Quailwood Meadows Community Facilities District Annual Financial

Transcription

Quailwood Meadows
Community Facilities District
Annual Financial Report
For Fiscal Year Ended
June 30, 2015
Quailwood Meadows Community Facilities District
For the Fiscal Year Ended June 30, 2015
Table of Contents
Independent Auditor’s Report
1
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position
Statement of Activities
Fund Financial Statements:
Balance Sheet
Statement of Revenues, Expenditures and Changes in Fund Balance
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Notes to Financial Statements
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5
6
7
8
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3033 N. Central Ave., Suite 300
Phoenix, Arizona 85012
Tel (602) 277-9449
Fax (602) 277-9297
INDEPENDENT AUDITOR’S REPORT
Board of Directors
Town of Prescott Valley, Arizona
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and the major fund of
the Quailwood Meadows Community Facilities District (District), a component unit of the Town of Prescott
Valley, Arizona, as of and for the year ended June 30, 2015, 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 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 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 that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and the major fund of the District, as of June 30, 2015, and the
respective changes in financial position thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Page 1
TUCSON • PHOENIX • FLAGSTAFF
www.heinfeldmeech.com
Other Matter
Required Supplementary Information
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.
HEINFELD, MEECH & CO., P.C.
CPAs and Business Consultants
November 6, 2015
Page 2
3
June 30, 2015
Governmental
Activities
ASSETS
Current assets:
Restricted cash and cash equivalents
Accounts receivable
Total current assets
$
Total assets
567,681
2,057
569,738
569,738
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding
Total deferred outflows of resources
332,625
332,625
LIABILITIES
Liabilities payable from restricted assets:
Advance from Town
Bonds, loans, capital leases and other payables-due within one year
Total liabilities payable from restricted assets
209,549
195,000
404,549
Noncurrent liabilities:
Bonds, loans, capital leases and other payables-due in more than one year
Total noncurrent liabilities
5,450,000
5,450,000
Total liabilities
5,854,549
NET POSITION
Unrestricted
Total net position
$
The notes to the financial statements are an integral part of this statement.
4
(4,952,186)
(4,952,186)
For the Year Ended June 30, 2015
Function/Programs
Administration
Interest and fiscal charges
Total district activities
Total primary government
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Expenses
$
62,018
262,421
324,439
$
-
$
-
$
-
$
324,439
$
-
$
-
$
-
Governmental
Activities
$
(324,439)
General revenues:
Taxes:
Property taxes
Interest and investment income
Developer Contributions
Total general revenues
Change in net position
Net position - beginning
Net position - ending
5
(62,018)
(262,421)
(324,439)
396,363
2
130,410
526,775
202,336
$
(5,154,522)
(4,952,186)
Balance Sheet
June 30, 2015
ASSETS
Restricted assets - cash and cash equivalents
Accounts receivable
Total assets
$
$
LIABILITIES AND FUND BALANCE
Liabilities:
Advance from Town
Total Liabilities
$
Fund balance:
Restricted
Total fund balance
567,681
2,057
569,738
209,549
209,549
360,189
360,189
Amounts reported for governmental activities in the statement of net position are different because:
Long-term liabilities, including bonds payable, are not due and payable in the current
period and therefore are not reported in the funds.
Bonds payable
Deferred charge on refunding
(5,645,000)
332,625
Net position of governmental activities - statement of net position
$
6
(4,952,186)
Year Ended June 30, 2015
REVENUES
Property taxes
Developer contributions
Interest income
Total revenues
$
EXPENDITURES
Administration
Debt service:
Principal payment
Total expenditures
396,363
130,410
2
526,775
62,018
165,000
240,246
467,264
Excess of revenues over (under) expenditures
59,511
Fund balance, beginning of year
Fund balance, end of year
$
7
300,678
360,189
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Net change in fund balances - Governmental Fund Type
$
59,511
Amounts reported for governmental activities in the statement of activities
are different because:
Issuance and repayment of long-term debt is a revenue and expenditure in the
governmental funds, but the issuance and repayment reduces long-term liabilities
in the statements of net position. In the current period, these amounts are:
Amortization on outstanding debt
Principal payments on debt
(22,175)
165,000
Changes in net position of governmental activities
$
8
202,336
NOTES TO FINANCIAL STATEMENTS
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Financial Reporting Entity
The Quailwood Meadows Community Facilities District (District) was created by the Town of Prescott Valley
(Town) as a special purpose community facilities district pursuant to state law on August 12, 2004. The purpose
of the District is to assist in financing necessary on and off-site infrastructure and public improvements.
The Town council serves as the District’s board of directors. In accordance with Governmental Accounting
Standards Board (GASB) Statement No. 39 – Determining Whether Certain Organizations are Component Units,
the District financial statements are reported in the Town’s financial statements for the year ended June 30, 2015,
using the blended method.
The financial statements of the District conform to generally accepted accounting principles as applicable to
governmental units. The District applies all relevant GASB pronouncements.
B. Basis of Presentation
Fund Accounting
The accounts of the District are organized and operated on the basis of funds and account groups, each of which is
considered to be a separate accounting entity. The District operates only one fund, a general fund, the operations
of which are accounted for by providing a separate set of self-balancing accounts that is comprised of the fund’s
assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. The minimum number of
funds is maintained consistent with legal and managerial requirements.
General Fund
The General Fund is the general operating fund of the District. It is used to account for all financial resources
except those required to be accounted for in another fund.
Government-Wide and Fund Financial Statements
The government-wide financial statements (e.g. the statement of net position and the statement of activities) report
information on the primary government and its component units. Governmental activities, which normally are
supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which
rely to a significant extent on fees and charges for support. The District does not have any business-type
activities.
The statement of activities demonstrates the degree to which the direct expenses for a given function or segment is
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.
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C. Measurement Focus and Basis of Accounting
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, where applicable, 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 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. The District considers property tax revenues to be
available if they are collected within sixty (60) days of the end of the current fiscal period. All other revenues are
considered to be measured and available when the District receives cash. Expenditures generally are recorded
when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to claims and judgments, are recorded only when payment is due.
D. Property Tax Calendar
The County Treasurer is responsible for collecting property taxes for all government entities within the county.
The county levies real and personal property taxes on or before the third Monday in August that become due and
payable in two equal installments. The first installment is due on the first day of October and becomes delinquent
after the first business day of November. The second installment is due on the first day of March of the next year
and becomes delinquent after the first business day of May.
Pursuant to Arizona statutes, a lien against assessed real and personal property attaches on the first day of January
preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not
arise.
E. Budgets and Budgetary Accounting
The District is not required to adopt an annual appropriated budget but does, however, adopt a budget for
management purposes. Therefore, no budgetary comparison is required.
F. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance
Cash and Cash Equivalents
Arizona statutes require that public deposits of more than $100,000 meet several specific requirements. Deposits
of less than $100,000 are subject only to local ordinance or resolution. Generally, the state statutes allow
investments in certain certificates of deposit, interest bearing savings accounts in qualified banks and savings and
loan institutions, repurchase agreements with maximum maturity of thirty (30) days, and pooled investment funds
established by the State Treasurer. Other investments include obligations of the U.S. Treasury, U.S. Government
agencies, bankers’ acceptances and mutual funds.
