financial statements and supplemental information for the

STONEWALL RANCH MUNICIPAL UTILITY

DISTRICT

Financial Statements and Supplemental Information for the Year Ended September 30, 2012

and Independent Auditors’ Report

STONEWALL RANCH MUNICIPAL UTILITY DISTRICT TABLE OF CONTENTS Page ANNUAL FILING AFFIDAVIT 1

INDEPENDENT AUDITORS’ REPORT 2-3

MANAGEMENT’S DISCUSSION AND ANALYSIS 4-8

BASIC FINANCIAL STATEMENTS: Statement of Net Assets and Governmental Funds Balance Sheet 9 Statement of Activities and Governmental Funds Revenues,

Expenditures, and Changes in Fund Balances 10 Statement of Revenues, Expenditures, and

Changes in Fund Balance - Budget and Actual - General Fund 11 Notes to Basic Financial Statements 12-21

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY SUPPLEMENTAL INFORMATION: Index of Supplemental Schedules Required by

Texas Commission on Environmental Quality 22 Supplemental Schedules Required by

Texas Commission on Environmental Quality 23-31

OTHER SUPPLEMENTAL INFORMATION: Other Supplemental Schedules 32-33

ANNUAL FILING AFFIDAVIT

THE STATE OF TEXAS COUNTY OF WILLIAMSON

I, ___________________________________________________________________

(Name of Duly Authorized District Representative)

of the STONEWALL RANCH MUNICIPAL UTILITY DISTRICT hereby swear, or affirm, that the District named above has reviewed and approved at a meeting of the Board of Directors of the District on the ______day of _______________, 20______, its annual audit report for the fiscal year ended September 30, 2012 and that copies of the annual audit report have been filed in the District office, located at 8500 Bluffstone Cove, Suite B-104, Austin, TX 78759. The annual filing affidavit and the attached copy of the annual audit report are being submitted to the Texas Commission on Environmental Quality in satisfaction of all annual filing requirements within Section 49.194 of the Texas Water Code. Date: ______________________, 20___. By: ______________________________________

(Signature of District Representative) Kelly Bell, Board President

(Typed Name and Title of above District Representative)

Sworn to and subscribed to before me this _______ day of ________________, 20____. ______________________________________ (Signature of Notary) (SEAL) ______________________________________ (Printed Name of Notary)

My Commission Expires On: _________________________ Notary Public in and for the State of Texas

INDEPENDENT AUDITORS’ REPORT To the Board of Directors of Stonewall Ranch Municipal Utility District: We have audited the accompanying financial statements of the governmental activities and each major fund of Stonewall Ranch Municipal Utility District (the “District”) as of and for the year ended September 30, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District’s 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 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. In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of September 30, 2012, the respective changes in financial position, and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 4 through 8 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 supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Accountants and Consultants

An Affiliate of CPAmerica International

MAXWELL LOCKE & RITTER L L P

Affiliated Company

“A Registered Investment Advisor”This firm is not a CPA firm

ML&R WEALTH MANAGEMENT L L C

tel (512) 370 3200 fax (512) 370 3250www.mlrpc.com

Austin: 401 Congress Avenue, Suite 1100Austin, TX 78701

Round Rock: 303 East Main StreetRound Rock, TX 78664

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The Texas Commission on Environmental Quality supplemental information and other supplemental information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The Texas Commission on Environmental Quality supplemental information listed in the table of contents has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Texas Commission on Environmental Quality supplemental information listed in the table of contents is fairly stated in all material respects in relation to the basic financial statements as a whole. 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 them.

January 14, 2013

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STONEWALL RANCH MUNICIPAL UTILITY DISTRICT Management’s Discussion and Analysis For the Year Ended September 30, 2012 In accordance with Governmental Accounting Standards Board (“GASB”) Statement No. 34, the management of Stonewall Ranch Municipal Utility District (the “District”) offers the following narrative on the financial performance of the District for the year ended September 30, 2012. Please read it in connection with the District’s financial statements that follow. For purposes of GASB Statement No. 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 “Total Governmental Funds” 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 Assets and the Statement of Activities. Overview of the Basic Financial Statements The District’s reporting is comprised of two parts:

Management’s Discussion and Analysis (this section)

Basic Financial Statements

Statement of Net Assets and Governmental Funds Balance Sheet

Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund

Notes to Basic Financial Statements Other supplementary information is also included.

The Statement of Net Assets and Governmental Funds Balance Sheet includes a column (titled “Total Governmental Funds”) that represents a balance sheet prepared using the modified accrual basis of accounting. 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 assets will indicate financial health. The Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances includes a column (titled “Total Governmental Funds”) 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 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund presents a comparison statement between the District’s adopted budget to its actual results. The Notes to Basic Financial Statements provide additional information that is essential to a full understanding of the information presented in the Statement of Net Assets and Governmental Funds Balance Sheet and the Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances. Schedules required by the Texas Commission on Environmental Quality and other supplemental information are presented immediately following the Notes to Basic Financial Statements.

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Comparative Financial Statements Statement of Net Assets Governmental Activities

2012 2011 % Change

Current and other assets $ 646,640 $ 650,084 (0.5%)Capital and non-current assets 2,210,289 2,264,039 (2.4%)

Total assets $ 2,856,929 $ 2,914,123 (2.0%)

Current liabilities $ 83,473 $ 83,145 0.4%Long-term liabilities 2,795,938 2,857,637 (2.2%)

Total liabilities $ 2,879,411 $ 2,940,782 (2.1%)

Invested in capital assets, net of related debt $ (529,871) $ (537,880) 1.49%Restricted 151,601 210,174 (27.9%)Unrestricted 355,788 301,047 18.2%

Total net assets $ (22,482) $ (26,659) 15.7%

The District’s total assets were approximately $2.9 million as of September 30, 2012. Of this amount, approximately $2.2 million is accounted for by intangible assets and unamortized deferred charges. The District had outstanding liabilities of approximately $2.9 million of which approximately $2.8 million represent bonds payable. The District’s assessed value for fiscal year 2012 (which is based on the 2011 tax levy) was approximately $29.9 million compared to approximately $26.6 million for fiscal year 2011. The tax rate is set after modeling revenue and expenses for the upcoming five year period. The District’s primary revenue source is property taxes.

