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REUNION WEST COMMUNITY DEVELOPMENT
DISTRICT

FINANCIAL REPORT
Year Ended September 30,  2017

Ill DA

MCDIRMIT	VIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS

REUNION WEST COMMUNITY DEVELOPMENT DISTRICT

TABLE  OF CONTENTS

Year  Ended  September  30, 2017

Page
Financial Section:
Independent Auditor's Report	1
Management Discussion and Analysis	3
Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position	7
Statement of Activities	8
Fund Financial Statements:
Balance Sheet - Governmental Funds	9
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds	10
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds
to the Statement of Activities	11
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual - General Fund	12
Notes to Financial Statements	13
Compliance Section:
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards	31
Management Comments	33
Independent Auditor's Report on Compliance with the Requirements
of Section 218.415, Florida Statutes	35

Ill

MCDIRMIT	DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS

INDEPENDENT AUDITOR'S REPORT

To the Board of Supervisors
Reunion West Community Development District

We have audited the accompanying financial statements of the governmental activities and each major fund of the Reunion West Community Development 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

The District's 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

MCDIRMIT DAVIS & COMPANY, LLC
934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803
TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM

MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
1

Opinions

In our opinion, the financial statements of the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, and each major fund of the District as of September 30, 2017, and the respective changes in financial position thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s  discussion and analysis starting on page 3, 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.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated March 28, 2018, on our consideration of the District’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, agreements and other matters.  The purpose of that report  is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Orlando, Florida March 28, 2018

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our discussion and analysis of the Reunion West Community Development District, Osceola County, Florida’s (the “District”) financial accomplishments provide an overview of the District’s financial activities for the year ended September 30, 2017. Please read it in conjunction with the District’s Independent Auditor’s Report, financial statements and accompanying notes.

This information is being presented to provide additional information regarding the activities of the District and to meet the disclosure requirements of Government Accounting Standards Board Statement (GASB) No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments issued June 1999.

Financial Highlights

The assets of the District  exceeded  its liabilities  at September  30, 2017 by
$10,132,862, a decrease in net position of $297,604 in comparison with the prior year.
At September 30, 2017, the District’s governmental funds reported fund balances of
$4,615,925, an increase of $685,021 in comparison with the prior year.

Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to the Reunion West Community Development District’s financial statements. The District’s financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements.

Government-Wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the District’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items  that will result in cash flows in future fiscal periods.

The government-wide financial statements include all governmental activities that are principally supported by special assessment revenues. The District does not have any business-type activities. The governmental activities of the District include general government, physical environment, culture and recreation, public safety and roads and streets related functions.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District has one fund category: Governmental Funds.

Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a District’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The District maintains three individual governmental funds. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances for the general fund, debt service fund, and capital projects fund, all of which are considered to be major funds.

The District adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with the budget.

Notes to Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Government-Wide Financial Analysis

Statement of Net Position - The District’s net position was $10,132,862 at September 30, 2017. The analysis that follows focuses on the net position of the District’s governmental activities.

Government-Wide Financial Analysis (Continued):

Reunion West Community Development District Statement of Net Position

	September 30,
2017		September 30,
2016	
Assets, excluding capital assets	$	4,727,739		$	4,883,906	
Capital Assets Net of Depreciation	 	41,510,857		 	35,000,826	
Total assets	 	46,238,596		 	39,884,732	
Liabilities, excluding long-term liabilities	809,212		1,572,865	
Long-term Liabilities	 	35,296,522		 	27,881,401	
Total liabilities	 	36,105,734		 	29,454,266	
Net Position:				
Net investment in capital assets	6,214,335	7,119,425	
Restricted for capital projects	4,212	1,605	
Restricted for debt service	1,948,611	1,337,844	
Unrestricted	 	1,965,704	 	1,971,592	
Total net position	  $	10,132,862	  $	10,430,466	

The following is a summary of the District’s governmental activities for the fiscal years ended September 30, 2017 and 2016.

Revenues:

Changes in Net Position Year ended September 30,

2017	2016

Program revenues

$	3,324,803	$

2,702,764

General revenues	 	25,216	 	7,859	
Total revenues	 	3,350,019	 	2,710,623	
Expenses:
General government	
478,040	
650,103	
Physical environment	1,401,115	1,280,877	
Culture and recreation	84,127	67,248	
Public safety	51,800	42,000	
Roads and streets	34,394	24,063	
Interest on long-term debt	 	1,598,147	 	1,513,046	
Total expenses	 	3,647,623	 	3,577,337	
Special Item:			
Gain on debt cancellation	 	-	 	37,053,283	
Change in net position	(297,604)	36,186,569	
Net position - beginning	 	10,430,466	 	(25,756,103)	
Net position - ending	  $	10,132,862	  $	10,430,466	

Government-Wide Financial Analysis (Continued):

As noted above and in the statement of activities, the cost of all governmental activities during the year ended September 30, 2017 was $3,647,623. The majority of these costs are physical environment and interest on long-term debt.

