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NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1

FINANCIAL STATEMENTS, SUPPLEMENTAL INFORMATION

AND INDEPENDENT AUDITOR’S REPORT

FOR THE YEAR ENDED

SEPTEMBER 30, 2017

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TABLE OF CONTENTS

Page

Annual Filing Affidavit ................................................................................................................. 1 Independent Auditor’s Report ....................................................................................................... 2 Management’s Discussion and Analysis ....................................................................................... MDA-1 Basic Financial Statements

Statement of Net Position and Governmental Funds Balance Sheet ..................................... FS-1 Statement of Activities and Governmental Funds Revenues, Expenditures and Changes in Fund Balance .......................................................................... FS-2

Notes to the Financial Statements ................................................................................................ FS-3 Required Supplemental Information (RSI)

Budgetary Comparison Schedule .......................................................................................... FS-16 Texas Supplemental Information (TSI)

Services and Rates ................................................................................................................. TSI-1 General Fund Expenditures ................................................................................................... TSI-2 Temporary Investments ........................................................................................................ TSI-3 Taxes Levied and Receivable ............................................................................................... TSI-4 Long-Term Debt Service Requirements - By Years ............................................................. TSI-5 Changes in Long-Term Bonded Debt ................................................................................... TSI-6 Comparative Schedule of Revenues and Expenditures General Fund and Debt Service Fund - Five Years ........................................................... TSI-7 Board Members, Key Personnel and Consultants ................................................................. TSI-8

Other Supplemental Information (OSI)

Principal Taxpayers ............................................................................................................... OSI-1 Assessed Value by Classification ......................................................................................... OSI-2

ST A TE OF TEXAS COUNTY OF TRAVIS

ANNUAL FlLlNG AFFlDA VIT

(Name of Duly Authotized District Representative)

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. l INamc of District)

hereby swear, or affirm, that the District above has reviewed and approved at a meeting of the District's Board of Directors on the 17th day of January, 2018 its annual audit report for the fiscal year ended September 30, 2017 and that copies of the annual audit report have been filed in the District's office, located at:

100 Con~ress AYe,, Sujte 1300 Austjn. TX 78701. (Address of District 's Office)

This filing affidavit and the attached copy of the audit report will be · mitted to the Texas Commission on Environmental Quality to satisfy the anm~Mi.r\\'ing req.uiretenrs f Tefas Water Code Section 49. 194.

, ' I . !\\\ \ , Date: January I 7. 2018 By: ~f--lr---' _ .. _l-'\ +' ...:::....>tl:::.,.,::..--:------------

\ ~Ian McNeil President

(Typed Name and Title of District Representative)

Sworn to and subscribed to before me this ~day of January, 2018.

My Commission Expires On: _____ 4_~_1 _( ___ , p t l::> _ Notary Public in the State of Texas

Form TCEQ-0723 (Revised 10/2003)

WEST, DAVIS & COMPANY A LIMITED LIABILITY PARTNERSHIP

________________________________________________________________________________________________

________________________________________________________________________________________________ 1 1 8 2 4 JOLLYVILLE RD, SUITE 1 0 0 AUSTIN, TEXAS 7 8 7 5 9 – 2 3 2 2

TELEPHONE 5 1 2 . 9 2 2 . 8 8 0 9 2

Independent Auditor’s Report

Board of Directors North Austin Municipal Utility District No. 1 We have audited the accompanying financial statements of the governmental activities and each major fund of North Austin Municipal Utility District No. 1 (the District) as of and for the year ended September 30, 2017, 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 of 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 evaluation the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

3

Opinion In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of the District at September 30, 2017, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplemental Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the budgetary comparison information identified as Required Supplemental Information in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplemental information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Texas Supplemental Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District’s basic financial statements. The supplemental schedules required by the Texas Commission on Environmental Quality are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental schedules required by the Texas Commission on Environmental Quality are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules required by the Texas Commission on Environmental Quality are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

4

Other Supplemental Information The other supplemental information listed in the table of contents has not been subjected 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 it. Austin, Texas December 31, 2017


MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2017

MDA-1

In accordance with Governmental Accounting Standards Board Statement 34 (“GASB 34”), the management of North Austin Municipal Utility District No. 1 (the “District”) offers the following discussion and analysis to provide an overview of the District’s financial activities for the year ended September 30, 2017. Since this information is designed to focus on current year’s activities, resulting changes, and currently known facts, it should be read in conjunction with the District’s financial statements that follow. FINANCIAL HIGHLIGHTS

• General Fund: At the end of the current fiscal year, the assigned and unassigned fund balance was $13,668,762, an increase of $2,410,813 from the previous fiscal year. General Fund revenues increased from $6,920,232 in the previous fiscal year to $7,068,933 in the current fiscal year primarily due to an increase in property tax revenue.

• Debt Service Fund: Fund balance restricted for debt service increased from $310,624 in the previous fiscal year to $353,415 in the current fiscal year. Debt service fund revenues increased from $528,407 in the previous fiscal year to $533,882 in the current fiscal year. The District made bond principal payments of $295,000 and bond interest payments of $190,850 during the fiscal year.

• Capital Projects Fund: Fund balance restricted for capital projects decreased from $5,299,988 in the previous fiscal year to $4,701,559 in the current fiscal year. The District expended $623,687 to fund projects including booster pump station improvements and drainage improvements.

• Governmental Activities: On a government-wide basis for governmental activities, the District had revenues net of expenses of $2,312,521. Net position increased from $24,492,793 to $26,805,314.

OVERVIEW OF THE DISTRICT The District was created, organized and established on November 15, 1983, by the Texas Commission on Environmental Quality. The District operates under Chapters 49 and 54 of the Texas Water Code, as amended. The District was created under the provisions of Article XVI, Section 59, of the Texas Constitution. The creation of the District was confirmed at an election held within the District on February 18, 1984. The District was created for the purpose of providing, operating and maintaining facilities to control storm water, distribute potable water, collect and treat wastewater and providing and operating park and recreational facilities. The District is located partly in Williamson County and partly in Travis County, Texas.



MDA-2

USING THIS ANNUAL REPORT This annual report consists of six parts:

1. Management’s Discussion and Analysis (this section) 2. Basic Financial Statements 3. Notes to the Financial Statements 4. Required Supplementary Information 5. Texas Supplemental Information (required by the Texas Commission on

Environmental Quality (the TSI section)) 6. Other Supplementary Information (the OSI section)

For purposes of GASB 34, the District is considered a special purpose government. This allows the District to present the required fund and government-wide statements in a single schedule. The requirement for fund financial statements that are prepared on the modified accrual basis of accounting is met with the “Governmental Funds Total” column. An adjustment column includes those entries needed to convert to the full accrual basis government-wide statements. Government-wide statements are comprised of the Statement of Net Position and the Statement of Activities. OVERVIEW OF THE BASIC FINANCIAL STATEMENTS The Statement of Net Position and Governmental Funds Balance Sheet includes a column (titled “Governmental Funds Total”) that represents a balance sheet prepared using the modified accrual basis of accounting. This method measures cash and all other financial assets that can be readily converted to cash. The adjustments column converts those balances to a balance sheet that more closely reflects a private-sector business. Over time, increases or decreases in the District’s net position will indicate financial health. The Statement of Activities and Governmental Funds Revenues, Expenditures and Changes in Fund Balance includes a column (titled “Governmental Funds Total”) that derives the change in fund balances resulting from current year revenues, expenditures, and other financing sources or uses. These amounts are prepared using the modified accrual basis of accounting. The adjustments column converts those activities to full accrual, a basis that more closely represents the income statement of a private-sector business. The Notes to the Financial Statements provide additional information that is essential to a full understanding of the information presented in the Statement of Net Position and Governmental Funds Balance Sheet and the Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balance. The Required Supplemental Information presents a comparison statement between the District’s adopted budget and its actual results.



