Lakeside Landing Community Development District

FINANCIAL STATEMENTS

September 30, 2016

Lakeside Landing Community Development District
Table of Contents September 30, 2016

REPORT
Independent Auditors’ Report	1
FINANCIAL STATEMENTS
Management’s Discussion and Analysis (required supplemental information)	3
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 the Balance Sheet of Governmental Funds to the 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
Notes to Financial Statements	14
Required Supplemental Information (other than MD&A)
Budget to Actual Comparison Schedule ‐ General Fund	22
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	23
Management Letter	25
Attestation Report on Compliance with Section 218.415 Florida Statutes	27

INDEPENDENT AUDITORS’ REPORT

To the Board of Supervisors
Lakeside Landing Community Development District Winter Haven, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and each major fund of Lakeside Landing Community Development District (hereinafter referred to as “District”), as of and for the year ended September 30, 2016, 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.

Auditors’ 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 auditors’ 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 and each major fund of the District as of September 30, 2016, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information, as listed in the table of contents, 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 June 23, 2017, on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and 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 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.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 23, 2017

Management’s Discussion And Analysis

Our discussion and analysis of the Lakeside Landing Community Development District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2016. Please read it in conjunction with the District’s financial statements, which begin on page 8.

FINANCIAL HIGHLIGHTS

At September 30, 2016, the assets of the District exceed its liabilities by approximately $5.4 million.

During the fiscal year ended September 30, 2016, the SPE (as discussed in Note 4 to the financial statements) sold land it had acquired from the former Developer. As part of the sale, certain net proceeds were deposited into the District’s accounts and distributed to the District’s bondholders. The remaining unpaid amounts of principal and interest on Special Assessment Bonds, Series 2007 were cancelled. The transaction resulted in a gain of approximately $10.3 million on the government‐wide financial statements.

USING THE ANNUAL REPORT

This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities on pages 8 – 9 provide information about the activities of the District as a whole and present a longer‐term view of the District’s finances. Fund financial statements start on page 10. For governmental activities, these statements tell how these services were financed in the short‐term as well as what remains for future spending. Fund financial statements also report the District’s operations in more detail than the government‐wide statements by providing information about the District’s most significant funds.

Reporting the District as a Whole

Our analysis of the District as a whole begins on page 4. One of the most important questions asked about the District’s finances is, “Is the District as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private‐sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the District’s net position and related changes during the current year. You can think of the District’s net position – the difference between assets and liabilities – as one way to measure the District’s financial health, or financial position. Over time, increases or decreases in the District’s net position is one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors; however, such as changes in the

District’s assessment base and the condition of the District’s infrastructure, to assess the overall health of the District.

Reporting the District’s Most Significant Funds

Our analysis of the District’s major funds begins on page 5. The fund financial statements begin on page 9 and provide detailed information about the most significant funds – not the District as a whole. Some funds are required to be established by State law and by bond covenants. All of the District’s funds are governmental fund‐types.

Governmental funds – All of the District’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year‐ end that are available for spending. The governmental fund statements provide a detailed short‐term view of the District’s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. We describe the relationship (or differences) between governmental activities and governmental funds in a reconciliation with the fund financial statements.

THE DISTRICT AS A WHOLE

The following table reflects the condensed Statement of Net Position and is compared to the prior year.

September 30,	2016	2015	Change	
Assets
Current and other assets	
$	133,847	
$	48,973	
$	84,874	
Capital assets, net	5,299,131	5,502,021	(202,890)	

Total assets

$	5,432,978	$

5,550,994	$

(118,016)

Liabilities

Current liabilities	$	68,816	$	3,465,525	$ (3,396,709)	
Other liabilities	‐	9,615,000	(9,615,000)	
Total liabilities	68,816	13,080,525	(13,011,709)	
Net position				
Net investment in capital assets	5,299,131	(2,523,891)	7,823,022	
Unrestricted	65,031	(5,005,640)	5,070,671	
Total net position (deficit)	5,364,162	(7,529,531)	12,893,693	

Total liabilities and net position

$	5,432,978	$

5,550,994	$

(118,016)

For more detailed information, see the accompanying Statement of Net Position.