Financial Analysis of the Government’s Funds

The District uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At September 30, 2017, the District’s governmental funds reported combined ending fund balances of $4,615,925. Of this total, $32,650 is nonspendable, $2,650,221 is restricted, and the remainder is an unassigned fund balance of $1,933,054.

In the current year, the fund balance of the general fund decreased by $5,888. The debt service fund balance increased by $688,302 due to assessment revenue in excess of debt service expenditures. The capital projects fund balance increased by $2,607.

General Fund Budgetary Highlights
An operating budget was adopted and maintained by the governing board for the District pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in preparation of the fund financial statements. There were no budget amendments to the September 30, 2017 general fund budget. The legal level of budgetary control is at the fund level.

Capital Asset and Debt Administration

Capital Assets - At September 30, 2017, the District had $41,510,857 invested in capital assets, net of accumulated depreciation. More detailed information about the District’s capital  assets is presented in the notes to the financial statements.

Capital Debt - At September 30, 2017, the District had $35,300,000 in bonds outstanding. More detailed information about the District’s capital debt is presented in the notes to the financial statements.

Requests for Information

If you have questions about this report or need additional financial information, contact the Reunion West Community Development District’s Finance Department at 135 W. Central Blvd, Suite 320, Orlando, Florida 32801.

FINANCIAL  STATEMENTS

STATEMENT  OF  NET  POSITION

September  30,  2017

	Governmental
Activities	
Assets:		
Cash	$	668,471	
Investments	1,373,107	
Assessments receivable	13,345	
Accounts receivable	1,000	
Prepaid costs	32,650	
Restricted assets:		
Temporarily restricted investments	2,639,166	
Capital Assets:		
Capital assets not being depreciated	25,958,378	
Capital assets being depreciated, net	 	15,552,479	
Total assets	46,238,596	

Liabilities:		
Accounts payable and accrued expenses	13,473	
Due to Reunion East	98,341	
Accrued interest payable Noncurrent liabilities:	697,398	
Due within one year	700,000	
Due in more than one year	 	34,596,522	
Total liabilities	 	36,105,734	

Net Position:		
Net Investment in capital assets	6,214,335	
Restricted for capital projects	4,212	
Restricted for debt service	1,948,611	
Unrestricted	 	1,965,704	
Total net position	  $	10,132,862	

STATEMENT  OF ACTIVITIES

Year  Ended  September  30, 2017

 	Program Revenue	

Operating Grants	Capital Grants

Net (Expense) Revenue and Changes in Net Position

Charges for	and	and	Governmental

unctions/Programs	Expenses	Services	Contributions	Contributions	Activities	
Governmental activities:						
General government	$	478,040	$	218,156	$	-	$	-	$	(259,884)	
Physical environment	1,401,115	639,406	-	-	(761,709)	
Culture and recreation	84,127	38,392	-	-	(45,735)	
Public safety	51,800	23,639	-	-	(28,161)	
Roads and streets	34,394	15,696	-	-	(18,698)	
Interest on long-term debt	1,598,147	2,381,814	6,581	1,119	791,367	
Total governmental activities	$ 3,647,623	$ 3,317,103	$	6,581	$	1,119	(322,820)	

General Revenues:	

F

Investment income	14,804	
Miscellaneous revenue	 	10,412	
Total general revenues	 	25,216	
Change in net position	(297,604)	
Net Position - beginning	 	10,430,466	
Net Position - ending	$	10,132,862	

BALANCE SHEET GOVERNMENTAL FUNDS

September  30,  2017

Assets:

 	General	Debt Service

Capital Projects

Total Governmental Funds

Cash	$	668,471	$	-	$	-	$	668,471	
Investments	1,373,107	2,634,954	4,212	4,012,273	
Assessments receivable	2,290	11,055	-	13,345	
Accounts receivable	1,000	-	-	1,000	
Prepaid costs	 	32,650	 	-	 	-	 	32,650	
Total assets	  $ 2,077,518	  $ 2,646,009	  $	4,212	  $	4,727,739	

Liabilities and Fund Balances:
Liabilities:
Accounts payable and accrued expenses	$	13,473	$	-	$	-	$	13,473	
Due to Reunion East	 	98,341	 	- 	- 	98,341	
Total liabilities	 	111,814	 	- 	-	111,814	
Fund balances:
Nonspendable-prepaid costs Restricted:
Debt service	32,650	-	-	32,650

-	2,646,009	-	2,646,009	
Capital projects	-	-	4,212	4,212	
Unassigned	 	1,933,054 	- 	- 	1,933,054	
Total fund balances	 	1,965,704 	2,646,009 	4,212 	4,615,925	
Total liabilities and fund balances	  $ 2,077,518      $ 2,646,009     $	4,212	

Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds.	41,510,857	
Liabilities not due and payable from current available resources are not reported in the governmental fund statements. All liabilities, both current and long-term, are reported in the government-wide statements.		
Accrued interest payable		(697,398) Bonds payable	 (35,296,522)	
 	(35,993,920)	
Net Position of Governmental Activities	  $	10,132,862	

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

Year  Ended  September  30, 2017

Revenues:

