Narcoossee Community Development District ANNUAL FINANCIAL REPORT September 30, 2023 Narcoossee Community Development District ANNUAL FINANCIAL REPORT September 30, 2023 TABLE OF CONTENTS Page Number REPORT OF INDEPENDENT AUDITORS 1-3 MANAGEMENT’S DISCUSSION AND ANALYSIS 4-9 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements Statement of Net Position 10 Statement of Activities 11 Fund Financial Statements: Balance Sheet – Governmental Funds 12 Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities 13 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 14 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 15 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund 16 Notes to Financial Statements 17-30 INDEPENDENT AUDITORS’ 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 31-32 MANAGEMENT LETTER 33-35 INDEPENDENT ACCOUNTANTS’ REPORT/COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES 36 REPORT OF INDEPENDENT AUDITORS To the Board of Supervisors Narcoossee Community Development District Orlando, Florida Report on Audit of the Financial Statements Opinion We have audited the financial statements of the governmental activities and each major fund of Narcoossee Community Development District (the “District”), as of and for the year ended September 30, 2023, and the related notes to financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Narcoossee Community Development District as of September 30, 2023, and the respective changes in financial position and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for 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. To the Board of Supervisors Narcoossee Community Development District In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for one year beyond the financial statement date, including currently known information that may raise substantial doubt thereafter. Auditor’s Responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore, is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 District’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgement, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. To the Board of Supervisors Narcoossee Community Development District Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 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 19, 2024 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations and contracts. 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 effectiveness of the District’s 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 Narcoossee Community Development District’s internal control over financial reporting and compliance. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida March 19, 2024 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. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) 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 capital assets 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, 2023. . The District’s total assets and deferred outflows of resources exceeded total liabilities by $2,192,651 (net position). Unrestricted net position for Governmental Activities was $447,725. Net investment in capital assets was $1,520,193. Restricted net position was $224,733. . Governmental activities revenues totaled $776,402 while governmental activities expenses totaled $659,532. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Financial Analysis of the District The following schedule provides a summary of the assets, liabilities and net position of the District and is presented by category for comparison purposes. Net Position The increase in current assets is mainly related to the increase in due from other governments in the current year. 20232022Current assets480,634$ 432,742$ Restricted assets396,605 390,671 Capital assets 3,770,338 3,895,623 Total Assets 4,647,577 4,719,036 Deferred outflows of resources 19,710 21,803 Current liabilities 249,172 242,729 Non-current liabilities 2,225,464 2,422,329 Total Liabilities 2,474,636 2,665,058 Net investment in capital assets 1,520,193 1,460,706 Restricted debt service 224,733 187,166 Net position - unrestricted 447,725 427,909 Total Net Position $ 2,192,651 $ 2,075,781 Governmental Activities 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. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) 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 The increase in charges for services is related to the increase in special assessments in the General Fund in the current year. 20232022Program Revenues Charges for services760,108$ 651,054$ General Revenues Investment earnings 16,294 1,284 Total Revenues 776,402 652,338 Expenses General government 130,221 111,049 Physical environment 407,585 317,616 Interest and other charges 121,726 129,395 Total Expenses 659,532 558,060 Change in Net Position 116,870 94,278 Net Position - Beginning of Year 2,075,781 1,981,503 Net Position - End of Year2,192,651$ 2,075,781$ Governmental Activities The increase in general government is related to the increase in legal fee expenses in the current year. The increase in physical environment is related to the increase in landscape maintenance expenses in the current year. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Capital Assets Activity The following schedule provides a summary of the District’s capital assets as of September 30, 2023 and 2022. The activity for the year consisted of $125,285 in depreciation. General Fund Budgetary Highlights Description20232022Land3,245,141$ 3,245,141$ Improvements720,278 720,278 Infrastructure2,145,239 2,145,239 Accumulated depreciation(2,340,320) (2,215,035) Total Capital Assets (Net)3,770,338$ 3,895,623$ Governmental Activities Actual governmental expenditures were less than final budgeted amounts primarily due to lower landscape maintenance, irrigation repairs and utilities expenditures 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, 2023 was $2,455,000. 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 2024. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) 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 - CF, LLC, 219 East Livingston Street, Orlando, Florida 32801. Narcoossee Community Development DistrictSTATEMENT OF NET POSITIONSeptember 30, 2023GovernmentalActivitiesASSETSCurrent Assets Cash $ 388,878 Investments28,487Due from other governments28,830 Prepaid items34,439 Total Current Assets480,634Non-current Assets Restricted assets Investments396,605 Capital assets,not being depreciatedLand3,245,141Capital assets, being depreciated Infrastructure2,145,239 Improvements720,278 Less: accumulated depreciation(2,340,320) Total Non-current Assets4,166,943 Total Assets4,647,577DEFERRED OUTFLOWS OF RESOURCES Deferred amount on refunding, net19,710LIABILITIESCurrent Liabilities Accounts payable and accrued expenses2,597 Accrued interest46,575 Bonds payable - current portion200,000 Total Current Liabilities249,172Non-current liabilities Bonds payable, net2,225,464 Total Liabilities2,474,636NET POSITIONNet investment in capital assets1,520,193Restricted debt service224,733Unrestricted 447,725 Total Net Position$ 2,192,651 See accompanying notes. - 10 - Narcoossee Community Development DistrictSTATEMENT OF ACTIVITIESFor the Year Ended September 30, 2023 Net (Expense) Revenues and ProgramChanges inRevenuesNet PositionCharges forGovernmental Functions/ProgramsExpensesServicesActivities Governmental Activities General government$ (130,221)$ 139,425$ 9,204 Physical environment(407,585)291,725(115,860) Interest and other charges(121,726)328,958207,232 Total Governmental Activities$ (659,532)$ 760,108100,576 General revenues: Investment earnings16,294 Change in Net Position116,870 Net Position - October 1, 20222,075,781Net Position - September 30, 2023$ 2,192,651 See accompanying notes. - 11 - Narcoossee Community Development DistrictBALANCE SHEET - GOVERNMENTAL FUNDSSeptember 30, 2023TotalDebt CapitalGovernmentalASSETSGeneralServiceProjectsFundsCash 90,145$ -$ 298,733$ 388,878$ Investments, at fair value28,487--28,487Due from other funds-17,835-17,835Due from other governments16,35312,477-28,830Prepaid items34,439--34,439Restricted assetsInvestments, at fair value-396,605-396,605Total Assets169,424$ 426,917$ 298,733$ 895,074$ LIABILITIES AND FUND BALANCESLIABILITIESAccounts payable and accrued expenses2,597$ -$ -$ 2,597$ Due to other funds17,835--17,835Total Liabilities20,432--20,432FUND BALANCESNonspendable Prepaids34,439--34,439Restricted - debt service-426,917-426,917Assigned - capital projects--298,733298,733Unassigned114,553- -114,553Total Fund Balances148,992426,917298,733874,642 Total Liabilities and Fund Balances169,424$ 426,917$ 298,733$ 895,074$ See accompanying notes. - 12 - Narcoossee Community Development DistrictRECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCESTO NET POSITION OF GOVERNMENTAL ACTIVITIESSeptember 30, 2023 Total Governmental Fund Balances$ 874,642Amounts reported for governmental activities in the Statement of Net Positionare different because: Capital assets, consisting of land, $3,245,141, improvements, $720,278, and infrastructure, $2,145,239, net of accumulated depreciation, $(2,340,320), used in governmental activities are not current financial resources andtherefore, are not reported at the fund level.3,770,338Deferred outflows of resources, deferred amount on refunding net, are not currentfinancial resources and, therefore, are not reported at the fund level.19,710Long-term liabilities, including bonds payable, $(2,455,000), less bond discount, net, $29,536, are not due and payable in the current periodand, therefore, are not reported at the fund level.(2,425,464) Accrued interest expense for long-term debt is not a current financial use, and therefore, is not reported at the fund level.(46,575) Net Position of Governmental Activities$ 2,192,651 See accompanying notes. - 13 - Narcoossee Community DevelopmentDistrictSTATEMENTOFREVENUES,EXPENDITURESAND CHANGESIN FUND BALANCES- GOVERNMENTALFUNDSForthe YearEndedSeptember30,2023 Total RevenuesSpecialassessmentsInvestmentearningsTotalRevenuesDebtGeneralService431,150$ 328,958$ 1,15915,107432,309344,065CapitalGovernmentalProjectsFunds-$ 760,108$ 2816,29428776,402ExpendituresCurrentGeneralgovernmentPhysicalenvironmentDebtservicePrincipalInterestTotalExpenditures128,397268650- - 397,047-- 190,000119,868309,8681,82413,650- - 15,474130,221282,300190,000119,868722,389Excessofrevenuesover/(under) expenditures35,26234,197(15,446)54,013Otherfinancing sources/(uses) TransfersinTransfersout- (29,695) - - 29,695- 29,695(29,695) TotalOtherFinancing Sources/(Uses)(29,695)-29,695- Netchange in fund balances5,56734,19714,24954,013Fund Balances-October1,2022143,425392,720284,484820,629Fund