REUNION EAST COMMUNITY DEVELOPMENT DISTRICT
OSCEOLA COUNTY, FLORIDA FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023

REUNION EAST COMMUNITY DEVELOPMENT DISTRICT OSCEOLA COUNTY, FLORIDA

TABLE OF CONTENTS

	  Page		
INDEPENDENT AUDITOR’S REPORT	1-3	
MANAGEMENT’S DISCUSSION AND ANALYSIS	4-7	
BASIC FINANCIAL STATEMENTS		
Government-Wide Financial Statements:		
Statement of Net Position	8	
Statement of Activities	9	
Fund Financial Statements:		
Balance Sheet – Governmental Funds	10	
Reconciliation of the Balance Sheet – 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	14-24	
REQUIRED SUPPLEMENTARY INFORMATION		
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual – General Fund	
25	
Notes to Required Supplementary Information	26	
OTHER INFORMATION		
Data Elements required by FL Statute 218.39 (3) (c)	27	
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS	

28-29	
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10)
OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA	

30	
MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550 OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA	
31-33	

INDEPENDENT AUDITOR’S REPORT
To the Board of Supervisors
Reunion East Community Development District Osceola County, Florida

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

Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities and each major fund of Reunion East Community Development District, Osceola County, Florida (“District”) as of and for the fiscal year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
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, 2023, and the respective changes in financial position, thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Notes 6 and other notes to the basic financial statements, the debt service fund had a deficit fund balance of ($14,413,217) at September 30, 2023. The District was unable to make debt service payments on the Series 2002 and 2005 Bonds since there are no special assessment revenues pledged to the Series 2002 and 2005 Bonds. The District’s failures to make its scheduled debt service payments when they are due are considered events of default. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge 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 Information Included in the Financial Report
Management is responsible for the other information included in the financial report. The other information comprises the information for compliance with Section 218.39(3)(c), Florida Statutes, but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 26, 2024, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

June 26, 2024

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our discussion and analysis of Reunion East Community Development District, Osceola County, Florida (“District”) provides a narrative overview of the District’s financial activities for the fiscal year ended September 30, 2023. Please read it in conjunction with the District’s Independent Auditor’s Report, basic financial statements, accompanying notes and supplementary information to the basic financial statements.

FINANCIAL HIGHLIGHTS

The liabilities of the District exceeded its assets at the close of the most recent fiscal year resulting in a net position deficit balance of ($1,403,575).

The change in the District’s total net position in comparison with the prior fiscal year was ($383,453), a decrease. The key components of the District’s net position and change in net position are reflected in the table in the government-wide financial analysis section.

At September 30, 2023, the District’s governmental funds reported combined ending fund balances of ($7,756,253), a decrease of ($9,824,735) in comparison with the prior fiscal year. The total fund balance is restricted for capital projects, non-spendable for prepaid items and deposits, assigned for maintenance reserves, and unassigned deficit fund balance in the debt service fund, and the remainder is unassigned fund balance in the general fund which is available for spending at the District’s discretion.
OVERVIEW OF FINANCIAL STATEMENTS

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

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

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

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

The government-wide financial statements include all governmental activities that are principally supported by assessments. The District does not have any business-type activities. The governmental activities of the District include the general government (management), recreation, public safety, roads and streets and maintenance functions.
Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District has one fund category: governmental funds.

OVERVIEW OF FINANCIAL STATEMENTS (Continued)

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

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

The District maintains three governmental funds. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, debt service and capital projects funds which are major funds.
The District adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with the budget.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indicator of an entity’s financial position. In the case of the District, liabilities exceeded assets at the close of the fiscal year.
Key components of the District’s net position are reflected in the following table:

NET POSITION SEPTEMBER 30,
2023	2022	
Current and other assets	$	9,784,793	$	17,778,642	
Capital assets, net of depreciation	50,019,334	43,850,091	
Total assets	59,804,127	61,628,733	
Current liabilities	18,243,264	16,448,707	
Long-term liabilities	42,964,438	46,200,148	
Total liabilities	61,207,702	62,648,855	
Net position
Net investment in capital assets	
7,655,569	
6,452,821	
Unrestricted	(9,059,144)	(7,472,943)	
Total net position	$	(1,403,575)	$	(1,020,122)	

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

GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued)

The District’s net position decreased during the most recent fiscal year. The majority of the decrease was due to an increase in maintenance costs during the current fiscal year.
Key elements of the change in net position are reflected in the following table:

CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
Revenues:	2023	2022
Program revenues
Charges for services	$	5,790,202	$	5,804,282	
Operating grants and contributions	136,029	8,572	
Capital grants and contributions	74,904	28,208	
General revenues
Unrestricted investment earnings	
210,868	
41,414	
Miscellaneous	11,473	12,252	
Total revenues	6,223,476	5,894,728	
Expenses:
General government	
190,913	
193,964	
Maintenance and operations	3,186,363	2,991,138	
Culture and recreation	95,613	84,987	
Public safety	780,835	725,759	
Roads and streets	46,264	37,588	
Interest	2,306,941	2,334,182	
Total expenses	6,606,929	6,367,618	
Change in net position	(383,453)	(472,890)	
Net position - beginning	(1,020,122)	(547,232)	
Net position - ending	$	(1,403,575)	$	(1,020,122)	

As noted above and in the statement of activities, the cost of all governmental activities during the fiscal year ended September 30, 2023, was $6,606,929. The costs of the District’s activities were partially funded by program revenues. Program revenue was comprised primarily of assessments. The increase in program revenues is primarily due to investment earnings received during the current fiscal year. In total, expenses increased due to increase in maintenance costs, professional services including the landscape maintenance and repairs.

