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HomeMy WebLinkAbout20202654.tiff RECEIVED AUG 2 r 2020 WELD COUNTY COMMISSIONERS LIBERTY RANCH METROPOLITAN DISTRICT Weld County , Colorado FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31 , 2019 Co Nl M u n : Coy f' : o nS 2020-2654 09 /02. /20 SD0119 LIBERTY RANCH METROPOLITAN DISTRICT TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2019 INDEPENDENT AUDITOR'S REPORT I BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION 1 STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS BALANCE SHEET-GOVERNMENTAL FUNDS 3 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-GOVERNMENTAL FUNDS 4 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 5 GENERAL FUND-STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL 6 NOTES TO BASIC FINANCIAL STATEMENTS 7 SUPPLEMENTARY INFORMATION DEBT SERVICE FUND-SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL 21 CAPITAL PROJECTS FUND-SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL 22 OTHER INFORMATION SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY 24 SUMMARY OF ASSESSED VALUATION, MILL LEVY, AND PROPERTY TAXES COLLECTED 25 WI P F L I 14143 Denver W Parkway#450 303 9881900 Lakewood,CO 80401 wipfli.com Independent Auditor's Report Board of Directors Liberty Ranch Metropolitan District Weld County, Colorado Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of Liberty Ranch Metropolitan District (the "District") as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Auditor's Responsibility Our responsibility is to express an opinion 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion 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 Liberty Ranch Metropolitan District as of December 31, 2019, and the respective changes in financial position and the respective budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters 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 opinion on the basic financial statements is not affected by this missing information. Our audit was conducted for the purpose of forming an opinion 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 the 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. The other information, as listed in the table of contents, has not been subject to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Wipfti LL P Lakewood, Colorado August 21, 2020 I I BASIC FINANCIAL STATEMENTS LIBERTY RANCH METROPOLITAN DISTRICT STATEMENT OF NET POSITION DECEMBER 31, 2019 Governmental Activities ASSETS Cash and Investments $ 80,422 Cash and Investments- Restricted 226,849 Receivable-County Treasurer 3,929 Prepaid Expense 3,160 Property Taxes Receivable 457,842 Total Assets 772,202 DEFERRED OUTFLOWS OF RESOURCES Cost of Refunding 37,349 Total Deferred Inflows of Resources 37,349 LIABILITIES Accounts Payable 7,941 Accrued Bond Interest 28,919 Noncurrent Liabilities: Due Within One Year 60,000 Due in More Than One Year 11,978,057 Total Liabilities 12,074,917 DEFERRED INFLOWS OF RESOURCES Property Tax Revenue 457,842 Total Deferred Inflows of Resources 457,842 NET POSITION Restricted for: Emergency Reserve 2,600 Debt Service 198,718 Capital Projects 44 Unrestricted (11,924,570) Total Net Position $ (11,723,208) See accompanying Notes to Basic Financial Statements. (1) LIBERTY RANCH METROPOLITAN DISTRICT STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2019 Net Revenues (Expenses) and Changes in Program Revenues Net Position Charges Operating Capital for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities FUNCTIONS/PROGRAMS Primary Government: Governmental Activities: General Government $ 49,631 $ - $ - $ - $ (49,631) Interest and Related Costs on Long-Term Debt 802,676 - - - (802,676) Total Governmental Activities $ 852,307 $ - $ - $ - (852,307) GENERAL REVENUES Property Taxes 487,293 Property Taxes-URA 120,083 Specific Ownership Taxes 46,257 Net Investment Income 10,867 Total General Revenues 664,500 CHANGES IN NET POSITION (187,807) Net Position- Beginning of Year (11,535,401) NET POSITION -END OF YEAR $ (11,723,208) See accompanying Notes to Basic Financial Statements. (2) LIBERTY RANCH METROPOLITAN DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2019 Total Debt Capital Governmental General Service Projects Funds ASSETS Cash and Investments $ 80,422 $ - $ - $ 80,422 Cash and Investments-Restricted 2,600 224,205 44 226,849 Receivable-County Treasurer 497 3,432 - 3,929 Prepaid Expense 3,160 - - 3,160 Property Taxes Receivable 61,914 395,928 - 457,842 Total Assets $ 148,593 $ 623,565 $ 44 $ 772,202 LIABILITIES,DEFERRED INFLOWS OF OF RESOURCES,AND FUND BALANCES LIABILITIES Accounts Payable $ 7,941 $ - $ - $ 7,941 Total Liabilities 7,941 - - 7,941 DEFERRED INFLOWS OF RESOURCES Property Tax Revenue 61,914 395,928 - 457,842 Total Deferred Inflows of Resources 61,914 395,928 - 457,842 FUND BALANCES Nonspendable: Prepaid Expenditures 3,160 - - 3,160 Restricted for: Debt Service - 227,637 - 227,637 Capital Projects - - 44 44 Emergency Reserves 2,600 - - 2,600 Assigned for: - Subsequent year expenditures 1,049 - - 1,049 Unrestricted 71,929 - - 71,929 Total Fund Balances 78,738 227,637 44 306,419 