Balances-September30,2023148,992$ 426,917$ 298,733$ 874,642$ See accompanying notes. -14 - Narcoossee Community Development DistrictRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES ANDCHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THESTATEMENT OF ACTIVITIESFor the Year Ended September 30, 2023 Net Change in Fund Balances - Total Governmental Funds$ 54,013Amounts reported for governmental activities in the Statement of Activities aredifferent because: lives as depreciation. This is the amount of depreciation in the current period. Governmental funds report capital outlays as expenditures. However, in the Statementof Activities, the cost of those assets is allocated over their estimated useful(125,285) The deferred amount on refunding is amortized in the Statement of Activities, butnot 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.190,000Statement of Activities, the cost is amortized as interest. This is the amount ofamortization in the current year. Governmental funds report bond discounts as expenditures. However, in the (3,135) In the Statement of Activities, interest is accrued on outstanding bonds; whereasin governmental funds, interest expenditures are reported when due. This isthe net amount between the prior year and the current year accruals.3,370Change in Net Position of Governmental Activities$ 116,870 See accompanying notes.- 15 - Narcoossee Community Development DistrictSTATEMENT OF REVENUES, EXPENDITURES ANDCHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUNDFor the Year Ended September 30, 2023 Variance WithFinal BudgetOriginalFinalPositiveBudgetBudgetActual(Negative) Revenues Special assessments$ 416,242$ 416,242$ 431,150$ 14,908 Investment earnings--1,1591,159Total Revenues416,242416,242432,30916,067Expenditures CurrentGeneral government125,027125,027128,397(3,370) Physical environment291,215291,215268,65022,565Total Expenditures416,242416,242397,04719,195Excess of revenues over/(under) expenditures--35,26235,262Other Financing Sources/(Uses) Transfers out(29,695)(29,695)(29,695)- Net change in fund balances(29,695)(29,695)5,56735,262Fund Balances - October 1, 202229,69529,695143,425113,730Fund Balances - September 30, 2023$ -$ -$ 148,992$ 148,992 See accompanying notes. - 16 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. 1. 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, Florida Statutes. 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. 2. 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 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) a. Government-wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. 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. b. 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. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) 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. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. 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. 3. Basis of Presentation a. 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. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. Basis of Presentation (Continued) a. 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. b. 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. 4. Assets, Deferred Outflows of Resources, Liabilities, and Net Position or Equity a. 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. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4. Assets, Deferred Outflows of Resources, Liabilities, and Net Position or Equity (Continued) a. 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: 1. Direct obligations of the United States Treasury; 2. The Local Government Surplus Funds Trust or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperative Act of 1969; 3. Interest-bearing time deposits or savings accounts in authorized qualified public depositories; 4. 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. b. 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. c. Capital Assets Capital assets, which include land, improvements 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, Deferred Outflows of Resources, Liabilities, and Net Position or Equity (Continued) c. 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 d. 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. e. 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 straight-line method. For financial reporting, the unamortized bond discount is netted against the applicable long-term debt. f. 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 1. 