WEST VILLAGES IMPROVEMENT DISTRICT CITY OF NORTH PORT, FLORIDA FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

WEST VILLAGES IMPROVEMENT DISTRICT CITY OF NORTH PORT, FLORIDA

TABLE OF CONTENTS

	    Page		
INDEPENDENT AUDITOR’S REPORT	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 Balance Sheet – Governmental Funds
to Statement of Net Position	
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 Net Position – Proprietary Fund	14	
Statement of Revenues, Expenses and Changes in Net Position – Proprietary Fund	15	
Notes to the Financial Statements	16-28	
REQUIRED SUPPLEMENTARY INFORMATION		
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual – General Fund	
29	
Notes to Required Supplementary Information	30	
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS	

31-32	
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10)
OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA	

33	
MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550 OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA	
34-36	

INDEPENDENT AUDITOR’S REPORT

To the Board of Supervisors
West Villages Improvement District City of North Port, Florida

Report on the Financial Statements

951 Yamato Road ▪ Suite 280 Boca Raton, Florida  33431 (561) 994-9299 ▪ (800) 299-4728
Fax (561) 994-5823
www.graucpa.com

We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of West Villages Improvement District, City of North Port, Florida (the “District”) as of and for the fiscal year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities and each major fund of the District as of September 30, 2018, and the respective changes in financial position, and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note 7 and other referenced notes to the basic financial statements, the District had approximately $1.4 million in delinquent assessments due from a Major Landowner as of September 30, 2018. As a result of the Major Landowners’ failure to pay assessments, the District did not make certain scheduled debt service payments. The District’s failures to make its scheduled debt service payments when they are due are considered events of default. The District is economically dependent on the Developers and Major Landowners within the District.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated July 18, 2019, 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, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the 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 the District’s internal control over financial reporting and compliance.

Report on Other Legal and Regulatory Requirements

We have also issued our report dated July 18, 2019, on our consideration of the District’s compliance with the requirements of Section 218.415, Florida Statutes, as required by Rule 10.556(10) of the Auditor General of the State of Florida. The purpose of that report is to provide an opinion based on our examination conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants.

July 18, 2019

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our discussion and analysis of West Villages Improvement District, City of North Port, Florida (“District”) provides a narrative overview of the District’s financial activities for the fiscal year ended September 30, 2018. Please read it in conjunction with the District’s Independent Auditor’s Report, basic financial statements, accompanying notes and supplementary information to the basic financial statements.

FINANCIAL HIGHLIGHTS

The assets of the District exceeded its liabilities at the close of the most recent fiscal year resulting in a net position balance of $76,344,180.

The change in the District’s total net position in comparison with the prior fiscal year was
$65,211,233, an increase. The key components of the District’s net position and change in net position are reflected in the table in the government-wide financial analysis section.

At September 30, 2018, the District’s governmental funds reported combined ending fund balances of $34,382,113, an increase of $17,573,293 in comparison with the prior fiscal year. A portion of the total fund balance is restricted for debt service and capital projects, and the remainder is unassigned fund balance.

OVERVIEW OF FINANCIAL STATEMENTS

This discussion and analysis are intended to serve as the introduction to the District’s basic financial statements. The District’s basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-Wide Financial Statements

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

The statement of net position presents information on all the District’s assets, deferred outflows of resources, liabilities and deferred inflows of resources with the residual amount being reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

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

Both of the government-wide financial statements distinguish functions of the District that are principally supported by assessments (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the District include general government and maintenance operations. The business-type activities of the District include irrigation services.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.  All of  the funds of the District can be divided into two categories: governmental funds and proprietary funds.

Governmental Funds

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

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

The District maintains eleven individual governmental funds for external reporting. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, Unit 1, Unit 2, Unit 3, Unit 4, and Unit 5 debt service funds and capital projects funds, all of which are considered to be major funds.

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

Proprietary Fund

The District maintains one type of proprietary fund, an enterprise fund. An enterprise fund is used to report the same function presented as business-type activities in the government-wide financial statements. The District uses an enterprise fund to account for the operations of the irrigation services within the District, which are included in Unit 6 of the District.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.

Notes to the Financial Statements

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

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indicator of an entity’s financial position. In the case of the District, assets exceeded liabilities at the close of the most recent fiscal year.

Key components of the District’s net position are reflected in the following table:
NET POSITION SEPTEMBER 30,
Governmental Activities	Business-type Activities	Total
	2018	2017	2018	2017	2018	2017	
Current and other assets	$ 66,660,400	$ 25,562,484	$	-	$	-	$ 66,660,400	$ 25,562,484	
Capital assets, net	171,495,499	85,665,977	893,596	-	172,389,095	85,665,977	
Total assets	238,155,899	111,228,461	893,596	-	239,049,495	111,228,461	
Current liabilities	32,916,308	8,606,795	102,417	-	33,018,725	8,606,795	
Long-term liabilities	129,686,590	91,488,719	-	-	129,686,590	91,488,719	
Total liabilities	162,602,898	100,095,514	102,417	-	162,705,315	100,095,514	
Net position							
Net investment in capital assets	37,728,909	(5,822,742)	791,179	-	38,520,088	(5,822,742)	
Restricted	32,627,267	15,270,581	-	-	32,627,267	15,270,581	
Unrestricted	5,196,825	1,685,108	-	-	5,196,825	1,685,108	
Total net position	$ 75,553,001	$ 11,132,947	$	791,179	$	-	$ 76,344,180	$ 11,132,947	

The District’s net position reflects its investment in capital assets (e.g. land, land improvements, and infrastructure); less any related debt used to acquire those assets that is still outstanding. These assets are used to provide services to residents; consequently, these assets are not available for future spending. Although the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

The restricted portion of the District’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position may be used to meet the District’s other obligations.

The District’s net position increased during the most recent fiscal year. The majority of the increase is the results from the receipt of Developer contributions and intergovernmental revenues.

Key elements of the change in net position are reflected in the following table:

Revenues: Program revenues

CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
Governmental Activities	Business-type Activities	Total

2018	2017	2018	2017	2018	2017

Charges for services	$	6,846,364	$	6,830,617	$	-	$	-	$	6,846,364	$	6,830,617	
Operating grants and contributions	4,827,218	20,984	-	-	4,827,218	20,984	
Capital grants and contributions	65,424,112	46,488	-	-	65,424,112	46,488	
General revenues
Unrestricted investment earnings	
4,307	
1,894	
-	-	
4,307	
1,894	
Miscellaneous	7,926	3,429	-	-	7,926	3,429	
Total revenues	77,109,927	6,903,412	-	-	77,109,927	6,903,412	
Expenses:						
General government	831,044	1,044,206	-	-	831,044	1,044,206	
Maintenance and operations	1,986,269	1,697,835	-	-	1,986,269	1,697,835	
Interest	5,906,940	5,036,437	-	-	5,906,940	5,036,437	
Bond/note issue costs	2,189,199	1,337,201	-	-	2,189,199	1,337,201	
Conveyance of infrastructure	985,242	-	-	-	985,242	-	
Total expenses	11,898,694	9,115,679	-	-	11,898,694	9,115,679	
Transfers	(791,179)	-	791,179	-	-	-	
Change in net position	64,420,054	(2,212,267)	791,179	-	65,211,233	(2,212,267)	
Net position - beginning	11,132,947	13,345,214	-	-	11,132,947	13,345,214	
Net position - ending	$ 75,553,001	$ 11,132,947	$	791,179	$	-	$ 76,344,180	$ 11,132,947	

Governmental activities

As noted above and in the statement of activities, the cost of all governmental activities during the fiscal year ended September 30, 2018 was $11,898,694. The costs of the District’s activities were paid by program revenues and general revenues. Program revenues were comprised primarily of assessments, developer contributions, and other contributions for both the current year and mostly assessments in the prior year. In total, expenses, including depreciation, increased from the prior fiscal year, the majority of the increase was due to bond issue costs and the recognition of conveyance of assets associated with Unit No. 3 to other entities.