MDA-3

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Statement of Net Position: The following table reflects the condensed Statement of Net Position:

Summary Statement of Net Position

ChangeIncrease

2017 2016 (Decrease)Current and other assets 19,745,781$ 17,930,369$ 1,815,412$ Capital and non-current assets 14,532,989 14,374,245 158,744 Total Assets 34,278,770 32,304,614 1,974,156

Current Liabilities 1,327,954 1,353,089 (25,135) Long-term Liabilities 6,145,502 6,458,732 (313,230) Total Liabilities 7,473,456 7,811,821 (338,365)

Net Investment in Capital Assets 12,779,046 12,920,501 (141,455) Restricted 343,731 300,643 43,088 Unrestricted 13,682,537 11,271,649 2,410,888 Total Net Position 26,805,314$ 24,492,793$ 2,312,521$

GovernmentalActivities

The District’s combined net position increased by $2,312,521 to a balance of $26,805,314 from the previous year balance of $24,492,793. Some of the District’s assets are accounted for by capital assets or restricted for debt service. The District’s unrestricted net assets, which can be used to finance day-to-day operations, totaled $13,682,537.



MDA-4

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued) Revenues and Expenses:

Summary Statement of Activities

ChangeIncrease

2017 2016 (Decrease)Property taxes 3,224,309$ 3,142,642$ 81,667$ Water/Wastewater/Garbage 4,174,523 3,932,242 242,281 Other 244,619 386,132 (141,513) Total Revenues 7,643,451 7,461,016 182,435

Water/Wastewater/Garbage 2,657,475 2,470,274 187,201 Park and pool expenses 849,522 725,083 124,439 Other 938,643 777,113 161,530 Debt service 187,881 200,367 (12,486) Depreciation/amortization 697,409 699,309 (1,900) Total Expenses 5,330,930 4,872,146 458,784

Change in Net Position 2,312,521 2,588,870 (276,349)

Beginning Net Position 24,492,793 21,903,923 2,588,870

Ending Net Position 26,805,314$ 24,492,793$ 2,312,521$

GovernmentalActivities

Revenues were $7,643,451 for the fiscal year ended September 30, 2017 while expenses were $5,330,930. Net position increased by $2,312,521. Property tax revenues in the current fiscal year totaled $3,224,309. Property tax revenue is derived from taxes being levied based upon the assessed value of real and personal property within the District. Property taxes levied for the 2016 tax year (September 30, 2017 fiscal year) were based upon a current assessed value of $1,116,979,120 and a tax rate of $0.289 per $100 of assessed valuation. Property taxes levied for the 2015 tax year (September 30, 2016 fiscal year) were based upon an adjusted assessed valuation of $988,213,539 and a tax rate of $0.317 per $100 of assessed valuation. The tax rate levied is determined after the District’s Board of Directors reviews the General Fund budget requirements and the Debt Service fund debt service obligations of the District. The District’s primary revenue sources are property taxes and service account revenues.



MDA-5

ANALYSIS OF GOVERNMENTAL FUNDS

Governmental Funds by Year 2017 2016

Cash and cash equivalents 17,831,691$ 13,987,899$ Investments 1,215,000 3,395,213 Receivables 628,995 542,543 Other 82,428 57,132 Total Assets 19,758,114$ 17,982,787$

Accounts payable and accrued expenses 543,831 565,002 Refundable deposits 459,847 477,798 Other 12,333 52,418 Total Liabilities 1,016,011 1,095,218

Deferred Inflows of Resources 18,367 19,008

Restricted 5,054,974 5,610,612 Assigned 8,145,866 2,808,064 Unassigned 5,522,896 8,449,885 Total Fund Balance 18,723,736 16,868,561

Total Liabilities and Fund Balances 19,758,114$ 17,982,787$

For the fiscal year ended September 30, 2017, the District’s governmental funds reflect a combined fund balance of $18,723,736. This fund balance includes a $2,410,813 increase in the General Fund Balance. The Debt Service Fund reflects an increase of $42,791 in fiscal year 2017. The Debt Service Fund remitted bond principal of $295,000 and bond interest of $190,850. More detailed information about the District’s debt is presented in the Notes to the Financial Statements. The Capital Project Fund purchases the District’s infrastructure. The Capital Projects Fund had a $598,429 decrease in fund balance for fiscal year 2017. The District expended $623,687 to fund improvements within the District.



MDA-6

BUDGETARY HIGHLIGHTS The General Fund pays for daily operating expenditures. The Board of Directors adopted a budget on September 19, 2016. The budget included revenues of $6,722,856 as compared to expenditures of $6,722,856. When comparing actual to budget, the District had a positive variance of $2,410,813. More detailed information about the District’s budgetary comparison is presented in the Required Supplemental Information.

CAPITAL ASSETS

The District’s governmental activities have invested $14,532,989 in land and infrastructure. The detail is reflected in the following schedule:

Summary of Capital Assets, net

9/30/2017 9/30/2016Capital Assets:Construction in progress 1,157,733$ 307,112$ Common and recreation areas 5,716,406 5,710,874 Water/Wastewater/Drainage 21,784,077 21,784,077 Less: Accumulated Depreciation (14,125,227) (13,427,818) Total Net Capital Assets 14,532,989$ 14,374,245$

More detailed information about the District’s capital assets is presented in the Notes to the Financial Statements.

LONG TERM DEBT

The District has the following balances outstanding on unlimited tax bonds:

BondsPayable

Series 1999 285,000$ Series 2014 6,125,000 Total 6,410,000$

The District owes approximately $6.4 million to bond holders. The ratio of the District’s long term debt to total 2016 taxable assessed valuation ($1,116,979,120) is less than 1%. The District’s estimated population, as provided by the District as of September 30, 2017, is 7,656. More detailed information about the District’s long-term debt is presented in the Notes to the Financial Statements.



MDA-7

CURRENTLY KNOWN FACTS, DECISIONS, OR CONDITIONS The property tax net assessed value for 2017 is approximately $1.2 billion. The fiscal year 2018 tax rate is $0.288 on each $100 of taxable value. Approximately 85% of the property tax will fund general operating expenses, and approximately 15% of the property tax will be set aside for debt service. The adopted budget for fiscal year 2018 projects no change to the operating fund balance. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the District’s finances and to demonstrate the District’s accountability for the funds it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the District in care of Armbrust & Brown, PLLC, 100 Congress Avenue, Suite 1300, Austin, Texas 78701.

Government -Debt Capital Governmental wide

General Service Projects Funds Adjustments Statement ofFund Fund Fund Total Note 2 Net Position

Cash and cash equivalents 12,712,816$ 355,707$ 4,763,168$ 17,831,691$ -$ 17,831,691$ Investments 1,215,000 - - 1,215,000 - 1,215,000 Receivables 624,403 4,592 - 628,995 - 628,995 Interfund receivable 8,207 4,126 - 12,333 (12,333) - Other current assets 70,095 - - 70,095 - 70,095 Capital assets, net of

accumulated depreciation - Construction in progress - - - - 1,157,733 1,157,733 Common and recreation areas - - - - 1,655,340 1,655,340 Water/Wastewater/Drainage Facilities - - - - 11,719,916 11,719,916

TOTAL ASSETS 14,630,521$ 364,425$ 4,763,168$ 19,758,114$ 14,520,656 34,278,770

Accounts payable 466,108$ 6,418$ 53,402$ 525,928$ - 525,928 Accrued interest payable - - - - 14,276 14,276 Accrued expenditures 17,903 - - 17,903 - 17,903 Refundable deposits 459,847 - - 459,847 - 459,847 Interfund payables 4,126 - 8,207 12,333 (12,333) - Bonds payable -