GENERAL BUDGETING HIGHLIGHTS

An operating budget was adopted and maintained by the governing board for the District pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in preparation of the fund financial statements. The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2023.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets
At September 30, 2023, the District had $81,822,455 invested in capital assets for its governmental activities. In the government-wide financial statements depreciation of $31,803,121 has been taken, which resulted in a net book value of $50,019,334. More detailed information about the District’s capital assets is presented in the notes of the financial statements.

Capital Debt
At September 30, 2023, the District had $39,715,000 in Bonds outstanding for its governmental activities. In addition, the District has not paid the $12,715,000 of the unexchanged Bonds. More detailed information about the District’s capital debt is presented in the notes of the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND OTHER EVENTS

The District anticipates that operations will be consistent with the prior year, however construction will continue on the Series 2021 project.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, landowners, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the financial resources it manages and the stewardship of the facilities it maintains. If you have questions about this report or need additional financial information, contact the Reunion East Community Development District’s Finance Department at 219 E. Livingston Street, Orlando, Florida 32801.

REUNION EAST COMMUNITY DEVELOPMENT DISTRICT OSCEOLA COUNTY, FLORIDA
STATEMENT OF NET POSITION SEPTEMBER 30, 2023

	Governmental
	Activities		
ASSETS		
Cash	$	1,430,750	
Investments	4,080,142	
Assessments receivable	41,831	
Due from Reunion West	655,242	
Prepaids and other assets	78,763	
Restricted assets:		
Investments	3,498,065	
Capital assets:		
Nondepreciable	22,035,168	
Depreciable, net		27,984,166 	
Total assets		59,804,127 	
LIABILITIES		
Accounts payable	74,259	
Accrued interest payable	702,218	
Due to Bondholders	17,466,787	
Non-current liabilities:		
Due within one year	2,045,000	
Due in more than one year		40,919,438 	
Total liabilities		61,207,702 	
NET POSITION		
Net investment in capital assets	7,655,569	
Unrestricted		(9,059,144) 	
Total net position	 $	(1,403,575) 	

See notes to the financial statements

REUNION EAST COMMUNITY DEVELOPMENT DISTRICT OSCEOLA COUNTY, FLORIDA
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023

Program Revenues

Net (Expense) Revenue and Changes in Net Position

Charges for

Operating Grants and

Capital Grants and

Governmental

Functions/Programs		Expenses	Services	Contributions	Contributions	Activities	 Primary government:
Governmental activities:

General government

$	190,913	$

190,913	$

-	$	-	$	-

Maintenance and operations	3,186,363	1,322,753	-	74,904	(1,788,706)	
Culture and recreation	95,613	39,692	-	-	(55,921)	
Public safety	780,835	324,148	-	-	(456,687)	
Roads and streets	46,264	19,206	-	-	(27,058)	
Interest on long-term debt		2,306,941	3,893,490	136,029	-	1,722,578 

Unrestricted investment earnings	210,868	
Miscellaneous		11,473 	
Total general revenues		222,341 	
Change in net position	(383,453)	
Net position - beginning		(1,020,122) 	
Net position - ending	 $	(1,403,575) 	

Total governmental activities			6,606,929	5,790,202	136,029	74,904	(605,794)  General revenues:

See notes to the financial statements

BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2023

	Major Funds	
Capital

Total Governmental

ASSETS

General

Debt Service

Projects

Funds

Cash	$ 1,430,750	$	-	$	-	$  1,430,750	
Investments	4,080,142	2,897,392	600,673	7,578,207	
Due from other funds	-	130,013	-	130,013	
Due from Reunion West	655,242	-	-	655,242	
Assessments receivable	15,666	26,165	-	41,831	
Prepaid items and deposits	78,763	-	-	78,763	
Total assets	 $ 6,260,563	$	3,053,570	$	600,673	$  9,914,806 	

LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable	

$	74,259	

$	-	

$	-	

$	74,259	
Due to Bondholders	-	17,466,787	-	17,466,787	
Due to other funds	130,013	-	-	130,013	
Total liabilities	204,272	17,466,787	-	17,671,059	

Fund balances: Nonspendable:
Prepaid items and deposits	

78,763	

-	

-	

78,763	
Restricted for:
Capital projects	
-	
-	
600,673	
600,673	
Assigned for:					
Maintenance reserve		968,322		-		-	968,322	
Unassigned		5,009,206		(14,413,217)		-	(9,404,011)	
Total fund balances		6,056,291		(14,413,217)		600,673	(7,756,253)	

