories and reporting of the uninsured deposits and assets maintained in
the collateral pools.
Custodial Credit Risks—Deposits
For 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 District does not have a deposit policy for custodial credit
risk. As of December 31, 2011, none of the District's bank balance of S3,816 was exposed to
custodial credit risk.
Credit Risk
The District has not adopted a formal investment policy, however, the District follows state
statutes regarding investments.
Colorado State statutes specify investment instruments meeting defined rating and risk criteria in
which local governments may invest which include:
* Obligations of the United States and certain U.S. government agency securities
• Certain international agency securities
• General obligation and revenue bonds of U.S. local government entities
• Bankers' acceptances of certain banks
• Commercial paper
• Written repurchase agreements collateralized by certain authorized securities
• Certain money market mutual funds
• Guaranteed investment contracts
• Local government investment pools
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 3 - CASH AND INVESTMENTS (CONTINUED)
The District generally limits its concentration of investments to those noted with an asterisk (*)
above, which are believed to have minimal credit risk; minimal interest rate risk and no foreign
currency risk.
The local government investment pools include the Colorado Local Government Liquid Assets
Trust (ColoTrust) rated AAAm by Standard & Poor's.
Interest Rate Risk
Colorado revised statutes limit investment maturities to five years or less unless formally
approved by the Board of Directors, such actions are generally associated with a debt service or
sinking fund requirements.
As of December 31, 2011 the District had the following investments:
Investment Maturity Fair Value
Colorado Liquid Asset Trust Less than one year $ 76,095
COLOTRUST
As of December 31, 2011 the District had invested in the Colorado Local Government Liquid
Asset Trust (ColoTrust), an investment vehicle established for local government entities in
Colorado to pool surplus funds. The State Securities Commission administers and enforces all
State statutes governing the Trust. The Trust operates similarly to a money market fund and each
share is equal in value to $1.00. The Trust offers shares in two portfolios, COLOTRUST PRIME
and COLOTRUST PLUS+. Both portfolios may invest in U.S. Treasury securities and
repurchase agreements collateralized by U.S. Treasury securities. COLOTRUST PLUS+ may
also invest in certain obligations of U.S. government agencies, highest rated commercial paper
and repurchase agreements collateralized by certain obligations of U.S. government agencies. A
designated custodial bank serves as custodian for the Trust's portfolios pursuant to a custodian
agreement. The custodian acts as safekeeping agent for the Trust's investment portfolios and
provides services as the depository in connection with direct investments and withdrawals. The
custodian's internal records segregate investments owned by the Trust. As of December 31,
2011, the District has $76,095 invested in COLOTRUST PRIME.
Concentration of Credit Risk
The District does not have a policy that addresses limitations on the amount that can be invested
in any one issuer, however, the District invests primarily in local government investment pools
and/or U.S. securities, which are not subject to concentration of credit risk.
12
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31,2011
NOTE 4—LONG-TERM OBLIGATIONS
The following is an analysis of changes in long-term obligations for the year ended December
31, 2011:
Balance at Balance at
January 1, December 31,
2011 Additions Reductions 2011
1998 General Obligation Bonds S 1,250,000 S - $ 125,000 $ 1,125,000
S 1,250.000 S - $ 125,000 1,125.000
Due in one year 135,000
Due after one year $ 990,000
The detail of the District's long-term obligations is as follows:
$2,000,000 General Obligation Bonds, Series 1998, dated October 1, 1998. On October 21,
1998, the District issued $2,000,000 in General Obligation Bonds for streets, water and park and
recreation improvements. The bonds are term bonds in the amount of $635,000 due October 1,
2009, $665,000 due October 1, 2014 and $700,000 due October 1, 2018. The bonds are currently
subject to mandatory sinking fund redemption. Bonds maturing on and after October 1, 2009 are
callable at the option of the District beginning October 1, 2008 and thereafter without call
premium. Interest is payable semiannually at 6%, 6.4% and 7%, respectively.
The District's long-term obligations will mature as follows:
Year Principal Interest Total
2012 S 135,000 $ 76,200 $ 211.200
2013 140,000 67,560 207,560
2014 150,000 58,600 208.600
2015 160,000 49,000 209.000
2016 170,000 37,800 207.800
2017-2018 370,000 39,200 409,200
S 1,125,000 S 328,360 S 1,453.360
13
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31,2011
NOTE 4-LONG-TERM OBLIGATIONS (CONTINUED)
On November 2,2010 the voters of the District revoked all of its previous debt authorization and
authorized the following:
Maximum
Annual
Debt Maximum Property Tax
Authorization Interest Rate Increase
Street improvements $ 1,500,000 15% $ 320,000
Park and recreation improvements 1,500,000 15% $ 320.000
Water improvements 1,500,000 15% S 320,000
Total S 4,500,000
NOTE 5 -RELATED PARTIES
The primary developer of real property in the District is R.E.I. Limited Liability Company
(Developer), successor in interest to Beebe Draw Farms, Ltd. All Directors are residents of the
District.
NOTE 6—RISK MANAGEMENT
The District is exposed to various risks of loss related to thefts of, damage to, or destruction of
assets: errors or omissions; injuries to employees, or acts of God.
The District is a member of the Colorado Special Districts Property and Liability Pool (Pool) as
of December 31, 2011. The Pool is an organization created by intergovernmental agreement to
provide property. liability, public officials liability, boiler and machinery and workers
compensation coverage to its members. Settled claims have not exceeded this coverage in any of
the past three fiscal years.