Total Liabilities,Deferred Inflows of Resources,and Fund Balances $ 148,593 $ 623,565 $ 44 Amounts reported for governmental activities in the statement of net position are different because: Long-term liabilities,including bonds payable and Developer advances,are not due and payable in the current period and, therefore,are not reported in the funds. Developer Advance Payable (215,642) Accrued Interest on Developer Advances (107,194) Accrued Bond Interest Payable (905,140) Bonds Payable (10,839,000) Cost of Refunding 37,349 Net Position of Governmental Activities $ (11,723,208) See accompanying Notes to Basic Financial Statements. (3) LIBERTY RANCH METROPOLITAN DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2019 Total Debt Capital Governmental General Service Projects Funds REVENUES Property Taxes $ 61,608 $ 425,685 $ - $ 487,293 Property Taxes-URA 15,182 104,901 - 120,083 Specific Ownership Taxes 5,848 40,409 - 46,257 Interest Income 2,226 8,641 - 10,867 Total Revenues 84,864 579,636 - 664,500 EXPENDITURES Accounting 17,165 - - 17,165 Audit 3,850 - - 3,850 County Treasurer's Fee 925 6,386 - 7,311 Dues and Licenses 352 - - 352 Insurance and Bonds 2,858 - - 2,858 District Management 8,646 - 8,646 Legal 13,540 - - 13,540 Miscellaneous 202 - - 202 Paying Agent Fees - 5,500 - 5,500 Bond Interest-Series 2017A - 258,750 - 258,750 Bond Interest-Series 2017B - 187,525 - 187,525 Bond Principal-Series 2017A - 25,000 - 25,000 Bond Principal-Series 2017B - 104,000 - 104,000 Total Expenditures 47,538 587,161 - 634,699 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 37,326 (7,525) - 29,801 OTHER FINANCING SOURCES(USES) Transfer from (to)Other Fund 1,353 - (1,353) - Repay Developer Advance (47,000) - - (47,000) Total Other Financing Uses (45,647) - (1,353) (47,000) NET CHANGE IN FUND BALANCES (8,321) (7,525) (1,353) (17,199) Fund Balances-Beginning of Year 87,059 235,162 1,397 323,618 FUND BALANCES-END OF YEAR $ 78,738 $ 227,637 $ 44 $ 306,419 See accompanying Notes to Basic Financial Statements. (4) LIBERTY RANCH METROPOLITAN DISTRICT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2019 Net Change in Fund Balances-Total Governmental Funds $ (17,199) Amounts reported for governmental activities in the statement of activities are different because: The issuance of long-term debt(e.g., bonds, Developer advances) provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Bond Principal Payment 129,000 Amortization of Cost of Refunding (2,093) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Accrued Interest on Bonds-Change in Liability (327,264) Accrued Interest on Developer Advance-Change in Liability 29,749 Changes in Net Position of Governmental Activities $ (187,807) See accompanying Notes to Basic Financial Statements. (5) LIBERTY RANCH METROPOLITAN DISTRICT GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2019 Variance with Original Final Budget and Final Actual Positive Budget Amounts (Negative) REVENUES Property Taxes $ 71,640 $ 61,608 $ (10,032) Property Taxes-URA 15,413 15,182 (231) Specific Ownership Taxes 5,223 5,848 625 Interest Income 1,900 2,226 326 Total Revenues 94,176 84,864 (9,312) EXPENDITURES • Accounting 20,000 17,165 2,835 Audit 3,850 3,850 - County Treasurer's Fee 1,075 925 150 Dues and Licenses 500 352 148 Insurance and Bonds 3,000 2,858 142 District Management 10,000 8,646 1,354 Legal 20,000 13,540 6,460 Miscenaneous - 202 (202) Total Expenditures 58,425 47,538 10,887 EXCESS OF REVENUES OVER EXPENDITURES 35,751 37,326 1,575 OTHER FINANCING SOURCES(USES) Transfers From Other Funds - 1,353 1,353 Repay Developer Advance (47,000) (47,000) - Total Other Financing Sources(Uses) (47,000) (45,647) 1,353 NET CHANGE IN FUND BALANCE (11,249) (8,321) 2,928 Fund Balance-Beginning of Year 85,491 87,059 1,568 FUND BALANCE-END OF YEAR $ 74,242 $ 78,738 $ 4,496 See accompanying Notes to Basic Financial Statements. (6) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 DEFINITION OF REPORTING ENTITY Liberty Ranch Metropolitan District (District), a quasi-municipal corporation located entirely in Weld County, Colorado, was organized by order and decree of the District Court for Weld County on December 23, 2005, and is governed pursuant to provisions of the Colorado Special District Act (Title 32, Article 1, Colorado Revised Statutes). The District was established to provide for construction and financing for street, safety protection, water, sanitation and mosquito control facilities and improvements. The street and safety control improvements have been dedicated to and are maintained by the Town of Mead. Water and sanitation improvements have been dedicated to and are maintained by the Longs Peak Water District and St. Vrain Sanitation District, respectively. The District follows the Governmental Accounting Standards Board (GASB) accounting pronouncements, which provide guidance for determining which governmental activities, organizations and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization's elected governing body as the basic criterion for including a possible component governmental organization in a primary government's legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization's governing body, ability to impose its will on the organization, a potential for the organization to provide specific financial benefits or burdens and fiscal dependency. The District has no employees and all operations and administrative functions are contracted. The District is not financially accountable for any other organization, nor is the District a component unit of any other primary governmental entity. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The more significant accounting policies of the District are described as follows: Government-Wide and Fund Financial Statements The government-wide financial statements include the statement of net position and the statement of activities. These financial statements include all of the activities of the District. The effect of interfund activity has been removed from these statements. Governmental activities are normally supported by property taxes. The statement of net position reports all financial and capital resources of the District. The difference between the sum of assets and deferred outflows and the sum of liabilities and deferred inflows is reported as net position. (7) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Expenditures for property, plant, and equipment are shown as increases in assets and redemption of bonds and notes are recorded as a reduction in liabilities. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. The major sources of revenue susceptible to accrual are property taxes and specific ownership taxes. All other revenue items are considered to be measurable and available only when cash is received by the District. The District determined that Developer advances are not considered as revenue susceptible to accrual. Expenditures, other than interest on long- term obligations, are recorded when the liability is incurred or the long-term obligation is due. The District reports the following major governmental funds: The General Fund is the District's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term debt of the governmental funds. The Capital Projects Fund is used to account for financial resources to be used for the acquisition and construction of capital equipment and facilities. (8) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budgets In accordance with the State Budget Law, the District's Board of Directors holds public hearings in the fall 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 has amended its annual budget for the year ended December 31, 2019. Pooled Cash and Investments The District follows the practice of pooling cash and investments 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. Investment earnings are allocated periodically to the participating funds based upon each fund's average equity balance in the total cash. Property Taxes Property taxes are levied by the District's Board of Directors. The levy is based on assessed valuations determined by the County Assessor generally as of January 1 of each year. The levy is normally set by December 15 by certification to the County Commissioners to put the tax lien on the individual properties as of January 1 of the following year. The County Treasurer collects the determined taxes during the ensuing calendar year. The taxes are payable by April or if in equal installments, at the taxpayer's election, in February and June. Delinquent taxpayers are notified in August and generally sales of the tax liens on delinquent properties are held in November or December. The County Treasurer remits the taxes collected monthly to the District. Property taxes, net of estimated uncollectible taxes, are recorded initially as deferred inflow of resources in the year they are levied and measurable. The unearned property tax revenues are recorded as revenue in the year they are available or collected. Facility Fees On July 26, 2006, the Board of Directors of the District adopted resolutions imposing certain Facilities Fees upon the property in the District. Pursuant to the Resolutions, the District imposes a Residential Facilities Fee in the amount of $2,000 per unit for each single-family detached or attached residential unit, and a Commercial Facilities Fee per building in the amount of$0.50 per square foot of commercial space within the District, both payable upon the issuance of a building permit for the subject property. Any unpaid Facilities Fees constitute a statutory and perpetual lien upon the property until paid. (9) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred Inflow/Outflow of Resources In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expenditure) until that time. The District has one item that qualifies for reporting in this category. Accordingly, the item, Cost of Refunding, is deferred and recognized as an outflow of resources in the period that the amount is incurred. In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies for reporting in this category. Accordingly, the item, deferred property tax revenue, is deferred and recognized as an inflow of resources in the period that the amount becomes available. Equity Net Position For government-wide presentation