The District records only bond trust activity. There are no checking or investment accounts for the District.
Restricted Assets
District bond assets as well as certain resources set aside for bond repayment, are classified as restricted assets on
the balance sheet because their use is limited by applicable bond covenants.
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Property and Equipment and Long-Term Liabilities
The District has no capital assets. All capital assets acquired by the District are donated to the Town. The Town
is responsible for maintaining the improvements.
Long-term debt and other long-term obligations are reported as liabilities in the governmental activities statement
of net position. Bond premiums and discounts, as well as the difference between the reacquisition price, and the
net carrying amount of the old debt, are deferred and amortized over the life of the bonds using the straight-line
method. Bond issuance costs are expensed.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, during the current period. The face amount of the debt is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances
are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report 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
(expense/expenditures) until then.
In addition to liabilities, the statement of financial position may report 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 will not be recognized as an inflow of resources (revenue) until that
time.
Accumulated Compensated Absences
No liability for accumulated compensated absences existed at June 30, 2015.
Fund Equity
In the fund financial statements, governmental funds report a restriction of fund balance for amounts that are not
legally restricted by outside parties for a specific purpose.
II. DETAILED NOTES
A. Cash and Cash Equivalents
Deposits
At June 30, 2015, the carrying amount of the District’s deposits was $567,681, which is comprised of the bank
checking account balance of $567,681.
Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure, the entity’s deposits may not be returned to it.
As of June 30, 2015, the District’s deposits were covered by federal depository insurance or by the collateral held
by the District’s agent or pledging financial institution’s trust department or agent in the name of the District, and
thus had no deposits that were exposed to custodial credit risk.
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B. Advance from Town
With the downturn in the housing market, the secondary assessed value for the District was severely affected. As
a result, the District did not generate sufficient ad valorem taxes to cover operating expenditures incurred within
the District. The Town has advanced funds to the District to cover these costs. The District will begin repaying
the Town as the secondary assessed value begins to increase.
C. Debt
On October 25, 2013, the District issued $5,810,000 in general obligation bonds with an interest rate of 4.213%.
The proceeds, along with a $568,501 developer deposit, were used to advance refund $5,865,000 of outstanding
Series 2004 Quailwood Meadows Community Facilities District general obligation bonds. The net proceeds of
$6,219,800 were deposited in an irrevocable trust with an escrow agent to provide for the future debt service
payment on the refunded bonds. As a result, the Series 2004 Quailwood Meadows Community Facilities District
general obligation bonds are considered defeased and the liability for those bonds has been removed from the
statement of net position.
The reacquisition price exceeded the net carrying amount of the old debt by $354,800. This amount is being
amortized over the remaining life of the refunding debt.
The District has the following long-term obligations:
$5,810,000 Quailwood Meadows Community Facilities District General Obligation Bonds, Series 2013, is due in
annual payments of $165,000 to $560,000 through July 15, 2029, with interest at 4.2125% per annum (payable
from revenues generated through an ad valorem tax assessed by the District against the properties located within
the boundaries of the District). The Town has no contingent obligation with respect to these bonds – streets,
parks, utilities and related improvements.
Changes in Long-Term Liabilities:
Balance
06/30/2014
$ 5,810,000
Increases
$
-
Decreases
Balance
06/30/2015
Due Within
One Year
$ 165,000
$ 5,645,000
$ 195,000
Debt Service requirements to maturity are as follows:
Fiscal Year
Ending
2016
2017
2018
2019
2020
2021-25
2026-30
Principal
$
$
195,000 $
190,000
215,000
240,000
265,000
1,975,000
2,565,000
5,645,000 $
12
Interest
233,688
225,579
217,049
207,466
196,829
765,938
278,973
2,125,522
The District has the authority to issue general obligation bonds in an aggregate principal amount not to exceed
$25,000,000. As of June 30, 2015, the District board has not received a request from the developer to issue the
remaining bonds to fund additional improvements. All bonds are payable from an ad valorem tax levied on all
taxable properties within the boundaries of the district.
III. OTHER INFORMATION
A. Contingent Liabilities
In the ordinary course of conducting its operations the District is involved in various legal matters. The District’s
legal counsel reports on the cases pending against the District. These matters are in various stages and the impact,
if any, is not currently determinable. The District’s management does not believe that any of these matters would
have a material impact on the financial statements.
B. Risk Management
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors
and omission; injuries to employees; and natural disasters for which it carries commercial insurance. The District
also carries commercial insurance for all other risks of loss, including workers’ compensation and employee
health and accident insurance.
D. Subsequent Events
On July 9, 2015, the District approved a property tax rate decrease from $4.60 per $100 of secondary assessed
value to $3.58.
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Quailwood Meadows
June 30, 2014
Table of Contents
1
Balance Sheet
4
5
6
7
8
9
Tel (602) 277-9449
Fax (602) 277-9297
Board of Directors
the Quailwood Meadows Community Facilities District (District), a component unit of the Town of Prescott
Valley, Arizona, as of and for the year ended June 30, 2014, and the related notes to the financial statements,
which collectively comprise the District’s basic financial statements as listed in the table of contents.
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 that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Opinions
Change in Accounting Principle
As described in Note 1, the District implemented the provisions of the Governmental Accounting Standards
Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended
June 30, 2014, which represents a change in accounting principle. Our opinion is not modified with respect to
this matter.
Page 1
Other Matter
Required Supplementary Information
Management has omitted the management’s discussion and analysis that accounting principles generally
November 6, 2014
Page 2
3
June 30, 2014
Governmental
Activities
ASSETS
Current assets:
Accounts receivable
$
Total assets
472,190
2,849
475,039
475,039
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding
Total deferred outflows of resources
354,800
354,800
LIABILITIES
Advance from Town
174,361
165,000
339,361
5,645,000
5,645,000
Total liabilities
5,984,361
NET POSITION
Unrestricted
Total net position
$
4
(5,154,522)
(5,154,522)
Function/Programs
Community Facility District
Administration
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Expenses
$
64,225
390,483
454,708
$
-
$
-
$
-
$
454,708
$
-
$
-
$
-
Governmental
Activities
$
(454,708)
General revenues:
Taxes:
Property taxes
379,451
27
945,303
1,324,781
870,073
Total net position - June 30, 2013, as previously reported
Unamortized bond issuance cost
Total net position - July 1, 2013, as restated
5
(64,225)
(390,483)
(454,708)
(5,828,028)
(196,567)
(6,024,595)
$
(5,154,522)
Balance Sheet
June 30, 2014
ASSETS
Accounts receivable
Total assets
$
$
Liabilities:
Advance from Town
Total Liabilities
$
Fund balance:
Restricted
Total fund balance
472,190
2,849
475,039
174,361
174,361
300,678
300,678
Bonds payable
Deferred charge on refunding
(5,810,000)
354,800
$
6
(5,154,522)
REVENUES
Property taxes
Interest income
Total revenues
$
EXPENDITURES
Administration
Debt service:
Principal payment
Bond issuance cost
Payments to advanced refunding escrow agent
Total expenditures
379,451
945,303
27
1,324,781
64,225
215,000
238,093
152,390
568,501
1,238,209
86,572
Other financing sources (uses):
Refunding bonds issued
Payments to advanced refunding escrow agent
Total other financing sources (uses)
5,810,000
(5,651,299)
158,701
Excess of revenues and other sources
over expenditures
245,273
$
7
55,405
300,678
$
245,273
Bond proceeds
Payment to refunding escrow agent
(5,810,000)
6,219,800
215,000
$
8
870,073
Standards Board (GASB) Statement No. 39 – Determining Whether Certain Organizations are Component Units,
During the year ended June 30, 2014, the District implemented the provisions of GASB Statement No. 65, Items
Previously Reported as Assets and Liabilities. GASB Statement No. 65 establishes accounting and financial
reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain
items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of
resources, certain items that were previously reported as assets and liabilities.