The District pays annual premiums to the Pool for liability, property and public officials liability
coverage. In the event aggregated losses incurred by the Pool exceed amounts recoverable from
reinsurance contracts and funds accumulated by the Pool, the Pool may require additional
contributions from the Pool members. Any excess funds which the Pool determines are not
needed for purposes of the Pool may be returned to the members pursuant to a distribution
formula.
14
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 7 -TAX,SPENDING AND DEBT LIMITATIONS
Article X, Section 20 of the Colorado Constitution. commonly known as the Taxpayer's Bill of
Rights (TABOR) contains tax, spending, revenue and debt limitations which apply to the State of
Colorado and all local governments.
Spending and revenue limits are determined based on the prior year's Fiscal Year Spending
adjusted for allowable increases based upon inflation and local growth. Fiscal Year Spending is
generally defined as expenditures plus reserve increases with certain exceptions. Revenue in
excess of the Fiscal Year Spending limit must be refunded unless the votes approve retention of
such revenue.
TABOR requires local governments to establish Emergency Reserves. These reserves must be at
least 3% of Fiscal Year Spending (excluding bonded debt service). Local governments are not
allowed to use the emergency reserves to compensate for economic conditions, revenue
shortfalls, or salary or benefit increases. The District has reserved 59,000 in compliance with the
emergency reserve.
The District management believes, after consultation with legal counsel, that it is in compliance
with the provisions of TABOR. However, TABOR is complex and subject to interpretation.
Many of the provisions, including the interpretation of how to calculate Fiscal Year Spending
limits will require judicial interpretation.
On November 3, 1998, the voters of the District approved the retention of all property taxes
collected from a levy of 40 mills and all other District revenue in 1998 and annually thereafter
without limitation under TABOR or other laws.
15
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 8-INTERGOVERNMENTAL AGREEMENTS
Beebe Draw Farms Establishing Agreement
Effective April 12. 2011 the District entered into an Establishment Agreement with the Beebe
Draw Farms Metropolitan District No. 2 and the Beebe Draw Farms Authority. The District,
through the Authority, will provide for financing the operations and maintenance of the existing
public improvements as well as providing for financing, constructing and operating and
maintaining additional public improvements. In no case shall the mill levy imposed by the
District for debt service and operations and maintenance exceed its' respective mill levy caps.
Other than the existing 1998 Bonds, the District will not issue any additional debt.
As a part of the Establishing Agreement, District No .1 has agreed to impose the District required
mill levy until 2018 and to transfer such revenues to the Authority for deposit into either the
infrastructure account or the amenity account, For tax collection year 2011 and thereafter the
District shall transfer all revenues from the operations and maintenance mill levy less the
Districts direct operations and maintenance costs to the Authority.
NOTE 9—RECONCILIATION OF GOVERNMENT-WIDE AND FUND
FINANCIAL STATEMENTS
Explanation of differences between the governmental fund Balance Sheet and the
government-wide Statement of Net Assets
The governmental fund Balance Sheet and the government-wide Statement of Net Assets
includes a reconciling column. Explanation of the adjustments included in the reconciling
column is as follows:
Bonds payable $ 1,125,000
Accrued interest payable 8 19,050
Long-term liabilities are not due and payable in the current period and therefore are not reported
in the funds.
16
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 9-RECONCILIATION OF GOVERNMENT-WIDE AND FUND
FINANCIAL STATEMENTS (CONTINUED)
Explanation of differences between the governmental fund Statement of Revenue,
Expenditures and Changes in Fund Balance and the government-wide Statement of
Activities
The governmental fund Statement of Revenue. Expenditures and Changes in Fund Balance and
the government-wide Statement of Activities include a reconciling column. Explanation of the
adjustments included in the reconciling column is as follows:
Loan from District No. 2 $ (125.000)
Bond principal $ (125.000)
Interest expense $ (2,000)
Property taxes $ (179,877)
Governmental funds report principal payments as expenditures. However in the Statement of
Activities, the payment of principal is reflected as a reduction in long-term liabilities. Interest is
expensed when paid in the government funds but net accrued interest (difference between the
beginning and ending accrual) is reflected in the Statement of Activities. Property taxes accrued
at December 31, 2011 on the Statement of Activities have been reversed in 2011.
NOTE 10— CAPITAL PLEDGE AGREEMENT
The District has an Amended and Restated Consolidated Service Plan for Beebe Draw Farms
Metropolitan District No. 1 and Beebe Draw Farms Metropolitan District No. 2 approved by the
Weld County Board of County Commissioners on March 16, 2011 ("Amended and Restated
Service Plan"). Pursuant to the Amended and Restated Service Plan, and subject to the
conditions of the Amended and Restated Service Plan, on June 14, 2011. District No. 1 entered
into a Capital Pledge Agreement between Beebe Draw Farms Metropolitan District No. 1 and the
Beebe Draw Farms Authority with a principal amount of 81,500,000, plus interest at a rate of
15%. The mill levy for payment of this obligation is capped at 40 mills, minus the 1998 Bond
Mill Levy for each year and less the Operating and Maintenance Mill Levy for each year. to be
imposed for collection beginning in 2012 and ending in tax collection year 2018. The total debt
repayment will be the lesser of the $1,500,000. plus 15% interest accrued per annum or the total
revenue that flows from the imposition of the 40 mills, minus the 1998 Bond Mill Levy and the
Operating and Maintenance Mill Levy, over the 2012-2018 term of the mill levy imposition.
