Highland Meadows West Community Development District

FINANCIAL STATEMENTS

September 30, 2022

Table of Contents

Page
REPORT
Independent Auditors’ Report ..............................................................................................	1
FINANCIAL STATEMENTS
Management’s Discussion and Analysis (required supplemental information) ...............	4
Basic Financial Statements Government‐Wide Financial Statements
Statement of Net Position ........................................................................................	10
Statement of Activities .............................................................................................	11
Fund Financial Statements
Balance Sheet – Governmental Funds......................................................................	12
Reconciliation of the Balance Sheet of Governmental Funds to the Statement
of Net Position ..........................................................................................................	13
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds ................................................................................................	14
Reconciliation of the Statement of Revenues, Expenditures and Change in
Fund Balances of Governmental Funds to the Statement of Activities ...................	15
Notes to Financial Statements ........................................................................................	16
Required Supplemental Information (other than MD&A)
Budget to Actual Comparison Schedule ‐ General Fund .............................................	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
Management Letter ........................................................................................................	29
Independent Accountants’ Report on Compliance with Section 218.415,
Florida Statutes ...............................................................................................................	32

INDEPENDENT AUDITORS’ REPORT

To the Board of Supervisors
Highland Meadows West Community Development District Polk County, Florida

Opinions

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Highland Meadows West Community Development District (hereinafter referred to as “District”), as of and for the year ended September 30, 2022, 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, each major fund, and the aggregate remaining fund information of the Highland Meadows West Community Development District as of September 30, 2022, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Highland Meadows West Community Development 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.

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.
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.

Auditors’ 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 generally accepted auditing standards 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 generally accepted auditing standards and Government Auditing Standards, 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 on pages 4 ‐ 9 and 26 be presented to supplement the basic financial statements. Such information is the responsibility of

‐ 2 ‐

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 Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 2, 2023, on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 2, 2023

Management’s Discussion and Analysis

Our discussion and analysis of the Highland Meadows West Community Development District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2022. Please read it in conjunction with the District’s financial statements, which begin on page 10.

FINANCIAL HIGHLIGHTS

At September 30, 2022, the liabilities of the District exceed its assets by approximately $3.1 million (deficit net position).

During the year ended September 30, 2022, the District made principal and interest payments totaling $179,237 and $376,192 respectively.

During the year ended September 30, 2022, the District repaid the developer approximately
$111,000.

USING THE ANNUAL REPORT

This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities on pages 10 – 11 provide information about the activities of the District as a whole and present a longer‐term view of the District’s finances. Fund financial statements start on page 12. For governmental activities, these statements tell how these services were financed in the short‐term as well as what remains for future spending. Fund financial statements also report the District’s operations in more detail than the government‐wide statements by providing information about the District’s most significant funds.

Reporting the District as a Whole

Our analysis of the District as a whole begins on page 5. One of the most important questions asked about the District’s finances is, “Is the District as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private‐sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

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

Reporting the District’s Most Significant Funds

Our analysis of the District’s major funds begins on page 7. The fund financial statements begin on page 12 and provide detailed information about the most significant funds – not the District as a whole. Some funds are required to be established by State law and by bond covenants. All of the District’s funds are governmental fund‐types.

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

THE DISTRICT AS A WHOLE

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

September 30,	2022	2021	Change	
Assets
Current and other assets	
$	740,012	
$	769,046	
$	(29,034)	
Capital assets, net	4,716,930	4,879,019	(162,089)	
Total assets	5,456,942	5,648,065	(191,123)	
Liabilities
Current liabilities	
$	344,231	
$	359,416	
$	(15,185)	
Other liabilities	8,194,586	8,361,220	(166,634)	
Total liabilities	8,538,817	8,720,636	(181,819)	
Net position
Net investment in capital assets	
43,983	
99,397	
(55,414)	
Restricted for:
Debt service	
159,866	
141,613	
18,253	
Capital projects	1	4,216	(4,215)	
Unrestricted	(3,285,725)	(3,317,797)	32,072	
Total net position (deficit)	(3,081,875)	(3,072,571)	(9,304)	
Total liabilities and net position	$	5,456,942	$	5,648,065	$	(191,123)	

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

During the fiscal year ended September 30, 2022, total assets and liabilities decreased by approximately $191,000 and $182,000, respectively. The decrease in assets and liabilities is due to current year depreciation on capital assets and scheduled principal payments on the Series 2019 and 2020 Bonds, respectively.