Business-type activities

Business-type activities reflect the operations of the irrigation facilities within the District. There were no operating revenues and expenses in the current year as the Master Irrigation Facility was not completed until the subsequent fiscal year.

GENERAL BUDGETING HIGHLIGHTS

An operating budget was adopted and maintained by the governing board for the District pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in preparation of the fund financial statements. The legal level of budgetary control, the level at which expenditures may not exceed budget is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. The fiscal year 2018 general fund budget was amended to increase revenues by $11,863,472, increase appropriations by
$12,113,969, and increase use of funds by $250,497. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2018.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2018, the District had $181,515,838 invested in capital assets for its governmental activities. In the government-wide financial statements depreciation of $10,020,339 has been taken, which resulted in a net book value of $171,495,499. The District’s business-type activities reported net capital assets of $893,596. More detailed information about the District’s capital assets is presented in  the notes of the financial statements.

Capital Debt

At September 30, 2018, the District had $106,925,000 in Bonds outstanding and $26,948,202 in Notes outstanding for its governmental activities. More detailed information about the District’s capital debt is presented in the notes of the financial statements.

ECONOMIC FACTORS AND OTHER EVENTS

Subsequent to fiscal year end, the District has continued its capital projects which include development of infrastructure improvements for residential and commercial areas, the construction of a wastewater treatment facility which will be conveyed to other entities for ownership and maintenance upon completion, the construction of a baseball facility primarily for the use of the Atlanta Braves, and construction of a Master Irrigation Facility which was completed and began operations in the subsequent fiscal year.

Subsequent to year end the District issued Series 2019 Bonds in the amount of $32,360,000 to fund construction improvements related to Unit 7.

This financial report is designed to provide our citizens, land owners, taxpayers, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the financial resources it manages and the stewardship of the facilities it maintains. If you have questions about this report or need additional financial information, contact the West Villages Improvement District’s management services at Special District Services, Inc., 2501A Burns Road, Palm Beach Gardens, Florida 33410.

WEST VILLAGES IMPROVEMENT DISTRICT CITY OF NORTH PORT, FLORIDA STATEMENT OF NET POSITION
SEPTEMBER 30, 2018

Governmental Activities

Business-type Activities

Total

ASSETS		
Cash	$	2,322,062	$	-	$	2,322,062	
Due from Developers	2,938,685	-	2,938,685	
Assessments receivable	2,264,653	-	2,264,653	
Other assets	2,325	-	2,325	
Restricted assets: Cash	
2,002,508	
-	2,002,508	
Investments	57,130,167	-	57,130,167	
Capital assets:			
Nondepreciable	150,729,050	893,596	151,622,646	
Depreciable, net	 	20,766,449	-	20,766,449 
Total assets	 	238,155,899	893,596	239,049,495 

LIABILITIES		
Accounts payable	3,333,842	-	3,333,842	
Contracts and retainage payable	20,570,343	102,417	20,672,760	
Accrued interest payable	2,272,060	-	2,272,060	
Escrow deposits	13,793	-	13,793	
Due to Bondholders:				
Principal	4,080,000	-	4,080,000	
Interest	2,646,270	-	2,646,270	
Non-current liabilities:
Due within one year*			3,473,694	-		3,473,694 Due in more than one year	 	126,212,896	-	126,212,896 
Total liabilities	 	162,602,898	102,417	162,705,315 

NET POSITION		
Net investment in capital assets	37,728,909	791,179	38,520,088	
Restricted for capital projects	29,114,020	-	29,114,020	
Restricted for debt service	3,513,247	-	3,513,247	
Unrestricted	 	5,196,825	-	5,196,825 
Total net position	 $	75,553,001	$	791,179	$	76,344,180 

* The missed debt service payment due for the Series 2005 Bonds

See notes to the financial statements

STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

Program Revenues Operating

Capital Grants

Net (Expense) Revenue and Changes in Net Position

Functions/Programs	Expenses Primary government:
Governmental activities:

Charges for Services

Grants and Contributions

and Contributions

Governmental Activities

Business-type Activities

Total

General government

$	831,044	$

960,055	$

-	$	-	$

129,011	$

-	$	129,011

Maintenance and operations	1,986,269	-	1,369,961	65,424,112	64,807,804	-	64,807,804	
Interest on long-term debt	5,906,940	5,886,309	3,457,257	-	3,436,626	-	3,436,626	
Bond/note issue costs	2,189,199	-	-	-	(2,189,199)	-	(2,189,199)	
Conveyance of infrastructure	985,242	-	-	-	(985,242)	-	(985,242)	
Total governmental activities	11,898,694	6,846,364	4,827,218	65,424,112	65,199,000	-	65,199,000	

General revenues:
Unrestricted investment earnings	

4,307	

-	

4,307	
Miscellaneous	 	7,926	-	7,926 	
Total general revenues	 	12,233	-	12,233 	
Transfers	 	(791,179)	791,179	-		
Change in net position	64,420,054	791,179	65,211,233
Net position - beginning	 	11,132,947	-	11,132,947 
Net position - ending	 $	75,553,001	$	791,179	$	76,344,180 

See notes to the financial statements

BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2018

Major Funds
 	Debt Service	

Capital Projects	Total

General

Unit 1 Series
2007 & 2017

Unit 2 Series
2005

Unit 3 Series
2006 & 2017

Unit 4 Series
2016

Unit 5 Series
2017

Unit 1 Series
2007 & 2017

Unit 2 Series
2005

Unit 3 Series
2006 & 2017

Unit 4 Series
2016

Unit 5 Series
2017

Governmental Funds

ASSETS		
Cash	$	4,324,570	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$ 4,324,570	
Investments		-		1,375,044		2,146,749		127,784		590,835		5,473,273		3,802,563		1,238,996		573,361		-		41,801,562	57,130,167	
Due from Developers	2,938,685	-	-	-	-	-	-	-	-	-	-	2,938,685	
Assessments receivable	1,400,012	-	-	331,744	532,897	-	-	-	-	-	-	2,264,653	
Other assets	2,325	-	-	-	-	-	-	-	-	-	-	2,325	
Total assets	$	8,665,592	$ 1,375,044	$ 2,146,749	$	459,528	$ 1,123,732	$ 5,473,273	$	3,802,563	$	1,238,996	$	573,361	$	-	$ 41,801,562	$ 66,660,400	