Total liabilities and fund balances	
$	
6,260,563	
$	
3,053,570	
$	
600,673	
$  9,914,806	

See notes to the financial statements

RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2023

Fund balance - governmental funds	$
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in the governmental funds. The statement of net position includes those capital assets in the net position of the government as a whole.
Cost of capital assets	81,822,455

(7,756,253)

Accumulated depreciation	(31,803,121)	50,019,334

Liabilities not due and payable from current available resources are not reported as liabilities in the governmental fund statements. All liabilities, both current and long-term, are reported in the government-wide financial statements.
Accrued interest payable	(702,218)
Bonds payable	(42,964,438)

Net position of governmental activities	 $	(1,403,575) 

See notes to the financial statements

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023

	Major Funds	
Capital

Total Governmental

REVENUES

General

Debt Service

Projects

Funds

Assessments	$  2,045,367	$	3,744,834	$	-	$  5,790,201	
Miscellaneous revenue	11,473	-	-	11,473	
Interest	210,869	136,029	74,904	421,802	
Total revenues	2,267,709	3,880,863	74,904	6,223,476	

EXPENDITURES
Current:
General government	190,913	-		190,913	
Maintenance and operations	1,498,622	-	-	1,498,622	
Public safety	95,613	-	-	95,613	
Culture and recreation	211,077	-	-	211,077	
Roads and streets	46,264	-	-	46,264	
Debt service:
Principal	
-	
3,210,000	
-	
3,210,000	
Interest	-	2,368,980	-	2,368,980	
Capital outlay	149,633	-	8,277,109	8,426,742	
Total expenditures	2,192,122	5,578,980	8,277,109	16,048,211	

Excess (deficiency) of revenues over (under) expenditures	

75,587	

(1,698,117)	

(8,202,205)	

(9,824,735)	
Fund balances - beginning	5,980,704	(12,715,100)	8,802,878	2,068,482	

Fund balances - ending	
$  6,056,291	
$	(14,413,217)	
$	600,673	
$ (7,756,253)	

See notes to the financial statements

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023

of activities are different because:		
Governmental funds report capital outlays as expenditures, however, in the statement of activities the cost of those assets is eliminated and capitalized as capital assets in the statement of net position.	

8,426,742	
Depreciation on capital assets is not recognized in the governmental fund statement but is reported as an expense in the statement of activities.	

(2,257,499)	
The change in accrued interest on long-term liabilities between the current and prior fiscal year is recorded in the statement of activities but not in the fund financial statements.	

36,329	
Amortization of Bond discounts/premiums is not recognized in the governmental fund financial statements, but is reported as an expense in the statement of activities.	

25,710	
Repayment of long-term liabilities 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.	

	3,210,000 	
Change in net position of governmental activities	 $	(383,453) 	

Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement

$	(9,824,735)

See notes to the financial statements

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – NATURE OF ORGANIZATION AND REPORTING ENTITY

Reunion East Community Development District ("District") was established on September 24, 2001, by the Board of County Commissioners of Osceola County, Osceola County Ordinance 01-31, pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes and expanded by Osceola County Ordinance 05-26. The Act provides, among other things, the power to manage basic services for community development and to levy and assess non-ad valorem assessments for the financing and maintenance of improvements.

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 the Board of Supervisors ("Board"), which is composed of five members. The Supervisors are elected on at large basis by the qualified electors of the property within the District. The Board of Supervisors of the District exercise all powers granted to the District pursuant to Chapter 190, Florida Statutes.

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

The financial statements were prepared in accordance with Governmental Accounting Standards Board (“GASB”) Statements. Under the provisions of those standards, the financial reporting entity consists of the primary government, organizations for which the District Board of Supervisors is considered to be financially accountable, and other organizations for which the nature and significance of their relationship with the District are such that, if excluded, the financial statements of the District would be considered incomplete or misleading. There are no entities considered to be component units of the District; therefore, the financial statements include only the operations of the District.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Government-Wide and Fund Financial Statements
The basic financial statements include both government-wide and fund financial statements.
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment. Operating-type special assessments for maintenance and debt service are treated as charges for services; and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not included among program revenues are reported instead as general revenues.

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

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

Assessments
Assessments are non-ad valorem assessments on benefited property within the District. Operating and maintenance assessments are based upon the adopted budget and levied annually at a public hearing of the District. Debt service assessments are levied when Bonds are issued and assessed and collected on an annual basis. The District may collect assessments directly or utilize the uniform method of collection under Florida Statutes. Direct collected assessments are due as determined by annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the uniform method are mailed by the County Tax Collector on November 1 and due on or before March 31 of each year. Property owners may prepay a portion or all of the debt service assessments on their property subject to various provisions in the Bond documents.

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

The District reports the following major governmental funds:

General Fund
The general fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund.
Debt Service 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
This fund accounts for the financial resources to be used for the acquisition or construction of major infrastructure within the District.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first for qualifying expenditures, then unrestricted resources as they are needed.