Sources of Revenue

Other1%

Taxes99%

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Statement of Activities Governmental Activities

2012 2011 % Change

Property taxes, including penalties $ 285,772 $ 265,617 7.6%Interest 1,276 1,356 (5.9%)

Total revenues $ 287,048 $ 266,973 7.5%

Service operations 60,835 71,480 (14.9%)Debt service 168,286 156,435 7.6%Amortization 53,750 48,838 10.1%

Total expenses 282,871 276,753 2.2%Change in net assets 4,177 (9,780) 142.7%Beginning net assets (26,659) (16,879) (57.9%)

Ending net assets $ (22,482) $ (26,659) 15.7%

Operating revenues increased by approximately $20,100 to approximately $287,000 for the fiscal year ended September 30, 2012. Property taxes generated approximately $286,000 in revenues and interest revenues provided approximately $1,300. Total expenses increased approximately $6,100 to approximately $283,000 for the fiscal year ended September 30, 2012. Net assets increased approximately $4,200 for the fiscal year ended September 30, 2012 compared to a decrease of approximately $9,800 for the fiscal year ended September 30, 2011. Analysis of Governmental Funds

2012 2011 2010

Cash $ 580,571 $ 649,832 $ 529,441Receivables 68,509 1,088 3,385Prepaids - - 313

Total assets $ 649,080 $ 650,920 $ 533,139

Accounts payable $ 4,930 $ 4,279 $ 4,782Other liabilities 68,668 1,327 3,615

Total liabilities 73,598 5,606 8,397

Nonspendable - - 313Restricted 186,238 284,731 239,167Unassigned 389,244 360,583 285,262

Total fund balances 575,482 645,314 524,742

Total liabilities and fund balances $ 649,080 $ 650,920 $ 533,139

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The District complies with GASB Statement No. 54 (“GASB 54”), Fund Balance Reporting and Governmental Fund Type Definitions, which establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Those fund balance classifications are described below.

Nonspendable - Amounts that cannot be spent because they are either not in a spendable form or are legally or contractually required to be maintained intact. Restricted - Amounts that can be spent only for specific purposes because of constraints imposed by external providers, or imposed by constitutional provisions or enabling legislation. Committed - Amounts that can only be used for specific purposes pursuant to approval by formal action by the Board of Directors. Assigned - For the General Fund, amounts that are appropriated by the Board of Directors that are to be used for specific purposes. For all other governmental funds, any remaining positive amounts not previously classified as nonspendable, restricted or committed. Unassigned - Amounts that are available for any purpose; these amounts can be reported only in the District’s General Fund.

The General Fund pays for daily operating expenditures. When comparing actual to budget, revenues were less than budgeted by approximately $20,800 due to less property tax revenue received in the current fiscal year. Expenditures were less than budgeted by approximately $41,500 mainly due to decreased landscape maintenance, director fees and legal expenditures in the current fiscal year. More detailed information about the District’s budgetary comparison is presented in the Basic Financial Statements. The Debt Service Fund remitted bond principal of $65,000 and interest of $164,428. More detailed information about the District’s debt is presented in the Notes to Basic Financial Statements. The Capital Projects Fund purchases the District’s infrastructure. During the fiscal year, the District did not have any capital outlay expenditures. Intangible Assets 2012 2011

Water capacity charges $ 2,011,916 $ 2,011,916Accumulated amortization (105,144) (64,905)

Total $ 1,906,772 $ 1,947,011 More detailed information about the District’s intangible assets is presented in the Notes to Basic Financial Statements.

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Long-Term Debt Activity 2012 2011

Series 2009 Bonds $ 1,915,000 $ 1,960,000Series 2011 Bonds 960,000 980,000

Total $ 2,875,000 $ 2,940,000 The District owes approximately $2.9 million to bond holders. During the year, the principal balance was reduced by $65,000. More detailed information about the District’s long-term debt is presented in the Notes to Basic Financial Statements. Currently Known Facts, Decisions, or Conditions The 2012 tax rate has been set at $0.95 per $100 of assessed valuation. The adopted budget for 2013 projects a General Fund fund balance increase of approximately $32,000. When compared to the 2012 budget, revenues are expected to increase by approximately 23% due to an increase in property tax revenues. Expenditures are expected to remain the approximately the same as budgeted in 2012. Approximately 44% of the property tax will fund general operating expenditures, and approximately 56% of the property tax will be set aside for debt service. 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 Freeman & Corbett, 8500 Bluffstone Cove, Suite B-104, Austin, TX 78759.

Debt Capital Total Statement General Service Projects Governmental Adjustments of

Fund Fund Fund Funds (Note 2) Net Assets

Cash and cash equivalents 396,773$ 122,692$ 61,106$ 580,571$ -$ 580,571$ Receivables:

Taxes 26,216 39,853 - 66,069 - 66,069 Interfund - 2,440 - 2,440 (2,440) -

Deferred charges, net of accumulated amortization - - - - 303,517 303,517

Intangible assets, net of accumulated amortization - - - - 1,906,772 1,906,772

Total assets 422,989$ 164,985$ 61,106$ 649,080$ 2,207,849$ 2,856,929$

Accounts payable 4,930 - - 4,930 - 4,930 Accrued interest payable - - - - 13,384 13,384 Accrued expenses payable 159 - - 159 - 159 Deferred revenue - taxes 26,216 39,853 - 66,069 (66,069) - Due to developer - - - - 59,672 59,672 Interfund payables 2,440 - - 2,440 (2,440) - Bonds payable:

Due within one year - - - - 65,000 65,000 Due after one year - - - - 2,736,266 2,736,266

Total liabilities 33,745 39,853 - 73,598 2,805,813 2,879,411

Fund balances:Restricted for debt service - 125,132 - 125,132 (125,132) - Restricted for capital projects - - 61,106 61,106 (61,106) - Unassigned 389,244 - - 389,244 (389,244) -

Total fund balances 389,244 125,132 61,106 575,482 (575,482) -

Total liabilities and fund balances 422,989$ 164,985$ 61,106$ 649,080$

Net assets:Invested in capital assets, net of

related debt (529,871) (529,871) Restricted for debt service 151,601 151,601 Unrestricted 355,788 355,788

Total net assets (22,482)$ (22,482)$

The notes to the financial statements are an integral part of this statement.

