Winter Garden Village at Fowler Groves Community Development District

FINANCIAL STATEMENTS

September 30, 2017

Winter Garden Village at Fowler Groves Community Development District
Table of Contents September 30, 2017

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
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	23
Management Letter	26
Attestation Report on Compliance with Section 218.415 Florida Statutes	28

INDEPENDENT AUDITORS’ REPORT

To the Board of Supervisors
Winter Garden Village at Fowler Groves Community Development District Winter Garden, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Winter Garden Village at Fowler Groves Community Development District (hereinafter referred to as “District”), as of and for the year  ended September 30, 2017, 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, each major fund, and the aggregate remaining fund information of the District as of September 30, 2017, 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 29, 2018, 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 29, 2018

Management’s Discussion And Analysis

Our discussion and analysis of the Winter Garden Village at Fowler Groves Community Development District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2017. Please read it in conjunction with the District’s financial statements, which begin on page 8.

FINANCIAL HIGHLIGHTS

At September 30, 2017, the liabilities of the District exceed its assets by approximately
$21.8 million (deficit).

During the fiscal year ended September 30, 2017, the District paid interest expenditures of approximately $1.2 million and repaid $1.1 million of outstanding long‐term bond principal. On October 20, 2016, the District issued $24,030,000 of Special Assessment Refunding Bonds, Series 2016 to refund the Series 2006 Bonds.

During fiscal year ended September 30, 2017, the District paid down approximately
$578,000 of the deferred cost liability.

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 6. 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,	2017	2016	Change	
Assets
Current and other assets	
$	1,659,027	
$	2,783,895	
$	(1,124,868)	
Total assets	$	1,659,027	$	2,783,895	$	(1,124,868)	
Liabilities				
Current liabilities	$	1,186,189	$	1,186,011	$	178	
Other liabilities	22,280,841	23,245,000	(964,159)	
Total liabilities	23,467,030	24,431,011	(963,981)	
Net position				
Restricted for:
Debt service	
1,202,708	
346,322	
856,386	
Capital projects	‐	78,009	(78,009)	
Unrestricted	(23,010,711)	(22,071,447)	(939,264)	
Total net position (deficit)	(21,808,003)	(21,647,116)	(160,887)	
Total liabilities and net position	$	1,659,027	$	2,783,895	$	(1,124,868)	

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

During the fiscal year ended September 30, 2017, total assets and liabilities decreased from the prior year by approximately $1.1 million and $964,000, respectively. The decrease in assets is primarily due to the decrease in investments due to refunding of the Series 2006 bonds with the issuance of the Series 2016 bonds in the current year. The decrease in liabilities is primarily due to the repayment of outstanding long‐term bond principal.

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

Year ended September 30,	2017	2016	Change	
Revenues:
Program revenues: Charges for services	

$	2,013,111	

$	2,012,114	

$	997	
General revenues:				
Interest and other revenues	8,056	593	7,463	
Total revenues	2,021,167	2,012,707	8,460	
Expenses:				
General government	53,591	70,803	(17,212)	
Bond issue costs	522,476	‐	522,476	
Deferred costs	578,010	‐	578,010	
Interest	1,027,977	1,367,206	(339,229)	
Total expenses	2,182,054	1,438,009	744,045	
Change in net position	(160,887)	574,698	(735,585)	
Net position (deficit), beginning	(21,647,116)	(22,221,814)	574,698	
Net position (deficit), ending	$ (21,808,003)	$ (21,647,116)	$	(160,887)	

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

Revenues did not vary significantly from prior year. Expenses increased from prior year by approximately $744,000, which is primarily due to the increase in bond issue costs and deferred costs associated with the refunding of the Series 2006 bonds in the current year offset by a decrease in bond interest. The overall result was a $160,887 decrease in net position for the fiscal year 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 $1.6 million, which is a decrease from last year’s balance of approximately $2.8 million. Significant transactions are discussed below.

During the fiscal year ended September 30, 2017, the District paid interest expenditures of approximately $1.2 million and repaid $1.1 million of outstanding long‐term bond principal. On October 20, 2016, the District issued $24,030,000 of Special Assessment Refunding Bonds, Series 2016 to refund the Series 2006 Bonds.

During fiscal year ended September 30, 2017, the District paid down approximately
$578,000 of the deferred cost liability.

The overall decrease in fund balance for the year ended September 30, 2017 totaled approximately
$1.1 million.

DEBT ADMINISTRATION

At September 30, 2017, the District had approximately $23.2 million of bonds outstanding. This amount represents a net decrease of $620,000 from the fiscal year 2016 total.