17
SUPPLEMENTAL INFORMATION
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
CONSERVATION TRUST
SCHEDULE OF REVENUES,EXPENDITURES, AND CHANGES IN FUND
BALANCES —BUDGET AND ACTUAL
Year Ended December 31, 2011
Variance with
Final Budget
OriginaU Actual Positive
Final Budget Amounts (Negative)
OTHER FINANCING SOURCES (USES) S 4,036 S 4,036
Transfer from(to) other funds $ 4,036 4,036
Total other financing sources(uses)
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND OTHER 4,036 4,036
FINANCING SOURCES (USES)
FUND BALANCE-BEGINNING OF YEAR _ - S q 036 S 4,036
FUND BALANCE— END OF YEAR S
NOTE: The accompanying notes are an integral part of the financial statements.
18
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
DEBT SERVICE FUND
SCHEDULE OF REVENUES,EXPENDITURES, AND CHANGES IN FUND
BALANCES—BUDGET AND ACTUAL
Year Ended December 31,2011
Variance with
Final Budget
Original Actual Positive
Budget Final Budget _ Amounts (Negative)
REVENUES
Property taxes S 194,922 5 194.922 5 372.274 $ 177.352
10073
Interest income — - 177.325
Total revenues 194.922 195.022 372.347
EXPENDITURES 16
Treasurer's fees 2.924 5.600 5.584 —
Bond interest 84.200 84.200 84.200
Bond principal 125.000 125.000 125.000
Loan repayment 125.000 125.000 125.000
Paying agent fees
1,000 1.000 I 50 850
Total expenditures
338.124 340.800 339.934 866
EXCESS(DEFICIENCY)OF
REVENUES OVER (145.778) 32.413 178.191
EXPENDITURES (143.202)
FUND BALANCE-BEGINNING
OF YEAR 193.736 193.736 1.606 (192.130)
FUND BALANCE-END OF
YEAR 5 50.534 5 47,958 $ 34.019 $ (13.939)
NOTE: The accompanying notes are an integral part of the financial statements.
19
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1
SCHEDULE OF DEBT SERVICEREQUIREMENTS 11 TO MATURITY
December 31,
2,000,000 General Obligation Bonds,
Dated October 1, 1998
Interest Rate 6.0%, 6.4% and 7.0%
Payable April 1 and October 1
Principal Due October 1
Bonds and
Interest
Year Ending
December
31, Principal _ Interest Total
2012 5 135,000 S 76,200 5 211,200
2013 140,000 67,560 207,560
2014 150,000 58,600 208,600
2015 160,000 49,000 209,000
2016 170,000 37,800 207,800
2017 180.000 25,900 205,900
2018 190.000 13,300 203,300
51.125,000 S 328,360 51,453,360
20
RECEIVED
SEP 1 3 2012
COMMISSIONERS
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
Weld County, Colorado
FINANCIAL STATEMENTS
December 31, 2011
C�vnv v e oVI3
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Governmental Funds Balance Sheet/Statement of Net Assets 2
Statement of Governmental Fund Revenues, Expenditures, and
Changes in Fund Balances/Statement of Activities 3
General Fund - Statement of Revenues, Expenditures,
And Changes in Fund Balance— Budget and Actual 4
Notes to Financial Statements 5-15
L. PAUL GOEDECKE P.C.
CERTIFIED PUBLIC ACCOUNTANTS
950 WADSWORTH BLVD.
SUITE 204
LAKEWOOD. COLORADO 80214
TELEPHONE (3031 232 2866
FAX (3031232-9452
p90 pare owe stoffic e.net
Independent Auditor's Report
Board of Directors
Beebe Draw Farms Metropolitan District No, 2
We have audited the accompanying financial statements of the governmental activities and each
major fund of Beebe Draw Farms Metropolitan District No. 2 as of and for the year ended
December 31, 2011, which collectively comprise the District's basic financial statements, as
listed in the table of contents. These financial statements are the responsibility of the District.
Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free 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 the District, as well as evaluating the overall financial statement
presentation. We believe that our audit provides reasonable basis for our opinions.
Management has omitted the management's discussion and analysis that accounting principles
generally accepted in the United States of America require to be presented to supplement the
basic financial statements. Such missing information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. Our opinions on the basic financial statements are
not affected by this missing information.
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 Beebe
Draw Farms Metropolitan District No. 2 as of December 31, 2011, and the respective changes in
financial position and the respective budgetary comparison for the general fund for the year then
ended in conformity with accounting principles generally accepted in the United States of
America,
L. Paul Goedecke, P.C.
July 10, 2012
1
MEMBER OP AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND COLORADO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
GOVERNMENTAL FUNDS BALANCE SHEET/STATEMENT OF NET ASSETS
December 31, 2011
General Adjustments Statement of
Fund Note 12 Net Assets
ASSETS:
Cash and investments $ 4,660 $ — S 4,660
Restricted investments 30,000 — 30.000
Accounts receivable
Current taxes 48,142 — 48,142
Deferred taxes 1,683,109 1,683,109
Prepaid expenses 2,407 — 2,407
Total assets $ 1,768,318 — 1,768,318
LIABILITIES:
Accounts payable $ 6,680 — 6,680
Due to the Authority 78,529 — 78,529
Deferred revenue 1,683,109 — 1,683,109
Total liabilities 1,768,318 — 1,768,318
FUND BALANCE/NET ASSETS:
Nonspendable
Prepaids 2,407 (2,407)
Restricted _
Emergencies 30.000 (30,000) —
Unassigned (32,407) 32,407 —
Total fund balances
Total liabilities and fund balance $ 1,768,318
Restricted for:
Emergencies 30,000 30,000
Unrestricted (30,000) (30,000)
Total net assets
NOTE: The accompanying notes are an integral part of the financial statements.