STONEWALL RANCH MUNCIPAL UTILITY DISTRICT

ASSETS

LIABILITIES

FUND BALANCE / NET ASSETS

STATEMENT OF NET ASSETS AND GOVERNMENTAL FUNDS BALANCE SHEETYEAR ENDED SEPTEMBER 30, 2012

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Debt Capital Total Statement General Service Projects Governmental Adjustments of

Fund Fund Fund Funds (Note 2) ActivitiesREVENUES:

Property taxes, including penalties 87,317$ 132,638$ -$ 219,955$ 65,817$ 285,772$ Interest 743 473 60 1,276 - 1,276

Total revenues 88,060 133,111 60 221,231 65,817 287,048

EXPENDITURES / EXPENSES:Current:

Landscape maintenance 7,042 - - 7,042 - 7,042 Director fees, including payroll taxes 3,068 - - 3,068 - 3,068 Legal fees 7,654 - - 7,654 - 7,654 Engineering fees 3,180 - - 3,180 - 3,180 Bookkeeping fees 7,823 - - 7,823 - 7,823 Audit fees 14,500 - - 14,500 - 14,500 Insurance 1,164 - - 1,164 - 1,164 Tax appraisal/collection fees 905 1,376 - 2,281 - 2,281 Utilities 10,317 - - 10,317 - 10,317 Other 3,746 60 - 3,806 - 3,806

Debt service:Bond principal - 65,000 - 65,000 (65,000) - Bond interest - 164,428 - 164,428 3,058 167,486 Fiscal agent fees and other - 800 - 800 - 800

Amortization - - - - 53,750 53,750

Total expenditures/ expenses 59,399 231,664 - 291,063 (8,192) 282,871

Excess (deficiency) of revenuesover (under) expenditures 28,661 (98,553) 60 (69,832) 74,009 4,177

FUND BALANCE / NET ASSETS:Beginning of the year 360,583 223,685 61,046 645,314 (671,973) (26,659) End of the year 389,244$ 125,132$ 61,106$ 575,482$ (597,964)$ (22,482)$



YEAR ENDED SEPTEMBER 30, 2012

STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

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ORIGINALAND FINAL

ACTUAL BUDGET VARIANCEREVENUES:

Property taxes, including penalties 87,317$ 108,324 (21,007) Interest 743 500 243

Total revenues 88,060 108,824 (20,764)

EXPENDITURES:Current:

Landscape maintenance 7,042 15,000 7,958 Director fees, including payroll taxes 3,068 10,000 6,932 Legal fees 7,654 25,000 17,346 Engineering fees 3,180 6,000 2,820 Bookkeeping fees 7,823 9,000 1,177 Audit fees 14,500 14,500 - Insurance 1,164 2,500 1,336 Tax appraisal/collection fees 905 3,000 2,095 Utilities 10,317 9,600 (717) Other 3,746 6,300 2,554 Total expenditures 59,399 100,900 41,501

EXCESS OF REVENUES OVER EXPENDITURES 28,661 7,924 20,737

FUND BALANCE:Beginning of the year 360,583 End of the year 389,244$



YEAR ENDED SEPTEMBER 30, 2012

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND

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STONEWALL RANCH MUNICIPAL UTILITY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2012 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stonewall Ranch Municipal Utility District (the “District”), was created, organized and established on March 28, 2006, by the Texas Commission on Environmental Quality (formerly the Texas Water Commission) pursuant to the provisions of Chapter 54 of the Texas Water Code. The District is a political subdivision of the State of Texas and operates under an elected Board of Directors (“the Board”). 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 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 the Governmental Accounting Standards Board (“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. Government-wide and Fund Financial Statements - For purposes of GASB Statement No. 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 “Total Governmental Funds” 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 assets and the statement of activities. The government-wide financial statements report information on all of the activities of the District. The effect of interfund activity has been removed from these statements. The statement of activities demonstrates the degree to which the expenses are offset by program revenues. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by the District. Taxes and other items not properly included among program revenues are reported instead as general revenues. Major individual governmental funds are reported as separate columns in the fund financial statements.

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Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Amounts reported as program revenues include charges to customers or applicants for goods, services, or privileges provided. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within sixty 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 are recorded only when payment is due. Major revenue sources considered susceptible to accrual include interest income. No accrual for property taxes collected within sixty days of year end has been made as such amounts are deemed immaterial; delinquent property taxes at year end are reported as deferred revenue. The District reports the following fund types:

The General Fund accounts for financial resources used for general operations. It is a budgeted fund, and any unassigned fund balances are considered resources available for current operations. The Debt Service Fund includes debt service taxes and other revenues collected to retire bond principal and to pay interest due. The Capital Projects Fund is used to account for financial resources restricted for authorized construction and other capital asset acquisitions.

Budgets and Budgetary Accounting Formal budgetary integration is employed as a management control device for the General Fund. Formal budgetary integration is not employed for the Debt Service Fund and the Capital Projects Fund. The budget is proposed by the District’s bookkeeper for the fiscal year commencing the following October 1, and is adopted on the modified accrual basis, which is consistent with generally accepted accounting principles.