During the fiscal year ended September 30, 2016, total assets and liabilities decreased from the prior year approximately $118,000 and $13.0 million, respectively. The decrease in assets is largely the result of depreciation of capital assets. The decrease in liabilities is primarily due to the cancellation of outstanding long‐term bond principal and interest.

The following schedule compares the Statement of Activities for the current and previous fiscal year.

Year ended September 30,	2016	2015	Change	
Revenues:
Program revenues: Charges for services	

$	3,158,756	

$	‐	

$	3,158,756	
General revenues and special item:				
Interest and other revenues	101	8	93	
Gain on cancellation	10,267,662	‐	10,267,662	
Total revenues	13,426,519	8	13,426,511	
Expenses:				
General government	155,945	38,611	117,334	
Unallocated depreciation	202,890	202,890	‐	
Interest	173,991	516,575	(342,584)	
Total expenses	532,826	758,076	(225,250)	
Change in net position	12,893,693	(758,068)	13,651,761	
Net position (deficit), beginning	(7,529,531)	(6,771,463)	(758,068)	
Net position (deficit), ending	$	5,364,162	$ (7,529,531)	$ 12,893,693	

For more detailed information, see the accompanying Statement of Activities.

Revenues increased over the prior year by approximately $13.4 million, while expenses decreased from prior year by approximately $225,000. Revenues increased based on the sale of SPE land and a gain on the cancellation of bond principal and interest. The expenses decreased due to a decrease in bond interest as bonds were cancelled during the year. The overall result was a $12.9 million increase in net position for the fiscal year 2016.

THE DISTRICT’S FUNDS

As the District completed the year, its governmental funds (as presented in the balance sheet on page 10) reported a combined fund balance of approximately $64,000, which is a substantial increase over last year’s deficit balance. Significant transactions are discussed below.

During the fiscal year ended September 30, 2016, the SPE sold land free and clear of all the Special Assessments. As part of the sale, approximately $2.9 million of net proceeds were deposited into the District’s account for the benefit of the Bondholders.

During the fiscal year ended September 30, 2016, the bondholders agreed to the cancellation of the Special Assessment Bonds, Series 2007 resulting from the sale of SPE land. The transaction resulted in a gain of approximately $7.3 million on the fund‐level basis.

The overall increase in fund balance for the year ended September 30, 2016 totaled approximately
$9.9 million.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2016, the District had approximately $5.3 million invested in capital assets (net of accumulated depreciation). This amount represents a decrease of $203,000 from the fiscal year 2015 total.

September 30,	2016	2015	Change	
Capital assets not being depreciated	$	1,850,000	$	1,850,000	$	‐	
Capital assets being depreciated	5,072,251	5,072,251	‐	
Total, prior to depreciation	6,922,251	6,922,251	‐	
Accumulated depreciation	(1,623,120)	(1,420,230)	(202,890)	
Net capital assets	$	5,299,131	$	5,502,021	$	(202,890)	

More information about the District’s statements.	
long‐term debt is presented in Note 3	
to the financial	
Debt			

At September 30, 2016, all of the District’s outstanding bonds were cancelled. This amount represents a decrease of $9.7 million from the fiscal year 2015 total. A listing of debt amounts outstanding for the current and prior year is as follows:

September 30,	2016		2015	Change	
Series 2007 bonds	$	−	$	9,680,000	$ (9,680,000)	
$	−	$	9,680,000	$ (9,680,000)	

More information about the District’s long‐term debt is presented in Note 4 to the financial statements.

GOVERNMENTAL FUNDS BUDGETARY HIGHLIGHTS

An Operating budget was established by the governing board for the District pursuant to the requirements of Florida Statutes. The budget to actual comparison for the general fund, including the original budget and final adopted budget, is shown at page 22.

The District experienced favorable variances in revenues and expenditures as compared to the budget in the amount of $38,583 and $106,823, respectively. The variance in expenditures occurred primarily due to anticipated budgeted operating expenditures that were not incurred during the year.