Assets, Liabilities and Net Position or Equity
Restricted Assets
These assets represent cash and investments set aside pursuant to Bond covenants or other contractual restrictions.

Deposits and Investments
The District’s cash and cash equivalents are considered to be cash on hand and demand deposits (interest and non-interest bearing).
The District has elected to proceed under the Alternative Investment Guidelines as set forth in Section
218.415 (17) Florida Statutes. The District may invest any surplus public funds in the following:
The Local Government Surplus Trust Funds, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act;
Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency;
Interest bearing time deposits or savings accounts in qualified public depositories;
Direct obligations of the U.S. Treasury.
The State Board of Administration’s (“SBA”) Local Government Surplus Funds Trust Fund (“Florida PRIME”) is a “2a-7 like” pool. A “2a-7 like” pool is an external investment pool that is not registered with the Securities and Exchange Commission (“SEC”) as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a-7 of the Investment Company Act of 1940, which comprises the rules governing money market funds. Thus, the pool operates essentially as a money market fund. The District has reported its investment in Florida PRIME at amortized cost for financial reporting purposes.
Securities listed in paragraph c and d shall be invested to provide sufficient liquidity to pay obligations as they come due. In addition, surplus funds may be deposited into certificates of deposit which are insured, and any unspent Bond proceeds are required to be held in investments as specified in the Bond Indenture.
The District records all interest revenue related to investment activities in the respective funds. Investments are measured at amortized cost or reported at fair value as required by generally accepted accounting principles.

Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.
Capital Assets
Capital assets which include property, plant and equipment, and infrastructure assets (e.g., roads, sidewalks and similar items) are reported in the government activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.
Property, plant and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:

Assets	Years	
Roadways	30	
Stormwater management	30	
Recreational facility and amenities	20	
Entry features	30	
Electrical, communications and lighting	20	
Landscaping and irrigation	15	

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

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

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

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

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

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

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

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

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

Assets, Liabilities and Net Position or Equity (Continued)

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

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

NOTE 3 – BUDGETARY INFORMATION

The District is required to establish a budgetary system and an approved Annual Budget. Annual Budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds. All annual appropriations lapse at fiscal year-end.
The District follows these procedures in establishing the budgetary data reflected in the financial statements.

Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.
Public hearing(s) are 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, unless otherwise delegated by the District Board.
The budgets are adopted on a basis consistent with generally accepted accounting principles.
Unused appropriation for annually budgeted funds lapse at the end of the year.

NOTE 4 – DEPOSITS AND INVESTMENTS

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

Investments (Continued)
The District’s investments were held as follows at September 30, 2023:

  Amortized Cost	Credit Risk	Maturities	

First American Government Obligation Fund Class Y	$

1,936,017

S&P AAAm

Weighted average of the fund portfolio: Under 24 days
Weighted average of the fund

Local Government Surplus Trust Funds (FL PRIME)	4,882,197	S&P AAAm	portfolio: 21 days
US Bank Money Market Accounts		759,993 	N/A	N/A
Total Investments	 $	7,578,207 
Credit risk – For investments, credit risk is generally the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Investment ratings by investment type are included in the preceding summary of investments.

Concentration risk – The District places no limit on the amount the District may invest in any one issuer.
Interest rate risk – The District does not have a formal policy that limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates.

However, the Bond Indenture limits the type of investments held using unspent proceeds.
Fair Value Measurement – When applicable, the District measures and records its investments using fair value measurement guidelines established in accordance with GASB Statements. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques.

These guidelines recognize a three-tiered fair value hierarchy, in order of highest priority, as follows:
Level 1: Investments whose values are based on unadjusted quoted prices for identical investments in active markets that the District has the ability to access;
Level 2: Investments whose inputs - other than quoted market prices - are observable either directly or indirectly; and,
Level 3: Investments whose inputs are unobservable.
The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the entire fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

Money market investments that have a maturity at the time of purchase of one year or less and are held by governments other than external investment pools should be measured at amortized cost. For external investment pools that qualify to be measured at amortized cost, the pool’s participants should also measure their investments in that external investment pool at amortized cost for financial reporting purposes. Accordingly, the District’s investments have been reported at amortized cost above.

Investments (Continued)
External Investment Pool – With regard to redemption gates, Section 218.409(8)(a), Florida Statutes, states that “The principal, and any part thereof, of each account constituting the trust fund is subject to payment at any time from the moneys in the trust fund. However, the Executive Director may, in good faith, on the occurrence of an event that has a material impact on liquidity or operations of the trust fund, for 48 hours limit contributions to or withdrawals from the trust fund to ensure that the Board can invest moneys entrusted to it in exercising its fiduciary responsibility. Such action must be immediately disclosed to all participants, the Trustees, the Joint Legislative Auditing Committee, the Investment Advisory Council, and the Participant Local Government Advisory Council. The Trustees shall convene an emergency meeting as soon as practicable from the time the Executive Director has instituted such measures and review the necessity of those measures. If the Trustees are unable to convene an emergency meeting before the expiration of the 48- hour moratorium on contributions and withdrawals, the moratorium may be extended by the Executive Director until the Trustees are able to meet to review the necessity for the moratorium. If the Trustees agree with such measures, the Trustees shall vote to continue the measures for up to an additional 15 days. The Trustees must convene and vote to continue any such measures before the expiration of the time limit set, but in no case may the time limit set by the Trustees exceed 15 days.” With regard to liquidity fees, Florida Statute 218.409(4) provides authority for the SBA to impose penalties for early withdrawal, subject to disclosure in the enrollment materials of the amount and purpose of such fees. At present, no such disclosure has been made.