 	General	Debt Service

Capital Projects

Total Governmental Funds

Special assessments	$	935,289		$ 2,258,421		$	-		$	3,193,710	
Special assessments - prepayments	-		123,393		-		123,393	
Investment income	14,804		6,581		1,119		22,504	
Miscellaneous revenue	 	10,412		-		-		10,412	
Total revenues	 	960,505		2,388,395		1,119		3,350,019	

Expenditures:
Current:
General government	141,615	-	-	141,615	
Physical environment	675,441	-	-	675,441	
Culture and recreation	63,143	-	-	63,143	
Public safety	51,800	-	-	51,800	
Roads and streets
Debt Service:	34,394	-	-	34,394	
Interest	-	1,520,491	-	1,520,491	
Principal	-	530,000	-	530,000	
Other debt service costs	-	-	336,425	336,425	
Capital outlay	 	-	-	7,256,689	7,256,689	

Total expenditures	 	966,393	2,050,491	7,593,114	10,609,998

Excess (Deficit) of Revenues Over
Expenditures	 	(5,888)		337,904		(7,591,995)		(7,259,979)	

Other Financing Sources (Uses):
Bonds issued	

-		

348,661		

7,596,339		

7,945,000	
Transfers in	-		1,737		-		1,737	
Transfers out	 	-		-		(1,737)		(1,737)	
Total other financing sources (uses)	 	-		350,398		7,594,602		7,945,000	

Net change in fund balances	
(5,888)		
688,302		
2,607		
685,021	
Fund Balances - beginning of year	 	1,971,592		1,957,707		1,605		3,930,904	
Fund Balances - end of year	$ 1,965,704		$ 2,646,009		$	4,212		$	4,615,925	

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

Year  Ended  September  30, 2017

Amounts reported for Governmental Activities in the Statement of Activities are different because:		
Net change in fund balances - total governmental funds (page 10)	$	685,021	
Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources; however, in the statement of net assets the cost of those assets is recorded as capital assets. Depreciation of capital assets is not recognized in the governmental fund statements but is reported as an expense in the statement of activities.		
Capital outlay	7,256,689		
Depreciation expense	(746,658)	6,510,031	

Repayments of long-term liabilities are reported as expenditures in governmental funds, while repayments reduce long-term liabilities in the statement of net position.	

530,000	

Issuance of bonds are reported as revenue in the fund statements. However, the proceeds are classified as long-term liabilities in the statement of net positon.	

(7,945,000)	
Some expenses reported in the statement of activities do not require the use of current financial		
resources and, therefore, are not reported as expenditures in governmental funds.		
Amortization of bond discount	(121)		
Change in accrued interest	(77,535)	(77,656)	

Change in Net Position of Governmental Activities (page 8)	
$	(297,604)	

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

Year  Ended  September  30, 2017

 	Budgeted Amounts	

Actual Amounts

Variance with Final Budget Positive (Negative)

	Original		Final		
Revenues:
Special assessments	
$	925,077		
$	925,077		
$	935,289		
$	10,212	
Investment income	3,000		3,000		14,804		11,804	
Miscellaneous revenue	2,556		2,556		10,412		7,856	
Total revenues	930,633	930,633	960,505	29,872	

Expenditures:
Current:
General government	131,785		131,785		141,615		(9,830)	
Physical environment	614,535		614,535		675,441		(60,906)	
Culture and recreation	52,500		52,500		63,143		(10,643)	
Public safety	42,000		42,000		51,800		(9,800)	
Roads and streets	35,520		35,520		34,394		1,126	
Capital outlay	151,100		151,100		-		151,100	
Total expenditures	1,027,440		1,027,440		966,393		61,047	

Net change in fund balance	
(96,807)		
(96,807)		
(5,888)		
90,919	
Fund Balance - beginning	1,971,592		1,971,592		1,971,592		-	
Fund Balance - ending	$ 1,874,785		$ 1,874,785		$ 1,965,704		$	90,919	

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS

Year  Ended  September  30, 2017

Note 1 - Summary of Significant Accounting Policies:

Reporting Entity

The Reunion West Community Development  District, (the “District”)  was established on October 3, 2001 by County Ordinance  01-32, pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes. The Act provides, among other things,  the power to manage basic services for community development, the power to borrow money and issue bonds, and the power to levy and assess non-ad valorem assessments for the financing and delivery of capital  infrastructure. The District was established  for the purpose  of financing  and managing the acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for community development within the District.

The District is governed by the Board of Supervisors (the “Board”), which is composed of five members. The Supervisors are elected on an at large basis by the owners of the property within the District. The Board of Supervisors of the District exercises all powers granted to the District pursuant to Chapter 190, Florida Statutes. At September 30, 2017, none of the Board members were associated with LRA Reunion Borrower, LLC (Developer). In a prior year, the District initiated foreclosure proceedings against the Prior Developer and a foreclosure sale was held on August 26, 2013 (See Note 7).

The Board has final responsibility for:

Assessing and levying assessments.

Approving budgets.

Exercising control over facilities and properties.

Controlling the use of funds generated by the District.

Approving the hiring and firing of key personnel.

Financing improvements.

