St. Augustine Lakes Community Development District ANNUAL FINANCIAL REPORT September 30, 2023 St. Augustine Lakes Community Development District ANNUAL FINANCIAL REPORT September 30, 2023 TABLE OF CONTENTS Page Number REPORT OF INDEPENDENT AUDITORS 1-3 MANAGEMENT’S DISCUSSION AND ANALYSIS 4-8 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position 9 Statement of Activities 10 Fund Financial Statements: Balance Sheet – Governmental Funds 11 Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities 12 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 13 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 14 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund 15 Notes to Financial Statements 16-26 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 27-28 MANAGEMENT LETTER 29-31 INDEPENDENT ACCOUNTANTS’ REPORT/COMPLIANCE WITH SECTION 218.415 FLORIDA STATUTES 32 REPORT OF INDEPENDENT AUDITORS To the Board of Supervisors St. Augustine Lakes Community Development District St. Johns County, Florida Report on Audit of the Financial Statements Opinion We have audited the financial statements of the governmental activities and each major fund of St. Augustine Lakes Community Development District (the “District”), as of and for the year ended September 30, 2023, and the related notes to financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of St. Augustine Lakes Community Development District as of September 30, 2023, and the respective changes in financial position and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audits 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 audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management 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; 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. To the Board of Supervisors St. Augustine Lakes Community Development District 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 one year beyond the financial statement date, including currently known information that may raise substantial doubt thereafter. Auditor’s Responsibility 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 opinion. 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 and Government Auditing Standards 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 and Government Auditing Standards, we: • Exercise professional judgement 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 judgement, 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. To the Board of Supervisors St. Augustine Lakes Community Development District Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis 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 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 a report dated October 21, 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 and contracts. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering St. Augustine Lakes Community Development District’s internal control over financial reporting and compliance. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida October 21, 2024 Management’s discussion and analysis of St. Augustine Lakes Community Development District (the “District”) financial performance provides an objective and easily readable analysis of the District’s financial activities. The analysis provides summary financial information for the District and should be read in conjunction with the District’s financial statements. OVERVIEW OF THE FINANCIAL STATEMENTS The District’s basic financial statements comprise three components; 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to financial statements. The Government-wide financial statements present an overall picture of the District’s financial position and results of operations. The Fund financial statements present financial information for the District’s major funds. The Notes to financial statements provide additional information concerning the District’s finances. The Government-wide financial statements are the statement of net position and the statement of activities. These statements use accounting methods similar to those used by private-sector companies. Emphasis is placed on the net position of governmental activities and the change in net position. Governmental activities are primarily supported by special assessments. The statement of net position presents information on all assets and liabilities of the District, with the difference between assets and liabilities reported as net position. Assets, liabilities, and net position are reported for all Governmental activities. The statement of activities presents information on all revenues and expenses of the District and the change in net position. Expenses are reported by major function and program revenues relating to those functions are reported, providing the net cost of all functions provided by the District. To assist in understanding the District’s operations, expenses have been reported as governmental activities. Governmental activities financed by the District include general government, physical environment and debt service. Fund financial statements present financial information for governmental funds. These statements provide financial information for the major funds of the District. Governmental fund financial statements provide information on the current assets and liabilities of the funds, changes in current financial resources (revenues and expenditures), and current available resources. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all governmental funds. A statement of revenues, expenditures, and changes in fund balances – budget and actual is provided for the District’s General Fund. Fund financial statements provide more detailed information about the District’s activities. Individual funds are established by the District to track revenues that are restricted to certain uses or to comply with legal requirements. The government-wide financial statements and the fund financial statements provide different pictures of the District. The government-wide financial statements provide an overall picture of the District’s financial standing. These statements are comparable to private-sector companies and give a good understanding of the District’s overall financial health and how the District paid for the various activities, or functions, provided by the District. All assets of the District, including capital assets, are reported in the statement of net position. All liabilities, including principal outstanding on bonds are included. In the statement of activities, transactions between the different functions of the District have been eliminated in order to avoid “doubling up” the revenues and expenses. The fund financial statements provide a picture of the major funds of the District. In the case of governmental activities, outlays for long lived assets are reported as expenditures and long-term liabilities, such as general obligation bonds, are not included in the fund financial statements. To provide a link from the fund financial statements to the government-wide financial statements, reconciliation is provided from the fund financial statements to the government-wide financial statements. Notes to financial statements provide additional detail concerning the financial activities and financial balances of the District. Additional information about the accounting practices of the District, investments of the District, capital assets and long-term debt are some of the items included in the notes to financial statements. Financial Highlights The following are the highlights of financial activity for the year ended September 30, 2023. . The District’s total assets exceeded total liabilities by $4,902 (net position). Restricted net position was $143,069 and unrestricted net position was $(138,167). . Governmental activities revenues totaled $717,936 while governmental activities expenses totaled $690,752. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Financial Analysis of the District The following schedule provides a summary of the assets, deferred outflows of resources liabilities and net position of the District and is presented by category for comparison purposes. 20232022Current assets212,947$ 24,808$ Restricted assets6,818,955 - Capital assets45,308 - Total Assets7,077,210 24,808 Current liabilities158,353 47,090 Non-current liabilities6,913,955 - Total Liabilities7,072,308 47,090 Net position - restricted143,069$ - Net position - unrestricted(138,167) (22,282) Total Net Position4,902$ (22,282)$ Governmental ActivitiesNet Position The increase in current assets is related to revenues exceeding expenditures in the General Fund in the current year. The increase in restricted assets and capital assets is related to the issuance of new debt in the current year. The increase in current liabilities is related to the increase in the current portion of long-term debt and accrued interest payable in the current year. The increase in non-current liabilities is related to the issuance of debt in the current year. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Financial Analysis of the District (Continued) The following schedule provides a summary of the changes in net position of the District and is presented by category for comparison purposes. 20232022Program RevenuesCharges for services509,421$ -$ Operating contributions6,932 66,932 General RevenuesInvestment income201,583 - Total Revenues717,936 66,932 ExpensesGeneral government85,035 66,932 Physical environment29,744 - Interest and other charges575,973 22,282 Total Expenses690,752 89,214 Change in Net Position27,184 (22,282) Net Position - Beginning of Year(22,282) - Net Position - End of Year4,902$ (22,282)$ Governmental ActivitiesChange in Net Position The increase in charges for services and the decrease in operating contributions is related to the District initiated special assessments in the current year. The increase in interest and other charges is related to the issuance of debt in the current year. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Capital Assets Activity The following schedule provides a summary of the District’s capital assets as of September 30, 2023 and 2022. During the year, construction in progress additions were $45,308. Description20232022Construction in progress45,308$ -$ Governmental Activities General Fund Budgetary Highlights Budgeted expenditures exceeded actual expenditures primarily due to less legal, landscape and lake maintenance and electric expenditures than were anticipated. The September 30, 2023 budget was not amended. Debt Management Governmental Activities debt includes the following: • In December 2022, the District issued $7,070,000 Series 2022 Special Assessment Bonds. These bonds were issued to finance a portion or all of the costs of the planning, financing, acquisition, construction, equipping and installation of the Series 2022 Project. As of September 30, 2023, the balance outstanding was $7,070,000. Economic Factors and Next Year’s Budget St. Augustine Lakes Community Development District is in the process of continuing construction within the District. The District cannot anticipate the effect on the financial position or results of operations of the District in fiscal year 2024. Request for Information The financial report is designed to provide a general overview of St. Augustine Lakes Community Development District’s finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the St. Augustine Lakes Community Development District, Governmental Management Services, 475 West Town Place, Suite 114, St. Augustine, Florida 32092. St. Augustine Lakes Community Development DistrictSTATEMENT OF NET POSITIONSeptember 30, 2023 ASSETS Current AssetsCashPrepaid expensesDeposits Total Current AssetsNon-Current AssetsRestricted