purposes when both restricted and unrestricted resources are available for use, it is the District's practice to use restricted resources first, then unrestricted resources as they are needed. Fund Balance Fund balance for governmental funds should be reported in classifications that comprise a hierarchy based on the extent to which the government is bound to honor constraints on the specific purposes for which spending can occur. Governmental funds report up to five classifications of fund balance: nonspendable, restricted, committed, assigned, and unassigned. Because circumstances differ among governments, not every government or every governmental fund will present all of these components. The following classifications describe the relative strength of the spending constraints: Nonspendable Fund Balance — The portion of fund balance that cannot be spent because it is either not in spendable form (such as prepaid amounts or inventory) or legally or contractually required to be maintained intact. Restricted Fund Balance—The portion of fund balance that is constrained to being used for a specific purpose by external parties (such as bondholders), constitutional provisions, or enabling legislation. Committed Fund Balance — The portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority, the Board of Directors. The constraint may be removed or changed only through formal action of the Board of Directors. (10) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Equity(Continued) Fund Balance (Continued) Assigned Fund Balance — The portion of fund balance that is constrained by the government's intent to be used for specific purposes, but is neither restricted nor committed. Intent is expressed by the Board of Directors to be used for a specific purpose. Constraints imposed on the use of assigned amounts are more easily removed or modified than those imposed on amounts that are classified as committed. Unassigned Fund Balance—The residual portion of fund balance that does not meet any of the criteria described above. If more than one classification of fund balance is available for use when an expenditure is incurred, it is the District's practice to use the most restrictive classification first. NOTE 3 CASH AND INVESTMENTS Cash and investments as of December 31, 2019 are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and Investments $ 80,422 Cash and Investments-Restricted 226,849 Total $ 307,271 Cash and investments as of December 31, 2019 consist of the following: Deposits with Financial Institutions $ 21,029 Investments 286,242 Total Cash and Investments $ 307,271 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. At December 31, 2019, the District's cash deposits had a bank balance of $25,767 and a carrying balance of$21,029. (11) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 3 CASH AND INVESTMENTS (CONTINUED) Investments The District's formal investment policy is to follow state statutes regarding investments. The District generally limits its concentration of investments to those noted with an asterisk (*) below, which are believed to have minimal credit risk, minimal interest rate risk and no foreign currency risk. Additionally, the District is not subject to concentration risk or investment custodial risk disclosure requirements for investments that are in the possession of another party. Colorado revised statutes limit investment maturities to five years or less unless formally approved by the Board of Directors. Such actions are generally associated with a debt service reserve or sinking fund requirements. Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local governments may invest which include: Obligations of the United States, certain U.S. government agency securities, and securities of the World Bank General obligation and revenue bonds of U.S. local government entities Certain certificates of participation Certain securities lending agreements Bankers' acceptances of certain banks Commercial paper Written repurchase agreements and certain reverse repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts * Local government investment pools As of December 31, 2019, the District had the following investments: Investment Maturity Amount Colorado Surplus Asset Fund Trust Weighted Average (CSAFE) Under 60 Days $ 286,242 (12) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 3 CASH AND INVESTMENTS (CONTINUED) CSAFE The District invested in the Colorado Surplus Asset Fund Trust (CSAFE) (the Trust), which is an investment vehicle established by state statute for local government entities to pool surplus assets. The State Securities Commissioner administers and enforces all state statutes governing the Trust. The Trust is similar to a money market fund, with each share valued at $1.00. CSAFE may invest in U.S. Treasury securities, repurchase agreements collateralized by U.S. Treasury securities, certain money market funds, and highest rated commercial paper. A designated custodial bank serves as custodian for CSAFE's portfolio pursuant to a custodian agreement. The custodian acts as safekeeping agent for CSAFE's investment portfolio and provides services