The financial statements were prepared  in accordance with Governmental  Accounting Standards Board (“GASB”)  Statements  14, 39 and 61. Under the provisions of those standards, the financial reporting entity consists of the primary government, organizations for which the District Board of Supervisors is considered to be financially accountable, and other organizations for which the nature and significance of their relationship with the District are such that, if excluded, the financial statements of the District would be considered incomplete or misleading. There are no entities considered to be component units of the District; therefore, the financial statements include only the operations of the District.

Note 1 - Summary of Significant Accounting Policies (Continued): Government-Wide and Fund Financial Statements
The financial statements include both government-wide and fund financial statements.
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 2) grants, contributions and investment earnings that are restricted to meeting the operational or capital requirements of a particular function or segment and 3) operating-type special assessments that are treated as charges for services (including assessments for maintenance and debt service). Other items not included among program revenues are reported instead as general revenues.
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. Assessments are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.

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 60 days of the end of the current fiscal period, except for Developer receivables for retainage, which are collected from the Developer when the amount is due to the contractor. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

Note 1 - Summary of Significant Accounting Policies (Continued):

Measurement Focus, Basis of Accounting  and Financial  Statement  Presentation (Continued)

Assessments, including debt service assessments and operation and maintenance assessments, are non-ad valorem assessments imposed on all lands located within the District and benefited by the District’s activities. Operation and maintenance special assessments are levied by the District prior to the start of the fiscal year which begins October 1st and ends on September 30th. These assessments are imposed upon all benefited lands located in the District. Debt service special assessments are imposed upon certain lots and lands as described in each resolution imposing the special assessment for each series of bonds issued by the District. Certain debt service assessments are collected upon the closing of those lots subject to short term debt and are used to prepay a portion of the bonds outstanding.

Assessments and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the District.

The District reports the following major governmental funds:

General Fund - is the District’s primary operating fund. It is used to account for and report all financial resources not accounted for and reported in another fund.

Debt Service Fund - accounts for the accumulation of resources for the annual payment of principal and interest on long-term debt.

Capital Projects Fund - accounts for the financial resources to be used for the acquisition or construction of major infrastructure within the District.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. When both restricted and unrestricted resources are available for use, it  is the District’s policy to use restricted resources first, then unrestricted resources as they are needed.

Note 1 - Summary of Significant Accounting Policies (Continued):

Assets, Liabilities,  Deferred Outflows/Inflows  of Resources and Net Position/Fund Balance

Restricted Assets - These assets represent cash and investments set aside pursuant to bond covenants.

Deposits and Investments - The District’s cash and cash equivalents are considered to be cash on hand and demand deposits.

Investments of the District are reported at fair value and are categorized within the fair value hierarchy established in accordance with GASB Statement No. 72, Fair Value Measurement and Application. The District’s investments consist of investments authorized in accordance with Section 218.415, Florida Statutes.

Prepaid Items - Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Capital Assets - Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, sidewalks and similar items), are reported in the applicable governmental activities column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition cost at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:

 	Assets		 	Years		
Stormwater Management	30	
Roadways	30	
Electrical, Communications and Lighting	20	
Recreation and Amenities	20	

Note 1 - Summary of Significant Accounting Policies (Continued):
Assets, Liabilities,  Deferred Outflows/Inflows  of Resources and Net Position/Fund Balance (Continued):
Long Term Obligations - In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as expenses. Bonds payable are reported net of premiums or discounts.

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 expenditures.
Deferred Outflows/Inflows of Resources - In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial  statement element,  deferred  outflows of resources, represents  a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any item that qualifies for reporting in this category for the year ended September 30, 2017.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District does not have any item that qualifies for reporting in this category for the year ended September 30, 2017.
Net Position Flow Assumption - Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position in the  government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted - net position to have been depleted before unrestricted-net position is applied.

Fund Balance Flow Assumptions - Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources (total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted  fund balance. Further,  when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

Note 1 - Summary of Significant Accounting Policies (Continued):

Assets, Liabilities,  Deferred Outflows/Inflows  of Resources and Net Position/Fund Balance (Continued):

Fund Balance Policies - Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The District itself can establish limitations on the use of resources through either commitment (committed fund balance) or an assignment (assigned fund balance).

The committed fund balance classification includes fund balance amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority. The Board of Supervisors is the highest level of decision-making authority for the government that can, by adoption of an ordinance or resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance or resolution remains in place until a similar action is taken to remove or revise the limitation.

Amounts in the assigned fund balance classification  are intended  to be used by the government for specific purposes but do not meet the criteria to be classified as committed. The Board of Supervisors has authorized the District Manager to assign amounts for specific purposes. The Board of Supervisors may also assign fund balance as it does when  appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for  the removal of an assignment. Conversely, as discussed above and additional action is essential to either remove or revise a commitment.

Other Disclosures

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts 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.

Note 2 - Stewardship, Compliance and Accountability:

Budgetary Information

The District is required to establish a budgetary system and an approved annual budget for the General Fund. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. All annual appropriations lapse  at the fiscal year end. The legal level of budgetary control is at the fund level. Any budget amendments that increase the aggregate budgeted appropriations, at the fund level, must be approved by the Board of Supervisors.