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable	

$	

3,333,842	

$	

-	

$	

-	

$	

-	

$	

-	

$	

-	

$	

-	

$	

-	

$	

-	

$	

-	

$	

-	

$ 3,333,842	
Contracts and retainage payable		1,232,826		-		-		-		-		-		254,108		-		-		-		19,083,409	20,570,343	

Escrow deposits
Due to Bondholders:	13,793	-	-	-	-	-	-	-	-	-	-	13,793	
Principal	-	-	4,080,000	-	-	-	-	-	-	-	-	4,080,000	
Interest	-	-	2,646,270	-	-	-	-	-	-	-	-	2,646,270	
Total liabilities	4,580,461	-	6,726,270	-	-	-	254,108	-	-	-	19,083,409	30,644,248	
Deferred inflows of resources: Unavailable revenue - special													
assessments	1,634,039	-	-	-	-	-	-	-	-	-	-	1,634,039	
Total deferred inflows of resources	1,634,039	-	-	-	-	-	-	-	-	-	-	1,634,039	

Fund balances: Restricted for:
Debt service Capital projects
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources, and fund balances

-	1,375,044	-	459,528	1,123,732	5,473,273	-	-	-	-	-	8,431,577	
1,035,055	-	-	-	-	-	3,548,455	1,238,996	573,361	-	22,718,153	29,114,020	
1,416,037	-	(4,579,521)	-	-	-	-	-	-	-	-	(3,163,484)	
2,451,092	1,375,044	(4,579,521)	459,528	1,123,732	5,473,273	3,548,455	1,238,996	573,361	-	22,718,153	34,382,113	

$ 8,665,592	
$ 1,375,044	
$ 2,146,749	
$	459,528	
$ 1,123,732	
$ 5,473,273	
$	3,802,563	
$ 1,238,996	
$	573,361	
$	-	
$ 41,801,562	
$ 66,660,400	

See notes to the financial statements

WEST VILLAGES IMPROVEMENT DISTRICT CITY OF NORTH PORT, FLORIDA
RECONCILIATION OF BALANCE SHEET – GOVERNMENTAL FUNDS TO STATEMENT OF NET POSITION
GOVERNMENTAL FUNDS SEPTEMBER 30, 2018

Fund balance -  governmental funds	$	34,382,113 Amounts reported for governmental activities in the statement
of net position are different because:
Capital assets used in governmental activities are  not financial resources and, therefore, are  not  reported  as assets in the governmental funds. The statement of  net position includes those capital assets, net of accumulated depreciation, in the net position of the government  as  a  whole.
Cost of capital assets	181,515,838

expenditures are unavailable in the fund statements.	1,634,039	
Liabilities not due and payable from current available resources are not reported as liabilities in the governmental fund financial statements. All liabilities, both current and long- term, are reported in the government-wide financial statements.
Accrued interest payable	

(2,272,060)	
Bonds payable *	(102,738,388)	
Note payable	    (26,948,202)	(131,958,650) 	
Net position of governmental activities	  $	75,553,001 	

Accumulated depreciation	 (10,020,339) 171,495,499 Assets that are not available to pay for current-period

* The missed debt service payment due for the Series 2005 Bonds are reflected in the due to Bondholders account balance.

See notes to the financial statements

WEST VILLAGES IMPROVEMENT DISTRICT CITY OF NORTH PORT, FLORIDA STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018
Major Funds
Debt Service	Capital Projects

Total

General

Unit 1 Series
2007 & 2017

Unit 2 Series
2005

Unit 3 Series
2006 & 2017

Unit 4 Series
2016

Unit 5 Series
2017

Unit 1 Series
2007 & 2017

Unit 2 Series
2005

Unit 3 Series
2006 & 2017

Unit 4 Series
2016

Unit 5 Series
2017

Governmental Funds

REVENUES
Assessments	
$ 960,055	
$	
2,354,550	
$	
1,425,113	
$ 1,270,852	
$	
835,794  $	-	$	-	$	-	$	-	$	-	$	-	$ 6,846,364	
Developers contributions	1,108,888	-	-	-	-	2,625,720	-	-	-	-	-	3,734,608	
Developers contributions - capital	10,655,577	-	-	-	-	-	-	-	-	-	4,700,000	15,355,577	
Other contributions	-	-	-	-	-	-	-	-	-	-	23,482,216	23,482,216	
Contributions other governments	27,046	-	-	-	-	749,997	-	-	-	-	25,962,000	26,739,043	
Miscellaneous	7,926	-	-	-	-	-	-	-	1,006	-	2,584	11,516	
Interest income	4,307	3,847	23,158	765	1,475	52,295	21,926	13,502	2,526	1,517	581,258	706,576	
Total revenues	12,763,799	2,358,397	1,448,271	1,271,617	837,269	3,428,012	21,926	13,502	3,532	1,517	54,728,058	76,875,900	
EXPENDITURES
Current:																
General government	771,096	-	59,198	-	-	-	-	-	-	-	750	831,044	
Maintenance and operations	724,983	-	-	-	-	-	-	-	-	-	-	724,983	
Principal	-	775,000	910,000	550,000	245,000	781,798	-	-	-	-	-	3,261,798	
Interest	-	923,009	1,769,580	501,280	609,928	1,079,557	-	-	-	-	-	4,883,354	

Debt service:

Cost of bond and loan issuance	-	44,000	-	42,500	-	-	-	-	-	-	2,102,699	2,189,199
Capital outlay	11,181,346	-	-	-	-	-	7,599,467	-	-	1,840,397	67,454,840	88,076,050
Total expenditures	12,677,425	1,742,009	2,738,778	1,093,780	854,928	1,861,355	7,599,467	-	-	1,840,397	69,558,289	99,966,428	
Excess (deficiency) of revenues
over (under) expenditures	86,374	
616,388	
(1,290,507)	
177,837	
(17,659)	
1,566,657	
(7,577,541)	
13,502	
3,532	
(1,838,880)	
(14,830,231)	
(23,090,528)	
OTHER FINANCING SOURCES (USES)
Bond/note proceeds	-	
-	
-	
-	
-	
-	
-	
-	
-	
-	
41,455,000	
41,455,000	
Transfer in (out)	(9,388)	(311)	-	(271,098)	-	3,906,616	311	-	(510,693)	-	(3,906,616)	(791,179)	
Total other financing sources (uses)	(9,388)	(311)	-	(271,098)	-	3,906,616	311	-	(510,693)	-	37,548,384	40,663,821	
Net change in fund balances	76,986	616,077	(1,290,507)	(93,261)	(17,659)	5,473,273	(7,577,230)	13,502	(507,161)  (1,838,880)	22,718,153	17,573,293	
Fund balances - beginning	2,374,106	758,967	(3,289,014)	552,789	1,141,391	-	11,125,685	1,225,494	1,080,522	1,838,880	-	16,808,820	
Fund balances - ending	$ 2,451,092	$ 1,375,044	$ (4,579,521)	$ 459,528	$ 1,123,732	$  5,473,273   $  3,548,455   $ 1,238,996   $	573,361  $	-	$ 22,718,153 $ 34,382,113	