A listing of debt amounts outstanding for the current and prior year is as follows:
September 30,	2017	2016	Change	
Series 2006 bonds	$	‐	$	23,860,000	$ (23,860,000)	
Series 2016 bonds	23,240,000	‐	23,240,000	
	$	23,240,000	$	23,860,000	$	(620,000)	

More information about the District’s long‐term debt is presented in Note 3 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 expenditures as compared to the budget in the amount of $83,420, while revenues did not vary significantly. The variance in expenditures occurred primarily due to anticipated budgeted operating expenditures, such as trustee, district counsel, engineering and pond maintenance related expenditures, which were not incurred during the year.

FUTURE FINANCIAL FACTORS

Winter Garden Village at Fowler Groves 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 2018 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 Winter Garden Village at Fowler Groves 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,	2017
Governmental Activities

Assets
Cash and cash equivalents

$	1,653,847

Interest receivable	256
Prepaid expenses	4,924
Total assets	1,659,027

Liabilities		
Accounts payable	3,994	
Accrued interest payable	357,195	
Non‐current liabilities:
Due within one year	
825,000	
Due in more than one year	22,280,841	

Total liabilities	
23,467,030	

Net position		
Restricted for:
Debt service	
1,202,708	
Unrestricted	(23,010,711)	

Total net position (deficit)	$	(21,808,003)

Year ended September 30,		2017		
			Net (Expense)	
			Revenue and	
			Changes in	
		Program Revenues	Net Position	
		Charges for	Governmental	
Functions/Programs	Expenses	Services	Activities	
Primary government:				
Governmental activities:				
General government	$	(53,591)	$	52,650	$	(941)	
Bond issue costs	(522,476)	‐	(522,476)	
Deferred costs	(578,010)	‐	(578,010)	
Interest	(1,027,977)	1,960,461	932,484	

Total governmental				
activities	$	(2,182,054)	$	2,013,111	(168,943)	
	
General revenues			
Interest and other revenues	8,056	

Total general revenues	
8,056	

Change in net position	
(160,887)	
Net position (deficit) ‐ beginning of year	(21,647,116)	

Net position (deficit) ‐ end of year	
$	(21,808,003)	

September 30,

2017

General	Debt Service	Non ‐ Major

Total Governmental Funds

Assets
Cash and cash equivalents	
$	94,200	
$	1,559,647	
$	‐	
$	1,653,847	
Interest receivable	‐	256	‐	256	
Prepaid expenditures	4,924	‐	‐	4,924	

Total assets	
$	99,124	
$	1,559,903	
$	‐	
$	1,659,027	

Liabilities and Fund Balances
Liabilities
Accounts payable	

$	3,994	

$	‐	

$	‐	

$	3,994	

Total liabilities	
3,994	
‐	
‐	
3,994	

Fund balances					
Nonspendable	4,924	‐	‐	4,924	
Restricted for debt service	‐	1,559,903	‐	1,559,903	
Unassigned	90,206	‐	‐	90,206	

Total fund balances	95,130	1,559,903	‐	1,655,033

Total liabilities and fund balances	$

99,124	$

1,559,903	$

−	$	1,659,027

Net Position

September 30,	2017	

Total fund balances, governmental funds	
$	1,655,033	
Liabilities not due and payable from current resources, including accrued interest, are not reported in the fund level statements.	
(23,463,036)	
Total net position (deficit) ‐ governmental activities	
$	(21,808,003)	

Governmental Funds

Year ended September 30,	2017
	General	

Debt Service	

Non ‐ Major	Total
Governmental
Funds	
Revenues
Assessment revenue	
$	52,650	
$	1,960,461	
$	‐	
$	2,013,111	
Interest and other revenues	418	7,638	‐	8,056	
Total revenues	53,068	1,968,099	‐	2,021,167	

Expenditures
Current:
General government	53,193	398	‐	53,591	
Deferred costs	‐	500,002	78,008	578,010	
Debt service:
Principal	
‐	
1,121,670	
‐	
1,121,670	
Interest	‐	1,225,425	‐	1,225,425	
Bond issue costs	‐	360,450	162,026	522,476	
Total expenditures	53,193	3,207,945	240,034	3,501,172	

Excess (deficit) of revenues over					
expenditures	(125)	(1,239,846)	(240,034)	(1,480,005)	

Other financing sources (uses)					
Debt service ‐ principal	‐	(23,528,330)	‐	(23,528,330)	
Bond discount	‐	(141,220)	‐	(141,220)	
Debt proceeds	‐	23,867,974	162,026	24,030,000	
Transfers in	‐	399	‐	399	
Transfers out	(398)	‐	(1)	(399)	
Total other financing sources (uses)	(398)	198,823	162,025	360,450	

Net change in fund balances	
(523)	
(1,041,023)	
(78,009)	
(1,119,555)	
Fund balances, beginning of year	95,653	2,600,926	78,009	2,774,588	