Fund Accounting
General Fund
The government-wide financial statements (e.g. the statement of net position and the statement of activities) report
information on the primary government and its component units. Governmental activities, which normally are
supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which
rely to a significant extent on fees and charges for support. The District does not have any business-type
activities.
9
enough thereafter to pay liabilities of the current period. The District considers revenues to be available if they
are collected within sixty (60) days of the end of the current fiscal period. Expenditures generally are recorded
when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to claims and judgments, are recorded only when payment is due.
D. Budgets and Budgetary Accounting
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance
loan institutions, repurchase agreements with maximum maturity of thirty (30) days, and pooled investment funds
Restricted Assets
District loan assets as well as certain resources set aside for loan repayment, are classified as restricted assets on
the balance sheet because their use is limited by applicable loan covenants.
of net position. Bond premiums and discounts, as well as the difference between the reacquisition price, and the
net carrying amount of the old debt, are deferred and amortized over the life of the bonds using the straight-line
method. Bond issuance costs are expensed.
10
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report 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
(expense/expenditures) until then.
In addition to liabilities, the statement of financial position may report 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 will not be recognized as an inflow of resources (revenue) until that
time.
Fund Equity
II. DETAILED NOTES
Deposits
At June 30, 2014, the carrying amount of the District’s deposits was $472,190, which is comprised of the bank
checking account balance of $472,186 and deposits with trustee of $4.
B. Advance from Town
With the downturn in the housing market, the secondary assessed value for the Quailwood Meadows Community
Facilities District was severely affected. As a result, the district did not generate sufficient ad valorem taxes to
cover operating expenditures incurred within the district. The Town has advanced funds to the district to cover
these costs. The district will begin repaying the Town as the secondary assessed value begins to increase.
C. Debt
On October 25, 2013, The Quailwood Meadows Community Facilities District issued $5,810,000 in general
obligation bonds with an interest rate of 4.213%. The proceeds, along with a $568,501 developer deposit, were
used to advance refund $5,865,000 of outstanding Series 2004 Quailwood Meadows Community Facilities
District general obligation bonds. The net proceeds of $6,219,800 were deposited in an irrevocable trust with an
escrow agent to provide for the future debt service payment on the refunded bonds. As a result, the Series 2004
Quailwood Meadows Community Facilities District general obligation bonds are considered defeased and the
liability for those bonds has been removed from the statement of net position.
11
The reacquisition price exceeded the net carrying amount of the old debt by $354,800. This amount is being
amortized over the remaining life of the refunding debt. The Quailwood Meadows Community Facilities District
General Obligation Bonds, Series 2004, were refunded, resulting in a reduction of its total debt service payments
over sixteen years by $1,108,063, and to obtain a present value cash flow savings of $975,210 (including
developer deposit of $568,501), for a net present value savings of $406,709.
$5,810,000 Quailwood Meadows Community Facilities District General Obligation Bonds, Series 2013, is due in
annual payments of $165,000 to $560,000 through July 15, 2029, with interest at 4.2125% per annum (Payable
from revenues generated through an ad valorem tax assessed by the District against the properties located within
the boundaries of the District. The Town has no contingent obligation with respect to these bonds – streets, parks,
utilities and related improvements).
Balance
06/30/2013
Series 2004
Series 2013
$ 6,080,000
$ 6,080,000
Increases
$
5,810,000
$ 5,810,000
Decreases
$ 6,080,000
$ 6,080,000
Balance
06/30/2014
Due Within
One Year
$
$
5,810,000
$ 5,810,000
165,000
$ 165,000
Fiscal Year
Ending
2015
2016
2017
2018
2019
2020-24
2025-29
2030
Principal
$
$
165,000 $
195,000
190,000
215,000
240,000
1,785,000
2,460,000
560,000
5,810,000 $
Interest
241,271
233,688
225,579
217,049
207,466
845,133
384,812
11,795
2,366,793
12
B. Risk Management
C. Developer Deposits
In order to regulate the tax rate levied against District property owners, Empire Land LLC (Developer) entered
into contribution agreements to make annual contributions towards bond payments. In addition, at the time bonds
were issued, a cash deposit of $694,000 was made. The amount held will be available to pay debt service if there
has been levied and assessed an ad valorem property tax of at least $3.00 per $100 of secondary assessed
valuation on all taxable property within the boundaries of the District and amounts to pay debt service are not
available pursuant to the notice of default of the standby contribution agreement.
In 2008, the Developer filed for bankruptcy. The District has since filed certain claims as creditors, but the
bankruptcy moved very slowly. On April 12, 2012, the District approved an Assignment and Assumption of
District Development, Financing Participation and Intergovernmental Agreement with Everest Holdings, LLC.
This agreement includes a contribution agreement limited to $315 per year per lot purchased (or to be purchased),
not to exceed a total of $1,000,000 over the term of the financing agreement.
An unscheduled draw of $47,497 was necessary to make the July 15, 2011 bond payment but sufficient taxes
were collected to make the January 15, 2012 bond payment. An unscheduled draw of $17,460 was necessary to
make the July 15, 2012 bond payment, but sufficient taxes were collected to make the January 15, 2013 bond
payment. Another unscheduled draw of $60,548 was necessary to make the July 15, 2013 bond payment.
On October 25, 2013, the Quailwood Meadows Community Facilities District General Obligation Bonds, Series
2004 were refinanced resulting in present value cash flow savings of $971,509 and net present value savings of
$406,709. The refinancing of the bonds eliminated the developer deposit and is expected to stabilize the property
tax rates for future debt service payments.
D. Prior Period Adjustments
The July 1, 2013, government-wide net position of Governmental Activities does not agree to the prior year
financial statements due to the implementation of GASB Statement No. 65, Items Previously Reported as Assets
and Liabilities.
Total net position - June 30, 2013, as previously reported
Unamortized bond issuance cost
Total net position - July 1, 2013, as restated
$ (5,828,028)
(196,567)
$ (6,024,595)
F. Subsequent Events
On July 10, 2014, the District approved a property tax rate decrease from $5.55 per $100 of secondary assessed
value to $4.60.