InvestmentsCapital assets, not being depreciatedConstruction in progressTotal Non-Current AssetsTotal Assets LIABILITIES Current LiabilitiesAccounts payableContracts payableAccrued interest payableBonds payable Total Current LiabilitiesNon-Current LiabilitiesBonds payable, netTotal Liabilities NET POSITIONRestricted for debt serviceUnrestricted Total Net Poistion GovernmentalActivities $ 205,5217,009417 212,947 6,818,95545,308 6,864,263 7,077,210 1,5701,30955,474100,000 158,353 6,913,955 7,072,308 143,069(138,167) $ 4,902 See accompanying notes to financial statements. - 9 - St. Augustine Lakes Community Development DistrictSTATEMENT OF ACTIVITIESFor the Year Ended September 30, 2023 Net (Expense) Revenues andChanges inProgram RevenuesNet PositionFunctions/ProgramsExpensesCharges forServicesOperatingContributionsGovernmentalActivitiesGovernmental ActivitiesGeneral government(85,035)$ 236,500$ 5,136$ 156,601$ Physical environment(29,744)82,7241,79654,776Interest and other charges(575,973)190,197-(385,776) Total Governmental Activities(690,752)$ 509,421$ 6,932$ (174,399) General RevenuesInvestment income201,583 Change in Net Position27,184Net Position - October 1, 2022(22,282) Net Position - September 30, 2023$ 4,902 See accompanying notes to financial statements. - 10 - St.Augustine Lakes CommunityDevelopmentDistrictBALANCESHEET– GOVERNMENTALFUNDSSeptember30,2023 TotalDebtGovernmentalGeneralServiceCapitalProjectsFundsASSETSCash$ 205,521$ --$ 205,521$ Prepaid expenses7,009--7,009Deposits417--417Restricted assetsInvestments-438,5636,380,3926,818,955TotalAssets212,947$ 438,563$ 6,380,392$ 7,031,902$ LIABILITIES ANDFUNDBALANCESLIABILITIESAccountspayable$ 1,570$ --$ 1,570$ Contractspayable--1,3091,309Total Liabilities1,570-1,3092,879FUND BALANCESNonspendable -prepaids/deposits7,426--7,426Restricted fordebtservice-438,563-438,563Restricted forcapitalprojects--6,379,0836,379,083Unassigned203,951--203,951TotalFund Balance211,377438,5636,379,0837,029,023TotalLiabilitiesand Fund Balances212,947$ 438,563$ 6,380,392$ 7,031,902$ See accompanying notesto financialstatements. - 11 - St. Augustine Lakes Community Development DistrictRECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCESTO NET POSITION OF GOVERNMENTAL ACTIVITIESSeptember 30, 2023 Total Governmental Fund Balances$7,029,023Amounts reported for governmental activities in the Statement of Net Positionare different because: Capital assets, construction in progress, are not current financial resourcesand therefore, are not reported at the fund level.45,308discount, $56,045, are not due and payable in the current period and Long-term liabilities, including bonds payable, $(7,070,000), net of bondtherefore, are not reported at the fund level.(7,013,955) Accrued interest expense for long-term debt is not a current financial useand therefore, is not reported at the governmental fund level.(55,474) Net Position of Governmental Activities$4,902 See accompanying notes to financial statements. - 12 - St.Augustine Lakes CommunityDevelopmentDistrictSTATEMENTOFREVENUES,EXPENDITURES ANDCHANGESIN FUND BALANCES–GOVERNMENTALFUNDSForthe YearEndedSeptember30,2023 TotalDebtGovernmentalGeneralServiceCapitalProjectsFundsRevenuesSpecialassessments$ 319,224$ 190,197$ -$ 509,421Developercontributions6,932--6,932Investmentincome-10,914190,669201,583TotalRevenues326,156201,111190,669717,936 Expenditures CurrentGeneralgovernment85,035--85,035Physicalenvironment29,744--29,744 Capitaloutlay--45,30845,308 DebtserviceInterest-184,914-184,914Other--334,118334,118 TotalExpenditures114,779184,914379,426679,119 Excessofrevenuesover/(under) expenditures211,37716,197(188,757)38,817 OtherFinancing Sources/(Uses) Issuance oflong-termdebt-424,9346,645,0667,070,000Bond discount--(57,512)(57,512) Transfersin-332,6012,634Transfersout-(2,601)(33)(2,634) TotalOtherFinancing Sources/(Uses)-422,3666,590,1227,012,488 NetChange in Fund Balances211,377438,5636,401,3657,051,305 Fund Balances-October1,2022--(22,282)(22,282) Fund Balances-September30,2023$ 211,377$ 438,563$ 6,379,083$ 7,029,023 See accompanying notesto financialstatements. -13 - St. Augustine Lakes Community Development DistrictRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIESFor the Year Ended September 30, 2023 Net Change in Fund Balances - Total Governmental Funds$ 7,051,305Amounts reported for governmental activities in the Statement of Activities aredifferent because: in the current period. Governmental funds report capital outlays as expenditures. However, in theStatement of Activities, the cost of those assets is allocated over theirestimated useful lives as depreciation. This is the amount of capital outlay45,308The issuance of long-term debt, $(7,070,000), net of bond discount, $57,512, isreported as an other financing source/(use)at the fund level, but they increaseliabilities at the government-wide level.(7,012,488) Bond discount is amortized over the life of the bonds, at the government-wide level. This is the amount of amortization in the current year.(1,467) At the fund level interest is recognized when due. At the government-wide levelinterest is accrued on outstanding debt. This is the current year change.(55,474) Change in Net Position of Governmental Activities$ 27,184 See accompanying notes to financial statements. - 14 - St. Augustine Lakes Community Development DistrictSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCES – BUDGET AND ACTUAL – GENERAL FUNDFor the Year Ended September 30, 2023 RevenuesSpecial assessmentsDeveloper contributions Total Revenues Expenditures CurrentGeneral governmentPhysical environment Total Expenditures Net Change in Fund Balances Fund Balances - October 1, 2022 Fund Balances - September 30, 2023 OriginalBudget $319,224- 319,224319,224119,224119,224200,000200,000319,224319,224-- -- $- FinalBudget $319,224- $- ActualVariance withFinal BudgetPositive(Negative) $319,2246,932326,156$- 6,9326,93285,03529,744114,77934,189170,256204,445211,377211,377-- 211,377$211,377$ See accompanying notes to financial statements. - 15 - NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District's more significant accounting policies are described below. 