The District follows these procedures in establishing the budgetary data reflected in the  financial statements.

Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.

Public hearings are conducted to obtain taxpayer comments.

Prior to October 1, the budget is legally adopted by the District Board.

All budget changes must be approved by the District Board.

The budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

Note 3 - Deposits and Investments:

Deposits

The District’s cash balances were entirely covered by federal depository insurance or by a collateral pool pledged to the State Treasurer. Florida Statutes Chapter 280, “Florida Security for Public Deposits Act”, requires all qualified depositories to deposit with the Treasurer or another banking institution eligible collateral equal to various percentages of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance held. The percentage  of eligible collateral  (generally,  U.S. Governmental  and agency securities, state or local government debt, or corporate bonds) to public deposits is dependent upon the depository’s financial history and its compliance with Chapter 280. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses.

Note 3 - Deposits and Investments (Continued):

Investments

The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The District adopted GASB 72 during the fiscal year.

Under GASB 72, assets or liabilities are classified into one of three levels. Level 1 is the most reliable and is based on quoted price for identical assets, or liabilities, in an active market. Level 2 uses significant other observable inputs when obtaining quoted prices for identical or similar assets, or liabilities, in markets that are not active. Level 3 is the least reliable, and uses significant unobservable inputs that uses the best information available under the circumstances, which includes the District’s own data in measuring unobservable inputs.

The District has the following recurring fair value measurements as of September 30, 2017:

Money market mutual funds of $2,642,021 are valued using Level 2 inputs.

The District’s investment policy is governed by State Statutes and the District Trust Indenture. The District investment policy allows investments in any financial institution that  is a qualified public depository of the State of Florida as identified by the State Treasurer, in accordance with Chapter 280 of the Florida Statutes. Authorized District investments include, but are not limited to:

The Local Government Surplus Funds Trust Fund (SBA);

Securities and Exchange Commission Registered Money Market Funds with the highest credit quality rating from a nationally recognized rating agency;

Interest-bearing time deposits or savings accounts in qualified public depositories;

Direct obligations of the U.S. Treasury.

The SBA is not a registrant with the Securities and Exchange Commission (SEC); however, the State of Florida does provide regulatory oversight. The Board has adopted operating procedures consistent with the requirements for a 2a-7 fund for the Florida Prime Fund; therefore, the pool net asset value per share can be used as fair value for  financial reporting.

Note 3 - Deposits and Investments (Continued): Investments (Continued):
Investments made by the District at September 30, 2017 are summarized below. In accordance with GASB 31, investments are reported at fair value.

Investment Type	

Fair Value	
Credit Rating	Weighted Average
Maturity	
First American Prime Obligation Fund Y	$	298,434	AAAm	23 days	
US Bank Money Market	1,108,821	NA	NA	
Fidelity Government Portfolio III	1,234,766	AAAm	27 days	
Local Government Surplus Trust Fund	1,370,252	AAAm	51 days	
	  $	4,012,273			

Credit Risk:				
The District’s investment policy limits	credit risk by restricting	authorized	investments to	
those described. Investments in U.S. Government securities and agencies must be backed by the full faith and credit of the United States Government. Short term bond funds shall be rated by a nationally recognized ratings agency and shall maintain the highest credit quality rating.

Custodial Credit Risk:

In the case of deposits, this is the risk that, in the event of a bank failure, the District’s deposits may not be returned to it. The District’s investment policy requires that bank deposits be secured as provided by Chapter 280, Florida Statutes. This law requires local governments to deposit funds only in financial institutions designated as qualified public depositories by the Chief Financial Officer of the State of Florida, and creates the Public Deposits Trust Fund, a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a default or insolvency has occurred. At September 30, 2017, all of the District’s bank deposits were in qualified public depositories.

For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At September 30, 2017, none of the investments listed are exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form.

Note 3 - Deposits and Investments (Continued): Investments (Continued):
Concentration of Credit Risk:

The District’s investment policy does not specify limits on the amount the District may invest in any one issuer.

Interest Rate Risk:

The District’s investment policy does not specifically address interest rate risk; however, the general investment policy is to apply the prudent-person rule: Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and in general, avoid speculative investments. The District manages its exposure to declines in fair values by investing primarily in pooled investments that have a weighted average maturity of less than three months.

Note 4 - Interfund Receivables, Payables and Transfers:

Interfund transfers for the year ended September 30, 2017 are as follows:

Transfers In

Debt
Transfers Out:	Service	Total

Capital Projects

$	1,737	$

$	1,737	$

1,737
1,737

Transfers between the capital projects fund and the debt service fund were to move funds for the 2017 Bonds.

