Narcoossee Community Development District

ANNUAL FINANCIAL REPORT

September 30, 2017

Narcoossee Community Development District ANNUAL FINANCIAL REPORT
Fiscal Year Ended September 30, 2017 TABLE OF CONTENTS

Page Number

REPORT OF INDEPENDENT AUDITORS	1-2
MANAGEMENT’S DISCUSSION AND ANALYSIS	3-7
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements
Statement of Net Position	8
Statement of Activities	9
Fund Financial Statements:
Balance Sheet – Governmental Funds	10
Reconciliation of Total Governmental Fund Balances to Net
Position of Governmental Activities	11
Statement of Revenues, Expenditures and Changes in Fund
Balances – Governmental Funds	12
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the
Statement of Activities	13
Statement of Revenues, Expenditures and Changes in Fund
Balances – Budget and Actual – General Fund	14
Notes to Financial Statements	15-27
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	28-29
MANAGEMENT LETTER	30-31
INDEPENDENT ACCOUNTANTS REPORT/COMPLIANCE
WITH SECTION 218.45, FLORIDA STATUTES	32

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��tt Berger, Toombs, Elam, Gaines & Frank
Certified Public Accountants	PL
600 Citrus Avenue
Suite 200
Fort Pierce, Florida 34950
7721461-6120 II 461-1155
FAX: 7721468-9278

REPORT OF INDEPENDENT AUDITORS

Orange County, Florida

TNoartchoeoBssoeaerdCoofmSmupuenrivtyisDoresvelopment District
Report on the Financial Statements

contents.

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Management's Responsibility for the Financial Statements
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misstatement, whether due to fraud or error.

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Auditor's Responsibility

misstatement.

We conducted our audits in accordance with auditing standards generally accepted in the

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presentation of the financial statements.

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TNoartchoeoBssoeaerdCoofmSmupuenrivtyisDoresvelopment District
Opinion

respects, the financial position of the governmental activities, and each major fund of

changes in financial position and the budgetary comparison for the General Fund for the year

In our opinion, the basic financial statements referred to abov	present fairly, in all material Narcoo	ee Community Development District as of September 30, 2017, and the respective Athmenereicnad. ed in conformity with accounting principles generally accepted  in the United States of Other Matters

Management's Discussion and Analysis
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by the Governmental Accounting Standards Board who considers it to be an essential part of

supplemen ry information in accordance with auditing standards generally accepted in

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the sufficient evidence to express an opinion or provide any assurance.

we obtained during our audit of the basic financial state	nts. We do not express an opinion or

ethods  of preparing the info mation  and compari	the infor	tion for consistency with

United States of America, which consisted principally of inquiries of management about the management's responses to our inquiries,  the basic financial statements, and other knowledge provide any assurance on the information because the limited procedures do not provide us with
Other Reporting Required by Government Auditing Standards

tests of its compliance with certain provisions of laws, regulations and contracts.

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reporting and compliance and the results of that testing, and not to provide an opinion on

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B ger, Toombs, Elam, Gaines & Frank Fort Pierce, Florida
June 3, 2018

Management’s discussion and analysis of Narcoossee Community Development District (the “District”) financial performance provides an objective and easily readable analysis of the District’s financial activities. The analysis provides summary financial information for the District and should be read in conjunction with the District’s financial statements.

OVERVIEW OF THE FINANCIAL STATEMENTS

The District’s basic financial statements comprise three components; 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to financial statements. The Government-wide financial statements present an overall picture of the District’s financial position and results of operations. The Fund financial statements present financial information for the District’s major funds. The Notes to financial statements provide additional information concerning the District’s finances.

The Government-wide financial statements are the statement of net position and the statement of activities. These statements use accounting methods similar to those used by private-sector companies. Emphasis is placed on the net position of governmental activities  and the change in net position. Governmental activities are primarily supported by special assessments.

The statement of net position presents information on all assets and liabilities of the District, with the difference between assets and liabilities reported as net position. Net position are reported in three categories; 1) net investment in capital assets, 2) restricted, and 3) unrestricted. Assets, liabilities, and net position are reported for all Governmental activities.

The statement of activities presents information on all revenues and expenses of the District and the change in net position. Expenses are reported by major function and program revenues relating to those functions are reported, providing the net cost of all functions provided by the District. To assist in understanding the District’s operations, expenses have been reported as governmental activities. Governmental activities financed by the District include general government, physical environment and debt service.

Fund financial statements present financial information for governmental funds. These statements provide financial information for the major funds of the District. Governmental fund financial statements provide information on the current assets and liabilities of the funds, changes in current financial resources (revenues and expenditures), and current available resources.

Fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all governmental funds. A statement of revenues, expenditures, and changes in fund balances – budget and actual is provided for the District’s General Fund. Fund financial statements provide more detailed information about the District’s activities. Individual funds are established by the District to track revenues that are restricted to certain uses or to comply with legal requirements.