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

For the year ended September 30,	2022	2021	Change	
Revenue:
Program revenue: Charges for services	

$	907,401	

$	853,612	

$	53,789	
Grants and contributions	23,237	122,837	(99,600)	
General revenue: Miscellaenous revenue	
440	
498	
(58)	

Total revenue	
931,078	
976,947	
(45,869)	
Expenses:
General government	
260,754	
249,441	
11,313	
Maintenance and operations	195,428	137,760	57,668	
Capital asset conveyance	‐	3,358,429	(3,358,429)	
Developer repayments	110,828	‐	110,828	
Interest	373,372	382,601	(9,229)	

Total expenses	
940,382	
4,128,231	
(3,187,849)	

Change in net position	
(9,304)	
(3,151,284)	
3,141,980	
Net position (deficit), beginning of year	(3,072,571)	78,713	(3,151,284)	

Net position (deficit), end of year	
$	(3,081,875)	
$	(3,072,571)	
$	(9,304)	

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

Revenue and expenses decreased from the prior year by approximately $46,000 and $3.2 million, respectively. The decrease in revenue is primarily due to less required developer funding for capital outlay, while the decrease in expenses is due to conveyance of certain District infrastructure during the prior year. The overall result was a decrease of $9,304 in net position for fiscal year 2022.

THE DISTRICT’S FUNDS

As the District completed the year, its governmental funds (as presented in the balance sheet on page 12) reported a combined fund balance of $737,035, which is a decrease from last year’s fund balance that totaled $766,307. Significant transactions are discussed below.

During the year ended September 30, 2022, the District made principal and interest payments totaling $179,237 and $376,192, respectively.

During the year ended September 30, 2022, the District repaid the developer approximately
$111,000.

The overall decrease in fund balance for the year ended September 30, 2022 totaled approximately
$29,000.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2022, the District had approximately $4.7 million invested in capital assets. This amount represents a net decrease of approximately $162,000 from the fiscal year 2021 total.

A listing of capital assets for the current and prior year follows:

September 30,	2022	2021	Change	

Capital assets being depreciated	
$	5,043,204	
$	5,043,204	
$	‐	
Accumulated depreciation	(326,274)	(164,185)	(162,089)	

Net capital assets	
$	4,716,930	
$	4,879,019	
$	(162,089)	

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

Debt

At September 30, 2022, the District had approximately $8.4 million of outstanding debt. This amount represents a decrease of $160,000 from the fiscal year 2021 total.

A listing of debt amounts outstanding for the current and prior year is as follows:

September 30,	2022	2021	Change	

Special Assessment Bonds: Series 2019	
$	4,780,000	$	4,865,000	
$	(85,000)	
Series 2020A2	2,660,000	2,715,000	(55,000)	
Series 2020A3	915,000	935,000	(20,000)	

Total	
$	8,355,000	$	8,515,000	
$	(160,000)	

More information about the statements.	
District's long term debt is presented in Note 5	
to the financial	

GOVERNMENTAL FUNDS BUDGETARY HIGHLIGHTS

An Operating budget was established in the current year by the governing board for the District pursuant to the requirements of Florida Statutes. The budget to actual comparison for the general fund, including the original budget and final adopted budget, is shown at page 26.

The District experienced a favorable variance in revenue and expenditures as compared to the budget in the amounts of $2,572 and $63,680, respectively. The variance in revenue occurred primarily due to the current year excess received on the tax roll. The variance in expenditures occurred primarily due to anticipated landscape and maintenance and professional services expenditures that were not incurred during the year.

FUTURE FINANCIAL FACTORS

Highland Meadows West Community Development District is an independent special district that operates under the provisions of Chapter 190, Florida Statutes. The District operates under an elected Board of Supervisors, which establishes policy and sets assessment rates. Assessment rates for fiscal year 2023 were established to provide for the operations of the District as well as the necessary debt service requirements.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide a general overview of the District’s finances. If you have questions about this report or need additional financial information, contact the Highland Meadows West Community Development District’s management company at 6200 Lee Vista Boulevard, Suite 300, Orlando, FL, 32822.