13
Quailwood Meadows
June 30, 2013
Table of Contents
1
Balance Sheet
4
5
6
7
8
9
Tel (602) 277-9449
Fax (602) 277-9297
Board of Directors
the Quailwood Meadows Community Facilities District (the “District”), a component unit of the Town of
Prescott Valley, Arizona, as of and for the year ended June 30, 2013, and the related notes to the financial
statements, which collectively comprise the District’s basic financial statements as listed in the table of
contents.
risk assessments, the auditor considers internal control relevant to the District’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 District’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 that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
Change in Accounting Principle
As described in Note 1, the District implemented the provisions of the Governmental Accounting Standards
Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of
Resources, and Net Position, for the year ended June 30, 2013, which represents a change in accounting
principle. Our opinion is not modified with respect to this matter.
Management has omitted the management’s discussion and analysis that accounting principles generally
October 30, 2013
Page 2
3
June 30, 2013
Governmental
Activities
ASSETS
Current assets:
Accounts receivable
$
Noncurrent assets:
Deferred charges
Total noncurrent assets
809,519
6,481
816,000
196,567
196,567
Total assets
1,012,567
LIABILITIES
Accounts payable
131,552
215,000
346,552
Developer deposits
5,865,000
629,043
6,494,043
Total liabilities
6,840,595
NET POSITION
Unrestricted
Total net position
$
4
(5,828,028)
(5,828,028)
Function/Programs
Administration
Charges for
Services
Expenses
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
$
68,096
389,833
457,929
$
-
$
-
$
-
$
457,929
$
-
$
-
$
-
General revenues:
Taxes:
Property taxes
Net position - beginning
5
Governmental
Activities
$
(68,096)
(389,833)
(457,929)
(457,929)
$
382,643
71
17,460
400,174
(57,755)
(5,770,273)
(5,828,028)
Balance Sheet
June 30, 2013
ASSETS
Accounts receivable
Total assets
$
$
Liabilities:
Accounts payable
Developer Deposits
Total Liabilities
$
Fund balance:
Restricted
Total fund balance
809,519
6,481
816,000
131,552
629,043
760,595
55,405
55,405
Bond issuance costs are recognized as debt service expenditures in the
governmental funds; however, these costs are capitalized on the statement
of net position and amortized in the statement of activities.
196,567
(6,080,000)
$
6
(5,828,028)
REVENUES
Property taxes
Interest income
Total revenues
$
EXPENDITURES
Administration
Debt service:
Principal payment
Total expenditures
382,643
17,460
71
400,174
68,096
205,000
372,740
645,836
(245,662)
$
7
301,067
55,405
$
(245,662)
of net position and amortized in the statement of activities.
(17,093)
205,000
$
8
(57,755)
Standards Board (GASB) “Statement 39 – Determining Whether Certain Organizations are Component Units,”
During the year ended June 30, 2013, the District implemented the provisions of GASB Statement No. 63,
Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB
Statement No. 63 establishes reporting guidance for certain elements of the financial statements which are distinct
from assets and liabilities.
Fund Accounting
General Fund
The government-wide financial statements (e.g. the statement of net position and the statement of changes in net
position) report information on the primary government and its component units. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from business-type
activities, which rely to a significant extent on fees and charges for support. The District does not have any
business-type activities.
9
are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures
related to claims and judgments, are recorded only when payment is due.
E. Assets, Liabilities and Fund Equity
loan institutions, repurchase agreements with maximum maturity of thirty days, and pooled investment funds
Restricted Assets
of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of
the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized
over the life of the related debt.
10
Fund Equity
II. DETAILED NOTES
The bank trust fund represents proceeds from bond sales and certain resources set aside for their repayment.
Under the terms of the bond indenture, the proceeds are required to be held by a trustee. Funds on deposit are
invested by the trustee in money market funds, as governed by state statute.
Deposits
At June 30, 2013, the carrying amount of the District’s deposits was $809,519 which is comprised of the deposits
with trustee of $809,519.
Interest Rate Risk
As a means of limiting its exposure to fair value losses arising from rising interest rates, the District limits its
investment portfolio to maturities of less than three years, unless matched to a specific cash flow.
Credit Risk
The District invests in obligations of the U.S. Treasury, U.S. Government agencies, Certificates of Deposit,
bankers’ acceptances, repurchase agreements and mutual funds consisting of the foregoing as a means of limiting
its credit risk.
The District’s investment in the bonds of U.S. agencies was rated AA+ by Standard & Poor’s, AAA by Fitch
Ratings and Aaa by Moody’s Investors Service.
B. Debt
$6,940,000 Quailwood Meadows Community Facilities District General Obligation Bonds, Series 2004 is due in
annual payments of $135,000 to $550,000 through July 15, 2029, with interest at 4.25-6.13% per annum.
(Payable from revenues generated through an ad valorem tax assessed against the properties located within the
boundaries of the District. A standby contribution agreement with the District developer is in place whereby in
the event of any deficiency in the revenues generated by the ad valorem tax, the developer is liable to contribute
an amount equal to $315 per year per lot purchased (or to be purchased), not to exceed a total of $1,000,000 over
the term of the financing agreement. In the event that the developer contribution does not cover the deficiency
amount, funds will be drawn from the reserve account with the Trustee to cover the deficiency.)
11
Balance
6/30/2012
Increases
$ 6,285,000
$
-
Decreases
Balance
6/30/2013
Due Within
One Year
$ 205,000
$ 6,080,000
$ 215,000
Fiscal Year
Ending
2014
2015
2016
2017
2018
2019-23
2024-28
2029-30
Principal
$
$
215,000 $
230,000
240,000
255,000
270,000
1,630,000
2,175,000
1,065,000
6,080,000 $
Interest
360,605
348,475
334,950
320,100
304,350
1,248,150
674,516
66,304
3,657,450
B. Risk Management
12
C. Developer Deposits
In order to regulate the tax rate levied against District property owners, Empire Land LLC (Developer) entered
into contribution agreements to make annual contributions towards bond payments. In addition, at the time bonds
were issued, a cash deposit of $694,000 was made. The amount held will be available to pay debt service if there
has been levied and assessed an ad valorem property tax of at least $3.00 per $100 of secondary assessed
valuation on all taxable property within the boundaries of the District and amounts to pay debt service are not
available pursuant to the notice of default of the standby contribution agreement.
In 2008, the Developer filed for bankruptcy. The District has since filed certain claims as creditors, but the
bankruptcy moved very slowly. On April 12, 2012, the District approved an Assignment and Assumption of
District Development, Financing Participation and Intergovernmental Agreement with Everest Holdings, LLC.
This agreement includes a contribution agreement limited to $315 per year per lot purchased (or to be purchased),
not to exceed a total of $1,000,000 over the term of the financing agreement.
An unscheduled draw of $47,497 was necessary to make the July 15, 2011 bond payment but sufficient taxes
were collected to make the January 15, 2012 bond payment. An unscheduled draw of $17,460 was necessary to
make the July 15, 2012 bond payment but sufficient taxes were collected to make the January 15, 2013 bond
payment. As of June 30, 2013 the deposit balance was $629,043.