Fund balances, end of year	
$	95,130	
$	1,559,903	
$	‐	
$	1,655,033	

Balances of Governmental Funds to the Statement of Activities

Year ended September 30,	2017
Net change in fund balances ‐ governmental funds	$	(1,119,555)

Amortization of original issue discount is not recognized in the governmental
fund statements but is reported as an expense in the Statement of Activities.	(7,061)

The net impact of bond refundings are reported as current period items in the governmental funds, whereas these items impact long‐term liabilities in the
Statement of Net Position.	(28,780)

Repayment of long‐term liabilities, not including those made in connection with the current bond refunding, are reported as expenditures in the governmental fund statement but such repayments reduce liabilities in the Statement of Net
Position and are eliminated in the Statement of Activities.	790,000

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.	204,509

Change in net position of governmental activities	$	(160,887)

NOTE 1: NATURE OF ORGANIZATION

The Winter Garden Village at Fowler Groves Community Development District (the “District”) was established on January 26, 2006 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, by City of Winter Garden Ordinance 06‐06. 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, 2017 certain Board members were affiliated with a major landowner, DDR Winter Garden, LLC.

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). 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, 2017, 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, 2017, 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.

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 and Balance Sheet – Governmental Funds 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 item at September 30, 2017.

In addition to liabilities, the Statement of Net Position and Balance Sheet – Governmental 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, 2017.

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.

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.

NOTE 3: BONDS PAYABLE

On June 9, 2006 the District issued $28,270,000 of Special Assessment Bonds, Series 2006 due on May 1, 2037 with a fixed interest rate of 5.65%. 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 Bonds was to be paid serially commencing May 1, 2008 through May 1, 2037. The Series 2006 Bonds were redeemed in full in connection with the issuance of the Series 2016 Bonds mentioned below.

On October 20, 2016 the District issued $24,030,000 of Special Assessment Refunding Bonds, Series 2016 consisting of $7,125,000 Term Bonds due May 1, 2024 with a fixed interest rate of 3%,
$8,030,000 Term Bonds due on May 1, 2031 with a fixed interest rate of 3.75%, and $8,875,000 Term Bonds due May 1, 2037 with a fixed interest rate of 4.125%. The Bonds were issued to provide funds for the refunding on the Series 2006 bonds and to pay the costs of issuance of the Series 2016 bonds. Interest is to be paid semiannually on each May 1 and November 1. Principal on the Bonds is to be paid serially commencing May 1, 2017 through May 1, 2037. The Series 2016 Bonds are subject to optional redemption beginning May 1, 2026 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 balance of the long‐term bonds at September 30, 2017 is summarized as follows:
September 30,	2017
Bond principal balance	$	23,240,000
Less unamortized bond discount	(134,159)
 	$	23,105,841
Long‐term liability activity for the year ended September 30, 2017, was as follows:

Governmental Activities
Bonds Payable:

Beginning
Balance	Additions	Reductions

Ending Balance

Due Within One Year

Series 2006

$ 23,860,000	$

−	$(23,860,000) $

−	$	‐

Series 2016	‐	24,030,000	(790,000)	23,240,000	825,000
 	$ 23,860,000	$ 24,030,000	$(24,650,000)  $ 23,240,000	$	825,000 

NOTE 3: BONDS PAYABLE (Continued)

At September 30, 2017, the scheduled debt service requirements on long‐term debt were as follows:

Year Ending September 30,	
Principal	
Interest	Total Debt
Service	
2018	$	825,000	$	857,269	$	1,682,269	
2019	850,000	832,519	1,682,519	
2020	875,000	807,019	1,682,019	
2021	905,000	780,769	1,685,769	
2022	930,000	753,619	1,683,619	
2023‐2027	5,140,000	3,307,481	8,447,481	
2028‐2032	6,170,000	2,292,656	8,462,656	
2033‐2037	7,545,000	959,269	8,504,269	
	$	23,240,000	$	10,590,600	$	33,830,600	

The Bond Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedure to be followed by the District on assessments to property owners. The District agreed to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District is in compliance with the requirements of the Bond Indenture.

The Bond Indenture requires that the District maintain adequate funds in reserve accounts to meet the debt service reserve requirements as defined in the Indenture. The requirements have been met for the fiscal year ended September 30, 2017

NOTE 4: DEFERRED COST LIABILITY

In connection with the 2006 project, the District has determined that deferred costs existed at the completion of the project and approved a deferred cost account to be established under the terms outlined in the Capital Improvement Revenue Bonds, Series 2006 Bond Indenture. The deferred  cost to the Developer was determined to be $6,079,279 and contingently payable from current and future funds available in the deferred cost account, including such funds as may be deposited in the deferred cost account as a result of the payment to the District of any and all impact fee credits in accordance with the First Supplemental Trust Indenture.