The government-wide financial statements and the fund financial statements provide different pictures of the District. The government-wide financial statements provide an overall picture of the District’s financial standing. These statements are comparable to private-sector companies and give a good understanding of the District’s overall financial health and how the District paid for the various activities, or functions, provided by the District. All assets of the District,  including land, buildings and improvements, and infrastructure are reported in the statement of net position. All liabilities, including principal outstanding on bonds are included. The statement of activities includes depreciation on all long lived assets of the District, but transactions between the different functions of the District have been eliminated in order to avoid “doubling up” the revenues and expenses. The fund financial statements provide a  picture of the major funds of the District. In the case of governmental activities, outlays for long lived assets are reported as expenditures and long-term liabilities, such as general obligation bonds, are not included in the fund financial statements. To provide a link from the  fund financial statements to the government-wide financial statements, a reconciliation is provided from the fund financial statements to the government-wide financial statements.

Notes to financial statements provide additional detail concerning the financial activities and financial balances of the District. Additional information about the accounting practices of the District, investments of the District, capital assets and long-term debt are some of the items included in the notes to financial statements.

Financial Highlights

The following are the highlights of financial activity for the year ended September 30, 2017.

The District’s total assets exceeded total liabilities by $1,653,502 (net position). Unrestricted net position for Governmental Activities was $108,495. Net Investment in Capital Assets was $1,154,541. Restricted net position was $390,466.

Governmental activities revenues totaled $634,177 while governmental activities expenses totaled $596,952.

Financial Analysis of the District

The following schedule provides a summary of the assets, liabilities and net position of the District and is presented by category for comparison purposes.

Net Position

Governmental Activities
	 	2017		 	2016		
Current assets	$	421,932	$	431,888	
Restricted assets	300,721	283,500	
Capital assets	4,422,918	4,544,643	
Deferred amount on refunding	 	32,268 	 	34,361 	
Total Assets and Deferred Outflows	 	5,177,839 	 	5,294,392 	
Current liabilities	227,683	224,596	
Non-current liabilities	 	3,296,654 	 	3,453,519 	
Total Liabilities	 	3,524,337 	 	3,678,115 	
Net investment in capital assets	1,154,541	1,126,775	
Restricted debt dervice	81,629	62,425	
Restricted capital projects	308,837	321,746	
Net position - unrestricted	 	108,495 	 	105,331 	
Total Net Position	$ 1,653,502	$ 1,616,277	

The decrease in capital assets is the result of current year depreciation.

The decrease in total liabilities is primarily related to principal payments on the bonds outstanding.

Financial Analysis of the District (Continued)

The following schedule provides a summary of the changes in net position of the District and is presented by category for comparison purposes.

Change In Net Position

Governmental Activities

 	2017	 	2016	
Program Revenues

Charges for services General Revenues

$	633,106	$

630,332

Investment earnings	1,071	89	
Miscellaneous revenues	 	- 	 	8,750 	
Total Revenues	 	634,177 	 	639,171 	

Expenses			
General government	111,203	102,134	
Physical environment	326,739	309,667	
Interest on long-term debt	 	159,010 	 	163,095 	
Total Expenses	 	596,952 	 	574,896 	
Change in Net Position	37,225	64,275	
Net Position - Beginning of Year	 	1,616,277 	 	1,552,002 	
Net Position - End of Year	  $	1,653,502 	  $	1,616,277 	

The increase in physical environment expenses is mostly attributable to an increase in repairs and maintenance fees at the fund level.

Capital Assets Activity

The following schedule provides a summary of the District’s capital assets as of September 30, 2017 and 2016.

Governmental Activities
 	Description		 	2017		 	2016		
Land	$	3,245,141	$	3,245,141	
Improvements	631,768	631,768	
Infrastructure	2,145,239	2,145,239	
Accumulated depreciation	 	(1,599,230)	 	(1,477,505)	

Total Capital Assets (Net)

  $	4,422,918 

  $	4,544,643 

 	

The activity for the year consisted of $121,725 in depreciation.

General Fund Budgetary Highlights

Actual governmental expenditures were less than final budgeted amounts primarily due to lower landscape maintenance and attorney fees than were anticipated in the approved budget.

There were no budget amendments in the current year.

Debt Management

Governmental Activities debt includes the following:

In March 2013, the District issued $4,180,000 Series 2013 Special Assessment Refunding Bonds. These bonds were issued to refund the Series 2002 Special Assessment Revenue Bonds for the District. The balance outstanding at September 30, 2017 was $3,505,000.

Economic Factors and Next Year’s Budget

The District does not expect any economic factors to have any significant effect on the financial position or results of operations of the District in fiscal year 2018.

Request for Information

The financial report is designed to provide a general overview of Narcoossee Community Development District finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Narcoossee Community Development District, Governmental Management Services, 135
W. Central Blvd, Suite 320, Orlando, FL 32801.