D. Subsequent Events
On July 11, 2013, the District approved a property tax rate of $5.55 per $100 of secondary assessed value.
Another unscheduled draw of $60,548 was necessary to make the July 15, 2013 bond payment. Sufficient taxes
are expected to be collected to make the January 15, 2014 bond payment.
On October 25, 2013, the Quailwood Meadows Community Facilities District General Obligation Bonds, Series
2004 were refinanced resulting in present value cash flow savings of $971,509 and net present value savings of
$406,709. The refinancing of the bonds eliminated the developer deposit and is expected to stabilize the property
tax rates for future debt service payments.
13
Quailwood Meadows
June 30, 2012
Tel (602) 277-9449
Fax (602) 277-9297
INDEPENDENT AUDITORS’ REPORT
Board of Directors
We have audited the accompanying financial statements of the governmental activities and the
major fund of the Quailwood Meadows Community Facilities District (the “District”), a
component unit of the Town of Prescott Valley, Arizona, as of and for the year ended
June 30, 2012, which collectively comprise the Districts’ basic financial statements as listed in
the table of contents. These financial statements are the responsibility of the Districts’
management. 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 the
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
As discussed in Note 1, the financial statements of the Quailwood Meadows Community
Facilities District are intended to present the fund balances and the changes in fund balances that
are attributable to the District, a component unit of the Town of Prescott Valley, Arizona. They
do not purport to, and do not represent fairly the financial position of the Town of Prescott
Valley, Arizona, as of June 30, 2012, and the changes in its financial position for the year then
ended in conformity with accounting principles generally accepted in the United States of
America.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities and the major fund of the District
as of June 30, 2012, and the respective changes in financial position thereof for the year then
America.
1
TUCSON • PHOENIX • FLAGSTAFF • ALBUQUERQUE
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.
November 8, 2012
2
Quailwood Meadows
June 30, 2011
Table of Contents
Independent Auditors’ Report
1
Statement of Net Assets
Balance Sheet
4
5
6
7
8
9
CERTIFIED PUBLIC ACCOUNTANTS
Hein
f
25
versary
th
A nni
1986-2011
Board of Directors
component unit of the Town of Prescott Valley, Arizona, as of and for the year ended
June 30, 2011, which collectively comprise the Districts’ basic financial statements as listed in
the table of contents. These financial statements are the responsibility of the Districts’
management. Our responsibility is to express opinions on these financial statements based on
our audit.
America.
America.
As described in Note 1, the District implemented the provisions of the Governmental Accounting
Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund
Type Definitions, for the year ended June 30, 2011, which represents a change in accounting
principle.
1
3033 N. Central Ave., Suite 300, Phoenix, Arizona 85012
Tel: (602) 277-9449
Fax: (602) 277-9297
Co.
&
, Meech
eld
Certified Public Accountants
November 9, 2011
2
3
June 30, 2011
Governmental
Activities
ASSETS
Current assets:
Accounts receivable
$
Noncurrent assets:
Deferred charges
1,059,080
19,491
1,078,571
230,753
230,753
Total assets
1,309,324
LIABILITIES
Accounts payable
47,067
195,000
242,067
Developer deposits
6,285,000
694,000
6,979,000
Total liabilities
7,221,067
NET ASSETS
Unrestricted
Total net assets
$
4
(5,911,743)
(5,911,743)
Function/Programs
Administration
Expenses
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Governmental
Activities
$
62,574 $
408,456
471,030
- $
-
- $
-
-
$
471,030 $
- $
- $
-
General revenues:
Taxes:
Property taxes
Change in net assets
Net assets - beginning
Net assets - ending
5
$
(62,574)
(408,456)
(471,030)
(471,030)
$
444,941
97
445,038
(25,992)
(5,885,751)
(5,911,743)
Balance Sheet
June 30, 2011
ASSETS
Accounts receivable
Total assets
$
$
1,059,080
19,491
1,078,571
Liabilities:
Accounts payable
Developer Deposits
Total Liabilities
47,067
694,000
741,067
Fund balance
Restricted
Total fund balance
337,504
337,504
Amounts reported for governmental activities in the statement of net assets are different because:
of net assets and amortized in the statement of activities.
230,753
Net assets of governmental activities - statement of net assets
(6,480,000)
$
6
(5,911,743)
REVENUES
Property taxes
Interest income
Total revenues
$
EXPENDITURES
Administration
Debt service:
Principal payment
Total expenditures
444,941
97
445,038
62,574
165,000
391,363
618,937
(173,899)
$
7
511,403
337,504
$
(173,899)
Bond interest charges are expended in the governmental funds when paid,
and are accrued in the statement of net assets. This is the amount
by which interest paid in the current year exceeds interest accrued.
(17,093)
in the statements of net assets. In the current period, these amounts are
165,000
Changes in net assets of governmental activities
$
8
(25,992)
During the year ended June 30, 2011, the District implemented the provisions of GASB Statement No. 54, Fund
Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 establishes standards for
financial reporting, including note disclosure requirements for fund balance classifications of governmental funds,
and clarifies existing governmental fund type definitions.
Fund Accounting
General Fund
The government-wide financial statements (e.g. the statement of net assets and the statement of changes in net
assets) report information on the primary government and its component units. Governmental activities, which
activities, which rely to a significant extent on fees and charges for support. The District does not have any
business-type activities.
9
are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures
related to claims and judgments, are recorded only when payment is due.
This means that only current assets and liabilities are generally included on their balance sheets. Their reported
fund balance (net current assets) is considered a measure of “available spendable resources.” Governmental Fund
operating statements present increases (revenues and other financing sources) and decreases (expenditures and
other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of
“available spendable resources” during a period.
Restricted Assets
10
Fund Equity
In the fund financial statements, governmental funds report reservation of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose.
II. CASH AND CASH EQUIVALENTS
invested by the trustee in money market funds, as governed by state statute.
Deposits
At June 30, 2011, the carrying amount of the District’s deposits was $1,059,080 which is comprised of the
deposits with trustee of $1,059,080.
Interest Rate Risk
Credit Risk
its credit risk.
The District’s investment in the bonds of U.S. agencies was rated AA+ by Standard & Poor’s, AAA by Fitch
Ratings and Aaa by Moody’s Investors Service.
11
III. DEBT
an amount equal to the deficiency to cover the debt service payments. In the event that the developer cannot
cover the deficiency amount, funds will be drawn from the reserve account with the Trustee to cover the
deficiency.)
Balance
6/30/2010
Quailwood (Series 2004)
Increases
$ 6,645,000
$
-
Decreases
Balance
6/30/2011
Due Within
One Year
$ 165,000
$ 6,480,000
$ 195,000
Fiscal Year
Ending
2012
2013
2014
2015
2016
2017-21
2022-26
2027-30
Principal
$
$
195,000 $
205,000
215,000
230,000
240,000
1,445,000
1,940,000
2,010,000
6,480,000 $
Interest
381,945
371,740
360,605
348,475
334,950
1,432,500
925,506
255,414
4,411,135
IV. CONTINGENT LIABILITIES
At this time there are no contingent liabilities.