1. Reporting Entity The District was established on November 4, 2021, pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the "Act"), and Ordinance 2021-81 of the St. Johns County, Florida Board of County Commissioners. The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of the infrastructure necessary for community development within its jurisdiction. The District is authorized to issue bonds for the purpose, among others, of financing, funding, planning, establishing, acquiring, constructing district roads, landscaping, and other basic infrastructure projects within or outside the boundaries of the St. Augustine Lakes Community Development District. The District is governed by a five member Board of Supervisors. The District operates within the criteria established by Chapter 190, Florida Statutes. As required by GAAP, these financial statements present the St. Augustine Lakes Community Development District (the primary government) as a stand-alone government. The reporting entity for the District includes all functions of government in which the District’s Board exercises oversight responsibility including, but not limited to, financial interdependency, selection of governing authority, designation of management, significant ability to influence operations and accountability for fiscal matters. Based upon the application of the above-mentioned criteria as set forth in Governmental Accounting Standards the District has identified no component units. 2. Measurement Focus and Basis of Accounting The basic financial statements of the District are composed of the following: • Government-wide financial statements • Fund financial statements • Notes to financial statements NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) a. Government-wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Government- wide financial statements report all non-fiduciary information about the reporting government as a whole. These statements include all the governmental activities of the primary government. The effect of interfund activity has been removed from these statements. Governmental activities are supported by special assessments and developer contributions. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets, rather than reported as an expenditure. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. b. Fund Financial Statements The underlying accounting system of the District is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self- balancing accounts that comprise its assets, deferred outflows of resources liabilities, deferred inflows of resources, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government’s governmental funds are presented after the government-wide financial statements. These statements display information about major funds individually. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) b. Fund Financial Statements (Continued) Governmental Funds The District reports fund balance according to Governmental Accounting Standards Board Statement 54 – Fund Balance Reporting and Governmental Fund Type Definitions. The Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The District has various policies governing the fund balance classifications. Nonspendable Fund Balance – This classification consists of amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. Restricted Fund Balance – This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation. Assigned Fund Balance – This classification consists of the Board of Supervisors’ intent to be used for specific purposes, but are neither restricted nor committed. The assigned fund balances can also be assigned by the District’s management company. Unassigned Fund Balance – This classification is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications. Unassigned fund balance is considered to be utilized first when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. Fund Balance Spending Hierarchy – For all governmental funds except special revenue funds, when restricted, committed, assigned, and unassigned fund balances are combined in a fund, qualified expenditures are paid first from restricted or committed fund balance, as appropriate, then assigned and finally unassigned fund balances. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) b. Fund Financial Statements (Continued) Governmental Funds (Continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are considered to be available when they are collected within the current period, or soon 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. Interest associated with the current fiscal period is considered to be an accrual item and so has been recognized as revenue of the current fiscal period. Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources are expended, rather than as fund assets. The proceeds of long- term debt are recorded as an other financing source rather than as a fund liability. Debt service expenditures are recorded only when payment is due. 3. Basis of Presentation a. Governmental Major Funds General Fund – The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Debt Service Fund – Accounts for debt service requirements to retire the capital improvement bonds which were used to finance the construction of District infrastructure improvements. Capital Projects Fund – The Capital Projects Fund accounts for the activity associated with the capital projects of the District NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. Basis of Presentation (Continued) b. Non-current Governmental Assets/Liabilities GASB Statement 34 requires that non-current governmental assets, such as construction in progress, and non-current governmental liabilities, such as general obligation bonds be reported in the governmental activities column in the government-wide Statement of Net Position. 