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Assets, Liabilities, and Net Assets or Equity Intangible Assets - Intangible assets, which include water capacity charges, are reported in the governmental activities column in the government-wide financial statements. Intangible assets are defined as assets with an initial, individual cost of at least $5,000. Such assets are recorded at historical cost if purchased or estimated fair value at the date of donation if donated. Intangible assets are amortized using the straight line method over the estimated useful lives of the assets, which is fifty years. 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 - In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. 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 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. Ad Valorem Property Taxes - Delinquent taxes are prorated between maintenance and debt service based on rates adopted for the year of the levy. Allowances for uncollectibles within the General Fund and Debt Service Funds are based on historical experience in collecting property taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. Fund Equity - The District complies with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, which establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. See Note 8 for additional information on those fund balance classifications.

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Recently Issued Accounting Pronouncements In June 2011, the GASB issued GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, effective for fiscal years beginning after December 15, 2011. The objective of GASB Statement No. 63 is to provide financial reporting guidance for deferred outflows of resources and deferred inflows of resources. GASB Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. Concepts Statement No. 4 also identifies net position as the residual of all other elements presented in a statement of financial position. GASB Statement No. 63 amends the net asset reporting requirements of GASB Statement No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets. Management is still evaluating the effects that the full implementation of GASB Statement No. 63 will have on its financial statements for the year ended September 30, 2013. In March 2012, the GASB issued GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, effective for fiscal years beginning after December 15, 2012. The objective of GASB Statement No. 65 is to establish 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 to recognize, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities, such as deferred bond issuance costs. Management is still evaluating the effects that the full implementation of GASB Statement No. 65 will have on its financial statements for the year ended September 30, 2014.

2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Amounts reported for governmental activities in the statement of net assets are different because:

Governmental funds total fund balance $ 575,482Capital assets used in governmental activities are not financial resources

and, therefore, are not reported in the funds. Intangible assets, net of accumulated amortization 1,906,772Deferred charges on bond issuance costs 303,517

Deferred tax revenue is not available to pay for current-period expenditures and, therefore, is deferred in the funds. 66,069

The following liabilities are not due and payable in the current period and, therefore, are not reported in the funds: Developer advances (59,672)Bonds payable, including discounts (2,801,266)Bond interest payable (13,384)

Total net assets $ (22,482)

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Amounts reported for governmental activities in the statement of activities are different because:

Deficiency of revenues under expenditures $ (69,832)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 as amortization expense.

Amortization expense - intangible assets (40,239)Revenues in the statement of activities that do not provide current

financial resources are not reported as revenues in the funds. Change in deferred tax revenue 65,817

Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets.

Repayment of bond principal 65,000Some expenses reported in the statement of activities do not require the

use of current financial resources and, therefore are not reported as expenditures in governmental funds.

Change in bond interest payable 243Amortization of bond issuance costs (13,511)Amortization of bond discounts (3,301)

Change in net assets $ 4,177

3. CASH AND CASH EQUIVALENTS The District’s deposits are required to be secured in a manner provided by law for the security of the funds. Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. As of September 30, 2012, the District’s bank deposits were entirely covered by Federal Deposit Insurance Corporation (“FDIC”) insurance or secured by collateral pledged by the depository. The Public Funds Investment Act authorizes the District to invest in funds under a written investment policy. The District’s deposits are invested pursuant to the investment policy, which is approved annually by the Board. The primary objectives of the District’s investment strategy, in order of priority are safety of principal, liquidity, return on investment, and standard of care.

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The District is entitled to invest in the following: Obligations of the United States or its agencies and instrumentalities;

Collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States if the obligation is not:

An obligation whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal;

An obligation whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest;

A collateralized mortgage obligation that has a stated final maturity date of greater than 10 years; and

A collateralized mortgage obligation the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.

Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the FDIC or by the explicit full faith and credit of the United States;

Obligations of states, agencies, counties, cities and other political subdivisions of any state rated as to investment quality by a nationally recognized rating firm not less than “A” or its equivalent;

Certificates of deposit issued by a state or national bank domiciled in this state or a savings and loan association domiciled in this state and is guaranteed or insured by the FDIC or its successor or secured by obligations described above which have a market value at least equal to the deposit and are pledged to the District only and held by a third-party custodian;

Fully insured certificates of deposit purchased from a broker or a bank that has its main office or a branch in the State of Texas and is selected from the list of qualified brokers approved in the District’s investment policy. All investments in such brokered certificates of deposit shall be made on a delivery versus payment basis to the District’s safekeeping agent, and the Investment Officer shall verify that the bank is fully insured with the FDIC prior to purchase. In the event that any bank from which the District has purchased a brokered certificate of deposit merges with, or is acquired by, another bank in which brokered certificates of deposit are owned by the District, the Investment Officer shall immediately contact the banks to liquidate any brokered certificate that exceeds FDIC insurance levels;

An investment pool that meets the requirements of the Public Funds Investment Act;

Other investments authorized by law and approved by the Board by resolution or minute entry.

At September 30, 2012, the District held no investments.

18

4. INTERFUND RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as “due from other funds” or “due to other funds.” The composition of interfund balances as of September 30, 2012, is as follows:

Receivable Fund Payable Fund Amount

Debt Service General $ 2,440

5. INTANGIBLE ASSETS Intangible assets activity for the year ended September 30, 2012, was as follows:

Balance September 30,

2011

Additions

Retirements and

Transfers


2012

Intangible assets - Water capacity charges 2,011,916 - - 2,011,916

Less: accumulated amortization (64,905) (40,239) - (105,144)

Intangible assets, net $ 1,947,011 (40,239) - 1,906,772

6. LONG-TERM DEBT The following is a summary of changes in long-term debt for the year ended September 30, 2012:

Balance

September 30, 2011

Additions/ Refundings

Retirements


2012

Bonds payable - Series 2009 $ 1,960,000 - (45,000) 1,915,000Bonds payable - Series 2011 980,000 - (20,000) 960,000Discount on bond issuances, net (77,035) - 3,301 (73,734)