FUTURE FINANCIAL FACTORS

Lakeside Landing Community Development District is an independent special district that operates under the provisions of Chapter 190, Florida Statutes. The District operates under an elected Board of Supervisors, which establishes policy and sets assessment rates. Assessment rates for fiscal year 2017 were established to provide for the operations of the District as well as the necessary debt service requirements.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide a general overview of the District’s finances. If you have questions about this report or need additional financial information, contact the Lakeside Landing Community Development District’s management company, Fishkind & Associates, Inc., at 12051 Corporate Blvd., Orlando, Florida 32817.

Basic Financial Statements

Statement of Net Position

September 30,	2016	
	Governmental	
	Activities	
Assets		
Cash and cash equivalents	$	300	
Accounts receivable	121,742	
Prepaid expenses	2,282	
Deposits	9,523	
Capital assets:		
Not being depreciated	1,850,000	
Depreciable, net	3,449,131	

Total assets	
5,432,978	

Liabilities
Accounts payable	68,816

Total liabilities	68,816

Net position
Net investment in capital assets	5,299,131
Unrestricted	65,031

Total net position	$	5,364,162

Statement of Activities

Year ended September 30,		2016		

Program Revenues	Net (Expense) Revenue and Changes in Net Position	

Functions/Programs	

Expenses	
Charges for Services	
Governmental Activities	
Primary government: Governmental activities:
General government	

$	(155,945)	

$	267,373	

$	111,428	
Unallocated depreciation	(202,890)	‐	(202,890)	
Interest	(173,991)	2,891,383	2,717,392	

Total governmental activities	
$	(532,826)	
$	3,158,756	
2,625,930	

General revenues
Interest and other revenues	101
Special item
    Gain on cancellation of debt	10,267,662 

 Total general revenues and special item	10,267,763 Change in net position	12,893,693
 Net position (deficit) ‐ beginning of year	(7,529,531)

 Net position ‐ end of year	$	5,364,162 

Balance Sheet – Governmental Funds

September 30,		2016		
			Total	
			Governmental	
	General	Debt Service	Funds	
Assets				
Cash and cash equivalents	$	300	$	‐	$	300	
Accounts receivable	121,742	‐	121,742	
Prepaid expenditures	2,282	‐	2,282	
Deposits	9,523	‐	9,523	

Total assets	
$	133,847	
$	‐	
$	133,847	

Liabilities, Deferred inflows of resources, and Fund Balances
Liabilities

Accounts payable	$	68,816	$	‐	$	68,816	

Total liabilities	
68,816	
‐	
68,816	

Deferred inflows of resources				
Deferred revenue	1,118	‐	1,118	

Nonspendable	11,805	‐	11,805	
Unassigned	52,108	‐	52,108	
Total fund balances	63,913	‐	63,913	

Total deferred inflows of resources	1,118	‐	1,118 Fund balances

Total liabilities, deferred inflows of resources, and fund balances

$	133,847	$

−	$	133,847

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of
Net Position

September 30,	2016	

Total fund balances, governmental funds	
$	63,913	
Capital assets used in governmental activities are note financial resources and therefore are not reported in the fund financial statements.	
5,299,131	
Revenues in the Statement of Activities that do not provide current financial resources are reported as deferred inflows at the fund level.	
1,118	

Total net position ‐ governmental activities	
$	5,364,162	

Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds

Year ended September 30,		2016		
			Total	
			Governmental	
	General	Debt Service	Funds	
Revenues				
Assessment revenue	$	169,634	$	‐	$	169,634	
Developer contributions	96,621	‐	96,621	
SPE contribution	‐	2,891,383	2,891,383	
Interest and other revenues	‐	101	101	
Total revenues	266,255	2,891,484	3,157,739	

Expenditures
Current:

General government	82,337	35,096	117,433	
Maintenance and operations	38,512	‐	38,512	
Debt service:				
Interest	‐	389,231	389,231	
Total expenditures	120,849	424,327	545,176	

Excess (deficit) of revenues over
expenditures	145,406	2,467,157	2,612,563

Other financing sources (uses)

Transfers in	1,007	‐	1,007	
Transfers out	‐	(1,007)	(1,007)	
Total other financing sources (uses)	1,007	(1,007)	‐	