4. Assets, Liabilities, and Net Position or Equity a. Cash and Investments Florida Statutes require state and local governmental units to deposit monies with financial institutions classified as "Qualified Public Depositories," a multiple financial institution pool whereby groups of securities pledged by the various financial institutions provide common collateral from their deposits of public funds. This pool is provided as additional insurance to the federal depository insurance and allows for additional assessments against the member institutions, providing full insurance for public deposits. The District is authorized to invest in those financial instruments as established by Section 218.415, Florida Statutes. The authorized investments consist of: 1. Direct obligations of the United States Treasury; 2. The Local Government Surplus Funds Trust or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperative Act of 1969; 3. Interest-bearing time deposits or savings accounts in authorized qualified public depositories; NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4. Assets, Liabilities, and Net Position or Equity (Continued) a. Cash and Investments (Continued) 4. Securities and Exchange Commission, registered money market funds with the highest credit quality rating from a nationally recognized rating agency. Cash and investments include time deposits, certificates of deposit, money market funds, and all highly liquid debt instruments with original maturities of three months or less. b. Capital Assets Capital assets, which include construction in progress, are reported in the governmental activities column. The District defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of two years. The valuation basis for all assets is historical cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Depreciation of capital assets is computed and recorded by utilizing the straight-line method. c. Budgets Budgets are prepared and adopted after public hearings for the governmental funds, pursuant to Chapter 190, Florida Statutes. The District utilizes the same basis of accounting for budgets as it does for revenues and expenditures in its various funds. The legal level of budgetary control is at the fund level. All budgeted appropriations lapse at year end. Formal budgets are adopted for the general and debt service funds. As a result, deficits in the budget columns of the accompanying financial statements may occur. d. Unamortized Bond Discounts Bond discounts are presented on the government-wide financial statements. The costs are amortized over the life of the bonds using the straight-line method of accounting. For financial reporting, the unamortized bond discount is netted with the applicable long-term debt. NOTE B – CASH AND INVESTMENTS All deposits are held in qualified public depositories and are included on the accompanying balance sheet as cash and investments. Custodial Credit Risk – Deposits Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a formal deposit policy for custodial credit risk, however, they follow the provisions of Chapter 280, Florida Statutes regarding deposits and investments. As of September 30, 2023, the District's bank balance was $227,499 and the carrying value was $205,521. Exposure to custodial credit risk was as follows. The District maintains all deposits in a qualified public depository in accordance with the provisions of Chapter 280, Florida Statutes, which means that all deposits are fully insured by Federal Depositors Insurance or collateralized under Chapter 280, Florida Statutes. Investments As of September 30, 2023, the District had the following investments and maturities: The District categorizes its fair value measurements within the fair value hierarchy recently established by generally accepted accounting principles. The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The District uses a market approach in measuring fair value that uses prices and other relevant information generated by market transactions involving identical or similar assets, liabilities, or groups of assets and liabilities. Assets or liabilities are classified into one of three levels. Level 1 is the most reliable and is based on quoted price for identical assets, or liabilities, in an active market. Level 2 uses significant other observable inputs when obtaining quoted prices for identical or similar assets, or liabilities, in markets that are not active. Level 3 is the least reliable and uses significant unobservable inputs that use the best information available under the circumstances, which includes the District’s own data in measuring unobservable inputs. Based on the criteria in the preceding paragraph, the investments listed above are level 1 assets. InvestmentsMaturitiesFair ValueDreyfus Treasury30 days*6,818,955$ * Weighted Average Maturity The District’s investment policy allows management to invest funds in investments permitted under Section 218.415, Florida Statutes. NOTE B – CASH AND INVESTMENTS (CONTINUED) Interest Rate Risk The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk The District's investments are limited by state statutory requirements and bond compliance. The District has no investment policy that would further limit its investment choices. As of September 30, 2023, the District’s investments in Dreyfus Treasury are rated AAAm by Standard and Poor’s. Concentration of Credit Risk The District places no limit on the amount it may invest in any one fund. The investments in Dreyfus Treasury represent 100% of the District's total investments. The types of deposits and investments and their level of risk exposure as of September 30, 2023 were typical of these items during the