as the depository in connection with direct investments and withdrawals. The custodian's internal records segregate investments owned by CSAFE. CSAFE is rated AAAm by Standard & Poor's. CSAFE records its investments at amortized cost and the District records its investments in CSAFE at net asset value as determined by amortized cost. There are no unfunded commitments, the redemption frequency is daily, and there is no redemption notice period. NOTE 4 LONG-TERM OBLIGATIONS The following is a summary of long-term obligations as of December 31, 2019: Balance at Balance at Due December 31, December 31, Within 2018 Additions Reductions 2019 One Year Governmental Activities: Bonds Payable G.O.Refunding and Improvement 2017A Bonds $ 5,175,000 $ - $ 25,000 $ 5,150,000 $ 60,000 G.O.Subordinate Limited Tax 2017B Bonds 2,308,000 - 104,000 2,204,000 - Total Bonds Payable 7,483,000 - 129,000 7,354,000 60,000 Bonds/Notes from Direct Borrowings/Direct Placements Junior Subordinate Cash Flow 2017C Bonds 3,485,000 - - 3,485,000 - Accrued and Unpaid Interest-Cash Flow 2017C Bonds 548,499 327,722 - 876,221 - Developer Advance 215,642 - - 215,642 - Developer Advance Interest 136,943 17,251 47,000 107,194 - Total Bonds/Notes from Direct Borrowings/ Direct Placements 4,386,084 344,973 47,000 4,684,057 - Total Long Term Obligations $ 11,869,084 $ 344,973 $ 176,000 $ 12,038,057 $ 60,000 (13) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 4 LONG-TERM OBLIGATIONS (CONTINUED) $5,225,000 General Obligation Refunding and Improvement Bonds, Series 2017A, $2,517,000 Subordinate Limited Tax General Obligation Improvement Bonds. Series 2017B and $3,485,000 Junior Subordinate Cash Flow Bonds, Series 2017C On February 22, 2017, the District issued its $5,225,000 General Obligation Refunding and Improvement Bonds, Series 2017A (2017A Bonds), its $2,517,000 Subordinate Limited Tax General Obligation Improvement Bonds, Series 2017B (2017B Bonds) and its $3,485,000 Junior Subordinate Cash Flow Bonds (2017C Bonds, and collectively with the 2017A Bonds and 2017B Bonds, the 2017 Bonds). The proceeds from the sale of the 2017A Bonds were used to refund the District's 2006 General Obligation Bonds, reimburse Developer advances related to public improvements for the District, and to pay the costs of issuing the 2017 Bonds. The proceeds from the sale of the 2017B Bonds will be applied to reimburse Developer advances related to public improvements for the District and to pay certain costs of issuing the 2017B Bonds. The proceeds from the sale of the 2017C Bonds were used to reimburse Developer advances related to public improvements for the District and to pay certain costs of issuing the 2017C Bonds. The 2017A Bonds bear interest at 5.00%, payable semi-annually on June 1 and December 1, beginning on June 1, 2017. Annual mandatory sinking fund principal payments are due on December 1, beginning on December 1, 2017. The 2017A Bonds mature on December 1, 2046. The 2017B Bonds bear interest at 8.125% per annum, are payable annually from Subordinate Pledged Revenue, if any, on December 15, beginning on December 15, 2017, and mature on December 15, 2046. The 2017B Bonds are structured as cash flow bonds meaning that there are no scheduled payments of principal prior to the final maturity date. Unpaid interest on the 2017B Bonds compounds annually on each December 15. All of the 2017B Bonds and interest thereon will be deemed to be paid, satisfied, and discharged on December 16, 2054, regardless of the amount of principal and interest paid on the 2017B Bonds prior to such Subordinate Termination Date. The 2017C Bonds bear interest at the rate of 8.125% per annum, and are payable annually from Junior Subordinate Pledged Revenue, if any available, on each December 15, commencing on the first December 15 occurring after the 2017B Bonds have been paid in full or are no longer outstanding, and mature on December 15, 2056. The 2017C Bonds are structured as cash flow bonds meaning that there are no scheduled payments of principal prior to the final maturity date. Unpaid interest on the 2017C Bonds compounds annually on each December 15. All of the 2017C Bonds and interest thereon will be deemed to be paid, satisfied, and discharged on December 16, 2057, regardless of the amount of principal and interest paid on the 2017C Bonds prior to such Termination Date. (14) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 4 LONG-TERM OBLIGATIONS (CONTINUED) $5,225,000 General Obligation Refunding and Improvement Bonds, Series 2017A, $2,517,000 Subordinate Limited Tax General Obligation Improvement Bonds, Series 2017B and$3,485,000 Junior Subordinate Cash Flow Bonds, Series 2017C (Continued) The District's long-term obligations regarding the Series 2017A general obligation bonds will mature as follows: Year Ending December 31, Principal Interest Total 2020 $ 60,000 $ 257,500 $ 317,500 2021 65,000 254,500 319,500 2022 75,000 251,250 326,250 2023 80,000 247,500 327,500 2024 90,000 243,500 333,500 2025-2029 555,000 1,143,250 1,698,250 2030-2034 805,000 981,250 1,786,250 2035-2039 1,120,000 750,500 1,870,500 2040-2044 1,545,000 430,000 1,975,000 