Special item				
Cancellation of debt	‐	7,292,662	7,292,662	

Net change in fund balances	
146,413	
9,758,812	
9,905,225	
Fund balances (deficit), beginning of year	(82,500)	(9,758,812)	(9,841,312)	

Fund balances, end of year	
$	63,913	
$	‐	
$	63,913	

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities

Year ended September 30,	2016	

Net change in fund balances ‐ governmental funds	
$	9,905,225	
Revenues in the Statement of Activities that do not provide current financial resources are reported as deferred inflows at the fund level.	
1,118	
Depreciation on capital assets is not recognized in the fund financial statements but is reported as an expense in the Statement of Activities.	
(202,890)	
Certain transactions involving debt cancellation generate a gain on the government wide financial statements but have no impact on the fund level financial statements.	

2,975,000	
The change in accrued interest between the current and prior year is recorded		
on the Statement of Activities but not on the fund level statements.	215,240

Change in net position of governmental activities	$	12,893,693

NOTE 1: NATURE OF ORGANIZATION

The Lakeside Landing Community Development District (the “District”) was established on August 14, 2006 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, by City of Winter Haven Ordinance O‐06‐84. The Act 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 governed by a Board of Supervisors (“Board”), which is comprised of five members. The Supervisors are elected on an at large basis by the owners of the property within the District. The Board of Supervisors of the District exercises all powers granted to the District pursuant to Chapter 190, Florida Statutes. At September 30, 2016 certain Board members were affiliated with
Horton. (“Developer”).

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.

In evaluating how to define the government, for financial reporting purposes, management has considered all potential component units. The decision to include or exclude a potential component unit in the reporting entity was made by applying the criteria set forth by Generally Accepted Accounting Principles (GAAP) as defined by the Governmental Accounting Standards Board (GASB) in statements No. 14 and No. 61. Based on the foregoing criteria, no potential component units were found.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the District conform to GAAP as applicable to governments in accordance with those promulgated by GASB. The following is a summary of the more significant 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 the non‐fiduciary activities of the primary government. Governmental activities, which normally are supported by assessments, are reported separately from business‐type activities, which rely to a significant extent on fees and charges for support. The business‐type activities are reported separately in government‐wide financial statements; however, at September 30, 2016, the District did not have any significant business‐type activities. Therefore, no business‐type activities are reported. Assessments and other items not properly included as program revenues (i.e., charges to customers or applicants who purchase, use, or directly benefit from goods or services) are reported as general revenues.

Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

Measurement Focus, Basis of Accounting and Basis of 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 the related cash flows. Assessments are recognized as revenues in the year for which they are levied. Grants and other 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 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. However, debt service expenditures are recorded only when payment is due.

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

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

The District reports the following major governmental funds:

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

Debt Service Fund – The Debt Service Fund is used to account for the accumulation of resources for the annual payment of principal and interest on long‐term debt.

For the year ended September 30, 2016, the District does not report any proprietary funds. As a general rule, the effect of interfund activity has been eliminated from the government‐wide financial statements.

When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use in the governmental fund financial statements, it is the government’s policy to use committed resources first, followed by assigned resources, then unassigned resources as needed.

Cash, Deposits and Investments

The District maintains deposits with "Qualified Public Depositories" as defined in Chapter 280, Florida Statutes. All Qualified Public Depositories must place with the Treasurer of the State of Florida securities in accordance with collateral requirements determined by the State’s Chief Financial Officer. In the event of default by a Qualified Public Depository, the State Treasurer will pay public depositors all losses. Losses in excess of insurance and collateral will be paid through assessments between all Qualified Public Depositories.

Under this method, all the District's deposits are fully insured or collateralized at the highest level of security as defined by GASB, Statement Number 40, Deposits and Investment Disclosures (An Amendment of GASB, Statement Number 3).

The District is authorized to invest in financial instruments as established by Section 218.415, Florida Statutes. The authorized investments include among others direct obligations of the United States Treasury; the Local Government Surplus Trust Funds as created by Section 218.405, Florida Statutes; SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency; and interest‐bearing time deposits or savings accounts in authorized financial institutions.