V. RISK MANAGEMENT
12
VI. DEVELOPER DEPOSITS
In order to regulate the tax rate levied against District property owners, developers entered into contribution
agreements to make annual contributions towards bond payments. In addition, at the time bonds were issued, a
cash deposit of $694,000 was made. The amount held will be available to pay debt service if there has been
levied and assessed an ad valorem property tax of at least $3.00 per $100 of secondary assessed valuation on all
taxable property within the boundaries of the District and amounts to pay debt service are not available pursuant
to the notice of default of the standby contribution agreement. This amount is reported on the financial statements
as developer deposits.
In 2008, the developer filed for bankruptcy. The District has since filed certain claims as creditors, but the
bankruptcy has moved very slowly. An unscheduled draw of $47,497 was necessary to make the July 15, 2011
bond payment but sufficient taxes are expected to be collected to make the January 15, 2012 bond payment. In
the event that one or more new developers willing to undertake the contribution obligations does not occur in the
near term, unscheduled draws will likely continue on the deposit. This may result in increased tax rates for
current owners in order to satisfy bond obligations.
On June 23, 2011 the District approved a property tax rate increase from $3.30 per $100 of secondary assessed
value to $4.23. This decision was the result of a continued decline in secondary assessed value within the District
boundaries.
13
QUAILWOOD MEADOWS
COMMUNITY FACILITIES DISTRICT
ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2010
QUAILWOOD MEADOWS COMMUNITY FACILITIES DISTRICT
TABLE OF CONTENTS
Independent Auditors’ Report
1
Balance Sheet
3
4
5
6
7
8
CERTIFIED PUBLIC ACCOUNTANTS
Hein
f
25
versary
th
A nni
1986-2011
Board of Directors
component unit of the Town of Prescott Valley, Arizona, as of and for the year ended June 30,
2010, which collectively comprise the Districts’ basic financial statements as listed in the table
of contents. These financial statements are the responsibility of the Districts’ management. Our
responsibility is to express opinions on these financial statements based on our audit.
America.
America.
1
3033 N. Central Ave., Suite 300, Phoenix, Arizona 85012
Tel: (602) 277-9449
Fax: (602) 277-9297
Co.
&
, Meech
eld
Certified Public Accountants
January 18, 2011
2
June 30, 2010
Governmental
Activities
ASSETS
Restricted cash and cash equivalents:
Cash and cash equivalents
Total restricted cash and cash equivalents
$
Noncurrent assets:
Deferred charges
1,246,796
1,246,796
247,846
247,846
Total assets
1,494,642
LIABILITIES
Accounts payable
41,393
165,000
206,393
Developer deposits
6,480,000
694,000
7,174,000
Total liabilities
7,380,393
NET ASSETS
Unrestricted
Total net assets
$
3
(5,885,751)
(5,885,751)
Function/Programs
Administration
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Expenses
Governmental
Activities
$
76,895
415,677
492,572
$
-
$
-
$
-
$
492,572
$
-
$
-
$
-
General revenues:
Taxes:
Property taxes
Net assets - ending
4
$
(76,895)
(415,677)
(492,572)
(492,572)
$
531,091
148
531,239
38,667
(5,924,418)
(5,885,751)
Balance Sheet
June 30, 2010
ASSETS
Total assets
$
$
1,246,796
1,246,796
Liabilities:
Accounts payable
Developer Deposits
Total Liabilities
41,393
694,000
735,393
Fund balance
Reserved
Total fund balance
511,403
511,403
247,846
(6,645,000)
$
5
(5,885,751)
REVENUES
Property taxes
Interest income
Total revenues
$
EXPENDITURES
Administration
Debt service:
Principal payment
Total expenditures
531,091
148
531,239
76,895
160,000
398,585
635,480
(104,241)
$
6
615,644
511,403
$
(104,241)
(17,092)
in the statements of net assets. In the current period, these amounts are
160,000
$
7
38,667
Fund Accounting
General Fund
activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is
reported separately from certain legally separate component units for which the primary government is financially
accountable.
8
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All
Governmental Fund types are accounted for using the “flow of current financial resources” measurement focus.
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and
reported in the financial statements. Basis of accounting relates to the timing of the measurements made,
regardless of the measurement focus applied.
Restricted Assets
9
Deposits
invested by the trustee in highly liquid investments, as governed by state statute.
Interest Rate Risk
Credit Risk
its credit risk.
The District’s investment in the bonds of U.S. agencies was rated AAA by Standard & Poor’s and Fitch Ratings,
and Aaa by Moody’s Investors Service.
III. DEBT
The Quailwood Meadows Community Facilities District has the following long-term obligations:
deficiency.)
10
Balance
6/30/2009
$6,805,000
Increases
Decreases
Balance
6/30/2010
Due Within
One Year
$
$ 160,000
$6,645,000
$ 165,000
-
Fiscal Year
Ending
2011
2012
2013
2014
2015
2016-20
2020-25
2026-30
Principal
$
165,000
195,000
205,000
215,000
230,000
1,360,000
1,830,000
2,445,000
$ 6,645,000
Interest
$
390,862
381,945
371,740
360,605
348,475
1,516,650
1,039,872
391,848
$ 4,801,997
V. RISK MANAGEMENT
VI. DEVELOPER DEPOSITS
To regulate the tax rate levied against property in the District, the developer entered into contribution agreements
to make annual payments needed to maintain the tax rate as well as preserve the improvements. The developer
also made a cash deposit to the bond trustee of $694,000 for the payment of debt service if annual payments
ceased. This amount is reported on the financial statements as developer deposits.
In 2008, the developer filed for bankruptcy. The District has since filed certain claims as creditors, but the
bankruptcy has moved very slowly. Falling secondary assessment values in the District and the lack of
contribution payments by the developers has resulted in pressure to draw upon the developer deposit to the bond
trustee of $694,000 and/or raise tax rates. This has not been necessary to date, but may soon be necessary.
11
QUAILWOOD MEADOWS
TABLE OF CONTENTS
1
Balance Sheet
3
4
5
6
7
8
Governing Board
We have audited the accompanying financial statements of the governmental activities of the Quailwood
Meadows Community Facilities District (District), a component unit of the Town of Prescott Valley, Arizona, as
of and for the year ended June 30, 2009, as listed in the table of contents. These financial statements are the
responsibility of the District’s management. 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
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. 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 the significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of the governmental activities of Quailwood Meadows Community Facilities District, as of June 30, 2009,
and the results of its operations for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
The District has not presented the Management’s Discussion and Analysis that the Governmental Accounting
Standards Board has determined is necessary to supplement, although not required to be part of, the basic
financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated December 2, 2009, on
our consideration of the District’s internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
Phoenix, Arizona
December 2, 2009
1
PEOPLE. PRINCIPLES. POSSIBILITIES.