2045-2046 755,000 57,250 812,250 Total $ 5,150,000 $ 4,616,500 $ 9,766,500 Authorized Debt On November 1, 2005, a majority of the qualified electors of the District authorized the issuance of indebtedness in an amount not to exceed $108,800,000 at an interest rate not to exceed 18% per annum. At December 31, 2019, the District had the following remaining authorized but unissued indebtedness: Authorized November 1, Remaining at 2005 Authorization December 31, Election Used 2019 Streets $ 9,900,000 $ 5,106,218 $ 4,793,782 Water Facilities 14,800,000 4,125,538 10,674,462 Sanitation Facilities 10,300,000 2,676,465 7,623,535 Mosquito Control 100,000 - 100,000 Safety Protection 1,000,000 - 1,000,000 Operations and Maintenance 500,000 - 500,000 Debt Refunding 36,100,000 - 36,100,000 Intergovermental Agreement 36,100,000 - 36,100,000 Total $ 108,800,000 $ 11,908,221 $ 96,891,779 (15) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 4 LONG-TERM OBLIGATIONS (CONTINUED) Authorized Debt(Continued) Pursuant to the District's Service Plan, the District is limited to issuing a total of$18,500,000 in bonds. The District is also limited to a maximum debt service mill levy of 50 mills, as adjusted for changes in the ratio of actual value to assessed value of property within the District, pursuant to the Service Plan. In 2019, the residential assessment rate changed from 7.96% to 7.15%; therefore, the maximum mill levy for debt service is 55.571 mills as of December 31, 2019. In December 2019, the District certified an adjusted mill levy of 55.571 mills for collection in budget year 2020. In the future, the District may issue a portion or all of the remaining authorized but unissued debt for purposes of providing public improvements to support development as it occurs within the District's service area. Developer Advances Facilities Acquisition Agreement(s) The District entered into a Facilities Acquisition Agreement on March 1, 2006, with Centex Homes (Centex) whereby the Developer will design, construct, complete, and convey to the District, and the District will accept, certain public infrastructure improvements benefiting the development within the District. The District agrees to make payment to Centex for costs of the improvements, including but not limited to, all costs of design, testing, engineering, acquisition, construction, related consultant fees and construction management up to a maximum amount of $18,500,000, together with interest thereon, at an annual rate of 8%. The Facilities Acquisition Agreement was amended on November 29, 2006, to decrease the maximum amount to be advanced by Centex to $9,000,000. Repayment of the advances is subject to annual appropriation by the District's Board of Directors. On December 1, 2010, the District terminated its Facilities Acquisition Agreement with Centex and entered into a Facilities Funding and Acquisition Agreement with LR Investments, LLC (LR), subject to the closing of the sale of property within the District's boundaries from Centex to LR. Previous advances made by Centex and the accrued interest on those advances were transferred to LR through the simultaneous execution of the Termination of Facilities Acquisition Agreement with Centex and the Facilities Funding and Acquisition Agreement with LR. During 2017, the District repaid the outstanding principal and interest balance and had no outstanding obligations as of December 31, 2019. On July 8, 2014, the District entered into a Facilities Acquisition Agreement with Lorson South Land Corporation (LSLC) whereby the Developer will design, construct, complete, and convey to the District, and the District will accept, certain public infrastructure improvements benefitting the development within the District. The District agrees to make payment to LSLC for costs of the improvements, including but not limited to, all costs of design, testing, engineering, acquisition, construction, related consultant fees and construction management, together with interest thereon, at an annual rate of 8%. Repayment of the advances is subject to annual appropriation by the District's Board of Directors. During 2014, the District accepted $2,879,630 in improvements. During 2017, the district repaid the outstanding principal and interest due and had no outstanding obligation at December 31, 2019. (16) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 4 LONG-TERM OBLIGATIONS (CONTINUED) Developer Advances (Continued) Operations Funding Agreements On March 1, 2006, the District and Centex entered into an Operations Funding Agreement (2006 OFA) in which Centex agreed to advance amounts to a maximum stated amount to fund operations and maintenance expenditures of the District in the event District revenues are not sufficient. The District agreed to repay Centex for such advances plus accrued interest at the rate of 8%. Additionally, the District entered into Operation Funding Agreements (hereinafter referred to as 2007 OFA, 2008 OFA, 2009 OFA and 2010 OFA and, collectively with the 2006 OFA, the 2006-2010 OFAs) with similar terms and provisions for 2007, 2008, 2009 and 2010. On December 1, 2010, the District terminated