Basic Financial Statements

September 30,	2022	
	Governmental	
	Activities	
Assets
Cash and cash equivalents	
$	144,156	
Investments	574,975	
Assessment receivables	1,890	
Prepaid expenses	18,991	
Capital assets:
Depreciable, net	
4,716,930	

Total assets	
5,456,942	

Liabilities
Accounts payable	

2,977	
Accrued interest payable	149,492	
Non‐current liabilities:
Due within one year	
191,762	
Due in more than one year	8,194,586	

Total liabilities	
8,538,817	

Net position
Net investment in capital assets	

43,983	
Restricted for:
Capital projects	
1	
Debt service	159,866	
Unrestricted	(3,285,725)	

Total net position (deficit)	$	(3,081,875)

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

Highland Meadows West Community Development District
Statement of Activities

For the year ended September 30,			2022		

Program Revenue		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	

$	(260,754)	

$	210,555	

$	‐	

$	21,316	

$	(28,883)	
Maintenance and operations	(195,428)	157,805	‐	‐	(37,623)	
Developer repayments	(110,828)	‐	‐	‐	(110,828)	
Interest	(373,372)	539,041	1,921	‐	167,590	

Total governmental activities	
$	(940,382)	
$	907,401	
$	1,921	
$	21,316	
(9,744)	

General revenue
Miscellaneous revenue	

440	
Total general revenue	440	
Change in net position	(9,304)	
Net position (deficit) ‐ beginning of year	(3,072,571)	

Net position (deficit) ‐ end of year	
$	(3,081,875)	

The accompanying notes are an integral part of these financial statements.
‐ 11 ‐

General	
Debt Service	
Non‐Major Fund	Total
Governmental Funds	
Assets
Cash and cash equivalents	
$	144,156	
$	‐	
$	‐	
$	144,156	
Investments	‐	574,974	1	574,975	
Assessments receivable	767	1,123	‐	1,890	
Prepaid expenditures	18,991	‐	‐	18,991	
Total assets	$	163,914	$	576,097	$	1	$	740,012	

Liabilities and Fund Balances
Liabilities
Accounts payable	

$	2,977	

$	‐	

$	‐	

$	2,977	
Total liabilities	2,977	‐	‐	2,977	

Fund balances
Nonspendable		18,991		‐		‐		18,991	
Restricted for debt service		‐		576,097		‐		576,097	
Restricted for capital projects		‐		‐		1		1	
Unassigned		141,946		‐		‐		141,946	
Total fund balance		160,937		576,097		1		737,035	

Total liabilities and fund balance	
$	
163,914	
$	
576,097	
$	
1	
$	
740,012	

Total fund balances, governmental funds	$	737,035	
Capital assets used in governmental activities are not financial resources and therefore are not reported in the fund financial statements.	
4,716,930	
Liabilities not due and payable from current resources, including accrued		
interest, are not reported in the fund financial statements.	(8,535,840)	

Total net position (deficit) ‐ governmental activities	
$	(3,081,875)	

	Governmental Funds	
For the year ended September 30,		2022	
		Total	
		Debt	Non‐Major	Governmental	
	General	Service	Fund	Funds	
Revenue
Assessments	
$ 368,360	
$ 539,041	$	‐	$	907,401	
Developer contributions	‐	‐	21,316	21,316	
Miscellaneous revenue	440	‐	‐	440	
Interest	‐	1,921	‐	1,921	
Total revenue	368,800	540,962	21,316	931,078	

Expenditures
Current:
General government	98,665	‐	‐	98,665	
Maintenance and operations	174,111	‐	21,317	195,428	
Developer repayments	‐	‐	110,828	110,828	
Debt service:
Principal	
19,237	
160,000	
‐	
179,237	
Interest	10,535	365,657	‐	376,192	
Total expenditures	302,548	525,657	132,145	960,350	
Excess (deficit) of revenue over					
expenditures	66,252	15,305	(110,829)	(29,272)	
Other Financing Sources (Uses)
Transfers in	
‐	
‐	
106,614	
106,614	
Transfers out	‐	(106,614)	‐	(106,614)	
Total other financing sources (uses)	‐	(106,614)	106,614	‐	

Net change in fund balances	
66,252	
(91,309)	
(4,215)	
(29,272)	
Fund balance, beginning of year	94,685	667,406	4,216	766,307	
Fund balance, end of year	
$ 160,937	
$ 576,097	
$	1	
$	737,035	

Balances of Governmental Funds to the Statement of Activities

For the year ended September 30,	2022
Net change in fund balances ‐ governmental fund	$	(29,272)

Governmental funds report principal payments on bonds and notes payable when debt is paid, whereas these payments are eliminated in the Statement of Activities and recognized as a decrease in bonds and notes payable in the
Statement of Net Position.	179,237

Depreciation on capital assets is not recognized in the fund financial statements
but is reported as an expense in the Statement of Activities.	(162,089)
Bond discount amortization is not recognized in the fund financial statements
but is reported as an expense in the Statement of Activities.	(128)
The change in accrued interest between the current and prior year is recorded
on the Statement of Activities but not on the fund financial statements.	2,948

Change in net position of governmental activities	$	(9,304)

NOTE 1: NATURE OF ORGANIZATION

The Highland Meadows West Community Development District (the “District”) was established on July 10, 2018 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, by Polk County Ordinance No. 18‐045. The Act provides, among other things, the power to manage basic services for community development, power to borrow money and issue bonds, and to levy and assess non‐ad valorem assessments for the financing and delivery of capital infrastructure.

The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for community development within the District.

The District is governed by a Board of Supervisors (“Board”), which is comprised of five members. The current Supervisors have been elected by the landowners. At September 30, 2022, all of the Supervisors are affiliated with the developer of the community, HMD West, LLC. The Board of Supervisors of the District exercises all powers granted to the District pursuant to Chapter 190, Florida Statutes.

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

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

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the District conform to GAAP as applicable to governments in accordance with those promulgated by GASB. The following is a summary of the more significant policies:

Government‐wide and Fund Financial Statements

The basic financial statements include both government‐wide and fund financial statements.

The government‐wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all the non‐fiduciary activities of the primary government. Governmental activities, which normally are supported by assessments, are reported separately from business‐type activities, which rely to a significant extent on fees and charges for support. The business‐type activities are reported separately in government‐wide financial statements; however, at September 30, 2022, the District did not have any significant business‐type activities. Therefore, no business‐type activities are reported. Assessments and other items not properly included as program revenues (i.e., charges to customers or applicants who purchase, use, or directly benefit from goods or services) are reported as general revenues.

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

Measurement Focus, Basis of Accounting and Basis of Presentation

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

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

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

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

The District reports the following major governmental funds:

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

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

For the year ended September 30, 2022, the District does not report any proprietary funds. As a general rule, the effect of interfund activity has been eliminated from the government‐wide financial statements.

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

Cash, Deposits and Investments

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

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

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

Capital Assets

Capital assets, which include primarily infrastructure assets (e.g., roads, sidewalks, water management systems and similar items), are reported in the governmental activities column in the government‐wide financial statements. Capital assets are defined by the District as assets with an initial/individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost and estimated historical cost if purchased or constructed. Donated assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

Property, plant and equipment of the primary government are depreciated using the straight‐line method over the estimated useful lives. Estimated useful lives for financial reporting purposes are as follows: Equipment – 20 years; Infrastructure – 15 to 40 years.

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

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position and balance sheet – governmental funds will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any of this type of item at September 30, 2022.

In addition to liabilities, the statement of financial position and balance sheet – governmental funds will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District does not have any of this type of item at September 30, 2022.

Long‐Term Obligations

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

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

Fund Equity

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

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

Estimates

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

Budgets

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

The District follows these procedures in establishing the budgetary data reflected in the financial statements:

Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.
A public hearing is conducted to obtain comments.
Prior to October 1, the budget is legally adopted by the District Board.
All budget changes must be approved by the District Board, unless otherwise delegated by the District Board.
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

Subsequent Events

Management has evaluated subsequent events through the date that the financial statements were available to be issued, June 2, 2023, and determined there were no events that occurred that require disclosure. No subsequent events occurring after this date have been evaluated for inclusion in these financial statements.

NOTE 3: INVESTMENTS

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

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

Custodial credit risk – For an investment, custodial credit risk is the risk that the District will not be able to recover the value of the investments or collateral securities that are in the possession of an outside party. The District has no formal policy for custodial risk. At September 30, 2022, the money market funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form.

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

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

September 30,	2022	Credit Risk  Maturities

Short‐term Money Market Funds

$	574,975

S&P AAAm	4 days

NOTE 4: CAPITAL ASSETS

The following is a summary of changes in the capital assets for the year ended September 30, 2022:

	Beginning
Balance	
Additions		Transfers and
Conveyances	Ending
Balance	
Governmental Activities:
Capital assets being depreciated Infrastructure	
4,965,188		
‐	
‐	
4,965,188	
Equipment	78,016		‐	‐	78,016	
Total capital assets, being depreciated	5,043,204		‐	‐	5,043,204	
Less accumulated depreciation						
Infrastructure	(158,188)	(158,188)	‐	(316,376)	
Equipment	(5,997)	(3,901)	‐	(9,898)	
Total accumulated depreciation	(164,185)	(162,089)	‐	(326,274)	
Total capital assets, being depreciated, net	4,879,019	(162,089)	‐	4,716,930	
Governmental activities capital assets, net	$ 4,879,019	$	(162,089)	$	‐	$  4,716,930	

NOTE 5: BONDS PAYABLE					

In April 2019, the District issued $6,385,000 of Special Assessment Bonds, Series 2019, consisting of
$575,000 Term Bonds, $695,000 Term Bonds, $1,960,000 Term Bonds, and $3,155,000 Term Bonds with interest rates of 4.000%, 4.125%, 4.875% and 5.000%. The Series 2019 bonds were issued to fund the planning, financing, acquisition, construction, equipping and installation of the Series 2019 Project. Interest is paid semiannually on each May 1 and November 1. Principal payments on the Series 2019 $575,000 Term Bonds are made serially commencing on November 1, 2020 through November 1, 2024. Principal payments on the Series 2019 $695,000 Term Bonds are made serially commencing on November 1, 2025 through November 1, 2029. Principal payments on the Series 2019
$1,960,000 Term Bonds are made serially commencing on November 1, 2030 through November 1,

Highland Meadows West Community Development District
Notes to Financial Statements

NOTE 5: BONDS PAYABLE (Continued)

2039. Principal payments on the Series 2019 $3,155,000 Term Bonds are made serially commencing on November 1, 2040 through November 1, 2049.

In February 2020, the District issued $3,725,000 of Series 2020A Bonds, consisting of $2,770,000 for the Assessment Area 2 Project and $955,000 for the Assessment Area 3 project with interest rates ranging from 2.875% to 4.000%. The Series 2020A bonds were issued to fund the planning, financing, acquisition, construction, and installation of the Assessment Area 2 and 3 projects. Interest is paid semiannually on each May 1 and November 1. Principal payments on the $2,770,000 Assessment Area 2 Project are made serially commencing on May 1, 2021 through May 1, 2050. Principal payments on the $955,000 Assessment Area 3 Project are made serially commencing on May 1, 2021 through May 1, 2050.

The Bond Indentures require that the District maintain adequate funds in reserve accounts to meet the debt service reserve requirements as defined in the Indentures. The requirements have been met for the fiscal year ended September 30, 2022.