1
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO.2
STATEMENT OF GOVERNMENTAL FUND REVENUES,EXPENDITURES,AND CHANGES IN FUND
BALANCES/STATEMENT OF ACTIVITIES
For the Year Ended December 31,2011
Governmental
Fund Type
Adjustments Note Statement of
General Fund 12 Activities
EXPENDITURES/EXPENSES
Accounting and audit S 24,642 S — S '224.642
Depreciation — 100,032 100.032
District management 44.001 — 44.001
Directors fees 4,898 — 4,898
Payroll taxes 3.607 — 3.607
Facility management 20,991 — 20.991
Repairs and maintenance 1.626 1.626
Insurance 12,298 — 12.298
Legal 75.034 — 75.034
Reservoir lease 37.656 — 37.656
Treasurer fees 15.842 — 15.842
Community Center 2,687 -
_,800
Nature Preserve 1.800 - 1,800
Span Coun 1.777 - 1777
Utilities 5.813 - 5.813
Community pool 21.620 - 21.620
Other 8.525 - 8.525
Landscape and maintenance 496' - 4.962
Mosquito control 4.260 - 4.260
Weed control 1.842 - 1.842
12
Engineering and planning 912 - 91_
i
Road maintenance 2,025 - 2,025
Vehicle and equipment 1.713 - 1,713
Transfer to Authory-infrastructure 1.539.858 - 1,539.858
Transfer to Authority-amenities 47,273 - 47.273
Transfer to Authority-initial amenities 400.000 - 4(0,000
Transfer to Authority-operations and maintenance.initial 200,000 200.000
Transfer to Authority-repair and maintenance resen e 125.000 - 125,000
Transfer to Authority-discretionary fund 20,000 - 20.000
Transfer to Authority--operations and maintenance 84,996 - 84,996
Miscellaneous 3.792 - 3,792
Total expenditures/expenses 2.719,450 100.032 2,819,482
REVENUES
Program revenues -Lease revenue 33.890 - 33.890
-User,pool and parking fees 2.674 - 2,674
-Exclusion cost reimbursements 830 - 830
General revenues -Property taxes 833.606 - 833.606
-Specific ownership taxes 61.870 - 61.870
-Investment income I,816 - 1,816
-Miscellaneous income 6.283 - 6.283
-Transfer from District No. I 39200 - 39,200
Total revenues 980.169 - 980.169
EXCESS(DEFICIENCY)OF REVENUES OVER EXPENDITURES 0.739.281) (1(0.032) (1.839.313)
OTHER FINANCING SOURCES(USES)
Transfer to other government - (7,099.985) (7.099985)
Loan repayment from District No. I 125.000 - 125.000
Total other financing sources(uses) 125.000 (7,099985) (6,974.985)
NET CHANGES IN FUND BALANCES/NET ASSETS (1,614.281) (7,200.017) (8,814.298)
FUND BALANCE/NET ASSETS:
BEGINNING OF YEAR 1,614.281 7.200.017 8.814,22298
END OF YEAR S - S - S -
NOTE: The accompanying notes are nn integral pall of the financial atatemeNs.