fiscal year then ended. The District considers any decline in fair value for certain investments to be temporary. NOTE C – SPECIAL ASSESSMENT REVENUES 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 by the District. Debt Service Assessments are levied when bonds are issued and collected annually. The District may collect assessments directly or utilize the uniform method of collections (Chapter 197.3632, Florida Statues). Direct collected assessments are due as determined by annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the uniform method are due and payable on November 1 or as soon as the assessment roll is certified and delivered to the Tax Collector. Per Section 197.162, Florida Statutes discounts are allowed for early payment at the rate of 4% in November, 3% in December, 2% in January, and 1% in February. Taxes paid in March are without discount. All unpaid assessments become delinquent as of April 1. Virtually all unpaid assessments are collected via the sale of tax certificates on, or prior to, June 1; therefore, there were no material amounts receivable at fiscal year-end. Assessment levied for the 2022-2023 fiscal year were levied in September 2022. NOTE D – CAPITAL ASSETS Capital asset activity for the year ended September 30, 2023 was as follows: NOTE E – LONG-TERM DEBT The following is a summary of activity for long-term debt of the Governmental Activities for the year ended September 30, 2023: Bonds payable at October 1, 2022 $ - BeginningEndingBalanceAdditionsDeletionsBalanceGovernmental Activities: Capital assets Construction in progress $ - $ 45,308 $ - 45,308$ Issuance of long-term debt 7,070,000 Bonds payable at September 30, 2023 7,070,000 Bond discount, net (56,045) Long-term debt at September 30, 2023 $ 7,013,955 District debt is comprised of the following at September 30, 2023: Special Assessment Bonds $7,070,000 Series 2022 Special Assessment Bonds due in annual principal installments beginning June 2024, maturing June 2053, at various interest rates between 4.70% and 5.50%, payable June 15 and December 15. Current portion is $100,000. $ 7,070,000 NOTE E – LONG-TERM DEBT (CONTINUED) The annual requirements to amortize the principal and interest of bonded debt outstanding as of September 30, 2023 are as follows: Summary of Significant Bonds Resolution Terms and Covenants The Series 2022 Bonds are subject to redemption at the option of the District prior to their maturity, in whole or in part, at any time on or after June 15, 2033, at a price equal to the par amount of the respective Bonds thereof, together with accrued interest to the date of redemption. The Series 2022 Bonds are subject to extraordinary mandatory redemption prior to maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Trust Indenture. The Trust Indenture established certain amounts be maintained in a reserve account. In addition, the Trust Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. Year EndingSeptember 30,PrincipalInterestTotal2024100,000$ 380,394$ 480,394$ 2025105,000 375,694 480,694 2026110,000 370,759 480,759 2027115,000 365,589 480,589 2028120,000 360,184 480,184 2029-2033705,000 1,704,338 2,409,338 2034-2038925,000 1,493,406 2,418,406 2039-20431,210,000 1,216,056 2,426,056 2044-20481,590,000 846,725 2,436,725 2049-20532,090,000 357,225 2,447,225 Totals7,070,000$ 7,470,370$ 14,540,370$ NOTE E – LONG-TERM DEBT (CONTINUED) Depository Funds The bond resolution establishes certain funds and determines the order in which revenues are to be deposited into these funds. A description of the significant funds, including their purposes, is as follows: Reserve Funds - The Series 2022 Reserve Accounts were funded from the proceeds of the Series 2022 Bonds in an amount equal to 50% of the maximum annual debt service required for the Series 2022 Bonds at the date of issue until the Reserve Account Release Conditions have been satisfied as established in the Trust Indenture. Once the Release Conditions have been satisfied as established in the Trust Indenture the Reserve Account shall be reduced to an amount equal to 10% of the maximum annual debt service with respect to the then outstanding principal amount. Monies held in the reserve accounts will be used only for the purposes established in the Trust Indenture. The following is a schedule of required reserve balances as of September 30, 2023: NOTE F – RELATED PARTY TRANSACTIONS The Developer owns a significant portion of land within the District. The District’s activity is dependent upon the continued involvement of the Developer, the loss of which could have a material adverse effect on the District’s operations. All voting members of the Board of Supervisors are employed by the Developer. The District received $6,932 in operating contributions from the Developer for the year ended September 30, 2023. ReserveReserveBalanceRequirementSeries 2022 Special Assessment Bonds $ 242,846 $ 240,020 NOTE G – RISK MANAGEMENT The government is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance. There were no claims or settled claims from these risks since inception. NOTE H – SUBSEQUENT EVENT In June 2024, the District accepted conveyance of certain amenity property. 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 St. Augustine Lakes Community Development District St. Johns 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, as listed in the table of contents, of St. Augustine Lakes Community Development District, as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the basic financial statements and have issued our report thereon dated October 21, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit, we considered St. Augustine Lakes Community Development District's internal control over financial reporting (internal control) as a basis for designing 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 St. Augustine Lakes Community Development District’s internal control. Accordingly, we do not express an opinion on the effectiveness of St. Augustine Lakes Community Development 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 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 have not been identified. To the Board of Supervisors St. Augustine Lakes Community Development District Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether St. Augustine Lakes Community Development District's financial statements are free of 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 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. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida October 21, 2024 MANAGEMENT LETTER To the Board of Supervisors St. Augustine Lakes Community Development District St. Johns County, Florida Report on the Financial Statements We have audited the financial statements of the St. Augustine Lakes Community Development District as of and for the year ended September 30, 2023, and have issued our report thereon dated October 21, 2024. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States; 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 Financial Statements Performed in Accordance with Government Auditing Standards and our Independent Auditor’s Report on an examination conducted in accordance with AICPA Professionals 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 October 21, 2024, 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 financial audit report. There were no findings or recommendations in the prior financial audit report. Financial Condition and Management Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether or not St. Augustine Lakes Community Development District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific conditions met. In connection with our audit, we determined that St. Augustine Lakes Community Development District did not meet any of the conditions described in Section 218.503(1), Florida Statutes. To the Board of Supervisors St. Augustine Lakes Community Development District Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for St. Augustine Lakes Community Development District. It is management’s responsibility to monitor the St. Augustine Lakes Community Development District’s financial condition; our financial condition assessment was based in part on the representations made by management and the review of the financial information provided by the same as of September 30, 2023. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Specific Information The information provided below was provided by management and has not been audited; therefore, we do not express an opinion or provide any assurance on the information. As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor General, the St. Augustine Lakes Community Development District reported: 1) The total number of District employees compensated in the last pay period of the District’s fiscal year: 5 2) The total number of independent contractors to whom nonemployee compensation was paid in the last month of the District’s fiscal year: 6 3) All compensation earned by or awarded to employees, whether paid or accrued, regardless of contingency: $8,312 4) All compensation earned by or awarded to nonemployee independent contractors, whether paid or accrued, regardless of contingency: $125,988 5) Each construction project with a total cost of at least $65,000 approved by the District that is scheduled to begin on or after October 1, 2022, together with the total expenditures for such project: N/A 6) A budget variance based on the budget adopted under Section 189.016(4), Florida Statutes, before the beginning of the fiscal year being reported if the District amends a final adopted budget under Section 189.016(6), Florida Statutes: The budget was not amended. As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)8, Rules of the Auditor General, the St. Augustine Lakes Community Development District reported: 1) The rate or rates of non-ad valorem special assessments imposed by the District: The District is funded by direct special assessments. 2) The amount of special assessments collected by or on behalf of the District: Total special assessments collected was $509,421. 3) The total amount of outstanding bonds issued by the District and the terms of such bonds: The Series 2022 Bonds, $7,070,000, maturing June 2053. To the Board of Supervisors St. Augustine Lakes Community Development District Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate 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 warrants the attention of those charged with governance. In connection with our audit, we did not note 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. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida October 21, 2024 INDEPENDENT ACCOUNTANTS’ REPORT/COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES To the Board of Supervisors St. Augustine Lakes Community Development District St. Johns County, Florida We have examined St. Augustine Lakes Community Development District's compliance with Section 218.415, Florida Statutes during the year ended September 30, 2023. Management is responsible for St. Augustine Lakes Community Development District’s compliance with those requirements. Our responsibility is to express an opinion on St. Augustine Lakes Community Development 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 and, accordingly, included examining, on a test basis, evidence about St. Augustine Lakes Community Development District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on St. Augustine Lakes Community Development District’s compliance with the specified requirements. In our opinion, St. Augustine Lakes Community Development District complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2023. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida October 21, 2024