Due within one year - - - - 310,000 310,000 Due after one year - - - - 6,145,502 6,145,502

TOTAL LIABILITIES 947,984 6,418 61,609 1,016,011 6,457,445 7,473,456

DEFERRED INFLOWS OF RESOURCESProperty taxes 13,775 4,592 - 18,367 (18,367) - TOTAL DEFERRED INFLOWS OF RESOURCES 13,775 4,592 - 18,367 (18,367) -

Fund balances:Restricted for debt service - 353,415 - 353,415 (353,415) - Restricted for authorized construction - - 4,701,559 4,701,559 (4,701,559) - Assigned for infrastructure 3,567,359 - - 3,567,359 (3,567,359) - Assigned for parks and pool 3,790,488 - - 3,790,488 (3,790,488) - Assigned for community center 1,100,389 - - 1,100,389 (1,100,389) - Assigned for future maintenance 2,637,630 - - 2,637,630 (2,637,630) - Unassigned 2,572,896 - - 2,572,896 (2,572,896) -

TOTAL FUND BALANCES 13,668,762 353,415 4,701,559 18,723,736 (18,723,736) -

TOTAL LIABILITIES, DEFERREDINFLOWS OF RESOURCESAND FUND BALANCES 14,630,521$ 364,425$ 4,763,168$ 19,758,114$

NET POSITION: Net investment in capital assets 12,779,046 12,779,046 Restricted for debt service 343,731 343,731 Unrestricted 13,682,537 13,682,537

TOTAL NET POSITION 26,805,314$ 26,805,314$


ASSETS

LIABILITIES

FUND BALANCE / NET POSITION

STATEMENT OF NET POSITION AND GOVERNMENTAL FUNDS BALANCE SHEETSEPTEMBER 30, 2017

The accompanying notes are an integral part of this statement. FS-1

Government -Debt Capital Governmental wide

General Service Projects Funds Adjustments Statement ofFund Fund Fund Total Note 2 Activities

REVENUES:

Property taxes, including penalties 2,696,097$ 528,853$ -$ 3,224,950$ (641)$ 3,224,309$ Water/wastewater service, including penalties 3,583,928 - - 3,583,928 - 3,583,928 Garbage revenue 590,595 - - 590,595 - 590,595 Interest 94,489 5,029 41,277 140,795 - 140,795 Tap connection/inspection fees 16,050 - - 16,050 - 16,050 Other 87,774 - - 87,774 - 87,774

TOTAL REVENUES 7,068,933 533,882 41,277 7,644,092 (641) 7,643,451

EXPENDITURES / EXPENSES:

Current -Water/Wastewater purchases 2,105,343 - - 2,105,343 - 2,105,343 Garbage service 552,132 - - 552,132 - 552,132 Contracted services 347,650 3,667 16,019 367,336 - 367,336 Professional fees 323,457 300 - 323,757 - 323,757 Director fees and related expenses 42,155 - - 42,155 - 42,155 Utilities 36,945 - - 36,945 - 36,945 Park/pool expenses 849,522 - - 849,522 - 849,522 Security 88,223 - - 88,223 - 88,223 Other 80,227 - 80,227 - 80,227

Debt service -Principal - 295,000 - 295,000 (295,000) - Interest - 190,850 - 190,850 (4,243) 186,607 Fiscal agent fees - 1,274 - 1,274 - 1,274

Capital outlay 232,466 - 623,687 856,153 (856,153) - Depreciation - - - - 697,409 697,409

TOTAL EXPENDITURES / EXPENSES 4,658,120 491,091 639,706 5,788,917 (457,987) 5,330,930

NET CHANGE IN FUND BALANCES 2,410,813 42,791 (598,429) 1,855,175 (1,855,175) -

CHANGE IN NET POSITION 2,312,521 2,312,521

FUND BALANCE / NET POSITION:

Beginning of the year 11,257,949 310,624 5,299,988 16,868,561 7,624,232 24,492,793 End of the year 13,668,762$ 353,415$ 4,701,559$ 18,723,736$ 8,081,578$ 26,805,314$


SEPTEMBER 30, 2017

STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS REVENUES,

EXPENDITURES AND CHANGES IN FUND BALANCE

The accompanying notes are an integral part of this statement. FS-2

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

FS-3

1. SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of the District relating to the funds included in the accompanying financial statements conform to generally accepted accounting principles (GAAP) as applied to governmental entities. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), which constitutes the primary source of GAAP for governmental units. The more significant of these accounting policies are described below and, where appropriate, subsequent pronouncements will be referenced. Reporting Entity - The District was created, organized and established on November 15, 1983, by the Texas Commission on Environmental Quality under Article XVI, Section 59 of the Texas Constitution and Texas Water Code, Chapter 49. The District is located partly in Williamson County and partly in Travis County. The reporting entity of the District encompasses those activities and functions over which the District’s elected officials exercise significant oversight or control. The District is governed by a five member Board of Directors (the “Board”) which has been elected by District residents or appointed by the Board. The District is not included in any other governmental “reporting entity” as defined by GASB Statement No. 14, since Board members are elected by the public and have decision making authority, the power to designate management, the responsibility to significantly influence operations and primary accountability for fiscal matters. In addition, there are no component units as defined in GASB Statement No. 61 which are included in the District’s reporting entity. Basis of Presentation - Government-wide and Fund Financial Statements - These financial statements have been prepared in accordance with GASB Codification of Governmental Accounting and Financial Reporting Standards Part II, Financial Reporting.

GASB Codification sets forth standards for external financial reporting for all state and local government entities, which include a requirement for a Statement of Net Position and a Statement of Activities. It requires the classification of net position into three components: Net Investment in Capital Assets; Restricted; and Unrestricted. These classifications are defined as follows:

• Net Investment in Capital Assets – This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvements of those assets.

• Restricted Net Position – This component of net position consists of external constraints placed on the use of assets imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulation of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

• Unrestricted Net Position – This component of net position consists of assets that do not meet the definition of “Restricted” or “Net Investment in Capital Assets.”

When both restricted and unrestricted resources are available for use, generally it is the District’s policy to use restricted resources first.


SEPTEMBER 30, 2017

FS-4

1. SIGNIFICANT ACCOUNTING POLICIES (continued) –

Basis of Presentation - Government-wide and Fund Financial Statements (continued) -

The financial statements are prepared in conformity with GASB Statement No. 34, and include a column for government-wide (based upon the District as a whole) and fund financial statement presentations. Statement No. 34 also requires as supplementary information the Management’s Discussion and Analysis, which includes an analytical overview of the District’s financial activities. In addition, a budgetary comparison statement is presented that compares the adopted and amended General Fund budget with actual results.

• Government-wide Statements: The District’s statement of net position includes both non-current assets and non-current liabilities of the District, which were previously recorded in the General Fixed Assets Account Group and the General Long-Term Debt Account Group. In addition, the government-wide statement of activities column reflects depreciation expense on the District’s capital assets, including infrastructure.

The government-wide focus is more on the sustainability of the District as an entity and the change in aggregate financial position resulting from financial activities of the fiscal period. The focus of the fund financial statements is on the individual funds of the governmental categories. Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information.

• Fund Financial Statements: Fund based financial statement columns are provided for governmental funds. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures of either fund category) for the determination of major funds. All of the District’s funds are reported as major funds.

Governmental Fund Types - The accounts of the District are organized and operated on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a self-balancing set of accounts that comprise its assets, liabilities, fund balances, revenues and expenditures. The various funds are grouped by category and type in the financial statements. The District maintains the following fund types:

• General Fund - The General Fund accounts for financial resources in use for general types of operations which are not encompassed within other funds. This fund is established to account for resources devoted to financing the general services that the District provides for its residents. Tax revenues and other sources of revenue used to finance the fundamental operations of the District are included in this fund.