the 2006-2010 OFAs with Centex and entered into a 2010-2011 Operation Funding Agreement (2010-2011 OFA) with LR. Pursuant to the 2010-2011 OFA, LR agrees to advance up to $30,000 for operations and maintenance for the period beginning December 1, 2010, through December 31, 2011. Previous advances made by Centex and the accrued interest on those advances have been transferred to LR through the simultaneous execution of the Termination of 2006-2010 OFAs with Centex and the 2010-2011 OFA with LR. On November 2, 2011, the District entered into a 2012 Operation Funding Agreement with LR (2012 OFA). Under the 2012 OFA, LR agreed to advance up to $14,000. No amounts were advanced under the 2012 OFA. As of December 31, 2019, the District had outstanding advances of $215,642 and accrued interest of$107,194. NOTE 5 NET POSITION The District has net position consisting of two components— restricted and unrestricted. Restricted assets include net position that are restricted for use either externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The District had restricted net position as of December 31, 2019 as follows: Restricted Net Position: TABOR Emergency Reserve $ 2,600 Debt Service 198,718 Capital Projects 44 Total Restricted Net Position $ 201,362 The District has a deficit in unrestricted net position. The deficit was a result of the District being responsible for the repayment of bonds issued for public improvements which were conveyed to other governmental entities and which costs were removed from the District's financial records. (17) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 6 RELATED PARTY Certain owners of the majority of the undeveloped property within the District are LR and LSLC. Certain members of the Board of Directors are associated with LR and/or LSLC and/or may have conflicts of interest in dealing with the District. NOTE 7 AGREEMENTS St. Vrain Intergovernmental Agreement The District and the St. Vrain Sanitation District (SVSD) entered into an Intergovernmental Agreement (the St. Vrain IGA) on February 15, 2006, pursuant to which SVSD consented to the formation of the District and authority of the District to construct and finance certain on site sanitary sewer system improvements as necessary within the development. Upon completion and acceptance of the sewer improvements by SVSD, the District dedicated and conveyed such sewer improvements to SVSD, at which time SVSD was assigned the responsibility for the operation and maintenance of the sewer improvements. The District agrees to request a meeting of SVSD to discuss and implement steps to dissolve the District when all of the financial obligations issued by the District have been repaid or when adequate provisions for payment in full have been made and there are not further operational requirements for District improvements which the District is responsible for. Longs Peak Intergovernmental Agreement The District and Longs Peak Water District (LPWD) entered into an Intergovernmental Agreement (the Longs Peak IGA) on April 20, 2006, pursuant to which LPWD consented to the formation of the District and authority of the District to construct and finance certain limited water system improvements as may be necessary within the Development. Upon completion and acceptance of the water improvements by LPWD, the District dedicated and conveyed such water improvements to LPWD, at which time LPWD assumed the responsibility for the operation and maintenance of the water improvements. The District is required to obtain the consent of LPWD prior to including any property into the boundaries of the District or amending its Service Plan. In addition, the District also agrees to notify LPWD to request a meeting to discuss and implement steps to dissolve the District when all of the financial obligations issued by the District have been repaid or when adequate provisions for payment have been made and there are no further operational requirements for District improvements for which the District is responsible. Town of Mead, Colorado and Mead Urban Renewal Authority Intergovernmental Agreement The District entered into a Cooperation Agreement on January 30, 2017 with the town of Mead, Colorado and the Mead Urban Renewal Authority ("MURA"). Under the terms of the agreement, MURA agrees to deposit all of the increase in property tax revenues allocated to MURA as a result of the levy of the District upon taxable property within the Urban Renewal Area. MURA then agrees to remit those funds to the District. (18) LIBERTY RANCH METROPOLITAN DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 8 RISK MANAGEMENT The District is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; or acts of God. The District is a member of the Colorado Special Districts Property and Liability Pool (Pool). 