Note 5 - Capital Assets:

Capital asset activity for the year ended September 30, 2017 was as follows:

Governmental Activities:
Capital Assets Not Being Depreciated:

Beginning
Balance	Additions	Reductions

Ending Balance

Land and land improvements	$ 6,987,855	$	-	$	-	$ 6,987,855	
Infrastructure under construction	11,713,834	7,256,689	-	18,970,523	
Total capital assets not being depreciated	18,701,689	7,256,689	-	25,958,378	

Capital Assets Being Depreciated:
Stormwater management	5,035,672	-	-	5,035,672	
Roadways	15,414,581	-	-	15,414,581	
Electrical, communications and lighting	879,988	-	-	879,988	
Recreation and amenities	419,684	-	-	419,684	
Total capital assets being depreciated	21,749,925	-	-	21,749,925	

Less Accumulated Depreciation for:			
Stormwater management	(1,338,731)	(167,856)	-	(1,506,587)	
Roadways	(3,596,634)	(513,819)	-	(4,110,453)	
Electrical, communications and lighting	(348,065)	(43,999)	-	(392,064)	
Recreation and amenities	(167,358)	(20,984)	(188,342)	
Total accumulated depreciation	(5,450,788)	(746,658)	-	(6,197,446)	

Total capital assets being depreciated, net	
16,299,137	(746,658)	
-	15,552,479	
Governmental activities capital assets, net	$  35,000,826	$	6,510,031	$	-	$ 41,510,857	

Depreciation expense was charged	
in the amounts of $725,674	
and $20,984 to physical	
environment and culture and recreation, respectively.

Note 6 - Long-Term Liabilities:

Series 2004 Special Assessment Revenue Bonds:

In September 2004, the District issued $59,960,000 of Special Assessment Revenue Bonds Series 2004 consisting of Term Bonds Series due on May 1, 2036 with a fixed interest rate of 6.25%. Interest is due semiannually on each May 1 and November 1. Principal on the Bonds  is due annually commencing May 1, 2008 through May 1, 2036. The Bonds were issued to  pay off the Bond Anticipation Notes issued on October 31, 2003 for $17,815,000 and to finance the acquisition and construction of certain improvements for the benefit of the District. During a prior fiscal year, these Bonds were Trifurcated into three (3) separate Bond Series (see below).

On August 21, 2012, the Series 2004 Bonds were Trifurcated into three (3) separate Bond Series. As a result of the Trifurcation, $10,000 of the bonds were cancelled and the matured principal amount of $1,745,000 was amortized over the remaining bond term. The remaining outstanding Series 2004 Bonds with a principal balance of $57,560,000 exchanged for;
$16,905,000 in principal amount of the District’s Series 2004-1, $40,405,000 in principal  amount of the District’s Series 2004-2, and $250,000 in principal amount (paid in November 2012) of the District’s Series 2004-3 (collectively, the “Series 2004 Bonds”). The Series 2004  Bonds are due May 1, 2036 with a fixed interest rate of 6.25%.

The Series 2004 Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are also subject to extraordinary mandatory redemption prior to their maturity in the manner determined by the Bond Indenture.

The Bond Indenture requires that the District maintain adequate funds in a reserve account to meet the debt service reserve requirements for the Series 2004A-1 Bonds, as defined in the Indenture. The requirement was met at September 30, 2017.

The Bond Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agreed to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The principal of and interest on the Series 2004 Special Assessment Revenue  Bonds issued under the Indenture are secured by all revenues received by the District from Series 2004 assessments levied and collected on the District lands benefited by the project. The District is not in compliance with the requirements of the Bond Indenture.

As of September 30, 2017, total principal and interest remaining on the Series 2004-1 Special Assessment Revenue Bonds was $25,807,500. Principal and Interest paid on the Series 2004-1 Bonds in the current year was $1,346,875. Total special assessment revenue pledged for the year was $1,365,878.

Note 6 - Long-Term Liabilities (Continued):

Series 2015 Special Assessment Refunding and Improvement Bonds:
In April 2015, the District issued $4,285,000  of Special Assessment  Refunding  and Improvement Bonds Series 2015 consisting of $550,000 Term Bonds Series due on May 1, 2019 with a fixed interest rate of 3.5%, $995,000 Term Bonds Series due on May 1, 2025 with a fixed interest rate of 4.25%, and $2,740,000 Term Bonds Series due on May 1, 2036 with a fixed interest rate of 5.0%. Interest is due semiannually on each May 1 and November 1. Principal on the Bonds is due annually commencing May 1, 2016 through May 1, 2036. The Bonds were issued to acquire a portion of the Assessment Area Two - Phase One Project and pay certain bond issuance costs.

The Series 2015 Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are also subject to extraordinary mandatory redemption prior to their maturity in the manner determined by the Bond Indenture.

The Bond Indenture requires that the District maintain adequate funds in a reserve account to meet the debt service reserve requirements for the Series 2015 Bonds, as defined in the Indenture. The requirement was met at September 30, 2017.

The Bond Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agreed to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The principal of and interest on the Series 2015 Special Assessment Refunding and Improvement Bonds issued under the Indenture are secured by all revenues received by the District from Series 2015 assessments levied and collected on the District lands benefited by the project. The District is in compliance with the requirements of the Bond Indenture.

As of September 30, 2017, total principal and interest remaining on the Series 2015 Special Assessment Refunding and Improvement Bonds was $6,259,588. Principal and Interest paid  in the current year was $328,988. Total special assessment revenue pledged for the year was
$335,174.

