North Boulevard Community

Development District

FINANCIAL STATEMENTS

September 30, 2018

North Boulevard Community Development District
Table of Contents

September 30, 2018

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	23	
Independent Auditors’ Report on Internal Control Over Financial Reporting and on		
Compliance and Other Matters Based on an Audit of Financial Statements		
Performed in Accordance With Government Auditing Standards	24	
Management Letter	26	
Independent Accountants’ Report on Compliance with Section 218.415 Florida Statutes	28	

CRI	~l:G::		
	IN GRAM		
			
CPAs and	Advisors		

Carr, Riggs & Ingram, LLC

Certified Public Accountants

500 Grand Boulevard

Suite 210

Miramar Beach, Florida 32550

INDEPENDENT AUDITORS' REPORT

(850)	837-3141	
(850)	654-4619	
CRlcpa .com	

(fax)

To the Board of Supervisors
North Boulevard Community Development District

Polk County, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and each major fund of North Boulevard Community Development District (hereinafter referred to as “District”), as of and for the 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.

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, 2018, 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 12, 2019, 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 12, 2019

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Management’s Discussion And Analysis

North Boulevard Community Development District Management’s Discussion and Analysis

Our discussion and analysis of the North Boulevard Community Development District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2018. Please read it in conjunction with the District’s financial statements, which begin on page 8.

FINANCIAL HIGHLIGHTS

	At September 30, 2018, the assets of the District exceed its liabilities by approximately $176,000.

	During the fiscal year ended September 30, 2018, the District incurred approximately $3.7 million of capital expenditures and $118,000 of bond issuance costs. In addition, the District paid interest expenditures of approximately $131,000 and repaid principal of $560,000.

	On October 16, 2017, the District issued $4,965,000 of Special Assessment Bonds, Series 2017 to fund the planning, financing, acquisition, construction, equipping and installation of the Series 2017 Project.

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 9. 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.

‐ 3 ‐

North Boulevard Community Development District Management’s Discussion and Analysis

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 10 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,		2018		2017		Change	
Assets							
Current and other assets	$	749,118	$	42,836	$	706,282	
Capital assets, net		3,938,240		231,504		3,706,736	
Total assets	$	4,687,358	$	274,340	$	4,413,018	
							
Liabilities							
Current liabilities	$	196,680	$	389,282	$	(192,602)	
Other liabilities		4,314,462		‐		4,314,462	
Total liabilities		4,511,142		389,282		4,121,860	
Net position							
Net investment in capital assets		(318,342)		(145,202)		(173,140)	
Restricted for:							
Debt service		275,257		‐		275,257	
Capital projects		208,530		‐		208,530	
Unrestricted		10,771		30,260		(19,489)	
Total net position (deficit)		176,216		(114,942)		291,158	
Total liabilities and net position	$	4,687,358	$	274,340	$	4,413,018	

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

During the fiscal year ended September 30, 2018, total assets and liabilities increased over the prior year by approximately $4.4 million and $4.1 million, respectively. The increase in both is primarily

‐ 4 ‐

North Boulevard Community Development District Management’s Discussion and Analysis

due to the issuance of Series 2017 bonds and the resulting infrastructure construction.

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

Year ended September 30,		2018		2017		Change	
Revenues:							
Program revenues:							
Charges for services	$	361,834	$	15,144	$	346,690	
Operating grants and contributions		102,667		‐		102,667	
Capital grants and contributions		253,125		‐		253,125	
General revenues:							
Developer contributions		‐		90,260		(90,260)	
Total revenues		717,626		105,404		612,222	
Expenses:							
General government		91,523		51,000		40,523	
Bond issue costs		117,969		169,346		(51,377)	
Interest		216,976		‐		216,976	
Total expenses		426,468		220,346		206,122	
Change in net position		291,158		(114,942)		406,100	
Net position (deficit), beginning		(114,942)		‐		(114,942)	
Net position (deficit), ending	$	176,216	$	(114,942)	$	291,158	

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

During the fiscal year ended September 30, 2018, total revenues and expenses increased approximately $612,000 and $206,000, respectively. The increase in revenues is primarily due to debt service assessments and prepayment revenues in the current year related to lot sales. The increase in expenses primarily due to interest payments made related to the Special Assessment Bonds, Series 2017.