www.eidebailly.com
1850 N. Central Avenue • Suite 400 • Phoenix, Arizona 85004 • Phone 602.264.5844 • Fax 602.277.4845 • EOE
2
June 30, 2009
Governmental
Activities
ASSETS
$
Noncurrent assets:
Deferred charges
1,333,011
1,333,011
264,938
264,938
Total assets
1,597,949
LIABILITIES
Accounts payable
23,367
160,000
183,367
Developer deposits
6,645,000
694,000
7,339,000
Total liabilities
7,522,367
NET ASSETS
Invested in capital assets, net of related debt
Unrestricted
Total net assets
$
3
(6,805,000)
880,582
(5,924,418)
Function/Programs
Administration
Expenses
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Governmental
Activities
$
76,702 $
422,226
498,928
- $
-
- $
-
-
$
498,928 $
- $
- $
-
General revenues:
Taxes:
Property taxes
Net assets - ending
4
$
(76,702)
(422,226)
(498,928)
(498,928)
$
574,449
9,271
583,720
84,792
(6,009,210)
(5,924,418)
Balance Sheet
June 30, 2009
ASSETS
Total assets
Liabilities:
Accounts payable
Developer Deposits
Total Liabilities
$
$
1,333,011
1,333,011
$
23,367
694,000
717,367
Fund balance
Reserved
Total fund balance
615,644
615,644
264,938
Long-term liabilities, including bonds payable, are not due and payable in the current period
and therefore are not reported in the funds.
(6,805,000)
$
5
(5,924,418)
REVENUES
Property taxes
Developer tax revenue
Interest income
Total revenues
$
574,449
9,271
583,720
EXPENDITURES
Administration
Debt service:
Principal payment
Total expenditures
135,000
405,133
616,835
(33,115)
76,702
$
6
648,759
615,644
$
(33,115)
(17,093)
135,000
Donations of capital assets are not reflected on the governmental fund
statements but are shown in the statement of activities.
$
7
84,792
The Town council serves as the District’s board of directors. In accordance with GASB “Statement 39 –
Determining Whether Certain Organizations are Component Units,” the District financial statements are reported
in the Town’s financial statements for the year ended June 30, 2009, using the blended method.
governmental units. The District applies all relevant Governmental Accounting Standards Board (GASB)
pronouncements.
Fund Accounting
General Fund
accountable.
accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related
cash flows. Property taxes, where applicable, are recognized as revenues in the year for which they are levied.
8
D. Implementation of New Accounting Principles
Governmental Accounting Standards Board Statement No. 40
The District adopted the provisions of GASB Statement No. 40, Deposit and Investment Risk Disclosures for the
year ended June 30, 2005. This statement establishes and modifies disclosure requirements related to investment
and deposit risks. Accordingly, the note disclosures on cash and investments are in conformity with the
provisions of GASB Statement No. 40.
F. Assets, Liabilities and Fund Equity
Cash equivalents for purposes of the statement of cash flows are investments (including restricted assets) in
money market funds.
established by the State Treasurer.
Restricted Assets
9
Deposits
Interest Rate Risk
Credit Risk
its credit risk.
III. DEBT
$ 6,940,000 Quailwood Meadows Community Facilities District General Obligation Bonds, Series 2004 is due in
10
deficiency.)
Balance
6/30/2008
Increases
6,940,000
-
Decreases
Balance
6/30/2009
Due within
One Year
135,000
6,805,000
160,000
Fiscal Year
Ending
2010
2011
2012
2013
2014
2015-19
2020-24
2025-29
2030
Principal
Interest
$
$
$
160,000
165,000
195,000
205,000
215,000
1,285,000
1,725,000
2,305,000
550,000
6,805,000
$
398,585
390,862
381,945
371,740
360,605
1,595,425
1,147,259
537,316
16,844
5,200,581
$25,000,000. As of June 30, 2009, the District Board has not received a request from the developer to issue the
V. RISK MANAGEMENT
11
QUAILWOOD MEADOWS
TABLE OF CONTENTS
1
Balance Sheet
3
4
5
6
7
8
Governing Board
Meadows Community Facilities District (District), a component unit of the Town of Prescott Valley, Arizona, as
responsibility of the District’s management. 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,
and the standards applicable to financial reports contained in Government Auditing Standards, issued by the
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
position of the governmental activities of the Quailwood Meadows Community Facilities District, at June 30,
2008, and the results of its operations for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
The District has not presented the Management’s Discussion and Analysis that the Governmental Accounting
financial statements.
In accordance with Government Auditing Standards, we have also issued our reports dated November 24, 2008 on
our consideration of the Districts’ internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. The purpose of that report is to describe the scope of
our testing of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
Phoenix, Arizona
November 24, 2008
1
PEOPLE. PRINCIPLES. POSSIBILITIES.
www.eidebailly.com
1850 N. Central Avenue • Suite 400 • Phoenix, Arizona 85004 • Phone 602.264.5844 • Fax 602.277.4845 • EOE
2
June 30, 2008
Governmental
Activities
ASSETS
$
Noncurrent assets:
Deferred charges
1,356,090
1,356,090
282,031
282,031
Total assets
1,638,121
LIABILITIES
Accounts payable
13,331
135,000
148,331
Developer deposits
6,805,000
694,000
7,499,000
Total liabilities
7,647,331
NET ASSETS
Unrestricted
Total net assets
$
3
(6,940,000)
930,790
(6,009,210)
Function/Programs
Administration
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Expenses
Governmental
Activities
$
52,264
425,095
477,359
$
-
$
-
$
-
$
477,359
$
-
$
-
$
-
General revenues:
Taxes:
Property taxes
Special items Donated infrastructure
Net assets - ending
4
$
(52,264)
(425,095)
(477,359)
(477,359)
326,011
45,754
113,522
$
(551,000)
(65,713)
(543,072)
(5,466,138)
(6,009,210)
Balance Sheet
June 30, 2008
ASSETS
Total assets
Liabilities:
Accounts payable
Developer Deposits
Total Liabilities
$
$
1,356,090
1,356,090
$
13,331
694,000
707,331
Fund balance
Reserved
Total fund balance
648,759
648,759
282,031
(6,940,000)
$
5
(6,009,210)
REVENUES
Property taxes
Interest income
Total revenues
$
EXPENDITURES
Administration
Debt service:
Total expenditures
326,011
113,522
45,754
485,287
52,264
408,002
460,266
25,021
$
6
623,738
648,759
$
25,021
(17,093)
Donations of capital assets are not reflected on the governmental fund
statements but are shown in the statement of activities.
(551,000)
$
7
(543,072)
The Quailwood Meadows Community Facilities District (District) was created by the Town of Prescott Valley as
a special purpose community facilities district pursuant to state law on August 12, 2004. The purpose of the
District is to assist in financing necessary on and off-site infrastructure and public improvements.
in the Town’s financial statements for the year ended June 30, 2008 using the blended method.
pronouncements.
Fund Accounting
General Fund
accountable.
8
and deposit risks. Accordingly, the note disclosures on cash and investments are in conformity with the
provisions of GASB Statement No. 40.
Cash equivalents for purposes of the statement of cash flows are investments (including restricted assets) in
money market funds.
Restricted Assets
The District’s capital asset is construction in progress. Once completed, all capital assets acquired by the District
will be donated to the Town. The Town is responsible for maintaining the improvements.