Narcoosee Community Development District	
STATEMENT OF NET POSITION		
September 30, 2017		
	Governmental	
	Activities	
ASSETS		
Current Assets		
Cash	$	371,224	
Investments	26,025	
Prepaid items	 	24,683 	
Total Current Assets	 	421,932 	
Non-current Assets		
Restricted assets		
Investments	300,721	
Capital assets, not being depreciated		
Land	3,245,141	
Capital assets, being depreciated		
Infrastructure	2,145,239	
Improvements	631,768	
Less: accumulated depreciation	 	(1,599,230)	
Total Non-current Assets	 	4,723,639 	
Total Assets	5,145,571	
Deferred Outflows of Resources		
Deferred amount on refunding	 	32,268 	
Total Assets and Deferred Outflows of Resources	 	5,177,839 	

LIABILITIES		
Current Liabilities		
Accounts payable and accrued expenses	4,600	
Accrued interest	63,083	
Bonds payable - current portion	 	160,000 	
Total Current Liabilities	 	227,683 	
Non-current liabilities		
Bonds payable	 	3,296,654 	
Total Liabilities	 	3,524,337 	
NET POSITION		
Net investment in capital assets	1,154,541	
Restricted debt service	81,629	
Restricted capital projects	308,837	
Unrestricted	 	108,495 	
Total Net Position	  $	1,653,502 	

Narcoossee Community Development District	
STATEMENT OF ACTIVITIES	
For the Year Ended September 30, 2017	
					
Net (Expense)	
					Revenues and	
			Program		Changes in	
			Revenues		Net Position	

Functions/Programs	
Expenses		Charges for
Services		Governmental
Activities	
Governmental Activities						
General government	$	(111,203)		$	117,938		$	6,735	
Physical environment	(326,739)		346,528		19,789	
Interest on long-term debt	 	(159,010)		 	168,640 		 	9,630 	
Total Governmental Activities	  $	(596,952)		  $	633,106 		36,154	

General revenues:			
	Investment earnings		 	1,071 	
	Change in Net Position		37,225	
	Net Position - October 1, 2016		 	1,616,277 	
	Net Position - September 30, 2017		  $	1,653,502 	

Narcoossee Community Development District	
BALANCE SHEET	
GOVERNMENTAL FUNDS	
September 30, 2017	
							Total	
			Debt		Capital		Governmental	
ASSETS	General		Service		Projects		Funds	

Cash	
$ 62,387		
$	-		
$ 308,837		
$	371,224	
Investments, at fair value	26,025		-		-		26,025	
Prepaid items	24,683		-		-		24,683	
Restricted assets								
Investments, at fair value	 	- 		     300,721 		 	- 		300,721	
Total Assets	$ 113,095		$ 300,721		$ 308,837		$	722,653	

LIABILITIES AND FUND BALANCES								
LIABILITIES								
Accounts payable and accrued expenses	  $	4,600 		  $	- 		  $	- 		$	4,600	

FUND BALANCES								
Nonspendable								
Prepaids	24,683		-		-		24,683	
Restricted								
Debt service	-		300,721		-		300,721	
Capital projects	-		-		308,837		308,837	
Unassigned	83,812		-		-		83,812	

Total Fund Balances	
108,495		
300,721		
308,837		
718,053	

Total Liabilities and Fund Balances	
  $ 113,095 		
   $300,721 		
   $ 308,837 		
  $	722,653 	

See accompanying notes.
- 10 -

Narcoossee Community Development District		
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES	
TO NET POSITION OF GOVERNMENTAL ACTIVITIES		
September 30, 2017		

Total Governmental Fund Balances	
$	718,053	
Amounts reported for governmental activities in the Statement of Net Position		
are different because:		
Capital assets consisting of land, $3,245,141, improvements, $631,768, and		
infrastructure, $2,145,239, net of accumulated depreciation, $(1,599,230), used in	
governmental activities are not currentfinancial resources and therefore,		
are not reported at the fund level.	4,422,918	
Deferred outflows of resources, deferred amount on refunding net, are not		
financial resources and, therefore, are not reported at the fund level.	32,268	
Long-term liabilities, including bonds payable, $(3,505,000), less bond		
discount, net $48,346, are not due and payable in the current period		
and, therefore, are not reported at the fund level.	(3,456,654)	
Accrued interest expense for long-term debt is not a current financial use,		
and therefore, is not reported at the fund level.	(63,083)	

Net Position of Governmental Activities	
  $	1,653,502 	

Narcoossee Community Development District	
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -	
GOVERNMENTAL FUNDS	
For the Year Ended September 30, 2017	
							
Totals	
			Debt		Capital		Governmental	
	General		Service		Projects		Funds	
Revenues								
Special assessments	$	306,303		$	326,803		$	-		$	633,106	
Investment earnings	136		902		33		1,071	
Total Revenues	306,439		327,705		33		634,177	

Expenditures								
Current								
General government	111,203		-		-		111,203	
Physical environment	169,386		-		35,628		205,014	
Debt service								
Principal	-		155,000		-		155,000	
Interest	-		155,484		-		155,484	
Total Expenditures	280,589		310,484		35,628		626,701	

Excess of revenues over/(under)								
expenditures	25,850		17,221		(35,595)		7,476	

Other financing sources/(uses)								
Transfers in	-		-		22,696		22,696	
Transfers out	(22,696)		-		-		(22,696)	

Total other financing sources/(uses)	
(22,696)		
-		
22,696		
-	

Net change in fund balances	
3,154		
17,221		
(12,899)		
7,476	
Fund Balances - October 1, 2016	105,341		283,500		321,736		710,577	

Fund Balances - September 30, 2017	
$	108,495		
$	300,721		
$	308,837		
$	718,053	

Narcoossee Community Development District		
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND	
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE		
STATEMENT OF ACTIVITIES		
For the Year Ended September 30, 2017		