							

See notes to the financial statements

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

Net change in fund balances - total governmental funds	$	17,573,293 Amounts reported for governmental activities in the statement of
activities are different because:
Governmental funds report capital outlays as expenditures, however, the cost of capital assets is eliminated in the statement of activities
and capitalized in the statement of net position.	88,076,050

Governmental funds report the face amount of Bonds issued as financial resources when debt is first issued, whereas these amounts are eliminated in the statement of activities and recognized as long-
term liabilities in the statement of net position.	(41,455,000)
Repayment of long-term liabilities are reported as expenditures in the governmental fund financial statements but such repayments reduce liabilities in the statement of net position and are eliminated in the
statement of activities.	3,261,798
Conveyances of infrastructure improvements to other governments of previously capitalized capital assets is recorded as an expense in
the statement of activities.	(985,242)
Depreciation of capital assets is not recognized in the governmental fund financial statements but is reported as an expense in the
statement of activities.	(1,261,286)

Amortization of Bond discounts/premiums is not recognized in the governmental fund financial statements, but is reported as an
expense in the statement of activities.	(4,669)
Revenues that do not provide current available resources are unavailable in the governmental fund financial statements but are
recognized as revenues in the statement of activities.	234,027
The change in accrued interest on long-term liabilities between the current and prior fiscal year is recorded in the statement of activities
but not in the fund financial statements.	 	(1,018,917) Change in net position of governmental activities	 $	64,420,054 

STATEMENT OF NET POSITION - PROPRIETARY FUND
SEPTEMBER 30, 2018

ASSETS
Noncurrent assets: Capital assets:

Business-type Activities -
   Irrigation  Fund 

Construction in progress	  $	893,596 	
Total capital assets, net of depreciation	 	893,596 	
Total noncurrent assets	 	893,596 	
Total assets	 	893,596 	

LIABILITIES
Current liabilities:
Contracts and retainage payable	 	102,417 
Total current liabilities	 	102,417 Total liabilities	 	102,417 

NET POSITION
Investment in capital assets	893,596
Unrestricted	 	(102,417) 
  $	791,179 

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUND
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

Business-type Activities -
   Irrigation Fund 

Income before transfers	$	-

Transfers in (out)	 	791,179 

Change in net position	791,179

Total net position - beginning	 	-	

Total net position - ending	 $	791,179 

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – NATURE OF ORGANIZATION AND REPORTING ENTITY

West Villages Improvement District ("District") was created on July 23, 2004. The District is governed by the Board of Supervisors ("Board"), which is composed of five members. The Board of Supervisors of the District exercise all powers granted to the District pursuant to Chapter 2004-456 Laws of Florida.

The District provides among other things, the power to manage basic services for community development, power to borrow money and issue bonds, and to levy and assess non-ad valorem assessments for the financing and delivery of capital infrastructure.

The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for community development within the District.

The District is being developed by separate Developers, a Master Developer and by  other  Homebuilders. The Master Developers are Thomas Ranch Land Partners Village, LLP (“Thomas Ranch”) who assumed responsibility as the major developer for Unit 1, replacing Fourth Quarter Properties XXXII, LLC and became the new majority owner for the District. Other Developers include Lennar Homes, Inc. (“Lennar”), Gran Paradiso I and II, and Pulte Homes, LP. At September 30, 2018, a majority of the Board Members are affiliated with Thomas Ranch. The District has previously created five separate development units – Units 1, 2, 3, 4 and 5. During the current year Unit 6 was created for  the construction of the Master Irrigation system, which is funded by the Master Developer and by fees generated from an approved rate structure. Subsequent to year end, Unit 7 was created for the development of Unit 7 infrastructure improvements.

The Board has the final responsibility for:
Assessing and levying assessments.
Approving budgets.
Exercising control over facilities and properties.
Controlling the use of funds generated by the District.
Approving the hiring and firing of key personnel.
Financing improvements.

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Government-Wide and Fund Financial Statements
The basic financial statements include both government-wide and fund financial statements.

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements.

Government-Wide and Fund Financial Statements (Continued)
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; operating- type special assessments for maintenance and debt service are treated as charges for services and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not included among program revenues are reported instead as general revenues.

Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Assessments are recognized as revenues in the year for which they are levied. Grants and similar items are to be recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

Assessments
Assessments are non-ad valorem assessments on certain land and all platted lots within the District. Assessments are levied each November 1 on property of record as of the previous January. The fiscal year for which annual assessments are levied begins on October 1 with discounts available for payments through February 28 and become delinquent on April 1. For debt service assessments, amounts  collected as advance payments are used to prepay a portion of the Bonds outstanding. Otherwise, assessments are collected annually to provide funds for the debt service on the portion of the Bonds which are not paid with prepaid assessments.

Assessments and interest associated with the current fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. The portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period.

The District reports the following major governmental funds:

General Fund
The general fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund.

Debt Service Funds - Unit 1, Unit 2, Unit 3, Unit 4 and Unit 5
The debt service funds for each unit are used to account for the accumulation of resources for the annual payment of principal and interest on long-term debt for each development unit.

Capital Projects Funds - Unit 1, Unit 2, Unit 3, Unit 4 and Unit 5
This funds accounts for the financial resources to be used for the acquisition or construction of major infrastructure within the District for each development unit.

Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
The District reports the following enterprise fund:

Irrigation Fund
The Irrigation Fund accounts for the operations of the irrigation lines, which are funded by proceeds from operations of these facilities including user fees, meter fees and connection fees.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the District’s enterprise fund are charges to customers for sales and services. Operating expenses of the enterprise fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Assets, Liabilities and Net Position or Equity

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.

When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first for qualifying expenditures, then unrestricted resources as they are needed.

Restricted Assets
These assets represent cash and investments set aside pursuant to Bond covenants or other contractual restrictions

Deposits and Investments
The District’s cash and cash equivalents are considered to be cash on hand and demand deposits (interest and non-interest bearing).

The District has elected to proceed under the Alternative Investment Guidelines as set forth in Section
218.415 (17) Florida Statutes. The District may invest any surplus public funds in the following:
The Local Government Surplus Trust Funds, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act;
Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency;
Interest bearing time deposits or savings accounts in qualified public depositories;
Direct obligations of the U.S. Treasury.

Securities listed in paragraph c and d shall be invested to provide sufficient liquidity to pay obligations as they come due.

The District records all interest revenue related to investment activities in the respective funds. Investments are measured at amortized cost or reported at fair value as required by generally accepted accounting principles.

Inventories and Prepaid Items
Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased.

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

Capital Assets
Capital assets which include property, plant and equipment, infrastructure assets, (e.g., roads, sidewalks and similar items) and construction in progress are reported in the government activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

Capital Assets (Continued)
Property, plant and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:

Assets	Years	
Water Management & Environmental	30	
Roadways	25	
Gateway Entry	15	
Landscape & Lighting	10	

In the governmental fund financial statements, amounts incurred for the acquisition of capital assets are reported as fund expenditures. Depreciation expense is not reported in the governmental fund financial statements.