Total $ 2,862,965 - (61,699) 2,801,266 Bonds payable at September 30, 2012 consisted of the following:

Series Description Matures Interest Rates


2012 Due within

one year

2009 Unlimited Tax

Bonds 2034 4.20% - 6.20% $ 1,915,000 $ 45,000

2011 Unlimited Tax

Bonds 2035 4.00% - 6.00% 960,000 20,000

Total $ 2,875,000 $ 65,000

19

Debt service requirements to maturity for District’s bonds are summarized as follows:

Fiscal Year

Principal

Interest Total

Requirement

2013 $ 65,000 161,503 226,5032014 65,000 158,713 223,7132015 75,000 155,923 230,9232016 75,000 152,773 227,7732017 80,000 149,498 229,498

2018-2022 480,000 685,214 1,165,2142023-2027 640,000 538,303 1,178,3032028-2032 885,000 323,448 1,208,4482033-2035 510,000 54,010 564,010

Total $ 2,875,000 2,379,385 5,254,385 The District bonds are secured by and payable from a first lien and pledge of ad valorem taxes of the District. At September 30, 2012, unlimited tax bonds of approximately $29,415,000 were authorized by the District, but unissued.

7. PROPERTY TAXES The Texas Water Code authorizes the District to levy a tax each October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located within its boundaries. Assessed values are established annually by the Williamson Central Appraisal District. District property tax revenues are recognized when levied to the extent that they are collected in the current year. The uncollected balance is reported as deferred revenue. Taxes receivable are due January 1 and are delinquent if received after January 31 and are subject to penalty and interest charges. In September 2011, the District levied a combined tax rate of $0.95 per $100 of assessed valuation to finance operating expenditures and debt service requirements. The maintenance tax rate and the debt service tax rate were $0.3770 and $0.5730, respectively. The total 2011 tax levy was $284,197 based on a taxable valuation of $29,915,490.

8. FUND BALANCES The District complies with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, which establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Those fund balance classifications are described below. Nonspendable - Amounts that cannot be spent because they are either not in a spendable form or are legally or contractually required to be maintained intact.

20

Restricted - Amounts that can be spent only for specific purposes because of constraints imposed by external providers, or imposed by constitutional provisions or enabling legislation. Committed - Amounts that can only be used for specific purposes pursuant to approval by formal action by the Board. Assigned - For the General Fund, amounts that are appropriated by the Board that are to be used for specific purposes. For all other governmental funds, any remaining positive amounts not previously classified as nonspendable, restricted or committed. Unassigned - Amounts that are available for any purpose; these amounts can be reported only in the District’s General Fund. The detail of the fund balances is included in the Governmental Funds Balance Sheet on page 9. Fund balance of the District may be committed for a specific purpose by formal action of the Board, the District’s highest level of decision-making authority. Commitments may be established, modified, or rescinded only through a resolution approved by the Board. The Board may also assign fund balance for a specific purpose. In circumstances where an expenditure is to be made for a purpose for which amounts are available in multiple fund balance classifications, the order in which resources will be expended is as follows: restricted fund balance, committed fund balance, assigned fund balance, and lastly, unassigned fund balance.

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. During the year ended September 30, 2012, there were no significant reductions in insurance coverage from coverage in the prior year. No claims were filed during the last three years.

10. COMMITMENTS AND CONTINGENCIES The developer of the land within the District has incurred costs related to construction of facilities. Such costs may be reimbursable to the developer by the District from proceeds of future District bond issues, subject to approval by the Texas Commission on Environmental Quality.

21

11. ECONOMIC DEPENDENCY At inception, the District was dependent upon its major developer for operating advances. The developer continues to own a substantial portion of the taxable property within the District. During the current fiscal year, the developer of the District did not advance any funds to the District. Advances since inception total $110,000. These advances, plus interest, are subject to reimbursement from future bond issues in accordance with the rules of the Texas Commission on Environmental Quality. At September 30, 2012, $59,672 remained due to the developer.

22

STONEWALL RANCH MUNICIPAL UTILITY DISTRICT INDEX OF SUPPLEMENTAL SCHEDULES REQUIRED BY TEXAS COMMISSION ON ENVIRONMENTAL QUALITY YEAR ENDED SEPTEMBER 30, 2012

SCHEDULE INCLUDED

YES NO

X TSI-0 Notes Required by the Water District Accounting Manual

X TSI-1 Schedule of Services and Rates

X TSI-2 Schedule of General Fund Expenditures

X TSI-3 Schedule of Temporary Investments

X TSI-4 Analysis of Taxes Levied and Receivable

X TSI-5 Long-Term Debt Service Requirements by Years

X TSI-6 Analysis of Changes in Long-Term Bonded Debt

X TSI-7 Comparative Schedule of Revenues and Expenditures - General Fund

and Debt Service Fund - Five Years

X TSI-8 Board Members, Key Personnel and Consultants

23

STONEWALL RANCH MUNICIPAL UTILITY DISTRICT TSI-0 NOTES REQUIRED BY THE WATER DISTRICT ACCOUNTING MANUAL YEAR ENDED SEPTEMBER 30, 2012 The notes which follow are not necessarily required for fair presentation of the audited basic financial statements of the District which are contained in the preceding section of this report. They are presented in conformity with requirements of the Texas Commission on Environmental Quality to assure disclosure of specifically required facts. (A) Creation of District

See Note 1 to basic financial statements. (B) Contingent Liabilities See Note 10 to basic financial statements. (C) Pension Coverage Not applicable. (D) Pledge of Revenues

See Note 6 to basic financial statements. (E) Compliance with Debt Service Requirements

The provisions of the bond resolutions as summarized in Note 6 to basic financial statements relating to debt service requirements have been met.

(F) Redemption of Bonds

See Note 6 to basic financial statements.