Note 6 - Long-Term Liabilities (Continued):

Series 2016 Special Assessment Bonds:
In May 2016, the District issued $8,500,000 of Special Assessment Bonds, Series 2016 consisting of $590,000 Term Bonds Series due on November 1, 2020 with a fixed interest rate of 3.625%, $1,510,000 Term Bonds Series due on May 1, 2028 with a fixed interest rate of 4.375%, and $6,400,000 Term Bonds Series due on May 1, 2046 with a fixed interest rate of 5.0%. Interest is due semiannually on each May 1 and November 1. Principal on the Bonds is due annually commencing November 1, 2017 through May 1, 2046. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District and pay certain bond issuance costs.

The Series 2016 Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are also subject to extraordinary mandatory redemption prior to their maturity in the manner determined by the Bond Indenture.
The Bond Indenture requires that the District maintain adequate funds in a reserve account to meet the debt service reserve requirements for the Series 2016 Bonds, as defined in the Indenture. The requirement was met at September 30, 2017.
The Bond Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agreed to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The principal of and interest on the Series 2016 Special Assessment Refunding and Improvement Bonds issued under the Indenture are secured by all revenues received by the District from Series 2016 assessments levied and collected on the District lands benefited by the project. The District is in compliance with the requirements of the Bond Indenture.

As of September 30, 2017, total principal and interest remaining on the Series 2016 Special Assessment Refunding and Improvement Bonds was $16,223,244. Interest paid in the current year was $374,628. There was no principal paid in the current year. Total special assessment revenue pledged for the year ended September 30, 2017 was $680,762.

Series 2017 Special Assessment Bonds:
In July 2017, the District issued $7,945,000 of Special Assessment Bonds, Series 2017 consisting of $725,000 Term Bonds Series due on November 1, 2022 with a fixed interest rate of 3.5%, $1,065,000 Term Bonds Series due on November 1, 2028 with a fixed interest rate of 4.25%, $2,550,000 Term Bonds Series due on November 1, 2038 with a fixed interest rate of 4.75%, and $3,605,000 Term Bonds Series due on November 1, 2047 with a fixed interest rate of 5.0%. Interest is due semiannually on each May 1 and November 1. Principal on the Bonds is due annually commencing November 1, 2017 through November 1, 2047. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District and pay certain bond issuance costs.

The Series 2017 Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are also subject to extraordinary mandatory redemption prior to their maturity in the manner determined by the Bond Indenture.

Note 6 - Long-Term Liabilities (Continued):

Series 2017 Special Assessment Bonds (Continued):

The Bond Indenture requires that the District maintain adequate funds in a reserve account to meet the debt service reserve requirements for the Series 2017 Bonds, as defined in the Indenture. The requirement was met at September 30, 2017.
The Bond Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agreed to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The principal of and interest on the Series 2017 Special Assessment Bonds issued under the Indenture are secured by all revenues received by the District from Series 2017 assessments levied and collected on the District lands benefited by the project. The District is in compliance with the requirements of the Bond Indenture.

As of September 30, 2017, total principal and interest remaining on the Series 2017 Special Assessment Refunding and Improvement Bonds was $15,297,674. There was no principal or interest paid in the current year. There was no special assessment revenue pledged for the year ended September 30, 2017.

Long-term debt activity for the year ended September 30, 2017 was as follows:

	Beginning
Balance	
Additions	
Reductions	Ending
Balance	Due Within
One Year	
Governmental activities:
Bonds Payable:						
Series 2004	$ 15,230,000	$	-	$ (395,000)	$ 14,835,000	$	420,000	
Series 2015	4,155,000	-	(135,000)	4,020,000	140,000	
Series 2016	8,500,000	-	-	8,500,000	140,000	
Bond discount	(3,599)	-	121	(3,478)	-	
Series 2017	-	7,945,000		7,945,000	-	
Governmental activity long-						
term liabilities	$ 27,881,401	$ 7,945,000	$ (529,879)	$ 35,296,522	$	700,000	

Note 6 - Long-Term Liabilities (Continued):

At September 30, 2017, the scheduled debt service requirements on the bonds payable were as follows:

Governmental Activities
Year Ending
September 30,		
Principal		
Interest	
2018		$	700,000		$	1,801,405	
2019		870,000		1,854,697	
2020		915,000		1,811,650	
2021		960,000		1,765,072	
2022		1,010,000		1,715,450	
2023 - 2027		5,940,000		7,706,558	
2028 - 2032		7,815,000		5,868,181	
2033 - 2037		8,645,000		3,363,406	
2038 - 2042		3,500,000		1,689,212	
2043 - 2047		4,460,000		700,250	
2048		 	485,000		12,125	
		  $	35,300,000		  $	28,288,006	

Note 7 - Related Party Transactions:					
Developer and Major Landowners:					

The Prior Developer and major landowners in the District failed to pay their assessments owed in prior years. The unpaid assessments have not been recognized as revenue in the Fund or Government Wide financial statements.

In a prior year, the District filed a foreclosure action against the Prior Developer for nonpayment of debt service and operating and maintenance assessments owed.