As of September 30, 2023, there were no redemption fees or maximum transaction amounts, or any other requirements that serve to limit a participant’s daily access to 100% of their account value.

NOTE 5 – CAPITAL ASSETS
Capital asset activity for the fiscal year ended September 30, 2023, was as follows:

Beginning
Balance	Additions	Deletions

Ending Balance

Governmental activities
Capital assets, not being depreciated		
Land and land improvements	$	3,620,313	$	-	$	-	$	3,620,313	
Infrastructure under construction	10,137,746	8,277,109	-	18,414,855	
Total capital assets, not being depreciated	13,758,059	8,277,109	-	22,035,168	

Capital assets, being depreciated					
Roadways	33,462,042	14,851	-	33,476,893	
Stormwater management	10,048,423	-	-	10,048,423	
Recreational facility and amenities	11,395,160	134,782	-	11,529,942	
Entry features	174,698	-	-	174,698	
Electrical, communications and lighting	4,335,102	-	-	4,335,102	
Landscaping and irrigation	222,229	-	-	222,229	
Total capital assets, being depreciated	59,637,654	149,633	-	59,787,287	

Less accumulated depreciation for:					
Roadways	14,477,291	1,115,401	-	15,592,692	
Stormwater management	4,664,120	334,947	-	4,999,067	
Recreational facility and amenities	7,155,989	569,758	-	7,725,747	
Entry features	15,256	5,823	-	21,079	
Electrical, communications and lighting	3,012,965	216,755	-	3,229,720	
Landscaping and irrigation	220,001	14,815	-	234,816	
Total accumulated depreciation	29,545,622	2,257,499	-	31,803,121	

Total capital assets, being depreciated, net	
30,092,032	
(2,107,866)	
-	27,984,166	

Governmental activities capital assets, net	
$  43,850,091	
$	6,169,243	
$	-	$  50,019,334	

The Districts master infrastructure continues to be constructed in phases. During the prior fiscal year, the District issued the Series 2021 Bonds in order to finance infrastructure improvements associated with Phase
3. The total estimated costs to complete Phase 3 are $23,735,095. The Phase 3 infrastructure improvements will include roadways, potable water and wastewater systems, stormwater facilities, electrical utilities, irrigation, parks, recreational facilities, and a connector. A portion of the project costs was expected to be financed with the proceeds from the issuance of Bonds with the remainder to be funded by EHOF Acquisitions II LLC and conveyed to the District. Upon completion, the potable and wastewater systems, electrical utility systems, and connector are to be conveyed to others for ownership and maintenance responsibilities.

Depreciation expense was charged to function/programs as follows:

Governmental activities: Maintenance and operations

$	1,687,741

Culture and recreation		569,758 
Total	 $	2,257,499 

NOTE 6 – LONG-TERM LIABILITIES

Series 2002
On August 8, 2002, the District issued $73,620,000 of Special Assessment Bonds, Series 2002 consisting of multiple Term Bonds with maturity dates from May 1, 2008, to May 1, 2033, and fixed interest rates ranging from 5.9% to 7.375%. The Bonds were issued to pay off the Bond Anticipation Notes issued on December 28, 2001, for $10,000,000 and to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the 2002A Bonds is to be paid serially commencing May 1, 2005, through May 1, 2033.

The Series 2002 Bonds were trifurcated in January 2012 and then restructured in 2015 resulting in a remaining balance of the Series 2002 Bonds of $6,275,000 (“Unexchanged Bonds”). All other remaining balances were either included in the new 2015 issues or were cancelled. Payment on the remaining Series 2002 Bonds is subordinate to the 2015 issues and is to be paid solely from the unexchanged 2002 Bond Assessments as defined in the bond indentures.

The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was not in compliance with the requirements at September 30, 2023.
Series 2005
On March 1, 2005, the District issued $18,880,000 of Special Assessment Bonds, Series 2005, due on May 1, 2036, with a fixed interest rate of 5.80%. 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 2005 Bonds is to be paid serially commencing May 1, 2008, through May 1, 2036.
The Series 2005 Bonds were trifurcated in January 2012 and then restructured in 2015 resulting in a remaining balance of the Series 2005 Bonds of $6,440,000 (“Unexchanged Bonds”). All other remaining balances were either included in the new 2015 issues or were cancelled. Payment on the remaining Series 2005 Bonds is subordinate to the 2015 issues and is to be paid solely from the unexchanged 2005 Bond Assessments as defined in the bond indentures.

The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was not in compliance with the requirements at September 30, 2023.