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 UsageCharge Y/N Levels

WATER: -$ (1) - N

WASTEWATER: -$ (1) - N

SURCHARGE: -$ - -

Wastewater -$

b. Water and Wastewater Retail Connections:

Total Active ESFC ActiveConnections Connections Factor ESFC's

0.0 0.0 1.0 0.00.0 0.0 1.0 0.00.0 0.0 2.5 0.00.0 0.0 5.0 0.00.0 0.0 8.0 0.00.0 0.0 15.0 0.00.0 0.0 25.0 0.00.0 0.0 50.0 0.00.0 0.0 80.0 0.00.0 0.0 115.0 0.0

0.0 0.0 0.0 0.0 0.0 1.0 0.0

(1) The District receives service from Chisholm Trail Special Utility District (the "CTSUD"). As a result, service rates are set by the CTSUD, not the District.

Unmetered

-$ Total charges per 10,000 gallons usage: Water

District employs winter averaging for wastewater usage? Yes No


TSI-1. SERVICES AND RATESYEAR ENDED SEPTEMBER 30, 2012

Wholesale Wastewater

-$

Flood ControlFire Protection

Minimum

Rate per 1000

Participates in joint venture, regional system and/or wastewater service (other than

2"

4"

Meter

Other (specify):________________________________________________________

Gallons Over

1 1/2"1"

< 3/4"

-$

Wholesale Water

emergency interconnect)

Total WastewaterTotal Water

10"8"

Size

-$

6"

3"

24

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

(1)

(1)

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?(continued)

(1) The District receives service from Chisholm Trail Special Utility District.

Gallons billed to customers: n/a-

Liberty Hill

Williamson

TSI-1. SERVICES AND RATES (continued)YEAR ENDED SEPTEMBER 30, 2012


(Gallons billed / Gallons Pumped)

Water Accountability Ratio- Gallons pumped into system:

X

X

X

X

X

X

25

Personnel Expenditures (including benefits) -$

Professional Fees: Auditing 14,500 Legal 7,654 Engineering 3,180 Financial Advisor -

Purchased Services for Resale: Bulk Water and Wastewater Purchases -

Contracted Services: Bookkeeping 7,823 General Manager - Appraisal District 905 Tax Collector - Other Contracted Services 7,042

Utilities -

Repairs and Maintenance -

Administrative Expenditures: Directors' Fees 3,068 Office Supplies - Insurance 1,164 Other Administrative Expenditures 3,746

Capital Outlay: Capitalized Assets - Expenditures not Capitalized -

Tap Connection Expenditures -

Solid Waste Disposal -

Utilities 10,317

Parks and Recreation -

Other Expenditures -

TOTAL EXPENDITURES 59,399$

Number of persons employed by the District: 0 Full-Time 5 Part-Time


TSI-2. GENERAL FUND EXPENDITURESYEAR ENDED SEPTEMBER 30, 2012

26

Maintenance Debt ServiceTaxes Taxes

TAXES RECEIVABLE, SEPTEMBER 30, 2011 136$ 116$

2011 Original tax levy, less abatements 112,781 171,416 Total to be accounted for 112,917 171,532 Tax collections: Current year 86,565 131,563 Prior years 136 116 Total collections 86,701 131,679

TAXES RECEIVABLE, SEPTEMBER 30, 2012 26,216$ 39,853$

TAXES RECEIVABLE, BY YEARS2011 26,216$ 39,853$

TAXES RECEIVABLE, SEPTEMBER 30, 2012 26,216$ 39,853$

PROPERTY VALUATIONS- 2011 2010 2009 2008

Land and improvements 29,915,490$ 26,601,890$ 21,326,764$ 19,214,672$ Total Property Valuations 29,915,490$ 26,601,890$ 21,326,764$ 19,214,672

TAX RATES PER $100 VALUATION:

Debt Service tax rates 0.5730$ 0.4388$ 0.2413$ -$ Maintenance tax rates 0.3770 0.5112 0.7087 1.0000

TOTAL TAX RATES PER $100 VALUATION: 0.9500$ 0.9500$ 0.9500$ 1.0000$

ORIGINAL TAX LEVY 284,197$ 252,718$ 202,604$ 192,147$

PERCENT OF TAXES COLLECTED TO TAXES LEVIED 76.75% 100.00% 100.00% 100.00%

Maximum Tax Rate Approved by Voters: 1.00$ on 11/15/2006

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


TSI-4. TAXES LEVIED AND RECEIVABLEYEAR ENDED SEPTEMBER 30, 2012

27

DUE DURING Principal Interest Principal Interest Principal InterestFISCAL YEARS Due Due Due Due Due Due

ENDING 9/30 9/01 3/01,9/01 Total 9/01 3/01,9/01 Total 9/01 3/01,9/01 Total

2013 45,000$ 110,065$ 155,065$ 20,000$ 51,438$ 71,438$ 65,000$ 161,503$ 226,503$ 2014 45,000 108,175 153,175 20,000 50,538 70,538 65,000 158,713 223,713 2015 50,000 106,285 156,285 25,000 49,638 74,638 75,000 155,923 230,923 2016 50,000 104,135 154,135 25,000 48,638 73,638 75,000 152,773 227,773 2017 55,000 101,860 156,860 25,000 47,638 72,638 80,000 149,498 229,498 2018 55,000 99,220 154,220 25,000 46,638 71,638 80,000 145,858 225,858 2019 60,000 96,443 156,443 30,000 45,588 75,588 90,000 142,031 232,031 2020 65,000 93,323 158,323 30,000 44,238 74,238 95,000 137,561 232,561 2021 70,000 89,813 159,813 35,000 42,843 77,843 105,000 132,656 237,656 2022 75,000 85,928 160,928 35,000 41,180 76,180 110,000 127,108 237,108 2023 75,000 81,653 156,653 35,000 39,465 74,465 110,000 121,118 231,118 2024 80,000 77,265 157,265 40,000 37,715 77,715 120,000 114,980 234,980 2025 85,000 72,505 157,505 40,000 35,715 75,715 125,000 108,220 233,220 2026 95,000 67,405 162,405 45,000 33,675 78,675 140,000 101,080 241,080 2027 100,000 61,705 161,705 45,000 31,200 76,200 145,000 92,905 237,905 2028 105,000 55,705 160,705 50,000 28,725 78,725 155,000 84,430 239,430 2029 115,000 49,405 164,405 50,000 25,913 75,913 165,000 75,318 240,318 2030 120,000 42,390 162,390 55,000 23,100 78,100 175,000 65,490 240,490 2031 130,000 35,070 165,070 60,000 19,800 79,800 190,000 54,870 244,870 2032 140,000 27,140 167,140 60,000 16,200 76,200 200,000 43,340 243,340 2033 145,000 18,600 163,600 65,000 12,600 77,600 210,000 31,200 241,200 2034 155,000 9,610 164,610 70,000 8,700 78,700 225,000 18,310 243,310 2035 - - - 75,000 4,500 79,500 75,000 4,500 79,500