• Debt Service Fund - The Debt Service Fund is used to account for the resources restricted, committed or assigned for the payment of debt principal, interest and related costs.

• Capital Projects Fund - The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities.

Non-current Governmental Assets and Liabilities - GASB Statement No. 34 eliminates the presentation of Account Groups, but provides for these records to be maintained and incorporates the information into the government-wide financial statement column in the Statement of Net Position.


SEPTEMBER 30, 2017

FS-5


Basis of Accounting

• Governmental Funds

• Government-wide Statements - The government-wide financial statement column is 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 the related cash flows. Property taxes are recognized as revenues in the year for which they are levied.

Fund Financial Statements - The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental fund types are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in the net current assets. Governmental funds are accounted for on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual (i.e. both measurable and available).

"Measurable" means that the amount of the transaction can be determined and "available" means the amount of the transaction is collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period.

Expenditures, if measurable, are generally recognized on the accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include the unmatured principal and interest on general obligation long-term debt which is recognized when due. This exception is in conformity with generally accepted accounting principles.

Property tax revenues are recognized when they become available. In this case, available means when due, or past due and receivable within the current period and collected within the current period or soon enough thereafter to be used to pay liabilities of the current period. Such time thereafter shall not exceed 60 days. Tax collections expected to be received subsequent to the 60-day availability period are reported as deferred revenue. All other revenues of the District are recorded on the accrual basis in all funds.

The District reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. In subsequent periods, when revenue recognition criteria are met, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized.


SEPTEMBER 30, 2017

FS-6


Budgets and Budgetary Accounting - A budget was adopted on September 19, 2016, for the General Fund on a basis consistent with generally accepted accounting principles. The District's Board of Directors utilizes the budget as a management tool for planning and cost control purposes. All annual appropriations lapse at fiscal year-end. Pensions - The District has not established a pension plan as the District does not have employees. The Internal Revenue Service has determined that Directors are considered to be “employees” for federal payroll tax purposes only. Cash and Cash Equivalents – Cash and cash equivalents includes cash on deposit as well as investments with maturities of three months or less. The investments, consisting of certificates of deposit and obligations in the State Treasurer’s Investment Pool, are recorded at amortized cost. Capital Assets - Capital assets, which include Administrative Facilities and Equipment, Common and Recreation Areas, Water Production/Distribution System, Wastewater Collection System, Water Quality Ponds and Organizational Costs are reported in the government-wide column in the Statement of Net Position. Public domain ("infrastructure") capital assets including water, wastewater and drainage systems, are capitalized. Items purchased or acquired are reported at historical cost or estimated historical cost. Contributed fixed assets are recorded as capital assets at estimated acquistion value at the time received. Interest incurred during construction of capital facilities is not capitalized.

Capital assets are depreciated using the straight-line method over the following estimated useful lives:

Asset YearsCommon and Recreation Areas 5 - 30Water Production/Distribution System 10 - 50Wastewater Collection System 5 - 50Organizational Costs 5

Interfund Transactions - Transfers from one fund to another fund are reported as interfund receivables and payables if there is intent to repay that amount and if the debtor fund has the ability to repay the advance on a timely basis. Operating transfers represent legally authorized transfers from the fund receiving resources to the fund through which the resources are to be expended. Long-Term Debt - Unlimited tax bonds, which have been issued to fund capital projects, are to be repaid from tax revenues of the District.

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount.


SEPTEMBER 30, 2017

FS-7


Long-Term Debt (continued) -

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 debt issued is reported as other financing sources. Premiums and discounts on debt issuances are reported as other financing sources and uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures.

Fund Balance – Fund balances in governmental funds are classified using the following hierarchy: • Nonspendable: amounts that cannot be spent either because they are in nonspendable form or

because they are legally or contractually required to be maintained intact. The District does not have any nonspendable fund balances.

• Restricted: amounts that can be spent only for specific purposes because of constitutional provisions, or enabling legislation, or because of constraints that are imposed externally.

• Committed: amounts that can be spent only for purposes determined by a formal action of the Board of Directors. The Board is the highest level of decision-making authority for the District. This action must be made no later than the end of the fiscal year. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Board. The District does not have any committed fund balances.

• Assigned: amounts that do not meet the criteria to be classified as restricted or committed, but that are intended to be used for specific purposes.

• Unassigned: all other spendable amounts in the General Fund.

When expenditures are incurred for which restricted, committed, assigned or unassigned fund balances are available, the District considers amounts to have been spent first out of restricted funds, then committed funds, then assigned funds, and finally unassigned funds.

Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. Fair Value Measurements - The District complies with GASB Statement No. 72, Fair Value Measurement and Application, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. Fair value accounting requires characterization of the inputs used to measure fair value into a three-level fair value hierarchy as follows:

• Level 1 inputs are based on unadjusted quoted market prices for identical assets or liabilities in an active market the entity has the ability to access

• Level 2 inputs are observable inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent from the entity


SEPTEMBER 30, 2017

FS-8


• Level 3 are unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available

There are three general valuation techniques that may be used to measure fair value:

• Market approach - uses prices generated by market transactions involving identical or

comparable assets or liabilities • Cost approach - uses the amount that currently would be required to replace the service

capacity of an asset (replacement cost) • Income approach - uses valuation techniques to convert future amounts to present amounts

based on current market expectations

Recently Issued Accounting Pronouncements In June 2017, the GASB issued GASB Statement No. 87, Leases, effective for fiscal years beginning after December 15, 2019. The objective of GASB Statement No. 87 is to improve accounting and financial reporting for leases by governments by requiring recognition of certain lease assets and liabilities that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. GASB Statement No. 87 establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under GASB Statement No. 87, a lessee is required to recognize a lease liability and an intangible right-to-use asset, and a lessor is required to recognize a lease receivable and deferred inflow of resources. Management is evaluating the effects that the full implementation of GASB Statement No. 87 will have on its financial statements for the year ended September 30, 2021.


SEPTEMBER 30, 2017

FS-9

2. RECONCILIATION OF THE GOVERNMENTAL FUNDS -

Adjustments to convert the Governmental Funds Balance Sheet to the Statement of Net Position are as follows :

Fund balances - total governmental funds 18,723,736$ Capital assets used in governmental activities are not

financial resources and therefore are not reportedin the governmental funds -

Capital assets 28,658,216$ Less: Accumulated depreciation (14,125,227) 14,532,989

Revenue is recognized when earned in the government-widestatements, regardless of availability. Governmentalfunds report deferred revenue for revenues earnedbut not available 18,367

Long-term liabilities are not due and payable in the currentperiod and therefore are not reported in thegovernmental funds -

Bonds payable (6,410,000) Unamortized bond premium (45,502) Accrued interest (14,276) (6,469,778)

Net position of governmental activities 26,805,314$

Adjustments to convert the Governmental Funds, Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities are as follows:

Changes in Fund Balances - Governmental Funds 1,855,175$ Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report -Capital expenditures in period purchased 856,153$ Interest expenditures in year paid 4,243 Tax revenue when collected (641) Bond principal in year paid 295,000 1,154,755

Governmental funds do not report -Depreciation (697,409)

Change in net position of governmental activities 2,312,521$


SEPTEMBER 30, 2017

FS-10

3. CASH AND INVESTMENTS

The investment policies of the District are governed by State statute and an adopted District Investment Policy that includes depository contract provisions and custodial contract provisions. Major provisions of the District’s investment policy include: depositories must be FDIC-insured Texas banking institutions; depositories must fully insure or collateralize all demand and time deposits; securities collateralizing time deposits are held by independent third party trustees. Cash and cash equivalents - At September 30, 2017, the carrying amount of the District's cash and cash equivalents was $17,831,691 and the bank balance was $17,866,118. The bank balance was covered by federal depository insurance and pledged securities. The District invests in Texpool, an external investment pool that is not SEC-registered. The State Comptroller of Public Accounts of the State of Texas has oversight of the pool. Federated Investors manages the daily operations of the pool under a contract with the Comptroller. These investments are stated at amortized cost in accordance with GASB Statement No. 31. Investments - Interest rate risk. In accordance with its investment policy, the District manages its exposure to declines in fair values through investment diversification and limiting investments as follows:

• Money market mutual funds are required to have weighted average maturities of 90 days or fewer; and

• Other mutual fund investments are required to have weighted average maturities of less than two years.