3
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES—BUDGET AND ACTUAL
Year Ended December 31, 2011
Variance with
Final Budget
Original Budget Final Budget Actual Amounts Positive(Negative)
REVENUES
Property taxes 5 859,979 S 859,979 S 833.606 S (26.373)
Specific ownership taxes 51.599 55,608 61,870 6.2_62
Miscellaneous/user fees 7.163 2,113 6,373 4.260
Pool fees
-
- 2,584 2.584
Advance reimbursement I2_5.000 175,000 I2_5.000 -
Interest income 1.500 1.5(X) 1,816 316
Exclusion cost reimbursements - 1,100 830 (270)
Resenoir lease 36.477 33,890 33,890 -
Transfer from District No. I 259.299 39.200 39,200 Other income 1.000 - - -
Total revenues 1,342.017 1.118.390 1,105,169 (13.221)
EXPENDITURES
Accounting and audit 24,000 31.042 24,642 6,400
Directors fees 16,000 5,399 4,898 501
Insurance 12_500 7,117 12.298 (5.181)
Legal 101.500 64.597 75,034 (10,437)
Resenoir lease 38.700 37,656 37.656 -
Maintenance - 750 1.626 (876)
Vehicle/equipment maintenance 4.000 1.750 1.713 37
Payroll taxes 4.612 1,500 3,607 (2,107)
Engineering and planning - - 912 (912)
Treasurers fees 12.900 12,900 15,842 (2.942)
District management 48,500 52.000 44.001 7,999
Facilities management 42.000 17.390 20,991 (3.601)
Community Center 5.000 2.470 2,687 (217)
Nature Preserve 1.100 - 1.800 (1.800)
Sport Court 1.000 - 1,777 (1,7771
Utilities 20.000 9,471 5,813 3,658
Community Pool 22,000 16,088 21,620 (5,532)
Other - 6.875 8,525 (1,650)
Landscape maintenance 22,000 4,687 4,962 (275)
Mosquito control 11,000 - 4,260 (4.260)
Weed control 5.000 - 1,842 (1.8421
Road maintenance 8.000 2,025 2,025 -
Physical facilities-operations and maintenance 6.925 - - -
Aquaticfacilities-operations and maintenance 12,559 - - -
Parksandopenspace-operations and maintenance 12.250 - - -
Roads.trails and ditches-operations and maintenance 8,940 - - -
Miscellaneous 2,500 1.046 3,792 (2.746)
Transfer to Authority-infrastructure 1260.623 1.248,146 1,539.858 (291,712)
Transfer to Authority-amenities 315.156 312,036 47,273 264,763
Transfer to Authority-initial amenities 400,000 400.000 400.000 -
Transfer to Authority-operations and maintenance,initial 200.000 200,000 200,000
Transfer to Authority-repairs and maintenance reserve 125.000 125.000 125,000 -
Transfer to Authority-discretionary fund 20.000 20,000 20.000 -
Transfer to Authority-operations and maintenance - 283.023 84,996 198,027
Conservation Trust 4.374 4,374 - 4 374
Contingency/emergency reserves 85.6)3 114,454 — 114.454
Total expenditures 2.853,752 2.981,796 2.719,450 262.346
EXCESS(DEFICIENCY)OF REVENUES OVER
EXPENDITURES (1.511.735) (1.863.406) (1.614,281) 249,125
FUND BALANCE—BEGINNING OF YEAR 1.511,735 1.863,406 1.614.281 1249,125)
FUND BALANCE—END OF YEAR S — S — S — S
NOTE:The arcompnm'ing notes ore no integral parr of the financial atatemerns.
4
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 1-DEFINITION OF REPORTING ENTITY
Definition of Reporting Entity
Beebe Draw Farms Metropolitan District No. 2 (The District), a quasi-municipal corporation, is
governed pursuant to provisions of the Colorado Special District Act and an Amended and
Restated Consolidated Service Plan (Service Plan) approved by Weld County March 16, 2011.
The District's service area is located in Weld County, Colorado. The District was established for
the purpose of designing, acquiring, installing, financing, and operating and maintaining certain
water. street, safety protection, mosquito control and park and recreation facilities and services
within the District and Beebe Draw Farms Metropolitan District No. 1 (District No. 1).
The District follows the Governmental Accounting Standards Boards (GASB) accounting
pronouncements which provide guidance for determining which governmental activities,
organizations and functions should be included within the financial reporting entity. GASB
pronouncements set forth the financial accountability of a governmental organization's elected
governing body as the basic criterion for including a possible component governmental
organization in a primary government's legal entity. Financial accountability includes, but is not
limited to, appointment of a voting majority of the organization's governing body, ability to
impose its will on the organization, a potential for the organization to provide specific financial
benefits or burdens and fiscal dependency.
The District is not financially accountable for any other organization, nor is the District a
component unit of any other primary governmental entity, including District No. 1 or the Beebe
Draw Farms Authority.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The more significant accounting policies of the District are described as follows:
Basis of Presentation
The accompanying financial statements are presented per GASB Statement No. 34 — Special
Purpose Governments.
Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenues in the year for which they are levied.
5
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are measurable and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the District considers revenues to be available if they are collected
within 60 days of the end of the current period. The material sources of revenue subject to
accrual arc property taxes and interest. Expenditures, other than interest on long-term
obligations, are recorded when the liability is incurred or the long-term obligation is paid.
The government reports the following major governmental fund:
General Fund — The General Fund is the general operating fund of the District. It is used to
account for all financial resources not accounted for and reported in another fund.
Fund Balances
Beginning with fiscal year 2011 the District implemented GASB Statement No. 54, "Fund
Balance Reporting and Governmental Fund Type Definitions." This statement provides more
clearly defined fund balance categories to make the nature and extent of the constraints placed on
a government's fund balances more transparent. In the fund financial statements the following
classifications describe the relative strength of the spending constraints.
Non-spendable fund balance — The portion of fund balance that cannot be spent because it is
either not in spendable form (such as inventory) or is legally or contractually required to be
maintained intact.
Restricted fund balance — The portion of fund balance constrained to being used for a specific
purpose by external parties (such as grantors or bondholders), constitutional provisions or
enabling legislation.
Committed fund balance — The portion of fund balance constrained for specific purposes
according to limitations imposed by the District's highest level of decision making authority, the
Board of Directors prior to the end of the current fiscal year. The constraint may be removed or
changed only through formal action of the Board of Directors.
Assigned fund balance — The portion of fund balance that is constrained by the government's
intent to be used for specific purposes, but is neither restricted nor committed. Intent is expressed
by the Board of Directors to he used for a specific purpose. Constraints imposed on the use of
assigned amounts are more easily removed or modified than those imposed on amounts that are
classified as committed.
6
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Unassigned fund balance — The residual portion of fund balance that does not meet any of the
above criteria.