9
Schedule of Activity in Construction in Progress:
Construction
in Progress
June 30, 2007
CFD - Quailwood
551,000
Increases
Decreases
-
Transfers
-
(551,000)
Construction
in Progress
June 30, 2008
-
Deposits
Interest Rate Risk
Credit Risk
its credit risk.
10
III. DEBT
the event of any deficiency in the revenues generated by the ad valorem tax the developer is liable to contribute an
amount equal to the deficiency to cover the debt service payments.)
Balance
6/30/2007
Increases
6,940,000
-
Decreases
Balance
6/30/2008
Due within
One Year
-
6,940,000
135,000
Fiscal Year
Ending
2009
2010
2011
2012
2013
2014-18
2019-23
2024-28
2029-30
Principal
$
$
135,000
160,000
165,000
195,000
205,000
1,210,000
1,630,000
2,175,000
1,065,000
6,940,000
Interest
$
405,134
398,585
390,862
381,945
371,740
1,668,480
1,248,150
674,516
66,304
5,605,716
V. RISK MANAGEMENT
11
QUAILWOOD MEADOWS
TABLE OF CONTENTS
1
Balance Sheet
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
3
4
5
6
7
8
~...~
EideBailly~
~
CPAi & RlJSINES..C;
AOVISORS
INDEPENDENT AUDITOR'S REPORT
Governing Board
Meadows CommunityFacilities District (District),a componentunit of the Town of Prescott Valley, Arizona, as
responsibility of the District's management. Our responsibility is to express an opinion on these financial
statementsbased on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America,
and the standards applicable to financial reports contained in Government Auditing Standards, issued by the
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
position of the governmental activities of the Quailwood Meadows Community Facilities District, at June 30,
2007, and the results of its operations for the year then ended, in conformitywith accountingprinciples generally
accepted in the United Statesof America.
The District has not presented the Management's Discussion and Analysis that the Governmental Accounting
financialstatements.
In accordance with Government Auditing Standards, we have also issued our reports dated January 8, 2008 on our
consideration of the Districts' internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts and grants. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
t;J~ fu:
11'1
Ld
Phoenix, Arizona
January 8, 2008
PEOPLE. PRINCIPLES.POSSIBIUTIES.
·
www.eidebailly.com
1850 N. Central Avenue. Suite 400. Phoenix, Arizona 85004
1
Phone 602.264.5844.
Fax 602.277.4845.
EOE
2
June 30, 2007
Governmental
Activities
ASSETS
Restricted cash, cash equivalents, and investment assets:
Cash and investments
Total restricted cash, cash equivalents, and investments assets
$
Noncurrent assets:
Deferred charges
Capital assets:
Land, water rights, and construction in progress
Total capital assets (net of accumulated depreciation)
1,320,925
1,320,925
299,124
551,000
551,000
850,124
Total assets
2,171,049
LIABILITIES
Accounts payable
Bonds, loans, capital leases, and other payables-due within one year
3,187
135,000
138,187
Bonds, loans, capital leases, and other payables-due in more than one year
Developer deposits
6,805,000
694,000
7,499,000
Total liabilities
7,637,187
NET ASSETS
Total net assets
$
3
(5,466,138)
(5,466,138)
Function/Programs
Administration
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Expenses
Governmental
Activities
$
19,995
425,095
445,090
$
-
$
-
$
-
$
445,090
$
-
$
-
$
-
General revenues:
Taxes:
Property taxes
Net assets - ending
4
$
(19,995)
(425,095)
(445,090)
(445,090)
$
147,556
179,667
73,378
400,601
(44,489)
(5,421,649)
(5,466,138)
Balance Sheet
June 30, 2007
ASSETS
Restricted assets - cash and investments
Total assets
Liabilities:
Accounts payable
Developer Deposits
Total Liabilities
$
$
1,320,925
1,320,925
$
3,187
694,000
697,187
Fund balance
Reserved
Total fund balance
623,738
623,738
Capital assets used in governmental activities are not financial resources and, therefore,
are not reported in the funds.
551,000
governmental funds, however these costs are capitalized on the statement
299,124
(6,940,000)
$
5
(5,466,138)
REVENUES
Property taxes
Interest income
Total revenues
$
EXPENDITURES
Administration
Capital outlay
Debt service:
Total expenditures
147,556
179,667
73,378
400,601
19,995
551,000
408,002
978,997
(578,396)
$
6
1,202,134
623,738
Reconciliation of the Statement of Revenues, Expenditures, and
$
(578,396)
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.
551,000
(17,093)
$
7
(44,489)
The Quailwood Meadows Community Facilities District (District) was created by the Town of Prescott Valley as
a special purpose community facilities district pursuant to state law on August 12, 2004. The purpose of the
District is to assist in financing necessary on and off-site infrastructure and public improvements.
in the Town’s financial statements for the year ended June 30, 2007 using the blended method.
pronouncements.
Fund Accounting
General Fund
8
and deposit risks; accordingly, the note disclosures on cash and investments are in conformity with the provisions
of GASB Statement No. 40.
Cash and Cash Equivalents and Investments
Restricted Assets
The District’s capital asset is construction in progress. Once completed, all capital assets acquired by the District
will be donated to the Town. The Town is responsible for maintaining the improvements.
received are reported as debt service expenditures.
9
II. CASH AND INVESTMENTS
A. Cash and Investments
Deposits
Interest Rate Risk
Credit Risk
bankers’ acceptances, repurchase agreements, and mutual funds consisting of the foregoing as a means of limiting
its credit risk.
Investments
The District’s investments at June 30, 2007, are summarized below.
Investment Maturities (in years)
Investment Type
Fair Value
Money Markets
Total Investments
$
10
Less
Than 1
1,320,925
1,320,925
1,320,925
$ 1,320,925
Total District cash and investments at fair value are as follows:
Investments
$
1,320,925
Total Cash and Investments
$
1,320,925
Primary Government
Restricted Cash
$
1,320,925
Total Cash and Investments
$
1,320,925
Total District cash and investments are reported as follows:
The District classifies its debt securities as held-to maturity. A debt security should be classified as held-tomaturity only if the reporting entity has both the positive intent and the ability to hold those securities to maturity.
In accordance with the District’s Investment Policy, securities shall not be sold prior to maturity with the
following exceptions; 1. A security with declining credit may be sold early to minimize loss of principal. 2.
Liquidity needs of the portfolio require that the security be sold. 3. If market conditions present an opportunity for
the Town to benefit from the sale.
III. DEBT
the event of any deficiency in the revenues generated by the ad valorem tax the developer is liable to contribute an
amount equal to the deficiency to cover the debt service payments.)
Fiscal Year
Ending
2008
2009
2010
2011
2012
2013-17
2018-22
2023-27
2028-29
Principal
$
$
135,000
160,000
165,000
195,000
205,000
1,210,000
1,630,000
2,175,000
1,065,000
6,940,000
Interest
408,002
402,265
394,905
386,820
377,070
1,703,560
1,297,050
741,125
98,919
5,809,716
11
V. RISK MANAGEMENT
12

Quailwood Meadows Community Facilities District Annual Financial

Transcription

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