Credit risk. The District’s investment policy requires the application of the prudent-person rule: Investments are made as a prudent person would be expected to act, with discretion and intelligence, and considering the probable safety of their capital as well as the probable income to be derived. The District’s investment policy requires that District funds be invested in:

• Obligations of the United States Government and/or its agencies and instrumentalities;

• Money market mutual funds with investment objectives of maintaining a stable net asset value of $1 per share;

• Mutual funds rated in one of the three highest categories by a nationally recognized rating agency; and

• Securities issued by a State or local government or any instrumentality or agency thereof, in the United States, and rated in one of the three highest categories by a nationally recognized rating agency; and

• Public funds investment pools rated AAA or AAA-m by a nationally recognized rating agency.


SEPTEMBER 30, 2017

FS-11

3. CASH AND INVESTMENTS (continued) -

Investments (continued) -

At September 30, 2017, the District held the following investments: Governmental Fund

General Debt Service Capital Projects Investment Rating

Fair Value

Investment at 9/30/2017 Unrestricted Restricted (1) Restricted (2) Rating Rating Agency

Certificates of Deposit 1,215,000$ 1,215,000$ -$ -$ Various Various

1,215,000$ 1,215,000$ -$ -$

(1) Restricted for Payment of Debt Service and Cost of Assessing and Collecting Taxes.

(2) Restricted for Purchase of Capital Assets.

Concentration of credit risk. In accordance with the District’s investment policy, investments in individual securities are to be limited to ensure that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. As of September 30, 2017, the District did not own any investments in individual securities. Custodial credit risk-deposits. Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. The government’s investment policy requires that the District’s deposits be fully insured by FDIC insurance or collateralized with Obligations of the United States or its agencies and instrumentalities. As of September 30, 2017, the District’s bank deposits were covered by FDIC and other pledged collateral.

4. PROPERTY TAXES

Property taxes attach as an enforceable lien on January 1. Taxes are levied on or about October 1, are due on November 1, and are past due the following February 1. The Travis Central Appraisal District and the Williamson Central Appraisal District establish appraisal values in accordance with requirements of the Texas Legislature. The District levies taxes based upon the appraised values. The Travis County Tax Collector and Williamson County Tax Collector bills and collects the District's property taxes. The Board of Directors set current tax rates on September 19, 2016.

The property tax rates, established in accordance with state law, were based on 100% of the net assessed valuation of real property within the District on the 2016 tax roll. The tax rate, based on total taxable assessed valuation of $1,116,979,120 was $0.2890 on each $100 valuation and was allocated $0.2416 to the General Fund and $0.0474 to the Debt Service Fund. The maximum allowable maintenance tax of $1.00 was established by the voters at an election held on April 7, 1984.


SEPTEMBER 30, 2017

FS-12

4. PROPERTY TAXES (continued) -

Property taxes receivable at September 30, 2017, consisted of the following: Debt

General Service

Fund Fund Total

Current year levy 3,882$ 762$ 4,644$ Prior years' levies 9,893 3,830 13,723

13,775$ 4,592$ 18,367$

The District is prohibited from writing off real property taxes without specific authority from the Texas Legislature.

5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

A summary of interfund accounts, which resulted from the time lag between dates that payments are made between funds are made, is as follows at September 30, 2017:

Receivables PayablesGeneral Fund - Debt Service Fund -$ 4,126$ Capital Projects Fund 8,207 - Debt Service Fund - General Fund 4,126 - Capital Projects Fund - General Fund - 8,207

12,333$ 12,333$

Interfund

6. RECEIVABLES

The following comprises the receivable balance at year-end:

General Debt ServiceFund Fund

Service, net of allowance for doubtful accounts of $1,671 600,554$ -$ Taxes 13,775 4,592 Interest 3,930 - Other 6,144 -

624,403$ 4,592$


SEPTEMBER 30, 2017

FS-13

7. CHANGES IN CAPITAL ASSETS

A summary of changes in capital assets follows:

Balance Balance10/1/2016 Additions Deletions 9/30/2017

Capital assets:Construction in Progress 307,112$ 850,621$ -$ 1,157,733$ Common and recreation areas 5,710,874 5,532 - 5,716,406 Water/Wastewater/Drainage Facilities 21,784,077 - - 21,784,077

Total capital assets 27,802,063 856,153 - 28,658,216

Less accumulated depreciation for:Common and recreation areas (3,800,313) (260,753) - (4,061,066) Water/Wastewater/Drainage Facilities (9,627,505) (436,656) - (10,064,161)

Total accumulated depreciation (13,427,818) (697,409) - (14,125,227)

Total capital assets, net of accumulated depreciation 14,374,245$ 158,744$ -$ 14,532,989$

8. BONDED DEBT

The following is a summary of bond transactions of the District for the year ended September 30, 2017:

Unliminted Tax and Revenue Bonds

Bonds payable at October 1, 2016 6,705,000$ Bonds retired (295,000) Bond premium, net of accumulated amortization 45,502 Bonds payable at September 30, 2017 6,455,502$

Bonds payable at September 30, 2017, were comprised of the following individual issues: Unlimited Tax Bonds: $285,000 – 1999 Unlimited Tax Bonds payable serially through the year 2018 at interest rates which range from 3.75% to 5.75%. Bonds maturing on or after August 1, 2010 are callable prior to maturity beginning August 1, 2009, or any date thereafter. $6,125,000 – 2014 Unlimited Tax Bonds payable serially through the year 2032 at interest rates which range from 2.0% to 3.20%. Bonds maturing on or after August 1, 2021 are callable prior to maturity beginning August 1, 2020, or any date thereafter.


SEPTEMBER 30, 2017

FS-14

8. BONDED DEBT (continued) - The annual requirements to amortize all bonded debt at September 30, 2017, including interest, are as follows:

Year Ended

September 30, Principal Interest Total

2018 310,000$ 178,200$ 488,200$ 2019 325,000 164,875 489,875 2020 350,000 158,375 508,375 2021 350,000 151,375 501,375 2022 375,000 144,375 519,375

2023 - 2027 2,100,000 580,752 2,680,752 2028 - 2032 2,600,000 255,050 2,855,050

6,410,000$ 1,633,002$ 8,043,002$

Annual Requirements for All Series

Bonds authorized but not issued as of September 30, 2017, are as follows:

Type Amount

Unlimited Tax Bonds 48,625,000$ $353,415 is available in the Debt Service Fund to service the bonded debt. The existing outstanding bonds of the District are payable from the proceeds of an ad valorem tax levied upon all property subject to taxation within the District, without limitation as to rate or amount.

9. RISK MANAGEMENT

The District is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District has obtained coverage from commercial insurance companies and the Texas Municipal League Intergovernmental Risk Pool (TML Pool) to effectively manage its risk. All risk management activities are accounted for in the General Fund. Expenditures and claims are recognized when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. In determining claims, events that might create claims, but for which none have been reported, are considered. The TML Pool was established by various political subdivisions in Texas to provide self-insurance for its members and to obtain lower costs for insurance. TML Pool members pay annual contributions to obtain the insurance. Annual contribution rates are determined by the TML Pool Board. Rates are estimated to include all claims expected to occur during the policy including claims incurred but not reported. The TML Pool has established Claims Reserves for each of the types of insurance offered. Although the TML Pool is a self-insured risk pool, members are not contingently liable for claims filed above the amount of the fixed annual contributions. If losses incurred are significantly higher than actuarially estimated, the TML Pool adjusts the contribution rate for subsequent years. Members may receive returns of contributions if actual results are more favorable than estimated.