In fiscal year 2010, the District filed foreclosure actions against Fourth Quarter Properties LVII, LLC and Fourth Quarter Properties LVIII, LLC, major landowners within the District, because of their failure to pay debt service and operating and maintenance assessments owed. In a prior year, RWest Holdings, LLC, a Special Purpose Entity (SPE), was awarded the land within the District owned by Fourth Quarter Properties LVII through a foreclosure sale. This land represents approximately 21% of assessable lots within the District. The SPE was formed by the Trustee, on behalf of the Bondholders, to own, manage and dispose of the property and is responsible for funding current operating and maintenance costs.

Note 7 - Related Party Transactions (Continued):

Developer and Major Landowners (Continued):

As a result of the foreclosure and settlement agreement, the Trustee directed the District to temporarily defer collection of the debt service assessments on the SPE-owned property. The Bondholders purchased tax certificates and took ownership through the tax deed process of  the land within the District owned by Fourth Quarter Properties LVIII, LLC, representing 31% of assessable lots within the District. During a previous fiscal year, RWest Holdings, LLC transferred its assets to Reunion West I, LLC and operations for RWest Holdings, LLC ended. In a prior year, the District transferred land valued at $2,316,502 to Reunion West I, LLC.

In a previous fiscal year, the District filed foreclosure actions against LRA Reunion Borrower, LLC, Developers within the District, because of their failure to pay debt service and operating and maintenance assessments owed. Reunion West SPE, LLC, a Special Purpose Entity (SPE), obtained the land within the District owned by LRA Reunion Borrower, LLC through a settlement agreement. The SPE was formed by the District, on behalf of the Bondholders, to own, manage and dispose of the property and is responsible for funding current operating and maintenance costs. Due to the foreclosure and the previous settlement, the outstanding O&M and debt assessments on this property was satisfied.

For the fiscal year ended September 30, 2017, there were no SPE’s considered a component unit of the District.

Developer Assessments:

In the current year, special assessment revenue from the Developers was $1,311,706, which is 39% of total special assessment revenue.

Reunion East:

The District has an Interlocal Agreement with Reunion East, to share certain maintenance costs. These shared costs are allocated based on the platted number of units (which is adjusted from year to year), resulting in 37% of the costs currently allocated to Reunion West and 63% to Reunion East (See Note 9 – Subsequent Event). Most of these costs are paid by Reunion East and reimbursed by Reunion West. At year end, Reunion West owed Reunion East $98,341 for reimbursement of Reunion West’s share of expenses.

Note 8 - Risk Management:

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. These risks are covered by commercial insurance from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage since inception of the District.

Note 9 - Subsequent Event:

For the fiscal year ending September 30, 2018, the District amended the Interlocal Agreement with Reunion East to share certain maintenance costs from 37% of the costs allocated to Reunion West to 40% and from 63% of the costs allocated to Reunion East to 60%.

COMPLIANCE SECTION

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS

To the Board of Supervisors
Reunion West Community Development District

We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Reunion West Community Development District (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 financial statements and have issued our report thereon dated March 28, 2018.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (“internal control”) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control over financial reporting that we consider to be a material weaknesses. However, material weaknesses may exist that have not been identified.

MCDIRMIT DAVIS & COMPANY, LLC
934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803
TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM

MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Orlando, Florida March 28, 2018

Ill

MCDIRMIT	DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS

MANAGEMENT COMMENTS

Board of Supervisors
Reunion West Community Development District

Report on the Financial Statements

We have audited the financial statements of the Reunion West Community Development District, (the “District”) as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated March 28, 2018.

Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Auditor General.

Other Reporting Requirements

We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and Independent Auditor’s Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated March 28, 2018, should be considered in conjunction with this management letter.

Prior Audit Findings

Section 10.554(1)(i.)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report.

Official Title and Legal Authority

Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial  statements. This information has been disclosed in the notes to the financial statements.

MCDIRMIT DAVIS & COMPANY, LLC
934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803
TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM

MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
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Financial Condition and Management

Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, requires us to apply appropriate procedures and communicate the results of our determination as to whether or not the District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify of the specific condition(s) met. In connection with our audit, we determined that the District did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the District. It is management’s responsibility to monitor the District financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not  have any such recommendations.

Annual Financial Report

Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, requires us to apply appropriate procedures and communicate the results of our determination as to whether the annual financial report for the District for the fiscal year ended September 30, 2017, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2017. In connection with our audit, we determined that these two reports were in agreement.

Additional Matters

Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Board of Supervisors, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.

Orlando, Florida March 28, 2018

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES

Board of Supervisors
Reunion West Community Development District

We have examined Reunion West Community Development District’s (the “District”) compliance with the requirements of Section 218.415, Florida Statutes, during the year ended September 30, 2017. Management is responsible for the District’s compliance with those requirements. Our responsibility is to express an opinion on the District’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a  reasonable basis for our opinion. Our examination does not provide a legal determination on the District’s compliance with specified requirements.

In our opinion, the District complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2017.

Orlando, Florida March 28, 2018

MCDIRMIT DAVIS & COMPANY, LLC
934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803
TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM

MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS