Management’s Discussion and Analysis
Financial Highlights
- The assets of the Town of Lakewood Village exceeded its liabilities at the close of the most recent fiscal year by $5,982,101 (net position). Of this amount $1,884,133 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.
- As of the close of the current fiscal year, the Town of Lakewood Village’s governmental funds reported ending fund balance of $1,569,962, an increase of $1,233,016 in comparison with the prior year. Of this balance, $1,475,098 is available for spending at the government’s discretion
(unassigned). Unassigned fund balance represents 273 percent of general fund expenditures, and 273 percent of total governmental fund expenditures. At the close of the current fiscal year, the Town of Lakewood Village’s governmental funds had a current ratio of approximately 23:1, based on the current assets of $1,640,829 and current liabilities of $70,867.
Governmental Activities:
- During the year revenues increased by $113,668 (14%), primarily due to property valuation increases.
- Expenses for the year increased by $200,435 (34%), primarily due to debt service, and increase repairs and maintenance expense.
Business-type Activities:
- Charges for services increased by $82,161 (18%) during the year primarily due to water sales, while expenses increased by $125,687 (32%).
Economic Factors and Next Year’s Budgets and Rates
Sales Taxes
In 2022 the Town approved two voluntary annexations of commercial enterprises. These businesses are expected to lead to significant permanent increases in the town’s sales tax collections beginning in Fiscal 2023. In 2022, the town’s sales taxes, which are based on residential at home (online) spending continued to grow. The Town has approved developments with almost 500 future homes. Based on our current collections, once occupied these homes would lead to an estimated 200 percent increase in sales tax revenues. These new developments would also lead to an estimated 200 percent increase in franchise fees.
Property Taxes
We experienced record breaking increases in appraised property values on top of the record increases of 2021. Market Values increased 34 percent in 2022 after increasing 27 percent in 2021. Overall property values have increased over 70 percent over the last 24 months. Taxable values have increased by almost 50 percent over the same period. More importantly, the amount of taxable value deferred under the homestead cap has exploded to almost $25 million. Even if appraised values decline in the near future, the 10 percent taxable value increase built into the homestead cap will mitigate any realized declines in taxable values. Property taxes from newly annexed commercial enterprises will not be material. In addition, we do not expect any property taxes from new residential developments for at least two years. Residential Development in Lakewood Village Extraterritorial Jurisdiction In 2022 the Town approved two Public Improvement Districts (Capital and M&O) for South Oak Phase 3, a Taylor Morrison/ Corson-Cramer Development of 285 single-family residential houses. On September 3, 2022, the developers paid the town a PID fee of $1,425,000 and escrowed $4.8 million of PID proceeds to reimburse the town for expenses associated with expanding water and wastewater infrastructure. The PID Bonds are NOT an obligation of the Town. The project is underway, housing units are expected to be completed in late Fall 2023.
| Denton Central Apprisal District - Lakewood Village |
|||
| Market Value |
Taxable Value |
Homestead Cap |
|
| 2019 | $112,403,425 | $107,729,095 | $418,425 |
| 2020 | $115,139,981 2% |
$110,695,695 3% |
$176,533 |
| 2021 | $146,341,444 27% |
$130,573,390 18% |
$9,778,884 |
| 2022 | $195,892,280 34% |
$161,270,886 24% |
$24,923,820 |
Debt Reduction and Future Tax Rates
The Town's Maintenance and Operations (M&O) rate is currently $0.25 per $100 and will continue to remain unchanged since the Town's incorporation in 1977. In 2022, the Town redeemed (paid off early) the Series 2014 Certificates of Obligation. Previously, the Town used a significant portion of M&O tax revenues to pay debt servicing, while keeping the I&S rate fixed at $0.20 per $100. With the reduction in bond payments combined with record tax
revenues, the current year budget calls for a significant surplus. This surplus will be earmarked for debt reduction in anticipation of an early redemption of the 2020 Certificates of Obligation. It is expected that the Town’s M&O and I&S rate will continue at $0.25 and $0.20 respectively until the 2020 Certificates of Obligation are called. Our overall tax rate of $0.45 remains substantially lower than our surrounding cities which average $0.60 and provides us with additional financial flexibility.
Request for Information
This financial report is designed to provide a general overview of the Town of Lakewood Village’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Mayor, 100 Highridge, Lakewood Village, Texas 75068.