SEPTEMBER 30, 2017

FS-15

10. COMMITMENTS AND CONTINGENCIES

In 2013, the District filed petitions with the Texas Commission on Environmental Quality appealing the rates charged by the City of Austin (the “City”) to the District for wholesale water and wastewater services. The petitions alleged that the City’s rates are in excess of the cost of services being provided and are, thus, in violation of Texas law. Since the filing of the petitions, the Texas Legislature transferred jurisdiction of water and wastewater rate appeals to the Public Utility Commission of Texas (the “PUC”). The State Office of Administrative Hearings (“SOAH”) completed a hearing on the merits in February 2015 and issued a Proposal for Decision in favor of the District in July 2015. The SOAH Judges established interim water rates to be charged by the City, lowering rates to what existed prior to the City’s adoption of new rates in 2012, which continue in effect. In October 2015, the PUC issued an Order lowering the water and wastewater rates for the District. The PUC issued a final order on January 14, 2016. On March 29, 2016, the City filed in Travis County District Court its appeal of the PUC Order. On May 25, 2017, the Judge for the case issued her Final Order, which denied the City’s appeal. The City staff are proposing a new rate increase, which the City must submit to the PUC for approval. The District anticipates participating in another rate hearing, again challenging the City proposed wholesale water and wastewater rates for the District. The District is unable to form a judgment whether it is probable, reasonable or possible that the outcome of this matter will be unfavorable to the District. The District is a plaintiff in a lawsuit styled North Austin Municipal Utility District No. 1 v. NW Austin Office Partners, LLC, Cause No. 17-0596-C26 in the 26th District Court, Williamson County, Texas filed on May 23, 2017. The District filed suit to enforce its rights under an easement it holds for the installation and maintenance of a water line, after the defendant installed improvements in the easement area and over the water line, interfering with the District’s rights under the easement. The District is seeking unspecified money damages in the event damage to its water line is discovered, as well as injunctive relief requiring removal of the improvements installed in the easement area. The defendant is not currently asserting any claims for affirmative relief against the District for money damages, attorney’s fees, or other relief. The case is currently not set for trial, as the parties have been recently engaged in potential settlement talks. The District is unable to form a judgment whether it is probable, reasonable or possible that the outcome of this matter will be unfavorable to the District.

11. SUBSEQUENT EVENTS

In preparing these financial statements, management has evaluated and disclosed all material subsequent events through December 31, 2017.

Variance Original Positive

Actual Budget (Negative)REVENUES:

Property taxes, including penalties 2,696,097$ 2,666,000$ 30,097$ Water/wastewater service, including penalties 3,583,928 3,247,856 336,072 Garbage revenue 590,595 590,000 595 Interest 94,489 20,500 73,989 Tap connection/inspection fees 16,050 20,000 (3,950) Other 87,774 178,500 (90,726) TOTAL REVENUES 7,068,933 6,722,856 346,077

EXPENDITURES/EXPENSES:Current:

Water/Wastewater purchases 2,105,343 2,527,265 421,922 Garbage service 552,132 552,234 102 Contracted services 347,650 367,615 19,965 Professional fees 323,457 672,600 349,143 Director fees and related expenses 42,155 37,000 (5,155) Utilities 36,945 52,000 15,055 Park/pool expenses 849,522 1,563,333 713,811 Security 88,223 92,000 3,777 Other 80,227 228,809 148,582

Capital outlay 232,466 630,000 397,534 TOTAL EXPENDITURES / EXPENSES 4,658,120 6,722,856 2,064,736

NET CHANGE IN FUND BALANCE 2,410,813 -$ 2,410,813$

FUND BALANCE:

Beginning of the year 11,257,949 End of the year 13,668,762$

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1BUDGETARY COMPARISON SCHEDULE - GENERAL FUND

SEPTEMBER 30, 2017

FS-16

1. Services Provided by the District during the Fiscal Year:

Retail Water DrainageRetail Wastewater IrrigationParks/Recreation SecuritySolid Waste/Garbage Roads

2. Retail Service Providers a. Retail Rates Based on 5/8" Meter (or equivalent):

Minimum Minimum Flat Rate Usage

Charge Usage Y/N Levels

8.00$ (1) 1,000 Y 1,001 to No Limit8.00$ 1,000 Y 1,001 to No Limit

35.00$ -

Yes No

Total charges per 10,000 gallons usage: Water Wastewater 65.60$

b. Water and Wastewater Retail Connections:

Total Active ESFC Active

Connections Connections Factor ESFC's

1.02,582 2,563 1.0 2,563

6 6 2.5 15 4 4 5.0 20

13 13 8.0 104 7 7 15.0 105 5 5 25.0 125

50.04 4 80.0 320

115.02,621 2,602 3,252 2,617 2,617 1.0 2,617

(1) - Base Charge of $35.00 includes 1,000 of water and wastewater service and monthly garbage collection.

District employs winter averaging for wastewater usage?

Unmetered

Wholesale WastewaterFire ProtectionFlood Control

Wholesale Water

Gallons Over

Other (specify):________________________________________________________

Rate per 1000

-$ BASE FEE:6.40$ WASTEWATER:

Minimum

4.65$

3"2"

1 1/2"

84.85$

< 3/4"

Meter

Size

1"

Total WastewaterTotal Water

10"8"

WATER:

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-1. SERVICES AND RATES

SEPTEMBER 30, 2017

6"4"

Participates in joint venture, regional system and/or wastewater service (other thanemergency interconnect)

X

X

X

X

3. Total Water Consumption during the Fiscal Year (rounded to the nearest thousand):

4. Standby Fees (authorized only under TWC Section 49.231):

Does the District assess standby fees? Yes No

If yes, Date of the most recent Commission Order: __________________

Does the District have Operation andMaintenance standby fees? Yes No

If yes, Date of the most recent Commission Order: __________________

5. Location of District

County(ies) in which district is located:

Is the District located entirely within one county? Yes No

Is the District located within a city? Entirely Partly Not at all

City(ies) in which district is located:

Is the District located within a city's extra territorial jurisdiction (ETJ)?

Entirely Partly X Not at all

ETJ's in which district is located:

Are Board members appointed by an office outside the district?

Yes No

If Yes, by whom?

Austin, Texas

Travis County and Williamson County, Texas

(Gallons billed / Gallons Pumped)

Gallons billed to customers: 93.3%

Water Accountability Ratio343,211 Gallons pumped into system:

320,231

X

X

X

X

X

TSI-1

Personnel Expenditures (including benefits) -$

Professional Fees: Auditing 10,500 Legal 131,189 Engineering 82,133 Financial Advisor 1,530

Purchased Services For Resale: Bulk Water and Wastewater Purchases 2,105,343 Garbage Collection 552,132

Contracted Services: Bookkeeping 54,750 General Manager 274,208 Appraisal District/Tax Collector 18,692 Other Contracted Services 186,328

Utilities 36,945

Administrative Expenditures: Directors' Fees 28,449 Office Supplies - Insurance 13,541 Other Administrative Expenditures 80,392

Capital Outlay: Capitalized Assets 232,466 Expenditures not Capitalized -

Bad Debt -

Parks and Recreation 849,522

Other Expenditures -

TOTAL EXPENDITURES 4,658,120$

Number of persons employed by the District: Full-Time Part-Time

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-2. GENERAL FUND EXPENDITURES