Capital Assets

Capital assets, which include primarily infrastructure assets (e.g., roads, sidewalks, water management systems and similar items), are reported in the governmental activities column in the government‐wide financial statements. Capital assets are defined by the District as assets with an initial/individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost and estimated historical cost if purchased or constructed. Donated 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 asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

Property, plant and equipment of the primary government are depreciated using the straight‐line method over the following estimated useful lives: Infrastructure – buildings, roadways, stormwater systems and other: 25 years.

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.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Long‐Term Obligations

In the government‐wide financial statements, long‐term debt and other long‐term obligations are reported as liabilities in the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight‐line or effective interest method. Bonds payable are reported net of these premiums or discounts. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as current period expenses.

In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of the 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 Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will  not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any of this type of item at September 30, 2016.

In addition to liabilities, the Statement of Net 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. At September 30, 2016, the District had approximately $1,000 of deferred revenues that relate to a future period.

Fund Equity

Net position in the government‐wide financial statements represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources and is categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets represents assets related to infrastructure and property, plant and equipment, net of any related debt. Restricted net position represents the assets restricted by the District’s bond covenants.

Governmental fund equity is classified as fund balance. Fund balance is further classified as nonspendable, restricted, committed, assigned, or unassigned. Nonspendable fund balance cannot be spent because of its form. Restricted fund balance has limitations imposed by creditors,  grantors, or contributors or by enabling legislation or constitutional provisions. Committed fund balance is a limitation imposed by the District board through approval of resolutions. Assigned fund balance is a limitation imposed by a designee of the District board. Unassigned fund balance in the General Fund is the net resources in excess of what can be properly classified in one of the above four categories. Negative unassigned fund balance in other governmental funds represents excess expenditures incurred over the amounts restricted, committed, or assigned to those purposes.

Budgets

The District is required to establish a budgetary system and an approved annual budget. Annual budgets are legally adopted on a basis consistent with GAAP for the General Fund. Any revision to the budget must be approved by the District Board. The budgets are compared to actual expenditures. In instances where budget appropriations and estimated revenues have been revised during the year, budget data presented in the financial statements represent final authorization amounts.

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.
A public hearing is conducted to obtain comments.
Prior to October 1, the budget is legally adopted by the District Board.
All budget changes must be approved by the District Board.
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

NOTE 3: CAPITAL ASSETS

The following is a summary of changes in the capital assets for the year ended September 30, 2016.

	
Beginning Balance	Transfers
and
Additions	Conveyances	
Ending Balance	
Governmental activities
Capital assets, not being depreciated
Land	

$1,850,000	

$	‐	$	‐	

$ 1,850,000	
Total capital assets, not being depreciated	1,850,000	−	‐	1,850,000	

Capital assets, being depreciated
Infrastructure ‐ buildings and other	

1,149,046	

−	‐	

1,149,046	
Infrastructure ‐ roadways and other	2,831,862	−	‐	2,831,862	
Infrastructure ‐ stormwater system	1,091,343	−	‐	1,091,343	
Total capital assets, being depreciated	5,072,251	−	‐	5,072,251	

Less accumulated depreciation for:
Infrastructure ‐  buildings  and other	

321,734	

45,962	‐	

367,696	
Infrastructure ‐ roadways and other	792,918	113,274	‐	906,192	
Infrastructure ‐ stormwater system	305,578	43,654	‐	349,232	
Total accumulated depreciation	1,420,230	202,890	‐	1,623,120	

Total capital assets, being depreciated, net	
3,652,021	
(202,890)	‐	
3,449,131	

Governmental activities capital assets, net	
$5,502,021	
$ (202,890)   $	‐	
$5,299,131	

NOTE 4: BONDS PAYABLE

On April 13, 2007, the District issued $3,350,000 of Special Assessment Bonds, Series 2007A and
$6,470,000 Series 2007B. The Series 2007A Bonds were due on May 1, 2038 with a fixed interest rate of 5.5% and the Series 2007B Bonds were due May 1, 2013, with a fixed rate of 5.25%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest was paid semiannually on each May 1 and November 1. Principal on the 2007A Bonds was paid serially commencing November 1, 2007 through November 1, 2037. The Series 2007B Bonds were due in one lump sum payment on May 1, 2013.