If more than one classification of fund balance is available for use when an expenditure is
incurred, it is the District's policy to use the most restrictive classification first.
Budgets
In accordance with the State Budget Law, the District's Board of Directors holds public hearings
in the fall of each year to approve the budget and appropriate the funds for the ensuing year. The
appropriation is at the total fund expenditures level and lapses at year end. The District's Board
of Directors can modify the budget by line item within the total appropriation without
notification. The appropriation can only be modified upon completion of notification and
publication requirements. The budget includes each fund on its basis of accounting unless
otherwise indicated,
The District modified the appropriation of the General Fund from S2,853,752 to S2,981,796,
Cash
The District follows the practice of pooling cash of all funds to maximize investment earnings.
Except when required by trust or other agreements, all cash is deposited to and disbursed from a
single bank account. Cash in excess of immediate operating requirements is pooled for deposit
and investment flexibility.
Property and Equipment
Property and equipment are stated at cost except for those assets contributed which are stated at
estimated fair market value at the date of contribution or at the Developer's cost. Depreciation on
property that will remain assets of the District is reported on the Statement of Activities as a
current charge. Depreciation has been provided over the estimated useful lives of 30-40 years
using the straight line method.
7
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31,2011
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reserved Fund Balance
Emergency Reserves have been provided for as required by Article X, Section 20 of the
Constitution of the State of Colorado. S 30,000 of the General Fund balance has been reserved in
compliance with this requirement.
NOTE 3 - CASH AND INVESTMENTS
Cash and investments as of December 31, 2011 are classified in the accompanying financial
statement as follows:
Statement of net assets:
Cash and investments - unrestricted $ 4,660
- restricted 30,000
S 34,660
Cash and investments as of December 31, 2011 consist of the following:
Deposits with financial institutions S 6,116
Investments 28,544
$ 34,660
Cash Deposits
The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government
deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts
on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is
determined by the PDPA. PDPA allows the institution to create a single collateral pool for all
public funds. The pool for all the uninsured public deposits as a group is to he maintained by
another institution or held in trust. The market value of the collateral must be at least 102% of
the aggregate uninsured deposits.
8
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 3 - CASH AND INVESTMENTS (CONTINUED)
The State Commissioners for banks and financial services are required by Statute to monitor the
naming of eligible depositories and reporting of the uninsured deposits and assets maintained in
the collateral pools.
Custodial Credit Risks— Deposits
For deposits, custodial credit risk is the risk that in the event of a bank failure, the District's
deposits may not he returned to it. The District does not have a deposit policy for custodial credit
risk. As of December 31, 2011, none of the District's bank balance of $6,654 was exposed to
custodial credit risk.
Investments
Credit Risk
The District has adopted a formal investment policy in accordance with state statutes.
Colorado State statutes specify investment instruments meeting defined rating and risk criteria in
which local governments may invest which include:
* Obligations of the United States and certain U.S. government agency securities
• Certain international agency securities
• General obligation and revenue bonds of U.S. local government entities
• Bankers' acceptances of certain banks
• Commercial paper
• Written repurchase agreements collateralized by certain authorized securities
• Certain money market mutual funds
• Guaranteed investment contracts
• Local government investment pools
The District generally limits its concentration of investments to those noted with an asterisk (*)
above, which are believed to have minimal credit risk; minimal interest rate risk and no foreign
currency risk.
The local government investment pools include the Colorado Local Government Liquid Assets
Trust (ColoTrust) rated AAAm by Standard & Poor's.
9
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 3 - CASH AND INVESTMENTS (CONTINUED)
Interest Rate Risk
Colorado revised statutes limit investment maturities to five years or less unless formally
approved by the Board of Directors, such actions are generally associated with a debt service or
sinking fund requirements.
As of December 31. 2011 the District had the following investments:
Investment Maturity Fair Value
Colorado Liquid Asset Trust Less than one year S 28,544
COLOTRUST
As of December 31, 2011 the District had invested in the Colorado Local Government Liquid
Asset Trust (ColoTrust), an investment vehicle established for local government entities in
Colorado to pool surplus funds. The State Securities Commission administers and enforces all
State statutes governing the Trust. The Trust operates similarly to a money market fund and each
share is equal in value to $1.00. The Trust offers shares in two portfolios, COLOTRUST PRIME
and COLOTRUST PLUS+. Both portfolios may invest in U.S. Treasury securities and
repurchase agreements collateralized by U.S. Treasury securities. COLOTRUST PLUS+ may
also invest in certain obligations of U.S. government agencies, highest rated commercial paper
and repurchase agreements collateralized by certain obligations of U.S. government agencies. A
designated custodial bank serves as custodian for the Trust's portfolios pursuant to a custodian
agreement. The custodian acts as safekeeping agent for the Trust's investment portfolios and
provides services as the depository in connection with direct investments and withdrawals. The
custodian's internal records segregate investments owned by the Trust. As of December 31,
2011, the District has $28,544 invested in COLOTRUST PRIME.
Concentration of Credit Risk
The District does not have a policy that addresses limitations on the amount that can be invested
in any one issuer, however, the District invests primarily in local government investment pools
and/or U.S. securities, which are not subject to concentration of credit risk.