Unearned Revenue
Governmental funds report unearned revenue in connection with resources that have been received, but not yet earned.

Long-Term Obligations
In the government-wide financial statements long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts are deferred and amortized ratably over the life of the Bonds. Bonds payable are reported net of applicable premiums or discounts. Bond issuance costs are expensed when incurred.

In the fund financial statements, governmental fund types recognize premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of  resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

Fund Equity/Net Position
In the fund financial statements, governmental funds report non spendable and restricted fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Assignments of fund balance represent tentative management plans that are subject to change.

The District can establish limitations on the use of fund balance as follows:

Committed fund balance – Amounts that can be used only for the specific purposes determined by a formal action (resolution) of the Board of Supervisors. Commitments may be changed or lifted only by the Board of Supervisors taking the same formal action (resolution) that imposed the constraint originally. Resources accumulated pursuant to stabilization arrangements sometimes are reported in this category.

Assigned fund balance – Includes spendable fund balance amounts established by the Board of Supervisors that are intended to be used for specific purposes that are neither considered restricted nor committed. The Board may also assign fund balance as it does when appropriating fund balance to cover differences in estimated revenue and appropriations in the subsequent year’s appropriated budget. Assignments are generally temporary and normally the same formal action need not be taken to remove the assignment.

The District first uses committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.

Net position is the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources. Net position in the government-wide financial statements are categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets represents net position related to infrastructure and property, plant and equipment. Restricted net position  represents the assets restricted by the District’s Bond covenants or other contractual restrictions. Unrestricted net position consists of the net position not meeting the definition of either of the other two components.

Other Disclosures

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

The District is required to establish a budgetary system and an approved Annual Budget. Annual  Budgets are adopted on a basis consistent with generally accepted accounting principles for the general fund. All annual appropriations lapse at fiscal year-end.

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

Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.
Public hearings are conducted to obtain public comments.
Prior to October 1, the budget is legally adopted by the District Board.
All budget changes must be approved by the District Board.
The budgets are adopted on a basis consistent with generally accepted accounting principles.
Unused appropriation for annually budgeted funds lapse at the end of the year.

NOTE 4 – DEPOSITS AND INVESTMENTS

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

Investments
The District’s investments were held as follows at September 30, 2018:

Investment	Amortized cost	Credit Risk	Maturities

US Bank Money Market Account

$	8,083,594

Not Available	Not available

Fidelity Govt  Portfolio Cl III		3,385,745	Not Available	Not available Florida Education Investment Trust Fund 	45,660,828		AAAm		38 days
  $	57,130,167 
Credit risk – For investments, credit risk is generally the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Investment ratings by investment type are included in the preceding summary of investments.

Concentration risk – The District places no limit on the amount the District may invest in any one issuer.

Interest rate risk – The District does not have a formal policy that limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates.

However, the Bond Indentures limit the type of investments held using unspent proceeds.

Investments (Continued)
Fair Value Measurement – When applicable, the District measures and records its investments using fair value measurement guidelines established in accordance with GASB Statements. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques.

These guidelines recognize a three-tiered fair value hierarchy, in order of highest priority, as follows:
Level  1:	Investments whose values are based on unadjusted quoted prices for identical investments in active markets that the District has the ability to access;
Level 2: Investments whose inputs - other than quoted market prices - are observable either directly or indirectly; and,
Level 3: Investments whose inputs are unobservable.

The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the entire fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

Money market investments that have a maturity at the time of purchase of one year or less and are held by governments other than external investment pools should be measured at amortized cost. Accordingly, the District’s investments have been reported at amortized cost above.

NOTE 5 – INTERFUND TRANSFERS

Interfund transfers for the fiscal year ended September 30, 2018 were as follows:

 Fund	Transfer in	Transfer out 
General	$	-	$	9,388	
Debt service Unit 1	-	311	
Debt service Unit 3	-	271,098	
Debt service Unit 5	3,906,616	-	
Capital projects Unit 1	311	-	
Capital projects Unit 3	-	510,693	
Capital projects Unit 5	-	3,906,616	
Master irrigation system 	791,179	-	
Total	 $ 4,698,106 $ 4,698,106 

Transfers from Unit 3 debt service to the master irrigation system were for excess funds that were reallocated for the master irrigation system. Transfers from Unit 3 capital projects were for the creation of the master irrigation system. Transfer from the Unit 5 capital projects to Unit 5 debt service were in accordance with the bond indenture for the creation of the debt service reserve account.

Capital asset activity for the fiscal year ended September 30, 2018 was as follows:
Beginning

Ending

 	Balance	Increases	Decreases	Balance	

Governmental activities
Capital assets, not being depreciated		
Land	$	12,837,903	$	-	$	-	$	12,837,903	
Infrastructure in progress	56,966,330	10,569,996	7,151,233	60,385,093	
Infrastructure in progress - wastewater treatment plant	-	10,041,784	-	10,041,784	

Infrastructure in progress - spring training facility	 	-	67,464,270	-	67,464,270 	
Total capital assets, not being depreciated	 	69,804,233	88,076,050	7,151,233	150,729,050 	
Capital assets, being depreciated		
Water Management and Environmental	8,482,591	3,306,666	-	11,789,257	
Roadways	7,865,343	2,859,325	-	10,724,668	
Gateway Entry	4,893,883	-	-	4,893,883	
Landscape and Lighting - Unit 3	 	3,378,980	-	-	3,378,980 

Water Management and Environmental	2,403,765	282,521	-	2,686,286	
Roadways	2,674,219	314,614	-	2,988,833	
Gateway Entry	2,582,900	326,253	-	2,909,153	
Landscape and Lighting - Unit 3	 	1,098,169	337,898	-	1,436,067 	
Total accumulated depreciation	 	8,759,053	1,261,286	-	10,020,339 	
Total capital assets, being depreciated, net	 	15,861,744	4,904,705	-	20,766,449 	
Governmental activities capital assets, net	  $	85,665,977	$   92,980,755   $	7,151,233	$ 171,495,499 	

Business type activities
Capital assets, not being depreciated Construction in progress	

  $	-	$	893,596	$	-	$	893,596 	
Business type activities capital assets, net	   $	-	$	893,596	$	-	$	893,596 	

Total capital assets, being depreciated	 24,620,797	6,165,991	-	30,786,788 Less accumulated depreciation for:

Depreciation expense was charged to maintenance and operations.

Governmental activities
Costs incurred to-date relate to Development Unit No. 1, No. 2, No. 3 and No. 4, and No. 5. Certain improvements were acquired directly from the Developers. The total anticipated project costs have been estimated at approximately $30 million for Unit No. 1, $34 million for Unit No. 2, $47 million for Unit No. 3 and $30 million for Unit No. 4, and $101 million for Unit 5. Lennar has agreed to complete the infrastructure improvements for Unit No. 3 which are not paid from the proceeds of the Unit 3 Bonds. Unit No. 3 was completed in the current fiscal year. Funding for the Unit 5 improvements are derived from multiple sources which include contributions from certain Developers, City Of North Port, Sarasota County, the State of Florida and Atlanta National League Baseball Club, LLC (“Atlanta Braves”). Certain improvements will be conveyed to other entities upon completion of the various developments, which include but are not limited to the wastewater treatment plant and the spring training facility. The District has open contracts and commitments as of September 30, 2018 for its governmental activities of
$88,659,739.