Both the Series 2002 and 2005 Bonds are in default. In accordance with the Bond Exchange discussed below, a portion of Series 2002 and 2005 Bonds were exchanged, and a portion are to remain outstanding as unexchanged Series 2002 and 2005 Bonds. There are no special assessment revenues pledged to the unexchanged Series 2002 and 2005 Bonds, therefore the District has missed its scheduled debt service payments on the Series 2002 and 2005 Bonds in the current fiscal year as well as previous fiscal years. The debt service fund has a deficit fund balance of ($14,413,217) as of September 30, 2023.

Bond Exchange – Series 2015 Restructured Bonds
In June 2015, $8,795,000 of the Series 2002 Bonds and $10,440,000 of the Series 2005 Bonds were exchanged for $7,245,000 Series 2015-1 Bonds, due May 1, 2033, with a fixed interest rate of 6.6%,
$8,475,000 Series 2015-2 Bonds, due May 1, 2036, with a fixed interest rate of 6.6% and $3,515,000 Series 2015-3 Bonds, due May 1, 2033, with a fixed interest rate of 6.6%. The Series 2015 Bonds were paid off during a prior fiscal year.
Series 2015A
On June 30, 2015, the District issued $30,710,000 of Special Assessment Refunding Bonds, Series 2015A consisting of multiple Term Bonds with due dates from May 1, 2020, to May 1, 2033, and fixed interest rates ranging from 4.0% to 5.0%. The Bonds were issued to refund a portion of the Series 2002A-1 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, 2016, through May 1, 2033.

The Series 2015A Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Bond Indenture.

The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was in compliance with the requirements at September 30, 2023.
Series 2021
During July 2021, the District issued $20,355,000 of Special Assessment Bonds, Series 2021 consisting of Term Bonds due ranging from May 1, 2026, to May 1, 2051, and fixed interest rates ranging from 2.4% to 4.0%. 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, commencing November 1, 2021, and the principal on the bonds is to be paid serially commencing May 1, 2022 through May 1, 2051.

The Series 2021 Bonds are subject to optional redemption, mandatory sinking fund and extraordinary mandatory redemption at the times, in the amounts, and at the redemption prices more fully described in the Redemption Provisions as outlined in the Bond Indenture.
The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was in compliance with the requirements at September 30, 2023.

Long-term Debt Activity
Changes in long-term liability activity for the fiscal year ended September 30, 2023, were as follows:

	Beginning
Balance	
Additions	
Reductions	
Ending Balance	Due Within
One Year	
Governmental activities						
Bonds payable:						
Series 2002	$	1,645,000	$	-	$	635,000	$	1,010,000	$	-	
Series 2005	2,290,000	-	605,000	1,685,000	-	
Series 2015A	21,755,000	-	1,535,000	20,220,000	1,600,000	
Add: original issue premium	94,966	-	8,834	86,132	-	
Series 2021	19,930,000	-	435,000	19,495,000	445,000	
Add: original issue premium	485,182	-	16,876	468,306	-	
Total	$  46,200,148	$	-	$	3,235,710	$ 42,964,438	$  2,045,000	

At September 30, 2023, the scheduled debt service requirements on the long-term debt were as follows:

Year ending
  September 30:	Principal	Interest	Total	
2024	$	2,045,000	$	1,685,323	$	3,730,323	
2025	2,140,000	1,594,643	3,734,643	
2026	2,230,000	1,499,473	3,729,473	
2027	2,335,000	1,400,063	3,735,063	
2028	2,450,000	1,293,633	3,743,633	
2029-2033	14,045,000	4,679,368	18,724,368	
2034-2038	3,150,000	2,477,238	5,627,238	
2039-2043	3,690,000	1,942,523	5,632,523	
2044-2048	4,480,000	1,182,000	5,662,000	
2049-2051		3,150,000	255,200	3,405,200 	
Total	 $	39,715,000	$	18,009,464	$	57,724,464 	

The unexchanged bonds are not included above as the Bonds have not been resized.
NOTE 7 – LITIGATION & CLAIMS
During a prior fiscal year, the District received correspondence dated May 4, 2016 regarding potential litigation involving the U.S. Bank Bond Trustee and a significant landowner (the former Developer) within the District regarding the possible imposition of debt assessments on certain unassessed parcels within the boundary of the District to pay the debt due on the Unexchanged Bonds (the 2002 and 2005 Bonds). The Trustee’s counsel and the landowner were unable to negotiate a settlement, which would have eliminated the District as a party. During a prior fiscal year, the original landowner sold its ownership interests in the land to the current Developer. The Trustee’s counsel contacted the District with questions regarding this matter and its allegation that the current Developer, as successor landowner, is responsible to pay the debt due on the Unexchanged Bonds. The District remains open to settling the default on the Unexchanged Bonds through negotiations with the current Developer and/or the Trustee for the Unexchanged Bonds. However, legal action could result if negotiations are unsuccessful.”
In addition, the prior landowner failed to turnover certain irrigation improvements to the district prior to selling its interests to the new Developer. The District sent a demand letter to the Developer in February 2020 and the parties are continuing to negotiate a resolution to the issues of the ownership and operation of these improvements. If the negotiation are not successful, litigation could ensue.