10
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 4 —PROPERTY
The following is an analysis of changes in property for the year ended December 31, 2011:
Balance at Balance at
January 1, December 31,
By Classification 2011 Additions Transfers* 2011
Land $ 1,482,975 S — 5(1,482,975) $ —
Roads 2,657,297 — (2,657.297) —
Waterdistributionfacilities 1,292,161 — (1,292,161) —
Offsite water facilities 300,000 - (300,000)Water capacity 815,660 - (815,660) —
Recreation facilities/equipment 2,598,934 — (2,598,934) —
Irrigation and landscape 70,196 - (70,196) —
9,217,223 — (9,217,223) —
Less accumulated depreciation (2,017,206) (100,032) 2,117,238 -
S 7,200,017 $ (100,032) $(7,099,985) $ —
Depreciation expense for the year 2011 is $100,032.
*The District transferred all fixed assets to the Beebe Draw Farms Authority. (See Note 10)
NOTE 5-LONG-TERM DEBT AUTHORIZATION
On November 2, 2010 the voters of the District revoked all of its previous debt authorization and
authorized the following:
Maximum
Annual
Debt Maximum Property Tax
Authorization Interest Rate Increase
Street improvements —Pledge Agreement $ 44,000,000 15% 550,600,000
Park & recreation improvements— Pledge
Agreement 44,000,000 15% $50,600,000
Water improvements —Pledge Agreement 44,000,000 15% $50,600,000
Street improvements — Bonds 44,000,000 15% $50,600,000
Park & recreation improvements - Bonds 44,000,000 15% $50,600,000
Water improvements - Bonds 44,000,000 15% $50,600,000
Total $264,000,000
BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31,2011
NOTE 6-RELATED PARTIES
The primary developer of real property in the District is R.E.I. Limited Liability Company
(Developer), successor in interest to Beebe Draw Farms. Ltd. Certain members of the Board of
Directors are associated with the Developer. During 2011, the Developer leased the clubhouse,
aka Community Information and Sales Center from the District for $1,308. The District entered
into a two year land lease with R.E.I. LLC for the equestrian facility beginning in 2006 in the
amount of $1,000 per year. Subsequent to the initial ground lease/arena area, a lease was
executed between REI and District No. 2, effective June 1, 2008 for a two and one half year
period at a rental rate of $2,500 per year, subject to annual appropriation of the District Board.
Subsequent to year end the District lease to the Developer of the Community Information and
Sales Center was renewed for a one year term subject to annual renewal at a rate of $1,000 per
year. These leases have been assigned to Beebe Draw Farms Authority.
NOTE 7—RISK MANAGEMENT
The District is exposed to various risks of loss related to thefts of, damage to, or destruction of
assets; errors or omissions; injuries to employees, or acts of God.
The District is a member of the Colorado Special Districts Property and Liability Pool (Pool) as
of December 31, 2011. The Pool is an organization created by intergovernmental agreement to
provide property, liability, public officials liability, boiler and machinery and workers
compensation coverage to its members. Settled claims have not exceeded this coverage in any of
the past three fiscal years.
The District pays annual premiums to the Pool for liability, property and public officials liability
coverage. In the event aggregated losses incurred by the Pool exceed amounts recoverable from
reinsurance contracts and funds accumulated by the Pool, the Pool may require additional
contributions from the Pool members, Any excess funds which the Pool determines are not
needed for purposes of the Pool may be returned to the members pursuant to a distribution
formula.
NOTE 8—TAX, SPENDING AND DEBT LIMITATIONS
Article X, Section 20 of the Colorado Constitution, commonly known as the Taxpayer's Bill of
Rights (TABOR) contains tax, spending, revenue and debt limitations which apply to the State of
Colorado and all local governments.
Spending and revenue limits are determined based on the prior year's Fiscal Year Spending
adjusted for allowable increases based upon inflation and local growth. Fiscal Year Spending is
generally defined as expenditures plus reserve increases with certain exceptions. Revenue in
excess of the Fiscal Year Spending limit must he refunded unless the votes approve retention of
such revenue.
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BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 8-TAX, SPENDING AND DEBT LIMITATIONS (CONTINUED)
TABOR requires local governments to establish Emergency Reserves. These reserves must be at
least 3% of Fiscal Year Spending (excluding bonded debt service). Local governments are not
allowed to use the emergency reserves to compensate for economic conditions, revenue
shortfalls, or salary or benefit increases. The District has reserved $30,000 to comply with this
requirement.
The District management believes, after consultation with legal counsel, that it is in compliance
with the provisions of TABOR. However, TABOR is complex and subject to interpretation.
Many of the provisions, including the interpretation of how to calculate Fiscal Year Spending
limits will require judicial interpretation.
NOTE 9— COMMITMENTS
Operating Lease and Sublease
On March 4, 1987, the Developer (see Note 5) entered into a grazing and recreation lease for
Milton Lake and surrounding land in Weld County. Subsequent to that date, the Developer
assigned the lease with the Farmers Reservoir and Irrigation Company("FRICO") to the District.
The lease continues through 2016 and requires annual payments of$20.000, plus an adjustment
for the change in the Consumer Price Index, which amounted to $37,656 for 2011. The annual
payment due over the last 12 years of the lease is subject to renegotiation by both parties. If the
fair market rental value of the property increases for any two consecutive years at a rate in excess
of the Consumer Price Index adjustment, the rate must increase in accordance with such
increased fair market rental value.