SEPTEMBER 30, 2017

- -

TSI-2

Accrued

Interest

Identification Balance Receivable

or Certificate Interest Maturity at End at End

Funds Number Rate Date of Year of Year

General Fund -

Certificate of deposit XXX4745 0.5000% 10/25/2017 245,000$ 229$ Certificate of deposit XXX5509 0.5500% 11/17/2017 240,000 1,146 Certificate of deposit XXX1922 0.3000% 1/14/2018 240,000 514 Certificate of deposit XXX5340 0.7120% 2/13/2018 245,000 1,091 Certificate of deposit XXX0807 0.8000% 4/5/2018 245,000 949

Total 1,215,000 3,929

Total - All Funds 1,215,000$ 3,929$

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-3. TEMPORARY INVESTMENTS

SEPTEMBER 30, 2017

TSI-3

Maintenance Debt ServiceTaxes Taxes

Taxes Receivable, Beginning of Year 13,700$ 5,308$

2016 Original Tax Levy, less abatements 2,702,837 530,275 Adjustments (4,165) (816) Total to be accounted for 2,712,372 534,767 Tax collections: Current year 2,694,790 528,696 Prior years 3,807 1,478 Total collections 2,698,597 530,174

Taxes Receivable, End of Year 13,775$ 4,593$

Taxes Receivable, By Years2015 and prior 9,893$ 3,830$ 2016 3,882 762

Taxes Receivable, End of Year 13,775$ 4,592$

Property Valuations: 2016 (a) 2015 (a) 2014 (a)

Land and improvements 1,116,979,120$ 988,213,539$ 884,423,890$ Total Property Valuations 1,116,979,120$ 988,213,539$ 884,423,890$

Tax Rates per $100 Valuation:

Debt Service tax rates 0.0474$ 0.0530$ 0.0661$ Maintenance tax rates 0.2416 0.2640 0.2738

Total Tax Rates per $100 Valuation: 0.2890$ 0.3170$ 0.3399$

Adjusted Tax Levy 3,228,070$ 3,132,637$ 3,006,157$

Percent of Taxes Collectedto Taxes Levied ** 99.9% 99.9% 99.9%

Maximum Tax Rate Approved by Voters: 1.00$ on 4/7/1984.

**Calculated as taxes collected in current and previous years divided by tax levy.

(a) Valuations are provided by the appropriate Appraisal District. Due to various factors including tax protests and disputes, such valuations change over time; therefore, they may vary slightly from those disclosed in the District's bond offering documents or the District's annual bond disclosure filings.

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-4. TAXES LEVIED AND RECEIVABLE

SEPTEMBER 30, 2017

TSI-4

Fiscal Principal Interest Principal Interest Principal InterestYear Due Due Due Due Due Due

Ending 9/1 3/1, 9/1 Total 9/1 3/1, 9/1 Total 9/1 3/1, 9/1 Total

2018 285,000$ 12,825$ 297,825$ 25,000$ 165,375$ 190,375$ 310,000$ 178,200$ 488,200$ 2019 - - - 325,000 164,875 489,875 325,000 164,875 489,875 2020 - - - 350,000 158,375 508,375 350,000 158,375 508,375 2021 - - - 350,000 151,375 501,375 350,000 151,375 501,375 2022 - - - 375,000 144,375 519,375 375,000 144,375 519,375 2023 - - - 400,000 135,938 535,938 400,000 135,938 535,938 2024 - - - 400,000 126,938 526,938 400,000 126,938 526,938 2025 - - - 425,000 116,938 541,938 425,000 116,938 541,938 2026 - - - 425,000 106,313 531,313 425,000 106,313 531,313 2027 - - - 450,000 94,625 544,625 450,000 94,625 544,625 2028 - - - 475,000 82,250 557,250 475,000 82,250 557,250 2029 - - - 500,000 68,000 568,000 500,000 68,000 568,000 2030 - - - 525,000 52,000 577,000 525,000 52,000 577,000 2031 - - - 550,000 35,200 585,200 550,000 35,200 585,200 2032 - - - 550,000 17,600 567,600 550,000 17,600 567,600

285,000$ 12,825$ 297,825$ 6,125,000$ 1,620,177$ 7,745,177$ 6,410,000$ 1,633,002$ 8,043,002$

Unlimited Tax Bonds Unlimited Tax BondsSeries 2014 Total - All Series

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-5. LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS

SEPTEMBER 30, 2017

Series 1999

TSI-5

Series 1999 Series 2014 Total

Interest Rate 3.75% - 5.75% 2.0% - 3.2%

Dates Interest Payable 2/1 ; 8/1 2/1 ; 8/1

Maturity Dates 8/1/2018 8/1/2032

Bonds Outstanding atBeginning of CurrentFiscal Year 555,000$ 6,150,000$ 6,705,000$

Bonds Sold During theCurrent Fiscal Year - - -

Retirements During the Current Fiscal Year: Principal (270,000) (25,000) (295,000) Refunded - - - Bonds Outstanding at Endof Current Fiscal Year 285,000$ 6,125,000$ 6,410,000$

Interest Paid During theCurrent Fiscal Year 24,975$ 165,875$ 190,850$

Paying Agent's Name & Address: Bank of New York Bank of Texas New York, NY Austin, TX

Park andRecreational

Bond Authority: Unlimited Tax Bonds* Refunding Bonds* Facillities Bonds*Amount Authorized by Voters: 73,100,000$ -$ -$ Amount Issued 24,475,000 - - Remaining To Be Issued 48,625,000$ -$ -$

in combination with taxes.

Debt Service Fund Cash and Temporary Investments balances as of September 30, 2017: 355,707$

Average Annual Debt Service Payment (Principal & Interest) for the remaining term of all debt: 536,200$


* Includes all bonds secured with tax revenues. Bonds in this category may also be secured with other revenues

SEPTEMBER 30, 2017

TSI-6. CHANGES IN LONG-TERM BONDED DEBT

Bond Issues

TSI-6

2017 2016 2015 2014 2013GENERAL FUND REVENUES -

Water/wastewater service, including penalties 3,599,978$ 3,448,713$ 3,364,065$ 3,441,428$ 3,578,042$ Garbage revenue 590,595 587,116 587,071 592,293 560,231 Property taxes, including penalties 2,696,097 2,619,462 2,476,503 2,015,485 2,058,818 Interest 94,489 35,155 18,580 17,293 17,730 Grant proceeds - - - 91,813 179,199 Other 87,774 229,786 106,391 92,237 82,425

TOTAL GENERAL FUND REVENUES 7,068,933 6,920,232 6,552,610 6,250,549 6,476,445

GENERAL FUND EXPENDITURES -Current:

Water/wastewater service 2,105,343 1,922,840 2,464,671 2,771,945 2,848,332 Garbage service 552,132 547,434 547,434 535,194 513,396 Contracted service 347,650 345,405 326,582 325,177 330,062 Professional fees 323,457 202,101 287,907 296,211 239,623 Director fees and related expenses 42,155 40,223 35,972 33,700 33,398 Utilities 36,945 37,263 53,044 53,684 51,902 Park/pool expenses 849,522 725,083 857,305 691,681 710,344 Security 88,223 85,575 64,797 51,342 54,653 Other 80,227 62,356 206,834 67,303 70,696

Capital outlay 232,466 103,010 - 28,607 341,927 TOTAL GENERAL FUND EXPENDITURES 4,658,120 4,071,290 4,844,546 4,854,844 5,194,333

EXCESS (DEFICIENCY) OF GENERAL FUND REVENUES OVER EXPENDITURES 2,410,813$ 2,848,942$ 1,708,064$ 1,395,705$ 1,282,112$

DEBT SERVICE FUND REVENUES - Property taxes, including penalties 528,853$ 526,366$ 606,241$ 658,886$ 659,906$ Bond proceeds - - 308,351 - - Interest and other 5,029 2,041 485 203 689 TOTAL DEBT SERVICE FUND REVENUES 533,882 528,407 915,077 659,089 660,595