Net Change in Fund Balances - Total Governmental Funds	
$	7,476	
Amounts reported for governmental activities in the Statement of Activities are		
different because:		
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 depreciation. This is the amount of depreciation in the current period.	(121,725)	
The deferred amount on refunding is amortized in the Statement of Activities, but		
not in the governmental funds. This is the amount of current year amortization.	(2,093)	
Repayment of bond principal is an expenditure in the governmental funds,		
but the repayment reduces long-term liabilities in the Statement of Net Position.	155,000	
Governmental funds report bond discounts as expenditures. However, in the		
Statement of Activities, the cost is amortized as interest. This is the amount of		
amortization in the current year.	(3,135)	
In the statement of activities, interest is accrued on outstanding bonds; whereas		
in governmental funds, interest expenditures are reported when due. This is		
the net amount between the prior year and the current year accruals.	 	1,702 	
Change in Net Position of Governmental Activities	$	37,225	

Narcoossee Community Development District	
STATEMENT OF REVENUES, EXPENDITURES AND	
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL	
GENERAL FUND	
For the Year Ended September 30, 2017	
							
Variance	
	Original		Final				Favorable	
	Budget		Budget		Actual		(Unfavorable)	
Revenues								
Special assessments	$ 297,263		$ 297,263		$ 306,303		$	9,040	
Investment earnings	-		-		136		136	
Total Revenues	297,263		297,263		306,439		9,176	

Expenditures								
Current								
General government	119,069		119,069		111,203		7,866	
Physical environment	178,194		178,194		169,386		8,808	
Total Expenditures	297,263		297,263		280,589		16,674	

Excess of revenues over/(under)								
expenditures	-		-		25,850		25,850	

Other financing sources/(uses)								
Transfers out	(22,696)		(22,696)		(22,696)		-	

Net change in fund balances	
(22,696)		
(22,696)		
3,154		
25,850	
Fund Balances - October 1, 2016	22,696		22,696		105,341		82,645	

Fund Balances - September 30, 2017	
   $	- 		
   $	- 		
  $ 108,495 		
   $	108,495 	

See accompanying notes.

The financial statements of Narcoossee Community Development District (the “District”) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District's more significant accounting policies are described below.

Reporting Entity

The District was established on March 4, 2002 by an ordinance of the City of Orlando, Florida, under the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the "Act"), as a Community Development District. The  District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of the infrastructure necessary for community development within its jurisdiction. The District is governed by a five-member Board of Supervisors, who are elected for terms of four years. The District operates within the criteria established by Chapter 190. The Board has the 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, and financing improvements.

The reporting entity for the District includes all functions of government in which the District’s Board exercises oversight responsibility. Oversight responsibility includes, but is not limited to, financial interdependency, designation of management, significant ability to influence operations and accountability for fiscal matters. As required by GAAP, these financial statements present the Narcoossee Community Development District (the primary government) as a stand-alone government.

Based upon the application of the above-mentioned criteria as set forth by the Governmental Accounting Standards Board, the District has identified no component units.

Measurement Focus and Basis of Accounting

The basic financial statements of the District are composed of the following:
Government-wide financial statements
Fund financial statements
Notes to financial statements

Government-wide Financial Statements

Government-wide financial statements report all non-fiduciary information about the reporting government as a whole. These statements include the governmental activities of the primary government. The effect of interfund activity has been removed from these statements.

Governmental activities are supported by special assessments, miscellaneous revenues and interest. Program revenues include charges for services, and payments made by parties outside of the reporting government’s citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program.

Amounts paid to acquire capital assets are capitalized as assets, rather than reported as an expenditure. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source.

Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure.

Fund Financial Statements

The underlying accounting system of the District is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Fund financial statements for the primary government’s governmental funds are presented after the government-wide financial statements. These statements display information about major funds individually.

b. Fund Financial Statements (Continued) Governmental Funds
The District has implemented the Governmental Accounting Standards Board Statement 54 – Fund Balance Reporting and Governmental Fund Type Definitions. The Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.

The District has various policies governing the fund balance classifications.

Nonspendable Fund Balance – This classification consists of amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact.

Restricted Fund Balance – This classification includes amounts that can be spent only for specific purposes stipulated by the state constitution, external resource providers, or through enabling legislation.

Assigned Fund Balance – This classification consists of the Board of Supervisors’ intent to be used for specific purposes, but are neither restricted nor committed. The assigned fund balances can also be assigned by the District’s management company.

Unassigned Fund Balance – This classification is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications. Unassigned fund balance is considered to be utilized first when expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

Fund Balance Spending Hierarchy – For all governmental funds except special revenue funds, when restricted, committed, assigned, and unassigned fund balances are combined in a fund, qualified expenditures are paid first from restricted or committed fund balance, as appropriate, then assigned and finally unassigned fund balances.

Measurement Focus and Basis of Accounting (Continued)

b. Fund Financial Statements (Continued) Governmental Funds (Continued)
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are considered to be available when they are collected within the current period or soon 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.

Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Interest associated with the current fiscal period is considered to be an accrual item and so has been recognized as revenue of the current fiscal period.

Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported  fund balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability.

Debt service expenditures are recorded only when payment is due.