The District has entered a contract with West Villages Construction, LLLP (“WVC”), whereby WVC has agreed to provide funding for the completion of the wastewater treatment plant. WVC is affiliated with Thomas Ranch. The waste water treatment plant will be conveyed to another entity for ownership and maintenance upon completion. During the current year Thomas Ranch contributed $10,655,577 towards the construction of the wastewater treatment plant. The total cost of the project is estimated at approximately $45 million.

Governmental activities (Continued)
The spring training facility, which comprises Unit No. 5 and is estimated to cost approximately $101 million, was funded from several sources in the current fiscal year which include $13.955 million of proceeds from the Series 2017A Bonds, $27.5 million of proceeds from the Series 2017B Senior Secured Notes, a contribution of $4.7 million from the City of North Port, a contribution of $4.7 million from one of the Developers, a contribution of $21.262 million from Sarasota County, and a contribution of
$28,899,960 from Atlanta Braves. Upon completion, the spring training facility will be conveyed to other entities for ownership and maintenance. The project was completed subsequent to year end.

Business type activities
Unit No. 6 is comprised of the Master Irrigation Facility. The project is funded with proceeds from the Series 2017 Unit 3 Bond and is estimated to cost a total of $1 million. The project was completed subsequent to year end. The District has open contracts and commitments as of September 30, 2018 for its business type activities of $172,280.

NOTE 7 – LONG TERM LIABILITIES

Series 2005 (Unit 2)
On November 5, 2005, the District issued $38,005,000 of Special Assessment Bonds, Series 2005 (Unit
2) for Unit of Development No. 2, consisting of $32,365,000 Term Bonds Series 2005 due on May 1, 2036 with a fixed interest rate of 5.80% and $5,640,000 Term Bonds Series 2005 due on May 1, 2015 with a fixed interest rate of 5.350%. The Bonds were issued to pay off the Bond Anticipation Notes, Series 2005 and to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the 2005 Bonds is to be paid serially commencing May 1, 2007 through May 1, 2036.

Series 2016 (Unit 4)
On November 15, 2016, the District issued $13,090,000 of Special Assessment Revenue Bonds, Series 2016 (Unit 4), due November 1, 2046 with interest rates of 3.375% to 5.0%. The Bonds were issued for the purpose of financing the acquisition and construction of certain improvements for the benefit of the District. Interest is paid semiannually on each May 1 and November 1, commencing May 1, 2017. Principal is paid serially commencing November 1, 2017 through November 1, 2046. The Series 2016 Bonds are subject to redemption at the option of the District prior to their maturity.

Series 2017 (Unit 1)
On August 31, 2017, the District issued $32,165,000 of Special Assessment Revenue Refunding Bonds, Series 2017 (Unit 1), due May 1, 2037 with interest rates of 3.50% - 4.625%. The Bonds were issued for the purpose of refunding the District’s outstanding Series 2007 Special Assessment Revenue Bonds (the “Refunded Bonds”), and to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is paid semiannually on each May 1 and November 1, commencing May 1, 2018. Principal is paid serially commencing May 1, 2018 through May 1, 2038.

Series 2017 (Unit 3)
On August 31, 2017, the District issued $16,550,000 of Special Assessment Revenue Refunding Bonds, Series 2017 (Unit 3), due May 1, 2037 with interest rates of 3.50% - 5.00%. The Bonds were issued for the purpose of refunding the District’s outstanding Series 2006 Special Assessment Revenue Bonds (the “Refunded Bonds”) and to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is paid semiannually on each May 1 and November 1, commencing November 1, 2017. Principal is paid serially commencing May 1, 2018 through May 1, 2037.

Series 2017A (Unit 5)
On December 21, 2017, the District issued $13,955,000 of Taxable Florida State Sales Tax Payments Revenue Bonds, Series 2017A, consisting of multiple term bonds with due dates ranging from February  1, 2019 – February 1, 2038 and fixed interest rates ranging from 2.277% to 3.831%. The Bonds were issued for the purpose of funding a portion of the costs of the 2017 Project. Interest is paid semiannually on each August 1 and February 1, commencing August 1, 2018. Principal is paid serially commencing August 1, 2018 through February 1, 2038. Principal and interest on the Bonds are to be paid with Florida State Sales Tax Payments pledged to the District and by an annual fee to be paid by Atlanta Braves.

Series 2017B (Unit 5)
On December 21, 2017, the District issued $27,500,000 of Senior Secured Notes due December 30, 2033 with a fixed interest rate of 5.4%. The Notes were issued for the purpose of funding a portion of the costs of the 2017 Project. Interest is paid semiannually on each June 30 and December 30, commencing June 30, 2018. Principal is paid serially commencing June 30, 2018 through December 30, 2033. Principal and interest on the Bonds are to be paid with Florida State Sales Tax Payments pledged to the District and by an annual fee to be paid by Atlanta Braves.

Redemption Provisions
The Series 2005 Unit 2, 2016 Unit 4, 2017 Unit 1, 2017 Unit 3, and 2017A Bonds and B Notes are subject to redemption at the option of the District prior to their maturity as outlined in the Bond/Note Indentures. The Bonds, except for the 2017A Bonds and B Notes are also subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occur as outlined in the Bond/Note Indentures.

Reserve Requirements
The Bond Indentures require that the District maintain adequate funds in the reserve accounts to meet  the debt service reserve requirements as defined in the Bond Indentures. In addition, the Bond Indentures have certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate  to  provide payment of debt service and to meet the reserve requirements. Due to the delinquent assessments, and prior fiscal year draws on the reserve accounts to make principal and interest payments, the District reported deficits of approximately $2,974,068 in the Series 2005 debt service reserve accounts at September 30, 2018. Therefore, the District is not in compliance with the reserve requirements outlined  in the 2005 Bond Indenture as of September 30, 2018. The District is in compliance with the reserve requirement for the Series 2016 and all Series 2017 Bonds/Notes as of September 30, 2018.

Series 2005 – Unit 2
In current year, the District was able to make a partial interest payment on the Unit 2 Series 2005 Bonds in the amount of $1,070,000 for past due interest amounts. However, the District had approximately $1.4 million in delinquent assessments still due from Major Landowners as of September 30, 2018 related to the Unit 2 Series 2005 Bonds. Consequently, the District did not make the current fiscal year principal payment of $910,000 and interest on the Bonds of $1,769,580 on the Unit 2 Series 2005 Bonds and now owes $4,080,000 to the Bondholders for principal payments and $2,646,270 to the Bondholders for interest payments. The District’s failures to make its scheduled debt service payments when they are due are considered events of default.