In prior fiscal years, the Developer failed to make payment on the special assessments which ultimately secured the Bonds. As a result, the Bondholders and the Developer entered into an agreement to deed the delinquent lots to a special purpose entity (SPE) in lieu of the District initiating foreclosure proceedings. The District and the SPE entered into an agreement whereby, the District will defer collection of the debt service assessments encumbering the property resulting in an abeyance of debt service assessments.

During the year ended September 30, 2016, the SPE sold the property to D.R. Horton. As part of the sale, certain net proceeds generated from the sale were deposited into the District’s account for the benefit of the Bondholders. The Bondholders applied all the remaining monies in the Trust Estate, as final distribution for the Bonds in exchange for all Bonds outstanding, which were cancelled following the final distribution. At total of approximately $2.9 million was distributed, and outstanding principal and interest of approximately $13.2 million was cancelled, which resulted in a gain on cancellation of approximately $10.3 million on the government‐wide Statement of Activities.

Long‐term liability activity for the year ended September 30, 2016, was as follows:

Governmental Activities
Bonds Payable:

Beginning
Balance	Additions	Reductions

Ending Balance

Due Within One Year

Series 2007

$  9,680,000	$

−	$ (9,680,000) $

−	$	‐

$  9,680,000	$

−	$ (9,680,000) $

−	$	‐

NOTE 5: 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 maintains commercial insurance coverage to mitigate the risk of loss. Coverage may not extend to all situations. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in the previous three years.

NOTE 6: 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 (Board appointed non‐voting positions) of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, and other administrative costs.

NOTE 7: CONCENTRATION

A significant portion of the District’s activity is dependent upon the continued involvement of the new Developer, D.R. Horton. The loss of significant involvement could have a material adverse effect on the District’s operations.

During the year ended September 30, 2016, the Developer was assessed approximately $143,000 and contributed $96,621 for the general operations and maintenance of the District, of which
$121,000 is receivable at year end.

Required Supplemental Information (Other Than MD&A)

Lakeside Landing Community Development District Budget to Actual Comparison Schedule – General Fund

Year ended September 30,		2016		
	Original and Final Budget	Actual Amounts	Variance with Final Budget	
Revenues
Assessment revenue	
$	227,672	
$	169,634	
$	(58,038)	
Developer contributions	‐	96,621	96,621	
Total revenues	227,672	266,255	38,583	

Expenditures
General government	

78,000	

82,337	

(4,337)	
Maintenance and operations	149,672	38,512	111,160	
Total expenditures	227,672	120,849	106,823	

Excess of revenues over expenditures	
$	‐	
$	145,406	
$	145,406	

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
Lakeside Landing Community Development District Winter Haven, 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 and each major fund of Lakeside Landing Community Development District (hereinafter referred to as the “District”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated June 23, 2017.

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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

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

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 23, 2017

MANAGEMENT LETTER

To the Board of Supervisors
Lakeside Landing Community Development District Winter Haven, Florida

Report on the Financial Statements

We have audited the financial statements of the Lakeside Landing Community Development District (“District”) as of and for the fiscal year ended September 30, 2016, and have issued our report thereon dated June 23, 2017.

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 Reports and Schedule

We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountant’s Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in this report, which is dated June 23, 2017, should be considered in conjunction with this management letter.

Prior Audit Findings

Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. The prior year findings 2015‐01, 2015‐02, and 2015‐03  were resolved in the current year.

Official Title and Legal Authority

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

Financial Condition

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

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

Annual Financial Report

Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, requires that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the District for the fiscal year ended September 30, 2016, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2016. In connection with our audit, we determined that these two reports were in agreement.

Other Matters

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

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

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 23, 2017

INDEPENDENT ACCOUNTANT’S REPORT

To the Board of Supervisors
Lakeside Landing Community Development District Winter Haven, Florida

We have examined Lakeside Landing Community Development District’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2016. Management is responsible for the District’s compliance with those requirements. Our responsibility is to express an opinion on the District’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. 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 above. 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 judgement, 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 year ended September 30, 2016.

This report is intended solely for the information and use of management and the State of Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 23, 2017