The Developer and EHOF Acquisitions II LLC own a portion of land within the District; therefore, assessment revenues in the general and debt service funds include the assessments levied on those lots owned by the Developer and EHOF Acquisitions II LLC.
NOTE 9 – CONCENTRATION

The District’s activity is dependent upon the continued involvement of the Developer and EHOF Acquisitions II LLC, the loss of which could have a material adverse effect on the District’s operations.
NOTE 10 – MANAGEMENT COMPANY

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

NOTE 11 – RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District has obtained commercial insurance from independent third parties to mitigate the costs of these risks; coverage may not extend to all situations. There were no settled claims over the past three years.
NOTE 12 – SHARED MAINTENANCE COSTS WITH REUNION WEST CDD
The District has an agreement with Reunion West CDD to share certain maintenance costs, including utilities and pool maintenance costs. The shared costs are allocated on a similar percentage basis as shared infrastructure with 56% allocated to Reunion East and 44% allocated to Reunion West during the current fiscal year. The majority of the costs are paid by Reunion East which is then reimbursed by Reunion West for its proportionate share. The District’s portion of these shared costs for the fiscal year ended September 30, 2023 was approximately $1,700,078. Reunion West owed $655,242 to the District as of September 30, 2023 related to their share of the costs.

NOTE 13 – SUBSEQUENT EVENTS

As a follow-up to the first item in Note 7, that on September 7, 2023, Kingwood Orlando Reunion Resort, LLC (hereinafter referred to as “Kingwood”) requested the transfer of conservation land from the District in order to modify a golf course, to allow for the construction of a new multi-unit development. The District’s bond trustee’s counsel sent a letter to the District on May 24, 2024, demanding that the District immediately commence assessment proceedings in order to consider whether and to what extent real property owned by Kingwood benefits from the District’s bond-funded projects and the debt special assessment that should be collected by the District resulting therefrom, and objecting to the transfer of conservation land from the District to Kingwood on the purported basis that the sale would constitute a breach of the bond contract. The District agreed to commence assessment proceedings after receiving the letter from the bond trustee’s counsel, and the District Manager is currently working with the District Counsel and the District Engineer to begin that process.
As a follow-up to the second item in Note 7, that as of December 5, 2023, the District entered into an agreement with the new Developer to resolve the second issue described in Note 7 related to the irrigation improvements.
Missed Debt Service Payments
The District had insufficient funds to make the November 1, 2023 and May 1, 2024 scheduled debt service payments due on both the Series 2002 and Series 2005 Bonds. Consequently, the payments were not made which is considered an event of default under the Bond Indenture.

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023

	Budgeted
	Amounts	 Original &
Final	

Actual Amounts	Variance with Final Budget - Positive
(Negative)	
REVENUES
Assessments	
$ 2,001,935	
$  2,045,367	
$	43,432	
Interest	1,250	210,869	209,619	
Miscellaneous revenue	2,240	11,473	9,233	
Total revenues	2,005,425	2,267,709	262,284	

EXPENDITURES
Current:
General government	174,052	190,913	(16,861)	
Maintenance and operations	1,975,131	1,498,622	476,509	
Public safety	110,992	95,613	15,379	
Culture and recreation	168,000	211,077	(43,077)	
Roads and streets	42,000	46,264	(4,264)	
Capital outlay	95,928	149,633	(53,705)	
Total expenditures	2,566,103	2,192,122	373,981	

Excess (deficiency) of revenues over (under) expenditures	

(560,678)	

75,587	

636,265	
OTHER FINANCING SOURCES				
Carryforward surplus	560,678	-	(560,678)	
Total other financing sources	560,678	-	(560,678)	

Net change in fund balances	
 $	-		
75,587	
 $	75,587 	
Fund balance - beginning			5,980,704 		
Fund balance - ending		 $  6,056,291 		

See notes to required supplementary information

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

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

The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2023.

OTHER INFORMATION – DATA ELEMENTS REQUIRED BY FL STATUTE 218.39(3)(C)
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 UNAUDITED

Element	Comments
Number of District employees compensated in the last pay period of the District’s fiscal year being reported.	5	
Number of independent contractors compensated to whom nonemployee compensation was paid in the last month of the District’s fiscal year being reported.	19	
Employee compensation	$9,973.80	
Independent contractor compensation	$2,604,444.63	
Construction projects to begin on or after October 1; ($65K)		
Roofing	$111,065.92	

Budget variance report	See the Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund	
Special assessment rate	

Operation & Maintenance:
Commercial Hotel/Condo Multi-Family
Single-Family

Golf Debt Service: Series 2015A Commercial Multi-Family Single-Family
Golf
Series 2021 Multi-Family
Single-Family	

$423.03	
		$423.03	
		$634.55	
		$846.07	
		$423.03	

$776.69	
		$1,165.04	
		$1,553.39	
		$776.69	
		$2,110.77	
		$2,250.44	
Special assessments collected	$5,790,201.00	
Outstanding Bonds:	see Note 6 for details	

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

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Board of Supervisors
Reunion East Community Development District Osceola 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 Reunion East Community Development District, Osceola County, Florida (“District”) as of and for the fiscal year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our opinion thereon dated June 26, 2024, which includes an emphasis of a matter paragraph.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we reported to management of the District in a separate letter dated June 26, 2024.
The District’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the District’s response to the findings identified in our audit and described in the accompanying Management Letter. The District’s Response was not subjected to the other auditing procedures applied in the audit of the financial statements, and, accordingly, we express no opinion on the response.