Long-term debt activity
Changes in long-term liability activity for the fiscal year ended September 30, 2018 were as follows:

Governmental activities Bonds payable:

Beginning
Balance	Additions	Reductions

Ending Balance

Due Within One Year

Bond Series 2005 (Unit 2)

$	32,965,000 $

-	$	-

$ 32,965,000

$ 4,080,000 *

Bond Series 2016 (Unit 4)	13,090,000	-	245,000	12,845,000	230,000	
Bond Series 2017 (Unit 1)	32,165,000	-	775,000	31,390,000	1,040,000	
Less: Original issue discount	(375,593)	-	(17,885)	(357,708)	-	
Bond Series 2017 (Unit 3)	16,550,000	-	550,000	16,000,000	570,000	
Add: Original issue premium	264,312	-	13,216	251,096	-	
Bond Series 2017 (Unit 5)	-	13,955,000	230,000	13,725,000	485,000	
Note 2017 (Unit 5)	 	-	27,500,000	551,798	26,948,202	1,148,694 
Total	 $	94,658,719   $	41,455,000   $	2,347,129    $  133,766,590    $ 7,553,694 
* Includes $4,080,000 due to bondholders for the Series 2005 Bond which was not paid.

At September 30, 2018, the scheduled debt service requirements on the long - term debt were as follows:
Governmental Activities
Year ending
September 30:	
Principal	
Interest	
Total	
2019	$	3,473,694	$	4,587,818	$	8,061,512	
2020	3,641,561	4,448,251	8,089,812	
2021	3,787,868	4,301,299	8,089,167	
2022	3,947,805	4,147,096	8,094,901	
2023	4,106,569	3,984,267	8,090,836	
2024-2028	23,498,590	17,014,019	40,512,609	
2029-2033	29,646,846	10,935,645	40,582,491	
2034-2038	22,870,269	4,312,204	27,182,473	
2039-2043	2,980,000	1,125,750	4,105,750	
2044-2047	 	2,955,000	304,625	3,259,625 
Total	 $   100,908,202	$	55,160,974	$ 156,069,176 
Series 2005 not included as amortization schedule has not been resized

NOTE 8 – DELINQUENT ASSESSMENTS

The Developers own a significant portion of land within the District; therefore, assessment revenues in the general and debt service funds include the assessments levied on those lots owned by the Developers. However, certain Major Landowners did not pay a portion of their assessments. As of September 30, 2018, there was approximately $1.4 million of delinquent assessments due from the Major Landowners for fiscal year 2018 and additional amounts due for prior fiscal years.

NOTE 9 – EVENTS OF DEFAULT

The non-payment of the Series 2005 principal due on May 1, 2018 is considered an event of default. The occurrence of an event of default creates certain remedial rights and remedies in favor of the Trustee. Pursuant to the Indentures, the owners of a majority in aggregate principal amount of the Bonds then outstanding may direct the Trustee with regard to such rights and remedies following an event of default and upon provision of indemnity satisfactory to the Trustee and in accordance with provisions of the Indenture. During the current fiscal year, approximately $59,000 of expenditures was incurred in the Unit 2 Debt Service Fund for services performed related to the events of default, legal services, and related matters.

The District’s activity is dependent upon the continued involvement of the Developers and Major Landowners, the loss of which could have a material adverse effect on the District’s operations.

NOTE 11 – MANAGEMENT COMPANY

The District has contracted with a management company to perform management advisory services, which include financial and accounting advisory services. Certain employees of the management company also serve as officers of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, computer and other administrative costs.

NOTE 12 – 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 costs of these risks; coverage may not extend to all situations. There were no settled claims during the past three years.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

On June 26, 2006, the District entered into a General Principles of Agreement with the City of North Port (“City”) and Fourth Quarter Properties XXXII, LLC. Under the agreement, the District is responsible for  the construction and equipping of a police substation and fire and emergency medical facilities, which are eligible to be reimbursed from impact fees collected within the District; dedication of certain lands for community parks and general government use; master plan and design of parks within the District eligible to be reimbursed from impact fees collected within the District; as well as other items as described in the General Principles of Agreement. Note, this is a summary; the agreement includes more specific content and provisions. The Agreement referred to above was assumed by the new major Developer.

On June 27, 2006, Fourth Quarter Properties XXXII, LLC (Fourth Quarter) entered into a Guarantee Agreement in favor of West Villages Improvement District. Under the agreement, Fourth Quarter unconditionally guarantees to transfer real property to the District or North Port as outlined in the General Principles of Agreement denoted above. Fourth Quarter also acknowledges that the District may not be able to reimburse or pay for this property unless it is authorized to do so pursuant to its enabling legislation and the applicable requirements of either Chapter 170 or 298, Florida Statutes. This  agreement also states that Fourth Quarter unconditionally agrees to advance funds to the District in a timely fashion as are necessary for the construction and equipping as outlined in the General Principles of Agreement; however, Fourth Quarter shall be entitled to reimbursement of any such advances from impact fees collected within the District and/or future unit development funding. Note, this is a summary; the agreement includes more specific content and provisions. The Agreement referred to above was assumed by the new major Developer.

NOTE 14 – LEGAL FEES RELATED TO THE ATLANTA BRAVES TRAINING FACILITY

The District and the Master Developer have agreed to share the legal expenses related to the Atlanta Braves training facility. Total legal fees paid by the District as of September 30, 2018 related to this project were $852,876. Per the agreement with the Master Developer, the District received the amount owed during the current fiscal year. The District’s share of $200,000 was paid from bond proceeds of the Note 2017 (Unit 5) notes during the current fiscal year.

Bond Issuance
Subsequent to fiscal year end, the District issued $32,360,000 Series 2019 Special Assessment Revenue Bonds to finance additional infrastructure construction associated with Unit 7. The Series 2019 consists of term Bonds with maturity dates from May 1, 2024 to May 1, 2050 and fixed interest rates from 4% to 5%.

Unit 7 Construction
Subsequent to fiscal year end, the District began construction on Unit No. 7 with proceeds from the  Series 2019 Special Assessment Revenue Bonds. The Unit No. 7 project is estimated to cost a total of
$61 million.

Event of Default
Subsequent to fiscal year end, the District failed to make the scheduled principal and interest payments on the Unit 2 Series 2005 Bonds. The trustee, under direction of the bondholders, used $1,240,000 from the Unit 2 Series 2005 acquisition and construction trust account to pay delinquent interest on the Unit 2 Series 2005 Bonds.

Public Records Request
Subsequent to fiscal year end, there was a car accident on roadways which belong to the District. A public records request has been submitted to District attorney by another law firm concerning various details related to the Districts roadways, parking, and other infrastructure and procedures. No claims or litigation have been filed.