Basis of Presentation

Governmental Major Funds

General Fund – The General Fund is the District’s primary operating fund. It accounts  for all financial resources of the general government, except those required to be accounted for in another fund.

Basis of Presentation (Continued)

Governmental Major Funds (Continued)

Debt Service Fund – Accounts for debt service requirements to retire certain special assessment refunding bonds which were used to finance the construction of District infrastructure improvements and finance certain additional improvements. The bond series is secured by a pledge of debt service special assessment revenues in any fiscal year related to the improvements. A lien is placed on all benefited land in relationship to the debt outstanding.

Capital Projects Fund – The Capital Project Fund accounts for the construction of infrastructure improvements within the boundaries of the district.

Non-current Governmental Assets/Liabilities

GASB Statement 34 requires that non-current governmental assets, such as land and buildings, and non-current governmental liabilities, such as special assessment bonds, be reported in the governmental activities column in the government-wide statement of net position.

Assets, Liabilities and Net Position or Equity

Cash and Investments

Florida Statutes require state and local governmental units to deposit monies with financial institutions classified as "Qualified Public Depositories," a multiple financial institution pool whereby groups of securities pledged by the various financial institutions provide common collateral from their deposits of public funds. This pool is provided as additional insurance to the federal depository insurance and allows for additional assessments against the member institutions, providing full insurance for public deposits.

Assets, Liabilities and Net Position or Equity (Continued)

Cash and Investments (Continued)

The District is authorized to invest in those financial instruments as established by Section 218.415, Florida Statutes. The authorized investments consist of:

Direct obligations of the United States Treasury;

The Local Government Surplus Funds Trust or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperative Act of 1969;

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

Securities and Exchange Commission, registered money market funds with the highest credit quality rating from a nationally recognized rating agency.

Cash equivalents include time deposits and certificates of deposit with original maturities of three months or less and held in a qualified public depository as defined by Florida Statute 280.02.

Restricted Net Position

Certain net position of the District are classified as restricted on the statement of net position because their use is limited either by law through constitutional provisions or enabling legislation; or by restrictions imposed externally by creditors. In a fund  with both restricted and unrestricted net position, qualified expenses are considered to be paid first from restricted net position and then from unrestricted net position.

Capital Assets

Capital assets, which include land and infrastructure, are reported in the applicable governmental activities column.

The District defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of one year. The valuation basis for all assets is historical cost.

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

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4. Assets, Liabilities and Net Position or Equity (Continued)

Capital Assets (Continued)

Major outlays for capital assets and improvements are capitalized as projects are constructed.

Depreciation of capital assets is computed and recorded by utilizing the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows:

Improvements:	10-30 years
Infrastructure:	10-30 years

Deferred Outflow of Resources

Deferred outflows of resources represent a consumption of net position/fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District only has one item that qualifies for reporting in this category. It is the deferred amount on refunding reported on the Statement of Net Position. A deferred amount on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

Unamortized Bond Discount

Bond discounts are presented on the government-wide financial statements. The costs are amortized over the life of the bonds using the method of accounting. For financial reporting, the unamortized bond discount is netted against the applicable long-term debt.

Budgets

Budgets are prepared and adopted after public hearings for the governmental funds, pursuant to Chapter 190, Florida Statutes. The District utilizes the same basis of accounting for budgets as it does for revenues and expenditures in its various funds. The legal level of budgetary control is at the fund level. All budgeted appropriations lapse at year end. Formal budgets are adopted for the general and debt service funds. As a result, deficits in the budget variance columns of the accompanying financial statements may occur.

NOTE	B	–		RECONCILIATION	OF	GOVERNMENT-WIDE	AND	FUND	FINANCIAL STATEMENTS

Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Position

“Total fund balances” of the District’s governmental funds ($718,053) differs from “net position” of governmental activities ($1,653,502) reported in the Statement of Net Position. This difference primarily results from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental fund balance sheet. The effect of the differences is illustrated below.

Capital related items

When capital assets (property, plant and equipment that are to be used in governmental activities) are purchased or constructed, the cost of those assets is reported as expenditures in governmental funds. However, the Statement of Net Position included those capital assets among the assets of the District as a whole.

Land	$	3,245,141	
Improvements	631,768	
Infrastructure	2,145,239	
Accumulated depreciation	 	(1,599,230)	
Total	$	4,422,918	

Deferred outflows of resources

Deferred amounts in refunding, net is not a current financial resource and, therefore, is not reported in the funds.

Deferred amount on refunding	 $	32,268

Long-term debt transactions

Long-term liabilities applicable to the District’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities.  All liabilities (both current and long-term) are reported in the Statement of Net Position. Balances at September 30, 2017 were:

Bonds payable				$	(3,505,000)	
Bond discount, net				 	48,346 	
Total

Accrued interest				$	(3,456,654)	
Accrued liabilities in the Statement	of	Net	Position	differ from the amount reported in	
governmental funds due to accrued interest on bonds.