1,915,000$ 1,593,700$ 3,508,700$ 960,000$ 785,685$ 1,745,685$ 2,875,000$ 2,379,385$ 5,254,385$

SERIES 2011ANNUAL REQUIREMENTS

STONEWALL RANCH MUNICIPAL UTILITY DISTRICT

TSI-5. LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARSYEAR ENDED SEPTEMBER 30, 2012

FOR ALL SERIESSERIES 2009UNLIMITED TAX BONDS UNLIMITED TAX BONDSS

28

Series 2009 Series 2011 Total

Interest Rate 4.2% - 6.2% 4.0% - 6.0%

Dates Interest Payable 3/1 ; 9/1 3/1 ; 9/1

Maturity Dates 9/1/2034 9/1/2035

Bonds Outstanding atBeginning of CurrentFiscal Year 1,960,000$ 980,000$ 2,940,000$

Bonds Sold During theCurrent Fiscal Year - - -

Retirements During the Current Fiscal Year: Principal (45,000) (20,000) (65,000) Bonds Outstanding at Endof Current Fiscal Year 1,915,000$ 960,000$ 2,875,000$

Interest Paid During theCurrent Fiscal Year 112,090$ 52,338$ 164,428$

Paying Agent's Name & Address: BOKF, N.A. BOKF, N.A.

Austin, Texas Austin, Texas

Bond Authority: Tax Bonds* Other Bonds Refunding Bonds

Amount Authorized by Voters 32,415,000$ -$ 45,750,000$ Amount Issued 3,000,000 - -

Remaining To Be Issued 29,415,000$ -$ 45,750,000$

with other revenues in combination with taxes.

Debt Service Fund Cash and Temporary Investments balances as of September 30, 2012: 122,692$

Average Annual Debt Service Payment (Principal & Interest) for the remaining term of all debt: 228,452$

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


TSI-6. CHANGES IN LONG-TERM BONDED DEBTYEAR ENDED SEPTEMBER 30, 2012

Bond Issue

29

2012 2011 2010 2009 2008 2012 2011 2010 2009 2008

GENERAL FUND REVENUES AND OTHER

FINANCING SOURCES - Property taxes, including penalties 87,317$ 144,724$ 158,706$ 192,083$ 149,108$ 99.2% 99.5% 99.2% 75.9% 99.6%Interest 743 684 1,447 1,825 659 0.8% 0.5% 0.8% 0.7% 0.4%Bond proceeds - - - 59,348 - - - - 23.4% -

TOTAL GENERAL FUND REVENUES

AND OTHER FINANCING SOURCES 88,060 145,408 160,153 253,256 149,767 100.0% 100.0% 100.0% 100.0% 100.0%

GENERAL FUND EXPENDITURES -Current: Landscape maintenance 7,042 8,707 5,177 11,629 12,915 8.0% 6.0% 3.2% 4.6% 8.6%

Director fees, including payroll taxes 3,068 6,828 5,098 10,378 5,881 3.5% 4.7% 3.2% 4.1% 3.9%Legal fees 7,654 13,696 16,430 46,143 35,373 8.7% 9.4% 10.3% 18.2% 23.6%Engineering fees 3,180 1,444 1,869 4,804 3,937 3.6% 1.0% 1.2% 1.9% 2.6%Bookkeeping fees 7,823 8,711 8,223 7,788 6,811 8.9% 6.0% 5.1% 3.1% 4.5%Audit Fees 14,500 14,500 13,000 10,500 6,500 16.5% 10.0% 8.1% 4.1% 4.3%Insurance 1,164 2,033 1,536 1,882 1,641 1.3% 1.4% 1.0% 0.7% 1.1%Tax appraisal/collection fees 905 1,176 1,357 1,967 1,252 1.0% 0.8% 0.8% 0.8% 0.8%Utilities 10,317 9,275 6,514 - - 11.7% 6.4% 4.1% - - Other 3,746 4,030 3,459 1,200 128 4.3% 2.8% 2.2% 0.5% 0.1%Interest Expense - - - 9,020 - - - - 3.6% -

TOTAL GENERAL FUND

EXPENDITURES 59,399 70,400 62,663 105,311 74,438 67.5% 48.5% 39.2% 41.6% 49.5%

EXCESS OF GENERAL FUND REVENUES

AND OTHER FINANCING SOURCES OVER EXPENDITURES 28,661$ 75,008$ 97,490$ 147,945$ 75,329$ 32.5% 51.5% 60.8% 58.4% 50.5%

DEBT SERVICE FUND REVENUES AND

OTHER FINANCING SOURCES -Property taxes, including penalties 132,638$ 123,062$ 53,933$ -$ -$ 99.6% 46.3% 97.1% - N/A

Interest 473 618 1,585 10 - 0.4% 0.2% 2.9% - N/A Miscellaneous - - 10 - - - - - - N/A Bond proceeds - 142,057 - 301,004 - - 53.5% - 100.0% N/A