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

 	Budgeted Amounts	

Actual

Variance with Final Budget - Positive

 	Original	Final	Amounts	(Negative)	

REVENUES		
Assessments	$ 1,299,269	$	1,124,783	$	960,055	$	(164,728)	
Developer contribution	-	12,000,000	11,764,465	(235,535)	
Intergovernmental revenues	-	-	27,046	27,046	
Miscellaneous	-	34,971	7,926	(27,045)	
Interest Income	 	1,000	3,987	4,307	320 
Total revenues	 	1,300,269	13,163,741	12,763,799	(399,942) 

EXPENDITURES
Current:
General government	1,025,051	815,270	771,096	44,174	
Maintenance and operations	612,000	935,750	724,983	210,767	
Capital outlay	 	-	12,000,000	11,181,346	818,654 
Total expenditures	 	1,637,051	13,751,020	12,677,425	1,073,595 

Excess (deficiency) of revenues
over (under) expenditures	(336,782)	(587,279)	86,374	673,653

OTHER FINANCING SOURCES (USES)
Transfer in/(out)	-	-	(9,388)	(9,388)
Use of fund balance	 	336,782	587,279		-	(587,279) Total other financing sources (uses)	 	336,782	587,279	(9,388)	(596,667) 

Net change in fund balance	  $	-	$	-		76,986	$	76,986	

Fund balance - beginning		
 	2,374,106 		
Fund balance - ending		  $	2,451,092 		

See notes to required supplementary information

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

The District is required to establish a budgetary system and an approved Annual Budget for the General Fund. The District’s budgeting process is based on estimates of cash receipts and cash expenditures which are approved by the Board. The budget approximates a basis consistent with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

The legal level of budgetary control, the level at which expenditures may not exceed budget is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. The fiscal year 2018 general fund budget was amended to increase revenues by $11,863,472, increase appropriations by $12,113,969, and increase use of funds  by $250,497. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2018.

951 Yamato Road ▪ Suite 280 Boca Raton, Florida  33431 (561) 994-9299 ▪ (800) 299-4728
Fax (561) 994-5823
www.graucpa.com

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

To the Board of Supervisors
West Villages Improvement District City of North Port, 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 of the governmental activities, the business-type activities and each major fund of West Villages Improvement District, City of North Port, Florida (“District”) as of and for the fiscal year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our opinion thereon dated July 18, 2019, which includes an emphasis of matter paragraph.

Internal Control Over Financial Reporting

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

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

Our consideration of internal control 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 may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and 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.

We noted certain matters that we reported to management of the District in a separate letter July 18, 2019.

The District's responses to the findings identified in our audit are described in the accompanying Management Letter. We did not audit the District's responses and, accordingly, we express no opinion on them.

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.

July 18, 2019

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10) OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA

To the Board of Supervisors
West Villages Improvement District City of North Port, Florida

We have examined West Villages Improvement District, City of North Port, Florida’s (“District”) compliance with the requirements of Section 218.415, Florida Statutes, in accordance with Rule 10.556(10) of the Auditor General of the State of Florida during the fiscal year ended September 30, 2018. Management is responsible for District’s compliance with those requirements. Our responsibility is to express an opinion on 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. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the District complied, in all material respects, with the specified requirements referenced in Section 218.415, Florida Statutes. An examination involves performing procedures to obtain evidence about whether the District complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the District’s compliance with specified requirements.

In our opinion, the District complied, in all material respects, with the aforementioned requirements for the fiscal year ended September 30, 2018.

This report 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, management, and the Board of Supervisors of West Villages Improvement District, City of North Port, Florida and is not intended to be and should not be used by anyone other than these specified parties.

July 18, 2019

MANAGEMENT LETTER PURSUANT TO THE RULES OF THE AUDITOR GENERAL FOR THE STATE OF FLORIDA

To the Board of Supervisors
West Villages Improvement District City of North Port, Florida

Report on the Financial Statements

We have audited the accompanying basic financial statements of West Villages Improvement District ("District") as of and for the fiscal year ended September 30, 2018, and have issued our report thereon dated July 18, 2019, which includes an emphasis of matter paragraph.

Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the 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 the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Auditor’s Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated July 18, 2019, should be considered in conjunction with this management letter.

Purpose of this Letter

The purpose of this letter is to comment on those matters required by Chapter 10.550 of the Rules of the Auditor General for the State of Florida. Accordingly, in connection with our audit of the financial statements of the District, as described in the first paragraph, we report the following:

Current year findings and recommendations.
Status of prior year findings and recommendations.
Compliance with the Provisions of the Auditor General of the State of Florida.

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, as applicable, management, and the Board of Supervisors of West Villages Improvement District, City of North Port, Florida and is not intended to be and should not be used by anyone other than these specified parties.

We wish to thank West Villages Improvement District, City of North Port, Florida and the personnel associated with it, for the opportunity to be of service to them in this endeavor as well as future engagements and the courtesies extended to us.

July 18, 2019

REPORT TO MANAGEMENT

CURRENT YEAR FINDINGS AND RECOMMENDATIONS 2018-01 Debt Service Reserve Requirements:
Observation: The debt service reserve requirements for the Series 2005 Unit 2 Bonds were not met as of September 30, 2018. In the prior fiscal year, funds from the debt service reserve accounts were used to cover partial debt obligations.

Recommendation: The District should take the necessary steps to replenish the reserve accounts.

Management Response: In the current and prior Fiscal Years, several large property owners did not pay their property taxes (which included assessments for the District). The WVID is working with, providing information and working on solutions to its Series 2005 (Unit 2) bondholders, tax-certificate holders, and potential developers in regard to the delinquent property.

2018-02 Financial Condition Assessment:

Observation: The District had approximately $1.4 million in delinquent assessments due from a Major Landowner as of September 30, 2018. Consequently, the District did not make certain scheduled debt service payments in the current and prior fiscal years. The District’s failures to make its scheduled debt service payments when they are due are considered events of default.

Recommendation: The District should take the necessary steps to alleviate the financial condition.

Management Response: In the current and prior Fiscal Years, several large property owners did not pay their property taxes (which included assessments for the District). The WVID is working with, providing information and working on solutions to its Series 2005 (Unit 2) bondholders, tax-certificate holders, and potential developers in regard to the delinquent property.

PRIOR YEAR FINDINGS AND RECOMMENDATIONS

2012-01, 2013-01, 2014-01, 2015-01, 2016-01, 2017-01 Debt Service Reserve Requirement: Matter is repeated again in the current fiscal year – see finding no. 2018-01 above.

2012-02, 2013-02, 2014-02, 2015-02, 2016-02, 2017-02 Financial Condition Assessment: Matter is repeated again in the current fiscal year – see finding no. 2018-02 above.

COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA

Unless otherwise required to be reported in the auditor’s report on compliance and internal controls, the management letter shall include, but not be limited to the following:

A statement as to whether or not corrective actions  have  been taken to address findings  and recommendations made in the preceding annual financial audit report.

There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2017, except as noted above.

Any recommendations to improve the local governmental entity's financial management.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2018, except as noted above.

REPORT TO MANAGEMENT (Continued)

III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA (Continued)

Noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported, for the fiscal year ended September 30, 2018, except as noted above.

The name or official title and legal authority of the District are disclosed in the notes to the financial statements.

In connection with our audit, we determined that the District has met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes. The District failed to make certain debt service payments on the Bonds. We applied financial condition assessment procedures pursuant to Rule 10.556(7). See Findings section above for additional information. It is management’s responsibility to monitor financial condition, and our financial condition assessment was based in part on representations made by management and the review of the financial information provided by same.