Accrued interest on bonds payable	$	(63,083)

NOTE	B	–		RECONCILIATION	OF	GOVERNMENT-WIDE	AND	FUND	FINANCIAL STATEMENTS (CONTINUED)

Explanation of Differences Between the Governmental Fund Operating Statements and the Statement of Activities

The “net change in fund balances” for government funds ($7,476) differs from the “change in net position” for governmental activities ($37,225) reported in the Statement of Activities. The differences arise primarily from the long-term economic focus of the Statement of Activities versus the current financial resources focus of the governmental funds. The effect of the differences is illustrated below.

Capital related items

When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation. As a result, fund balances decrease by the amount of financial resources expended, whereas net position decrease by the amount of depreciation charged for the year.

Depreciation	$	(121,725)

Deferred outflows of resources

The deferred amount on refunding is amortized in the Statement of Activities, but not in governmental funds. This is the amount of current year amortization.

Deferred amount on refunding amortization	$	(2,093)

Long-term debt transactions

Repayments of bond principal are reported as an expenditure in the governmental funds and, thus, have the effect of reducing fund balance because current financial resources have been used.

Debt principal payments	$	155,000	
Bond discount amortization	 	(3,135)	
Total	$	151,865	

Some expenses reported in the Statement of Activities do not require the use of current financial resources, therefore, are not reported as expenditures in governmental funds.

Net change in accrued interest payable	$	1,702

NOTE C – CASH AND INVESTMENTS

All deposits are held in qualified public depositories and are included on the accompanying balance sheet as cash and investments.

Custodial Credit Risk – Deposits

Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a formal deposit policy for custodial credit risk; however, they follow the provisions of Chapter 280, Florida Statutes regarding deposits and investments. As of September 30, 2017, the District's bank balance was $371,407 and the carrying value was $371,224. The District maintains all deposits in a qualified public depository in accordance with the provisions of Chapter 280, Florida Statutes, which means that all deposits are fully insured by Federal Depositors Insurance or collateralized under Chapter 280, Florida Statutes.

As of September 30, 2017, the District had the following investments and maturities:

Investment	Maturities	Fair Value

First American Government
Obligation Fund	23 days*

  $	326,746 

*Maturity is a weighted average maturity.

The District categorizes its fair value measurement 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 uses a market approach in measuring fair value that uses prices and other relevant information generated by market transactions involving identical or similar assets, liabilities, or groups of assets and liabilities.

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 investment listed above is a level 1 asset. Interest Rate Risk
The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

NOTE C – CASH AND INVESTMENTS (CONTINUED)

Credit Risk

The District's investments are limited by state statutory requirements and bond  compliance. The District has no investment policy that would further limit its investment choices. As of September 30, 2017, the District's investment in First American Government Obligation Fund was rated AAAm by Standards & Poors.

Concentration of Credit Risk

The District places no limit on the amount it may invest in any one investment. The investment in the First American Government Obligation is 100% of the District’s total investments.

The types of deposits and investments and their level of risk exposure as of September 30, 2017 were typical of these items during the fiscal year then ended. The District considers any decline in fair value for certain investments to be temporary.

NOTE D – SPECIAL ASSESSMENT REVENUES

Assessments are non-ad valorem assessments on benefitted property within the District. Operating and Maintenance Assessments are based upon adopted budget and levied annually. Debt Service Assessments are levied when bonds are issued and collected annually. The District may collect assessments directly or utilize the uniform method of collection (Chapter 197.3632, Florida Statutes). Direct collected assessments are due as determined by annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the uniform method are mailed by County Tax Collector on November 1 and due on or before March 31 of each year. Property owners may prepay a portion or all of the Debt Service Assessments on their property subject to various provisions in the bond documents.

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.

NOTE E – CAPITAL ASSETS

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

Governmental Activities:
Capital assets, not being depreciated:

Beginning	Ending
 	Balance	 Additions	 Deletions 	Balance	

Land	 $ 3,245,141     $	-     $	- $ 3,245,141 

Capital assets, being depreciated:
Improvements	631,768	-	-	631,768	
Infrastucture	 	2,145,239 	 	- 	- 	2,145,239 	
Total Capital Assets, Being Depreciated	2,777,007	-	-	2,777,007	
Less accumulated depreciation	 	(1,477,505)	 	(121,725) 	- 	(1,599,230)	
Total Capital Assets Depreciated, Net	 	1,299,502 	 	(121,725) 	- 	1,177,777 	
Governmental Activities Capital Assets	  $ 4,544,643 	  $ (121,725)    $	- $ 4,422,918 	

Depreciation of $121,725 was charged to physical environment.

NOTE F – LONG-TERM DEBT		
The following is a summary of activity for long-term debt September 30, 2017:	of	the	District for the year ended	
Long-term debt at October 1, 2016			$	3,660,000	
Principal payments			 	(155,000)	
Long-term debt at September 30, 2017			$	3,505,000 	
$4,180,000 Series 2013 Special Assessment Refunding				
Bonds due in annual installments beginning May 2014 and				
maturing May 2033. Interest from 5.125% to 5.625% is due				
in May and November starting May 2013.			$	3,505,000	
Bond Discount, Net			 	(48,346)	
Bonds Payable, Net			$	3,456,654	

NOTE F – LONG-TERM DEBT (CONTINUED)

The annual requirements to amortize the principal and interest of bonded debt outstanding as of September 30, 2017 are as follows:

Year Ending
    September 30,		
 	Principal		
 	Interest		
 	Total		
2018	$	160,000	$	150,961	$	310,961	
2019	165,000	145,780	310,780	
2020	175,000	140,174	315,174	
2021	175,000	133,861	308,861	
2022	185,000	127,236	312,236	
2023-2027	1,040,000	504,673	1,544,673	
2028-2032	1,310,000	243,087	1,553,087	
2033	 	295,000 	 	10,972 	 	305,972 	
Totals	  $	3,505,000 	  $	1,456,744 	  $	4,961,744 	

Summary of Significant Bonds Resolution Terms and Covenants
The District levies special assessments pursuant to Section 190.022, Florida Statutes and the assessment rolls are approved by resolutions of the District Board. The collections are to be strictly accounted for and applied to the debt service of the bond series for which they were levied. The District covenants to levy special assessments in annual amounts adequate to provide for payment of principal and interest on the bonds. Payment of principal and interest is dependent on the money available in the debt service fund and the District’s ability to collect special assessments levied.

The Bonds are subject to redemption at the option of the District and are also subject to extraordinary mandatory redemption prior to maturity as outlined in the Bond Indenture.

The bond resolution and the trust indenture provide for the establishment of certain accounts. The accounts include a construction, revenue, redemption, reserve, interest and prepayment account and are maintained by a trustee.

The bond indenture provides for Debt Service Reserve Funds, which shall be held by the Trustee separate and apart from all other funds. The following is a schedule of reserve requirements and balances in the reserve accounts at September 30, 2017:

Reserve	Reserve
 	Balance		 Requirement 
Series 2013	 $   156,009	 $	156,009 

NOTE G – RISK MANAGEMENT
The government is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance.

.....o,,

��tt Berger, Toombs, Elam, Gaines & Frank
Certified Public Accountants	PL
600 Citrus Avenue
Suite 200
Fort Pierce, Florida 34950
7721461-6120 II 461-1155
FAX: 7721468-9278

RINEDPEO

PRETNINDGENATNDAUODNITCOORM'SPLRIEAPNOCRETAONND IONTHEERRNAMLACTOTENRTSROBLASOEVDERONFINAANNACUIADLIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

Orange County, Florida

TNoartchoeoBssoeaerdCoofmSmupuenrivtyisDoresvelopment District

September 30, 2017, and the related notes to the financial statements, and have issued our

Auditing  Standards  is ued by the  Comptroller  General  of the  United States, th	financial

WStaetehsavoef aAumdeiteridca,  inanadccthoerdasntacnedawridths tahpepalicuadbitliengtostfainadnacrdiasl gaeundeitrsalclyonatcacineepdtedin inGothveernUmnietendt statements of Narcoossee Community Development District, as of and for the year ended
report thereon dated June 3, 2018.
Internal Control Over Financial Reporting

Community Development District' internal control. Accordingly, we do not express an pinion

appropriate in the circumstance	for the purpose of expressing our op nions on the financial

DInisptrliacnt'sniningtearnadl pceornfotrroml iongveroufirnanucdiiat,l wreepocrotingidteoreddetNeramrcinoeostsheee aCuodmit mpruoncietyduDresvetlhoaptmaernet statements, but not for the purpose of expressing an opinion on the effectiveness of Narcoossee

financial reporting.

on the effectiveness of Narcoossee Community Development District's internal control over

management or employees, in the normal course of performing their assigned functions, to

A deficiency in internal control exists when the design or operation of a control	oes not allow

combination of deficiencies, in internal c	trol that is less se	than a material weakness, yet

deficiency,  or  combination  of  deficiencies,  in internal  control,  such that there  is  a  reasonable

prevent,  or  detect  and correct misstat  me s on	timely basis. A material weakness is a oprosdseibteilictytetdhaatnadmcaotrerericatlemd isosntaatemtimenetlyofbtahseise. ntiAty'ssigfinnaifniccaianlt sdtaetfeicmieennctys wisillanodtebficeiepnrecvye, notreda,
important enough to merit attention by those charged with governance.

consider to be material weaknesses. However, material weaknesses may exist that have not

in	ternal control that might be material weaknesses or significant deficie cies. . Given thes

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Fort P�e�c§ I_Stuart

Member AICPA

Member AICPA Division For CPA Firms

Member FICPA

��ti Berger, Toombs, Elam,

,OJ Gaines & Frank

NBoaarcrodoosfsSeuepCeorvmismorusnity Development District
Compliance and Other Matters

District's financial statements are free of material misstatement, we performed tests of its

As part of obtaining reasonable assu ance about whether Narcoossee Community Development

noncompliance with which could have a direct and material effect on the determination of

provisions  was  not  an  objective  of  our  audit,  and  accordingly,  we  do  not  express  such  an

c	pliance with certain provisions of laws, regulations, contracts, and grant agreements, financ al statement amounts.	However,   providing  an  opinion  on  compliance  with  t ose
oarpeinrieoqnu. iTrehde troesbueltrsepoof roteudr tuensdtserdGisocvloesrnedmneont iAnsutdainticnegsSotaf nndoanrcdosm.  pliance or other matters that
Purpose of this Report

compliance and the results of that testing, and not to provide an opinion on the effectiveness of

The purpose of t s report is solely to describe the scope of our testing of internal control and