TOTAL DEBT SERVICE FUND REVENUES

AND OTHER FINANCING SOURCES 133,111 265,737 55,528 301,014 - 100.0% 100.0% 100.0% 100.0% N/A

DEBT SERVICE FUND EXPENDITURES AND

OTHER FINANCING USES - Tax appraisal/collection fees 1,376 1,010 462 - - 1.0% 0.4% 0.8% - N/A Bond principal 65,000 60,000 - - - 48.8% 22.6% - - Bond interest 164,428 148,670 104,921 - - 123.5% 55.9% 189.0% - N/A Bond discount - 26,000 - 56,525 - - 9.8% - 18.8% N/A Fiscal agent fees and other 800 525 - 400 - 0.6% 0.2% - 0.1% N/A Other 60 66 - 15 - - - - - N/A

TOTAL DEBT SERVICE FUND

EXPENDITURES AND OTHER

FINANCING USES 231,664 236,271 105,383 56,940 - 173.9% 88.9% 189.8% 18.9% N/A

EXCESS (DEFICIENCY) OF DEBT

SERVICE FUND REVENUES AND OTHER

FINANCING SOURCES OVER (UNDER)

EXPENDITURES AND OTHER FINANCING

USES(98,553)$ 29,466$ (49,855)$ 244,074$ -$ -73.9% 11.1% -89.8% 81.1% N/A

TOTAL ACTIVE RETAIL WATER CONNECTIONS (1) (1) (1) (1) (1)

TOTAL ACTIVE RETAIL WASTEWATER CONNECTIONS (1) (1) (1) (1) (1)

(1) District receives service from Chisholm Trail Special Utility District.


TOTAL REVENUES

PERCENTAGE OF FUND

AMOUNTS

TSI-7. COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES GENERAL FUND AND DEBT SERVICE FUND - FIVE YEARSYEAR ENDED SEPTEMBER 30, 2012

30

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 9/30/2012 9/30/2012 Title at Year End

Board Members:

Kelly Bell (Elected) 450$ -$ President05/2010 - 05/2014

Kareem Hajjar (Elected) 450$ -$ Vice-President05/2012 - 05/2016

Talley Williams (Elected) 750$ -$ Secretary05/2010 - 05/2014

Scott Wuest (Elected) 600$ -$ Treasurer05/2012 - 05/2016

Melissa Neslund (Elected) 600$ -$ Director05/2010 - 05/2014

Consultants:

Blakeslee, Monzingo & Co. 06/10/2006 7,898$ -$ Bookkeeper

Freeman & Corbett 11/06/2009 7,070$ -$ Attorney

Jones-Heroy & Associates 03/07/2012 1,832$ -$ Engineer

Pate Engineers 04/26/2006 487$ -$ Former Engineer

Maxwell Locke & Ritter LLP 04/18/2011 14,500$ -$ Auditor

Southwest Securities 08/10/2009 3,469$ -$ Financial Advisor

Williamson County Tax Collector 11/15/2006 463$ -$ Tax Collector

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

$7,200

Complete District Mailing Address:

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

Suite B-104, Austin, Texas 78759

(512) 451-6689

10/23/2012

8500 Bluffstone Cove


TSI-8. BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTSYEAR ENDED SEPTEMBER 30, 2012

31

Taxpayer Type of Property 2012 2011 2010

Lennar Buffington Stonewall Ranch, L.P. Real Land & Improvements 3,536,220$ 7,769,925$ 8,439,698$

PH SPMSL, L.P. Real Land & Improvements 3,430,000 - -

Buffington Texas Classic Homes, L.L.C. Real Land & Improvements 1,193,987 525,299 525,000

Compagno B.J. & D.E., Trustees Compagno Family Trust Real Land & Improvements 393,523 402,669 466,698

Wright, L.A. & M.D. Real Land & Improvements 333,027 365,982 -

Yates, M.J. Real Land & Improvements 262,009 258,348 272,596

Bodine, J. Real Land & Improvements 230,101 - -

Harris, O. & C. Real Land & Improvements 229,346 222,682 -

Haught, S.S. & J.G. Real Land & Improvements 223,318 217,777 -

Schilli, M.E. & D.A. Real Land & Improvements 222,958 218,385 -

Lennar Homes of Texas Land & Construction, Ltd. Real Land & Improvements - 456,983 434,000

Capitol City Insurance Agency, Inc. Real Land & Improvements - 217,801 260,665

Buffington Texas Classic Homes, Ltd. dba Texas Classic Homes Real Land & Improvements - - 638,869

Buffington Texas Classic Homes, Ltd. Real Land & Improvements - - 315,000

Secretary of Housing & Urban Development Real Land & Improvements - - 300,118

Glenn, J. & A. Real Land & Improvements - - 244,400

Total 10,054,489$ 10,655,851$ 11,897,044$

Percent of Assessed Valuation 23.3% 27.5% 34.0%

Tax Roll Year


YEAR ENDED SEPTEMBER 30, 2012OSI-1. PRINCIPAL TAXPAYERS

32

Type of Property Amount % Amount % Amount %

Residence (Single Family) 24,746,259$ 57.4% 19,576,227$ 50.5% 15,733,967$ 44.9%

Residential Inventory 3,586,163 8.3% 4,144,793 10.7% 4,413,241 12.6%

Vacant Lot 70,000 0.2% 59,400 0.2% 62,911 0.2%

Acreage 3,546,023 8.2% 3,752,187 9.7% 4,123,284 11.8%

Tangible Personal Business 71,690 0.2% 73,182 0.2% 44,043 0.1%

Exempt Property 11,089,055 25.7% 11,120,066 28.7% 10,662,136 30.4%

Total 43,109,190$ 100.0% 38,725,855$ 100.0% 35,039,582$ 100.0%

2012 2010

Tax Roll Year


OSI-2. ASSESSED VALUE BY CLASSIFICATIONYEAR ENDED SEPTEMBER 30, 2012

2011

33

financial statements and supplemental information for the

Documents