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

June 26, 2024

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

To the Board of Supervisors
Reunion East Community Development District Osceola County, Florida

We have examined Reunion East Community Development District, Osceola County, Florida’s (“District”) compliance with the requirements of Section 218.415, Florida Statutes, in accordance with Rule 10.556(10) of the Auditor General of the State of Florida during the fiscal year ended September 30, 2023. Management is responsible for District’s compliance with those requirements. Our responsibility is to express an opinion on District’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the District complied, in all material respects, with the specified requirements referenced in Section 218.415, Florida Statutes. An examination involves performing procedures to obtain evidence about whether the District complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the District’s compliance with specified requirements.

We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the examination engagement.

In our opinion, the District complied, in all material respects, with the aforementioned requirements for the fiscal year ended September 30, 2023.
This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, management, and the Board of Supervisors of Reunion East Community Development District, Osceola County, Florida and is not intended to be and should not be used by anyone other than these specified parties.

June 26, 2024

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

To the Board of Supervisors
Reunion East Community Development District Osceola County, Florida
Report on the Financial Statements

We have audited the accompanying basic financial statements of Reunion East Community Development District, Osceola County, Florida ("District") as of and for the fiscal year ended September 30, 2023, and have issued our report thereon dated June 26, 2024, which includes an emphasis of a matter paragraph.
Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor General.
Other Reporting Requirements

We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Auditor’s Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated June 26, 2024, should be considered in conjunction with this management letter.
Purpose of this Letter

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

Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, as applicable, management, and the Board of Supervisors of Reunion East Community Development District, Osceola County, Florida and is not intended to be and should not be used by anyone other than these specified parties.

We wish to thank Reunion East Community Development District, Osceola County, Florida and the personnel associated with it, for the opportunity to be of service to them in this endeavor as well as future engagements, and the courtesies extended to us.

June 26, 2024

REPORT TO MANAGEMENT

CURRENT YEAR FINDINGS AND RECOMMENDATIONS
2023-01: Financial Condition Assessment

Observation: The prior Developer failed to pay assessments on both the Series 2002 and 2005 Bonds and there are currently no special assessment revenues pledged to the Series 2002 and 2005 Bonds. The District did not make any of the schedule debt service payments on the Series 2002 and 2005 Bonds during the current fiscal year. Also, the District is not in compliance with the reserve requirements for the Series 2002 and 2005 Bonds. In addition, the debt service fund reported a deficit fund balance of ($14,413,217) at September 30, 2023.

Recommendation: The District should continue to take the necessary steps to alleviate the situation.
Management response: The Series 2015, Special Assessment Refunding Bonds ("Series 2015 Bonds") were collectively issued in order to refund defaulted Special Assessment Bonds, Series 2002A-2 and Series 2005 (Collectively "Prior Bonds"). However, at the request of the debt holders of the Prior Bonds, the Series 2015 Bonds did not refund 100% of the Prior Bonds leaving a portion of the Prior Bonds outstanding and in default (collectively "Un-exchanged Bonds"). The Un-exchanged Bonds debt holders have made a formal request to the District to review all properties within the District and determine if any of the Un-exchanged Bonds can be assigned to property within the District. The District Manager is currently working with District Counsel and the District Engineer to undertake this review. To the extent the Un-exchanged Bonds can be assigned to property they will. In the absence of the assignment of the Un-exchanged Bonds, the debt holders will need to cancel them to resolve the default.

PRIOR YEAR FINDINGS AND RECOMMENDATIONS

2020-01: Financial Condition Assessment 2021-01: Financial Condition Assessment 2022-01: Financial Condition Assessment
Current Status: Matter is not resolved. See current year finding above.

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

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

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

There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2022, except as noted above.
Any recommendations to improve the local governmental entity's financial management.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2023, except as noted above.

REPORT TO MANAGEMENT (Continued)

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

Noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but which warrants the attention of those charged with governance.
There were no such matters discovered by, or that came to the attention of, the auditor, to be reported, for the fiscal year ended September 30, 2023, except as noted above.
The name or official title and legal authority of the District are disclosed in the notes to the financial statements.
In connection with our audit, we determined that the District has met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes. The District failed to make certain scheduled debt service payments due on the Series 2002 and Series 2005 Bonds, as a result of a lack of funds. We applied financial condition assessment procedures pursuant to Rule 10.556(7) and determined that a deteriorating financial condition was noted. See Findings section above for additional information. It is management’s responsibility to monitor financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.
Management has provided the specific information required by Section 218.39(3)(c) in the Other Information section of the financial statements on page 27.