DEBT SERVICE FUND EXPENDITURES - Bond principal, interest and fiscal charges 487,124 479,500 812,506 662,797 652,447 Other 3,967 4,190 4,863 5,370 7,109 TOTAL DEBT SERVICE FUND EXPENDITURES 491,091 483,690 817,369 668,167 659,556

EXCESS (DEFICIENCY) OF DEBT SERVICEFUND REVENUES OVER EXPENDITURES 42,791$ 44,717$ 97,708$ (9,078)$ 1,039$

TOTAL ACTIVE RETAIL WATER CONNECTIONS 2,602 2,570 2,570 2,570 2,570

TOTAL ACTIVE RETAIL WASTEWATER CONNECTIONS 2,617 2,566 2,566 2,566 2,566

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-7. COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES

GENERAL FUND AND DEBT SERVICE FUND - FIVE YEARSSEPTEMBER 30, 2017

Amounts

TSI-7

2017 2016 2015 2014 2013

50.9% 49.8% 51.3% 55.1% 55.2%8.4% 8.5% 9.0% 9.5% 8.7%

38.1% 37.9% 37.8% 32.2% 31.8%1.3% 0.5% 0.3% 0.2% 0.3%

- - - 1.5% 2.8%1.3% 3.4% 1.6% 1.5% 1.2%

100.0% 100.0% 100.0% 100.0% 100.0%

29.8% 49.3% 49.3% 49.3% 49.3%7.8% 8.3% 8.3% 8.3% 8.3%4.9% 5.0% 5.0% 5.2% 5.1%4.6% 2.9% 4.4% 4.7% 3.7%0.6% 0.6% 0.5% 0.5% 0.5%0.5% 0.5% 0.8% 0.9% 0.8%

12.0% 12.8% 12.8% 12.8% 12.8%1.2% 1.2% 1.0% 0.8% 0.8%1.1% 0.8% 3.1% 1.0% 1.0%3.3% 1.4% - 0.4% 5.2%

65.9% 82.8% 85.2% 83.9% 87.5%

34.1% 17.2% 14.8% 16.1% 12.5%

99.1% 99.6% 66.3% 100.0% 99.9%- - 33.7% - -

0.9% 0.4% - - 0.1%100.0% 100% 100% 100% 100%

91.3% 90.8% 88.9% 100.7% 98.9%0.7% 0.8% 0.5% 0.8% 0.9%

92.0% 91.5% 89.4% 101.5% 99.8%

8.0% 8.5% 10.6% -1.5% 0.2%

Percent ofFund Total Revenues

TSI-7

District Business Telephone Number:

Submission Date of the most recent DistrictRegistration Form TWC Sections 36.054 & 49.054):

Limits on Fees of Office that a Director may receive

Term of Office (Elected or Fees of ExpenseAppointed) Office Paid * Reimbursements

Name and Address: or Date Hired 9/30/2017 9/30/2017 Title at Year End

Board Members:

ALAN MCNEIL (Elected) 5,100$ 943$ President11/4/2014 -11/6/2018

DONALD G. CONKLIN (Elected) 4,950$ 1,476$ Vice-President

11/4/2014 -11/6/2018

JO JONES (Elected) -$ 1,181$ Secretary11/8/2016 -11/3/2020

KIM GREEN (Elected) 7,200$ 1,029$ Treasurer11/8/2016 -11/3/2020

RACHEL BEAULIEU (Elected) 3,450$ 715$ Assistant Secretary/11/8/2016 - Treasurer11/3/2020

Consultants:

Armbrust & Brown, PLLC 4/1997 133,450$ -$ Attorney

Murfee Engineering Company, Inc. 3/1987 235,332$ -$ Engineer

Clearwater Management Company 9/1994 90,887$ -$ Former Pool/Community Center Operations

Premier Recreation Management Services 12/1/2016 261,433$ -$ Pool/Community CenterOperations

Texascapes, Inc. 2/1992 333,917$ -$ Landscape Maintenance

Bott & Douthitt, PLLC 10/2012 54,750$ -$ District Accountant

Crossroads Utility Services, Inc. 6/2010 366,215$ -$ General Manager

West, Davis & Company 8/2013 10,500$ -$ Auditor

Williamson County Tax Collector 10/2014 675$ -$ Tax Collector

*Fees of Office are the amounts actually paid to a director during the District's fiscal year.

TWC Section 49.060)during a fiscal year: (Set by Board Resolution

$7,200

November 22, 2016

100 Congress Ave., Ste. 1300, Austin, TX 78701

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1TSI-8. BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS

SEPTEMBER 30, 2017

(512) 435-2300

Complete District Mailing Address:

TSI-8

Taxpayer Type of Property 2017 2016 2015

NW Austin Office Partners LLC N/A 100,078,952$ 115,580,191$ -$ SFT INS (TX) LLC N/A 79,230,341 72,737,144 66,833,583 8 One Hundred TC LLC N/A 56,412,074 44,277,520 - Bell Fund IV Rattan Creek Apartments LLC N/A 49,136,560 47,185,371 38,953,511 Fund Amber Oaks LLC N/A 42,507,440 40,471,540 36,700,000 Fund Amber Oaks Phase 2 LLC N/A 32,681,308 31,257,772 27,910,829 Artisan I LLC & Artisan II LLC N/A 26,467,684 25,844,857 24,214,173 TLO TX3 Investments LLC N/A 19,500,000 - - SCI Parmer Fund 1 LLC N/A 18,747,088 16,460,929 - LTF Real Estate MP III LLC N/A 14,104,171 13,579,762 13,415,698 Austin Jack LLC N/A - 11,746,521 - HHC Amber Oaks V LLC N/A - - 48,376,344 HHC Amber Oaks III LLC & Buchanan AO III Spe LLC N/A - - 33,517,077 REO Amber Oaks II LLC N/A - - 25,546,794 Broadstone Parmer LLC N/A - - 14,000,000 Total 438,865,618$ 419,141,607$ 329,468,009$

Percent of Assessed Valuation 36% 38% 33%

Tax Roll Year

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1OSI-1. PRINCIPAL TAXPAYERS

SEPTEMBER 30, 2017

OSI-1

Type of Property Amount % Amount % Amount %

Real Residential Single Family 803,725,809$ 65.7% 743,631,338$ 66.6% 690,754,435$ 69.9%Multi-Family Residential 207,182,414 16.9% 189,014,408 16.9% 141,756,684 14.3%Vacant Platted Lots/Tracts 15,624,806 1.3% 15,625,142 1.4% 14,225,908 1.4%Real Acreage 2,541,949 0.2% 2,541,949 0.2% 2,449,514 0.2%Real Commercial 231,336,362 18.9% 217,951,167 19.5% 199,040,036 20.1%Utilities 1,900,820 0.2% 1,753,537 0.2% 1,542,421 0.2%Tangible Personal Business 43,267,616 3.5% 34,188,127 3.1% 31,409,339 3.2%Real Inventory 1,460,096 0.1% 2,323,014 0.2% 929,767 0.1%Exempt 8,563,512 0.7% 8,541,186 0.8% 8,506,659 0.9%Adjustments & Exemptions (91,914,954) -7.5% (98,590,748) -8.8% (102,401,224) -10.4%

Total 1,223,688,430$ 100.0% 1,116,979,120$ 100.0% 988,213,539$ 100.0%

NORTH AUSTIN MUNICIPAL UTILITY DISTRICT NO. 1OSI-2. ASSESSED VALUE BY CLASSIFICATION

SEPTEMBER 30, 2017

Tax Roll Year

2016 20152017

OSI-2

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