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 $713,000, which is an increase from prior year’s deficit fund balance that totaled approximately $346,000. Significant transactions are discussed below.

	On October 16, 2017, the District issued $4,965,000 of Special Assessment Bonds, Series 2017 to fund the planning, financing, acquisition, construction, equipping and installation of the Series 2017 Project.

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North Boulevard Community Development District Management’s Discussion and Analysis

	During the fiscal year ended September 30, 2018, the District incurred approximately $3.7 million of capital expenditures and $118,000 of bond issuance costs.

	During the fiscal year ended September 30, 2018, the District paid interest expenditures of approximately $131,000 and repaid principal of $560,000.

The overall increase in fund balance for the year ended September 30, 2018 totaled approximately $1.1 million.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2018, the District had approximately $3.9 million invested in capital assets. This amount represents an increase of approximately $3.7 million from the fiscal year 2017 total. A listing of capital assets by major category for the current and prior year follows:

September 30,		2018		2017		Change	
Capital assets not being depreciated	$	3,938,240	$	231,504	$	3,706,736	

More information about the District's capital assets is presented in Note 4 to the financial statements.

Debt

At September 30, 2018, the District had approximately $4.4 million of bonds outstanding. This amount represents an increase of $4.4 million from the fiscal year 2017 total. A listing of debt amounts outstanding for the current and prior year is as follows:

September 30,		2018		2017		Change	
Series 2017 bonds	$	4,405,000	$	‐	$	4,405,000	
	$	4,405,000	$	‐	$	4,405,000	

More information about the District’s long‐term debt is presented in Note 5 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 23.

‐ 6 ‐

North Boulevard Community Development District Management’s Discussion and Analysis

The District experienced an unfavorable variance of $81,500 in revenues and a favorable variance of $88,477 in expenditures, as compared to the budget. The variance in expenditures occurred primarily due to the District budgeting conservatively in the current year. Revenues varied in a similar manner because the Developer currently funds the District generally to the extent it makes expenditures.

FUTURE FINANCIAL FACTORS

North Boulevard 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 2019 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 North Boulevard Community Development District’s management company at 12051 Corporate Blvd., Orlando, Florida 32817.

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Basic Financial Statements

	North Boulevard Community Development District	
	Statement of Net Position	
September 30,		2018	
		Governmental	
		Activities	
Assets			
Cash and cash equivalents	$	15,658	
Investments		723,047	
Due from Developer		8,747	
Interest receivable		946	
Deposits		720	
Capital Assets:			
Not being depreciated		3,938,240	
Total assets		4,687,358	
Liabilities			
Accounts payable		36,298	
Accrued interest payable		85,382	
Non‐current liabilities:			
Due within one year		75,000	
Due in more than one year		4,314,462	
Total liabilities		4,511,142	
Net position			
Net investment in capital assets		(318,342)	
Restricted for:			
Debt service		275,257	
Capital projects		208,530	
Unrestricted		10,771	
Total net position	$	176,216	

The accompanying notes are an integral part of these financial statements.

‐ 8 ‐

North Boulevard Community Development District Statement of Activities

Year ended September 30,							2018									
											Net (Expense)		
											Revenue and		
					Program Revenues				Changes in		
								Net Position		
							Operating			Capital						
			Charges for	Grants and	Grants and	Governmental		
Functions/Programs		Expenses	Services	Contributions Contributions			Activities		
Primary government:																
Governmental activities:																
General government	$	(91,523)	$	‐	$	98,500	$		‐	$	6,977		
Bond issue costs		(117,969)		‐		‐			71,053			(46,916)		
Interest		(216,976)		361,834			4,167			182,072			331,097		
Total governmental																
activities	$	(426,468)	$	361,834		$	102,667	$		253,125			291,158		
	Change in net position								291,158		
	Net position (deficit) ‐ beginning of year						(114,942)		
	Net position ‐ end of year						$	176,216		

‐ 9 ‐

North Boulevard Community Development District Balance Sheet – Governmental Funds

September 30,				2018				
								Total	
						Capital	Governmental	
		General	Debt Service	Project Fund		Funds	
Assets									
Cash and cash equivalents	$	15,658	$	‐	$	‐	$	15,658	
Investments		‐		517,533		205,514		723,047	
Due from the Developer		6,000		‐		2,747		8,747	
Interest receivable		‐		677		269		946	
Deposits		720		‐		‐		720	
Total assets	$	22,378	$	518,210	$	208,530	$	749,118	
									
Liabilities and Fund Balances									
Liabilities									
Accounts payable	$	11,607	$	‐	$	24,691	$	36,298	
Total liabilities		11,607		‐		24,691		36,298	
Fund balances									
Nonspendable		720		‐		‐		720	
Restricted for debt service		‐		518,210		‐		518,210	
Assigned for capital projects		‐		‐		183,839		183,839	
Unassigned		10,051		‐		‐		10,051	
Total fund balances		10,771		518,210		183,839		712,820	
Total liabilities and fund balances	$	22,378	$	518,210	$	208,530	$	749,118	

‐10‐

North Boulevard Community Development District Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position

September 30,		2018		
Total fund balances, governmental funds	$	712,820		
Capital assets used in governmental activities are not financial resources and		3,938,240		
therefore are not reported in the fund level statements.				
Liabilities not due and payable from current resources, including accrued		(4,474,844)		
interest, are not reported in the fund level statements.				
Total net position ‐ governmental activities	$	176,216		

‐11‐

North Boulevard Community Development District Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds

Year ended September 30,				2018				
								Total	
						Capital	Governmental	
		General	Debt Service	Project Fund		Funds	
Revenues									
Prepayment revenue	$	‐	$	361,834	$	‐	$	361,834	
Developer contributions		98,500		‐		231,603		330,103	
Interest and other revenues		‐		4,167		21,522		25,689	
Total revenues		98,500		366,001		253,125		717,626	
Expenditures									
Current:									
General government		88,803		‐		‐		88,803	
Field operations		2,720		‐		‐		2,720	
Debt service:									
Principal		‐		560,000		‐		560,000	
Interest		‐		131,058		‐		131,058	
Bond issue costs		‐		‐		117,969		117,969	
Capital outlay		‐		‐		3,706,736		3,706,736	
Total expenditures		91,523		691,058		3,824,705		4,607,286	
Excess (deficit) of revenues over									
expenditures		6,977		(325,057)		(3,571,580)		(3,889,660)	
Other financing sources (uses)									
Transfers in		‐		560,577		‐		560,577	
Transfers out		(26,466)		‐		(534,111)		(560,577)	
Bond issuance proceeds		‐		298,764		4,666,236		4,965,000	
Original issue discount		‐		(16,074)		‐		(16,074)	
Total other financing sources (uses)		(26,466)		843,267		4,132,125		4,948,926	
Net change in fund balances		(19,489)		518,210		560,545		1,059,266	
Fund balances (deficit), beginning of year		30,260		‐		(376,706)		(346,446)	
Fund balances, end of year	$	10,771	$	518,210	$	183,839	$	712,820	

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North Boulevard Community Development District Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities

Year ended September 30,		2018		
Net change in fund balances ‐ governmental funds	$	1,059,266		
Capital outlay, reported as expenditures in the governmental funds, is		3,706,736		
shown as capital assets on the Statement of Net Position.				
Governmental funds report principal payments on bonds when debt is paid,				
whereas these payments are eliminated in the Statement of Activities and				
recognized as a decrease in bonds payable in the Statement of Net Position.		560,000		
Amortization of the original issue discount, premium, and defeased interest				
on bonds is not recognized in the governmental fund statements but is				
reported as an expense in the Statement of Activities.		(536)		
The change in accrued interest between the current and prior year is				
recorded  on  the  Statement  of  Activities  but  not  on  the  fund  level		(85,382)		
statements.				
Bond proceeds and original issue discount which are reported as other				
financing sources (uses) in the governmental funds are recognized as				
components of long‐term liabilities in the Statement of Net Assets.		(4,948,926)		
Change in net position of governmental activities	$	291,158		

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North Boulevard Community Development District Notes to Financial Statements

NOTE 1: NATURE OF ORGANIZATION

The North Boulevard Community Development District (the “District”) was established on April 6, 2017 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, by Board of County Commissioners of the City of Haines City Ordinance 17‐1555. 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 construction, maintenance and operation of a community development within the District.

of financing and managing the acquisition, portion of the infrastructure necessary for

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, 2018, certain Board members were affiliated with HH CR 547 Investors I, LLC. (“the Developer”).

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

6.	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). 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.

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North Boulevard Community Development District Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, 2018, 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 within60 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.

Developer contributions 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.

‐15‐

North Boulevard Community Development District Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

Capital Projects Fund – The Capital Projects fund is used to account for the financial resources to be used for the acquisition or construction of major infrastructure within the District.

For the year ended September 30, 2018, 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

‐16‐

North Boulevard Community Development District Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 estimated useful lives. Estimated useful lives for financial reporting purposes are as follows: infrastructure: 20‐30 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.

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 current period 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, 2018.

In addition to liabilities, the Statement of Net Position and Balance Sheet ‐ Gov't Funds will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District does not have any of this type of item at September 30, 2018.

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North Boulevard Community Development District Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Estimates

The preparation of financial statements in accordance 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.

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 creditors, grantors or contributors.

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:

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

B.	A public hearing is conducted to obtain comments.
C.	Prior to October 1, the budget is legally adopted by the District Board.
D.	All budget changes must be approved by the District Board.

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

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North Boulevard Community Development District Notes to Financial Statements

NOTE 3: INVESTMENTS

The District’s investments consist of money market funds and similar instruments in which shares are owned in the fund rather than the underlying investments. In accordance with GASB 72, Fair Value Measurement and Application, these amounts are reported at amortized cost.

The following is a summary of the District’s investments:

September 30,		2018	Credit Risk	Maturities	
Short‐term Money Market Funds	$	723,047	S&P AAAm	19 days	
	$	723,047			

Custodial credit risk – For an investment, custodial credit risk is the risk that the District will not be able to recover the value of the investments or collateral securities that are in the possession of an outside party. The District has no formal policy for custodial risk. At September 30, 2018, the money market funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form.

Concentration risk – The District’s investment policy requires diversification, but does not specify limits on types of investments.

Interest rate risk – The District does not have a formal policy for addressing interest rate risk; however, investments are made with discretion, to seek reasonable returns, preserve capital, and in general, avoid speculative investments. The District manages its exposure to declines in fair values from interest rate changes by reviewing the portfolio on an ongoing basis for changes in effective yield amounts.

NOTE 4: CAPITAL ASSETS

The following is a summary of changes in the capital assets for the year ended September 30, 2018:

	Beginning		Transfers and		Ending	
		Balance	Additions	Conveyances		Balance	
Governmental Activities:								
Capital assets not being depreciated								
Infrastructure under construction	$	231,504	$ 3,706,736	$	‐	$	3,938,240	
Total capital assets, not being depreciated		231,504	3,706,736		‐		3,938,240	
Governmental activities capital assets, net	$	231,504	$ 3,706,736	$	‐	$	3,938,240	

The total projected cost of the infrastructure has been estimated at $10 million, of which approximately $4.4 million is expected to be financed with the proceeds from the issuance of Bonds with the remainder to be funded by the Developer.

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North Boulevard Community Development District Notes to Financial Statements

NOTE 5: LONG‐TERM DEBT

On October 16, 2017 the District issued $4,965,000 of Special Assessment Bonds, Series 2017 consisting of $445,000 2017 Term Bonds due May 1, 2023 with a fixed interest rate of 3.50%, $545,000 2017 Term Bonds due May 1, 2028 with a fixed interest rate of 4.13%, $1,515,000 2017 Term Bonds due May 1, 2038 with a fixed interest rate of 4.70%, and $2,460,000 2017 Term Bonds due May 1, 2048 with a fixed interest rate of 5.00%. The Bonds were issued 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 Series 2017 Bonds is to be paid serially commencing May 1, 2018 through May 1, 2048. The Series 2017 Bonds are subject to optional redemption beginning May 1, 2028 and to extraordinary mandatory redemption prior to maturity in the manner determined by the Bond Registrar if certain events occur as outlined in the Bond Indenture.

The Bond indenture requires that the District maintain adequate funds in the reserve accounts to meet the debt service reserve requirements as defined in the Indentures. The requirements have been met for fiscal year ended September 30, 2018.

The balance of the bonds at September 30, 2018 is summarized as follows:

September 30,		2018	
Bond principal balance	$	4,405,000	
Less unamortized bond discount		(15,538)	
	$	4,389,462	

Long‐term liability activity for the year ended September 30, 2018, was as follows:

	Beginning								Due Within	
	Balance			Additions	Reductions	Ending Balance		One Year	
Governmental Activities											
Bonds Payable:											
Series 2017	$	‐	$	4,965,000	$	(560,000)	$	4,405,000	$	75,000	
	$	‐	$	4,965,000	$	(560,000)	$	4,405,000	$	75,000	

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North Boulevard Community Development District Notes to Financial Statements

NOTE 5: LONG‐TERM DEBT (Continued)

At September 30, 2018, the scheduled debt service requirements on long‐term debt were as follows:

Year Ending September 30,						Total Debt		
		Principal		Interest		Service		
2019	$	75,000	$	196,856	$	271,856		
2020		70,000		186,170		256,170		
2021		75,000		183,720		258,720		
2022		75,000		181,095		256,095		
2023		75,000		178,470		253,470		
2024 ‐ 2028		445,000		843,145		1,288,145		
2029 ‐ 2033		550,000		739,438		1,289,438		
2034 ‐ 2038		690,000		599,300		1,289,300		
2039 ‐ 2043		875,000		418,750		1,293,750		
2044 ‐ 2048		1,475,000		176,500		1,651,500		
	$	4,405,000	$	3,703,444	$	8,108,444		

NOTE 6: 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. The District has not settled any claims in the time since its inception.

NOTE 7: 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 8: DEVELOPER TRANSACTIONS

The Developer has agreed to fund the general operations of the District. For the year ended September 30, 2018, the Developer contributed $98,500 and $71,053 to the General and Capital Project Funds, respectively. Of these contributions, a total of $8,747 is recorded as Due from developer on the accompanying Statement of Net Position and Balance Sheet ‐ Governmental Funds.

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North Boulevard Community Development District Notes to Financial Statements

NOTE 8: DEVELOPER TRANSACTIONS (Continued)

A significant portion of the District’s activity is dependent upon the continued involvement of the Developer, HH CR 547 Investors I, LLC. The loss of significant involvement could have a material adverse effect on the District’s operations.

NOTE 9: INTERFUND TRANSFERS

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

Funds		Interfund			
	Transfers in	Transfers out		
General	$	‐	$	‐		
Debt Service		560,577		‐		
Capital Project		‐		(534,111)		
Total	$	560,577	$	(534,111)		

The interfund transfers are to fund the debt service prepayments made during the current year.

NOTE 10: RELATED PARTY TRANSACTIONS

During the year ended September 30, 2018, the District incurred $66,000 worth of construction management expenses from Heath Construction & Management, LLC, whose CEO is the District's Board Chairman.

NOTE 11: SUBSEQUENT EVENTS

On January 17, 2019 the District issued $4,335,000 of Special Assessment Bonds, Series 2019 consisting of $355,000 2019 Term Bonds due November 1, 2024 with a fixed interest rate of 4.25%, $440,000 2019 Term Bonds due November 1, 2029 with a fixed interest rate of 4.75%, $1,300,000 2019 Term Bonds due November 1, 2039 with a fixed interest rate of 5.50%, and $2,240,000 2019 Term Bonds due November 1, 2049 with a fixed interest rate of 5.625%. The bonds were issued to fund the construction of the District’s portions of amenities as set forth in an Interlocal Agreement with Holly Hill Road East Community Development District. Interest is to be paid semiannually on each May 1 and November 1.