The District has also been assigned a hunting sublease with Aristocrat Duck Club for the above
described property. The lease income to the District for the year ended December 31, 2011 was
$33,890. The term of the subleases continue through 2016.
NOTE 10—DEVELOPER FEE AND WATER TAP FEE AGREEMENT
On December 8, 1998, District No. 1 entered into a Developer Fee and Water Tap Fee
Agreement with the Developer (see Note 7) pursuant to which the Developer agreed to pay
certain fees to the District on or before the date of transfer or sale of a lot. Such fees constitute a
statutory lien on each lot, subject to release upon payment of the fees.
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BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 10—DEVELOPER FEE AND WATER TAP FEE AGREEMENT (CONTINUED)
On December 5. 2000, this agreement was amended and the Developer agreed to prepay up to
$627,500 in fees at the rate of$16,000 per lot, by December 31, 2001 or, if later, within 10 days
of a written demand by the District to the Developer for such funds as needed to make all
required construction payments for improvements to Milton Lake. As of December 31, 2011, the
Developer prepaid S587,000 in advance developer fees; applied $227,000 to specific lots,
leaving a balance of 5360,000 in prepaid developer fees.
Pursuant to the Intergovernmental Agreement with District No. 2, all fees collected subsequent
to December 31, 2001 will be collected and used by District No. 2.
NOTE 11 - BEEBE DRAW FARMS AUTHORITY ESTABLISHMENT AGREEMENT
Effective April 12, 2011 the District entered into an Authority Establishment Agreement with the
Beebe Draw Farms Metropolitan District No. 1 (AEA), whereby the Beebe Draw Farms
Authority (Authority), an authority and separate legal entity was created pursuant to Section 29-
1-203, C.R.S. The Authority was created to effect the development and operations and
maintenance of the Public Improvements (as defined in the AEA) for the benefit of the District,
District No. 1, the residents and property owners. The District, through the Authority, will
provide for financing the operations and maintenance of the existing public improvements as
well as providing for financing, constructing and operating and maintaining additional public
improvements. In no case shall the mill levy imposed by the District for debt service and
operations and maintenance exceed its' respective mill levy cap.
Commencing in tax collection year 2011 and each year thereafter, District No. 2 shall transfer
revenues from the Required O&M Mill Levy into the Authority O&M Account, less the Direct
District No. 2 Administrative Costs. For tax collection year 2011 and each year thereafter,
District No. 2 shall transfer 100% of all revenues from the Development Fees (if any) into the
Infrastructure Account and 80% of all revenues from the District No. 2 Required Mill Levy and
Specific Ownership Tax Revenues into the Authority Infrastructure Account. Also for tax
collection year 2011 and each year thereafter, District No. 2 shall transfer 20% of all revenues
from the District No. 2 Required Mill Levy and Specific Ownership Tax Revenues into the
Authority Amenity Account. Upon consent of both District No. 1 and District No. 2, the
80%/20% split described above may be adjusted upward or downward in any given year.
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BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 2
NOTES TO FINANCIAL STATEMENTS
December 31 , 2011
NOTE 12 - RECONCILIATION OF GOVERNMENT- WIDE AND FUND
FINANCIAL STATEMENTS
Explanation of differences between the governmental fund Statement of Revenue,
Expenditures and Changes in Fund Balance and the government-wide Statement of
Activities
The governmental fund Statement of Revenue. Expenditures and Changes in Fund Balance and
the government- wide Statement of Activities include a reconciling column. Explanation of the
adjustments included in the reconciling column is as follows :
Transfer to other governments $ (7 ,099,985)
Depreciation expense $ 100,032
Governmental funds report capital outlay as expenditures . However in the Statement of
Activities , the cost of those assets is allocated over their estimated useful lives as depreciation
expense . During 2011 , the District transferred all capital assets to the Beebe Draw Farms
Authority .
NOTE 13 — CAPITAL PLEDGE AGREEMENT
The District has an Amended and Restated Consolidated Service Plan for Beebe Draw Farms
Metropolitan District No. 1 and Beebe Draw Farms Metropolitan District No . 2 approved by the
Weld County Board of County Commissioners on March 16 , 2011 ("Amended and Restated
Service Plan") . Pursuant to the Amended and Restated Service Plan, and subject to the
conditions of the Amended and Restated Service Plan, on June 14, 2010, District No. 2 entered
into an Initial District No. 2 Capital Pledge Agreement between Beebe Draw Farms Metropolitan
District No . 2 and the Beebe Draw Farms Authority, which is a debt instrument with a principal
amount of $26, 125 ,508 plus an interest rate of 15 %. The mill levy for payment of this
obligation is capped at 50 mills, minus the 1998 Bond Mill Levy for each year and less the
Operating and Maintenance Mill Levy for each year, to be imposed for collection beginning in
2012 and ending in tax collection year 2051 . The total debt repayment will be the lesser of the
$26, 125 ,508 , plus 15 % interest accrued per annum or the total revenue that flows from the
imposition of the 50 mills , minus the 1998 Bond Mill Levy and the Operating and Maintenance
Mill Levy, over the term of the mill levy imposition.
The District shall be authorized to provide for the financing, design, acquisition , construction and
operations and maintenance of additional public improvements the estimated costs which
approximate $26 . 125 , 208 and as adjusted for inflation approximate $36 ,000,000 which would be
financed through bond issued by the District in an amount not to exceed $36 .000,000 .
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