NOTE 4: DEFERRED COST LIABILITY (Continued)

In March 2006, the District entered into an agreement with the Developer regarding the partial assignment of development agreement whereby the Developer agreed, among other things, that any reimbursement of Transportation impact fees received by the District (pursuant to the Development Agreement (“the Agreement”) between the Developer and the City of Winter Garden, Florida (“the City”) shall be retained by the District and may be used by the District for any lawful purpose. Under the Agreement, the Developer is entitled to receive Transportation impact fee reimbursements in an aggregate amount not to exceed $4,905,061. As of September 30, 2017, the Developer had received $3,473,874 from the City and $578,010 in connection with the issuance of the Series 2016 bonds. The remaining Transportation impact fee balance of $853,177 may be deposited into the deferred cost account when received. However, there is no guarantee that the remaining Transportation impact fee balance will be collected under the Agreement. Thus the remaining contingent deferred cost liability has not been recorded on the accompanying financial statements.

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 major landowner, DDR Winter Garden, LLC, which is not affiliated with the Developer. The loss of significant involvement could have a material adverse effect on the District’s operations.

During the year ended September 30, 2017, certain Board members were affiliated with the major landowner. The major landowner was assessed $1,474,748.

Required Supplemental Information (Other Than MD&A)

Winter Garden Village at Fowler Groves Community Development District Budget to Actual Comparison Schedule – General Fund

Year ended September 30,		2017		
	Original and	Actual	Variance with	
	Final Budget	Amounts	Final Budget	
Revenues				
Assessment revenue	$	52,501	$	52,650	$	149	
Interest and other revenues	‐	418	418	
Total revenues	52,501	53,068	567	

Expenditures				
General government	136,613	53,193	83,420	
Total expenditures	136,613	53,193	83,420	

Excess (deficit) of revenues over expenditures	

$	(84,112)	

*   $	(125)	

$	83,987	
‐ District budgeted for $54,112 of carryforward revenue and $30,000 of operating capital.

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

To the Board of Supervisors
Winter Garden Village at Fowler Groves Community Development District Winter Garden, 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, each major fund, and the aggregate remaining fund information of Winter Garden Village at Fowler Groves Community Development District (hereinafter referred to as the “District”), as of and for the year ended September 30, 2017, 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 29, 2018.

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 two deficiencies in internal control described below that we consider to be material weaknesses.

Condition: As part of our audit procedures, we identified approximately $141,000 of bond discount and $360,000 of underwriter’s discount that was not recorded on the District’s financial statements as of September 30, 2017.
Criteria: Internal controls relating to the annual financial close process should be in place to provide reasonable assurance that bond issuance related costs are properly recorded.
Cause: The bond discount and underwriter’s costs are not a direct expense paid through the District’s financial accounting system.
Effect: Bond issuance costs and long‐term debt on the financial statements were understated by approximately $502,000.
Recommendation: We recommend the District record the full bond proceeds and related issuance costs.
The District’s response to finding IC2017‐001 is described below. We did not audit the District’s response and, accordingly we express no opinion on it.

Management response: The District has already taken further steps to insure that this oversight is avoided in the future.

IC2017‐002: Prepaid expenses

Condition: As part of our audit procedures, we identified $5,000 of prepaid expenses that were recorded on the District’s financial statements as of September 30, 2017, but were not actually paid until December 2017.
Criteria: Internal controls relating to the annual financial close process should be in place to provide reasonable assurance that prepaid expenses are properly recorded.
Cause: The prepayment related to one specific invoice and appears to have been overlooked when the District staff was preparing the annual financial report.
Effect: Prepaid expenses and accounts payable on the financial statements were overstated by $5,000.
Recommendation: We recommend the District review the prepaid expense listing at year‐ end to ensure that all items recorded are appropriate.
The District’s response to finding IC2017‐002 is described below. We did not audit the District’s response and, accordingly we express no opinion on it.

Management response: The District has already taken further steps to insure that this oversight is avoided in the future.

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 29, 2018

MANAGEMENT LETTER

To the Board of Supervisors
Winter Garden Village at Fowler Groves Community Development District Winter Garden, Florida

Report on the Financial Statements

We have audited the financial statements of the Winter Garden Village at Fowler Groves Community Development District (“District”) as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated June 29, 2018.

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 this report, which is dated June 29, 2018, 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.

Financial Condition and Management

Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we 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 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.

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.

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 communicate the results of our determination as to whether the annual financial report for the District for the fiscal year ended September 30, 2017, 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, 2017. In connection with our audit, we determined that these two reports were in agreement.

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 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 29, 2018

INDEPENDENT ACCOUNTANTS’ REPORT

To the Board of Supervisors
Winter Garden Village at Fowler Groves Community Development District Winter Garden, Florida

We have examined Winter Garden Village at Fowler Groves Community Development District’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2017. 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 depended on our judgement, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that our examination provides 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, 2017.

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 29, 2018