Principal on the Series 2019 Bonds is to be paid serially commencing November 1, 2019 through November 1, 2049. The Series 2019 Bonds are subject to optional redemption beginning November 1, 2024 and to extraordinary mandatory redemption prior to maturity in the manner determined by the Bond Registrar if certain events occur as outlined in the Bond Indenture.

‐22‐

Required Supplemental Information

(Other Than MD&A)

North Boulevard Community Development District

Budget to Actual Comparison Schedule – General Fund

Year ended September 30,				2018			
	Original and Final			Variance with	
		Budget	Actual Amounts		Final Budget	
Revenues							
Developer contributions	$	180,000	$	98,500	$	(81,500)	
Total revenues		180,000		98,500		(81,500)	
Expenditures							
General government		103,000		88,803		14,197	
Maintenance and operations		77,000		2,720		74,280	
Total expenditures		180,000		91,523		88,477	
Excess of revenues over expenditures	$	‐	$	6,977	$	6,977	

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CRI	~l:G::		
	INGRAM		
			
CPAs and	Advisors		

Carr, Riggs & Ingram, LLC

Certified Public Accountants

500 Grand Boulevard

Suite 210

Mira mar Beach, Florida 32550

(850)	837-3141	
(850)	654-4619	
CRlcpa .com	

(fax)

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
North Boulevard Community Development District

Polk County, 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 North Boulevard Community Development District (hereinafter referred to as the “District”), as of and for the 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 report thereon dated June 12, 2019.

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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did identify a deficiency in internal control, described on the following page as IC2018‐01, which we consider to be a material weakness.

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IC2018‐01: Financial Statement Closing Procedures

	Condition: As part of our audit procedures, we identified approximately $16,000 of bond discount that was not recorded on the District’s fund level financial statements as of September 30, 2018. We also identified approximately $26,000 of capital outlay expenditures that were improperly capitalized as of September 30, 2018.

	Criteria: Internal controls should be in place to provide reasonable assurance that all accounting transactions, including those items that do not directly impact cash, are properly recorded as part of the financial statement close process.

	Cause: The District only recorded the cash activity of the bond issuance. The District failed to reduce retainage payable once paid.

	Effect: Bond issuance costs and long‐term debt on the financial statements were understated by approximately $16,000. Capital outlay expenditures were overstated by approximately $26,000.

	Recommendation: We recommend the District review its financial statement closing procedures to ensure all noncash items are properly recorded.

	Management response: The District will take steps to implement the aforementioned recommendation.

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 12, 2019

‐25‐

CRI	~l:G::		
	INGRAM		
			
CPAs and	Advisors		

MANAGEMENT LETTER

To the Board of Supervisors
North Boulevard Community Development District

Polk County, Florida

Carr,	Riggs &	Ingram, LLC	
Certified Public Accountants	
500 Grand Boulevard	
Suite	210		
Mira mar Beach, Florida 32550	
(850)	837-3141		
(850)	654-4619	(fax)	
CRlcpa .com		

Report on the Financial Statements

We have audited the financial statements of the North Boulevard Community Development District (“District”) as of and for the fiscal year ended September 30, 2018, and have issued our report thereon dated June 12, 2019.

Auditors' 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 Auditors' 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 Accountants' 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 report, which are dated June 12, 2019, 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. There were no findings or recommendations made in the preceding annual audit report.

Official Title and Legal Authority

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

‐26‐

Financial Condition and Management

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

Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the District. It is management’s responsibility to monitor the District’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.

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

Additional Matters

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 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 12, 2019

‐27‐

CRI	~l:G::		
	IN GRAM		
			
CPAs and	Advisors		

Carr, Riggs & Ingram, LLC

Certified Public Accountants

500 Grand Boulevard

Suite 210

Mira mar Beach, Florida 32550

INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Supervisors

North Boulevard Community Development District Polk County, Florida

(850)	837-3141	
(850)	654-4619	
CRlcpa .com	

(fax)

We have examined North Boulevard Community Development District’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2018. 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 performed 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 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 year ended September 30, 2018.

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 12, 2019

‐28‐