(i()IPvJ{)(ffl/otY2

J/4t)vL

performed in accordance with Government Auditing Standards in considering the entity's

the entity's  internal  control  or on compliance.	This report is an integral part of an audit iP.nUterprnoasle.control and  compliance.  Accordingly,  this communication is  not suitable for any other

Certified Public Accountants

BergerO, TiJoomtubiuJs,  Elam4, GJainiLesd/VJ& Frank Fort Pierce, Florida
June 3, 2018

- 29-

....ry

��ti Berger, Toombs, Elam, Gaines & Frank
Certified Public Accountants	PL
600 Citrus Avenue
Suite 200
Fort Pierce, Florida 34950
7721461-6120 II 461-1155
FAX: 7721468-9278

MANAGEMENT LETTER

Orange County, Florida

TNoartchoeoBssoeaerdCoofmSmupuenrivtyisDoresvelopment District
Report on the Financial Statements

June 3, 2018.

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Auditor's Responsibility

States;   the   standards   applicable   to   financial   audits   contained   in   Government   Auditing

We conducted our	dit in accordance with auditing standards generally accepted in the United oSftathnedaFrldosri,diassAuuedditobry GtheeneCroaml. ptroller General of the  United States and Chapter 10.550,  Rules
Other Reporting Requirements

and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in

Aexcacmoridnaticoen wcoitnhdGucotveedrninmaecnctoArduadnitcinegwSitthandards and our Independent Auditor's Report on an

We have issued our Independent Auditor' Report on Internal Control over Financial Reporting

General. Disclosures in those reports, which are dated June 3, 2018, should be considered in

regarding  compliance  requirements  in  accoAr/dCaPnAcePwroitfhesCsihoanpatlesrS1t0a.n5d5a0r,dsR, uAleTs-CofStehcetioAnud3i1to5r, conjunction with this Management Letter.
Prior Audit Findings

corrective actions have been taken to address findings and recommendations made in the

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Section 10.554(1)(i)1. , Rul s of th Auditor General, requires that we determine wheth or not apuredcite. ding financial audit report.   There were no findings or recommendations in the preceding Financial Condition and Management

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Member AICPA

Fort Pierce I Stuart

- 30 -

Member AICPA Division For CPA Firms Private Companies Practice Section

Member FICPA

 	

��ti

Be'.ger, Toombs, Elam,
....o,,  Gaines &  Frank
Cl!J(lrl..dPublic.,\an,.,nl.anb PL

TNoartchoeoBssoeaerdCoofmSmupuenrivtyisDoresvelopment District

is management's responsibility to monitor th	Narcoossee Community Development District'

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made by management and the review of the financial information provided by the same as of

financial condition; our financial condition assessment was based in part on the representations September 30, 2017.

have any such recommendations.

rSeeccotmionme1n0d.a5t5io4n(1s)(tio)2i.m,  pRrouvleesfinoaf ntchiael AmuadniatogremGeennte. raIln,
Annual Financial Report

croenqnueirectsionthwatithwoeurcoamudmitu, nwiceatdeid annoyt

these two reports were in agreement.

appropriate  procedures  and  communicate  the  results  of  our  determination  as  to  whether  the

ended September 30, 2017, filed with the Florida Department of Financial Services pursuant to

Section 10. 554(1)(i)5.b.  and 10.556(7),  Rul  of  the Auditor Gener l,  require us to apply  a nual financial report for the Narcooss Community Developme t District for the fiscal year tSheectfiiosnca2l 1y8e.a3r2(e1n)(dae)d,  FSloerpidteamSbteartu3te0s, , 2is01in7.agInreceomnennetctwioitnh wthiteh aonunruaudfinit,anwceialdaeutedrimt rienpedortthfoart
Additional Matters

audit, we did not note any such findings.

or are likely to have occurred,	at have an effect on the financial statements that is less than

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Purpose of this Letter
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these specified parties.

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Fort Pierce, Florida

CBergtifeier,dTPouobmlibcsA, cEclaomun, tGanatisnePsL& Frank June 3, 2018

- 31 -

.....o,,

��tt Berger, Toombs, Elam, Gaines & Frank
Certified Public Accountants	PL
600 Citrus Avenue
Suite 200
Fort Pierce, Florida 34950
7721461-6120 II 461-1155
FAX: 7721468-9278

INDEPWEINTHDESNETCTAICOCNO2U1N8.T4A15N,TF'SLORREIPDOARSTT/CAOTUMTPELSIANCE

Orange County, Florida

TNoartchoeoBssoeaerdCoofmSmupuenrivtyisDoresvelopment District

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DenedvedopSmeepnttemDbisetr ct3's0,co2m01p7li.anMceanwaigthemSeencttioins

requirements.	Our responsibility is to express an opinion on

sponsible  for  Narcoossee  Community	Development District's Development District's compliance based on our examination.

Ncoamrcpoloiasnscee

wCiothmmthuonsitey

est  basis,	idence  about  Narcoo	ee  Community  Developm  nt  District's  compliance  with

those requirements and performing such other procedures as we considered necessary in the

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Certified Public Accountants PL

Fort Pierce, Florida June 3, 2018

Fort P-ier3c2e I-Stuart
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