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, public officials' liability, and workers' compensation 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 9 TAX, SPENDING AND DEBT LIMITATIONS Article X, Section 20 of the Colorado Constitution, commonly known as the Taxpayer's Bill of Rights (TABOR), contains tax, spending, revenue and debt limitations which apply to the state of Colorado and all local governments. Spending and revenue limits are determined based on the prior year's Fiscal Year Spending adjusted for allowable increases based upon inflation and local growth. Fiscal Year Spending is generally defined as expenditures plus reserve increases with certain exceptions. Revenue in excess of the Fiscal Year Spending limit must be refunded unless the voters approve retention of such revenue. 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. On November 1, 2005, District voters passed an election question to increase property taxes $500,000 annually, without limitation of rate, to pay the District's operational and maintenance costs. The voters also authorized the District to retain and spend all revenue from sources other than property taxes without regard to any limitations under TABOR. The District's management believes it is in compliance with the provisions of TABOR. However, TABOR is complex and subject to interpretation. Many of the provisions, including the interpretation of how to calculate Fiscal Year Spending limits will require judicial interpretation. (19) SUPPLEMENTARY INFORMATION (20) LIBERTY RANCH METROPOLITAN DISTRICT DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) REVENUES Property Taxes $ 495,005 $ 495,005 $ 425,685 $ (69,320) Property Taxes-URA 106,499 106,499 104,901 (1,598) Specific Ownership Taxes 36,090 36,090 40,409 4,319 Interest Income 4,500 4,500 8,641 4,141 Total Revenues 642,094 642,094 579,636 (62,458) EXPENDITURES County Treasurer's Fee 7,425 7,425 6,386 1,039 Paying Agent Fees 5,000 5,000 5,500 (500) Bond Interest-Series 2017A 258,750 258,750 258,750 - Bond Interest-Series 2017B 189,719 189,719 187,525 2,194 Bond Principal-Series 2017A 25,000 25,000 25,000 - Bond Principal-Series 2017B 172,000 172,000 104,000 68,000 Contingency - 17,606 - 17,606 Total Expenditures 657,894 675,500 587,161 88,339 NET CHANGE IN FUND BALANCE (15,800) (33,406) (7,525) 25,881 Fund Balance-Beginning of year 222,056 235,162 235,162 - FUND BALANCE-END OF YEAR $ 206,256 $ 201,756 $ 227,637 $ 25,881 (21) LIBERTY RANCH METROPOLITAN DISTRICT CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget Budget Actual Positive Original Final Amounts (Negative) REVENUES Total Revenues - - - EXPENDITURES Total Expenditures - - - - EXCESS OF REVENUES OVER EXPENDITURES - - - - OTHER FINANCING SOURCES(USES) Transfer to Other Fund - (1,397) (1,353) 44 Total Other Financing Sources(Uses) - (1,397) (1,353) 44 NET CHANGE IN FUND BALANCE - (1,397) (1,353) 44 Fund Balance- Beginning of Year 1,397 1,397 1,397 - FUND BALANCE-END OF YEAR $ 1,397 $ - $ 44 $ 44 • (22) OTHER INFORMATION (23) LIBERTY RANCH METROPOLITAN DISTRICT SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY DECEMBER 31, 2019 $5,225,000 General Obligation Refunding and Improvement Bonds Series 2017A Issue date February 22, 2017 Principal Due Annually December 1 Interest at 5.00% Due June 1 and December 1 Year Ending December 31, Principal Interest Total 2020 $ 60,000 $ 257,500 $ 317,500 2021 65,000 254,500 319,500 2022 75,000 251,250 326,250 2023 80,000 247,500 327,500 2024 90,000 243,500 333,500 2025 95,000 239,000 334,000 2026 105,000 234,250 339,250 2027 110,000 229,000 339,000 2028 120,000 223,500 343,500 2029 125,000 217,500 342,500 2030 140,000 211,250 351,250 2031 150,000 204,250 354,250 2032 160,000 196,750 356,750 2033 170,000 188,750 358,750 2034 185,000 180,250 365,250 2035 195,000 171,000 366,000 2036 210,000 161,250 371,250 2037 220,000 150,750 370,750 2038 240,000 139,750 379,750 2039 255,000 127,750 382,750 2040 275,000 115,000 390,000 2041 285,000 101,250 386,250 2042 310,000 87,000 397,000 2043 325,000 71,500 396,500 2044 350,000 55,250 405,250 2045 365,000 37,750 402,750 2046 390,000 19,500 409,500 Total $ 5,150,000 $ 4,616,500 $ 9,766,500 (24) LIBERTY RANCH METROPOLITAN DISTRICT SUMMARY OF ASSESSED VALUATION, MILL LEVY, AND PROPERTY TAXES COLLECTED DECEMBER 31, 2019 Prior Year Assessed Valuation for Mills Levied for Total Property Taxes Current Year Refunds Percent Year Ended Property and Collected to December 31, Tax Levy General Debt Service Abatements Levied Collected Levied 2015 $ 5,119,570 8.000 50.000 4.195 $ 318,413 $ 318,393 99.99% 2016 16,610,240 8.000 50.000 0.000 963,394 963,378 100.00 2017 11,134,732 8.000 50.000 0.000 645,815 645,881 100.01 (1) 2018 9,241,217 8.000 55.277 0.000 584,757 585,645 100.15 2019 8,954,995 8.000 55.277 0.000 566,645 487,293 86.00 (2) Estimated for Calendar Year Ending December 31, 2020 $ 7,124,732 8.690 55.571 0.000 $ 457,842 (1)Beginning in collection year 2017,a portion of the District is located in the Mead Urban Renewal Authority and the assessed valuation is reflective of the net assessed valuation of the District. (2)Collections in 2019 are net of an abatement of$125,465 in the District. NOTE:Property taxes collected in any one year include collection of delinquent property taxes assessed in prior years,as well as reductions for property tax refunds or abatements.Information received from County Treasurer does not permit identification of specific year of assessment. (25) Hello