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, $874,642, differs from “net position” of governmental activities, $2,192,651, 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 720,278 Infrastructure 2,145,239 Accumulated depreciation (2,340,320) Total $ 3,770,338 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, net $ 19,710 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, 2023 were: Bonds payable $ (2,455,000) Bond discount, net 29,536 Total $ (2,425,464) Accrued interest 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 $ (46,575) NOTE B – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) 2. Explanation of Differences Between the Governmental Fund Operating Statements and the Statement of Activities The “net change in fund balances” for government funds, $54,013, differs from the “change in net position” for governmental activities, $116,870, 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 $ (125,285) 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 $ 190,000 Bond discount amortization (3,135) Total $ 186,865 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 $ 3,370 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, 2023, the District's bank balance was $442,343 and the carrying value was $388,878. The District maintains all deposits in a qualified public depository in accordance with the provisions of Chapter 280, Florida Statutes, which means that all deposits are fully insured by Federal Depositors Insurance or collateralized under Chapter 280, Florida Statutes. As of September 30, 2023, the District had the following investments and maturities: The District categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The District uses a market approach in measuring fair value that uses prices and other relevant information generated by market transactions involving identical or similar assets, liabilities, or groups of assets and liabilities. Assets or liabilities are classified into one of three levels. Level 1 is the most reliable and is based on quoted price for identical assets, or liabilities, in an active market. Level 2 uses significant other observable inputs when obtaining quoted prices for identical or similar assets, or liabilities, in markets that are not active. Level 3 is the least reliable and uses significant unobservable inputs that uses the best information available under the circumstances, which includes the District's own data in measuring unobservable inputs. The investment listed above is a level 1 asset. InvestmentMaturitiesFair ValueFirst American GovernmentObligation Fund24 days*425,092$ *Maturity is a weighted average maturity. 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, 2023, the District's investment in First American Government Obligation Fund was rated AAAm by Standard & Poor’s. 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 Fund is 100% of the District’s total investments. The types of deposits and investments and their level of risk exposure as of September 30, 2023 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, 2023 was as follows: Depreciation of $125,285 was charged to physical environment. BeginningEndingBalanceAdditionsDeletionsBalanceGovernmental Activities: Capital assets, not being depreciated: Land3,245,141$ -$ -$ 3,245,141$ Capital assets, being depreciated: Improvements720,278 - - 720,278 Infrastructure2,145,239 - - 2,145,239 Total Capital Assets, Being Depreciated2,865,517 - - 2,865,517 Less accumulated depreciation (2,215,035) (125,285) - (2,340,320) Total Capital Assets Depreciated, Net650,482 (125,285) - 525,197 Governmental Activities Capital Assets3,895,623$ (125,285)$ -$ 3,770,338$ NOTE F – LONG-TERM DEBT The following is a summary of activity for long-term debt of the District for the year ended September 30, 2023: Long-term debt at October 1, 2022 $ 2,645,000 Principal payments (190,000) Long-term debt at September 30, 2023 $ 2,455,000 $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. $ 2,455,000 Bond Discount, Net (29,536) Bonds Payable, Net $ 2,425,464 NOTE F – LONG-TERM DEBT (CONTINUED) The annual requirements to amortize the principal and interest of bonded debt outstanding as of September 30, 2023 are as follows: 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. Year EndingSeptember 30,PrincipalInterestTotal2024 $ 200,000 $ 110,092 $ 310,092 2025 205,000 101,467 306,467 2026 215,000 92,295 307,295 2027 230,000 82,498 312,498 2028 240,000 72,020 312,020 2029-2033 1,365,000 182,039 1,547,039 Totals $ 2,455,000 $ 640,411 $ 3,095,411 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, 2023: ReserveReserveBalanceRequirementSeries 2013 $ 155,610 $ 155,609 NOTE G – INTERFUND ACTIVITY Transfers from the General Fund to the Capital Projects Funds were made to fund future capital project expenditures. Interfund transfers for the year ended September 30, 2023, consisted of the following: Transfers OutTransfers InGeneral FundCapital Projects Funds29,695$ NOTE H – 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. The District has obtained commercial insurance from independent third parties to mitigate the cost of these risks, coverage may not extend to all situations. Settled claims from these risks have not exceeded commercial insurance coverage over the past three years. INDEPENDENT AUDITORS’ 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 Narcoossee Community Development District Orlando, Florida We have audited, in accordance with the 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, as listed in the table of contents, of Narcoossee Community Development District, as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the basic financial statements and have issued our report thereon dated March 19, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit, we considered Narcoossee Community Development District's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Narcoossee Community Development District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Narcoossee Community Development 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 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 was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. To the Board of Supervisors Narcoossee Community Development District Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether Narcoossee Community Development District's financial statements are free of 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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida March 19, 2024 MANAGEMENT LETTER To the Board of Supervisors Narcoossee Community Development District Orlando, Florida Report on the Financial Statements We have audited the financial statements of the Narcoossee Community Development District as of and for the year ended September 30, 2023, and have issued our report thereon dated March 19, 2024. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States; 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 Florida Auditor General. Other Reporting Requirements We have issued our 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 and our Independent Auditor’s Report on an examination conducted in accordance with AICPA Professionals 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 19, 2024, 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 financial audit report. There were no findings or recommendations in the preceding audit. Financial Condition and Management Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether or not Narcoossee Community Development District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific conditions met. In connection with our audit, we determined that Narcoossee Community Development District did not meet any of the conditions described in Section 218.503(1), Florida Statutes. To the Board of Supervisors Narcoossee Community Development District Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for Narcoossee Community Development District. It is management’s responsibility to monitor the Narcoossee Community Development District’s financial condition; our financial condition assessment was based in part on the representations made by management and the review of the financial information provided by the same as of September 30, 2023. 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. Specific Information The information below was provided by management and has not been audited by us; therefore, we do not express an opinion or provide any assurance on the information. As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor General, Narcoossee Community Development District reported: 1) The total number of district employees compensated in the last pay period of the District’s fiscal year: 0 2) The total number of independent contractors to whom nonemployee compensation was paid in the last month of the District’s fiscal year: 6 3) All compensation earned by or awarded to employees, whether paid or accrued, regardless of contingency: $5,400 4) All compensation earned by or awarded to nonemployee independent contractors, whether paid or accrued, regardless of contingency: $425,083 5) Each construction project with a total cost of at least $65,000 approved by the District that is scheduled to begin on or after October 1, 2022, together with the total expenditures for such project: N/A. 6) A budget variance based on the budget adopted under Section 189.016(4), Florida Statutes, before the beginning of the fiscal year being reported if the District amends a final adopted budget under Section 189.016(6), Florida Statutes: The District did not amend the original budget. As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)8, Rules of the Auditor General, the Narcoossee Community Development District reported: 1) The rate or rates of non-ad valorem special assessments imposed by the District. The General Fund assessment was $0.15-$544.14 and the Debt Service assessment was $117.29-$566.13. 2) Total Special Assessments collected was $760,108. 3) The total amount of outstanding bonds issued by the District and the terms of such bonds. The District had outstanding bonds at September 30, 2023 of $2,445,000 Series 2013A and 2013A-2 Bonds maturing in May, 2033. To the Board of Supervisors Narcoossee Community Development District 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 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. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida March 19, 2024 INDEPENDENT ACCOUNTANTS’ REPORT/COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES To the Board of Supervisors Narcoossee Community Development District Orlando, Florida We have examined Narcoossee Community Development District's compliance with Section 218.415, Florida Statutes during the year ended September 30, 2023. Management is responsible for Narcoossee Community Development District’s compliance with those requirements. Our responsibility is to express an opinion on Narcoossee Community Development 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, accordingly, included examining, on a test basis, evidence about Narcoossee Community Development 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 Narcoossee Community Development District’s compliance with the specified requirements. In our opinion, Narcoossee Community Development District complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2023. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida March 19, 2024