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

At September 30, 2022, the scheduled debt service requirements on bonds payable were as follows:

Total Debt
Year Ending September 30,	Principal	Interest	Service
2023	$	170,000	$	356,982	$	526,982	
2024	170,000	351,082	521,082	
2025	175,000	345,082	520,082	
2026	185,000	338,882	523,882	
2027	190,000	331,959	521,959	
2028 ‐ 2032	1,060,000	1,546,638	2,606,638	
2033 ‐ 2037	1,305,000	1,310,079	2,615,079	
2038 ‐ 2042	1,620,000	996,094	2,616,094	
2043 ‐ 2047	2,025,000	591,453	2,616,453	
2048 ‐ 2050	1,455,000	113,950	1,568,950	
	$	8,355,000	$	6,282,201	$	14,637,201	

Highland Meadows West Community Development District
Notes to Financial Statements

NOTE 6: NOTES PAYABLE

In October 2019, the District obtained a note payable totaling $28,750 for the purchase of playground equipment. The note is payable in 48 monthly payments of $771 each, bears interest at 13.005% and matures in November 2023.

In June 2020, the District obtained a note payable totaling $49,265 for the purchase of playground equipment. The note is payable in 48 monthly payments of $1,298 each, bears interest at 12.01% and matures in July 2024.

At September 30, 2022, the future annual principal payments on the notes payable were as follows:

2023	21,763
2024		13,052 
 $	34,815 

NOTE 7: LONG TERM DEBT

Long‐term liability activity for the year ended September 30, 2022 was as follows:

	Beginning
Balance	
Additions	
Reductions	Ending
Balance	Due Within
One Year	
Governmental Activities
Bonds payable: Series 2019	
$	4,865,000	
$	‐	
$	(85,000)	
$	4,780,000	
$	90,000	
Series 2020A2	2,715,000	‐	(55,000)	2,660,000	60,000	
Series 2020A3	935,000	‐	(20,000)	915,000	20,000	
Bond discount	(3,595)	‐	128	(3,467)	‐	
Total bonds payable	8,511,405	‐	(159,872)	8,351,533	170,000	
Notes Payable:						
Playground equipment	54,052	‐	(19,237)	34,815	21,762	
	$	8,565,457	$	‐	$	(179,109)	$	8,386,348	$	191,762	

NOTE 8: RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District maintains commercial insurance coverage to mitigate the risk of loss. Coverage may not extend to all situations. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. As of the date of this report, the District has not filed any claims against this commercial coverage.

NOTE 9: MANAGEMENT COMPANY

The District has contracted with a management company to perform management advisory services, which include financial and accounting advisory services. Certain employees of the management company also serve as officers (Board appointed non‐voting positions) of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, and other administrative costs.

NOTE 10: RELATED PARTY TRANSACTIONS

In 2020, the District entered into two agreements with Orchid Terrace Development, LLC, an owner and developer of certain lands within the District, for the acquisition of work product, improvements and real property for the Assessment Area 2 Project and the Assessment Area 3 Project. In conjunction with these projects, the District and Orchid Terrace Development, LLC entered into a cost share agreement, whereby Orchid Terrace was responsible for the project costs including excavation or disposal of trash or any other unforeseen site conditions, any extended warranty, landscaping or irrigation, well abandonment, power relocation or removal, and fencing, which were not included in the District’s capital improvement projects plan. Under the terms of these agreements, Orchid Terrace Development, LLC remitted $21,316 to the District and the District repaid Orchid Terrace Development, LLC for certain capital outlay expenditures paid on behalf of the District totaling
$110,828, which are recorded as Developer contributions and Developer repayments, respectively, on the accompanying Statement of Revenue, Expenses and Fund Balance – Governmental Funds.

NOTE 11: INTERLOCAL AGREEMENT

In 2019, the District entered into an interlocal agreement with Davenport Road South Community Development District for its share of the amenity costs. The allocation is based on the number of assessable units developed and to be developed within each District. The District’s initial share of the amenity budget expenses is approximately 55%. During the year ended September 30, 2022, the District incurred expenses totaling $77,147 for its share of the operations and maintenance of the amenity center.

Required Supplemental Information (Other than MD&A)

For the year ended September 30,		2022		
	Original and	Actual	Variance with	
	Final Budget	Amounts	Final Budget	

Revenue
Assessments	

$	366,228	

$	368,360	

$	2,132	
Miscellaneous revenue	‐	440	440	
Total revenue	366,228	368,800	2,572	

Expenditures
General government	

145,522	

98,665	

46,857	
Maintenance and operations
Debt service: Principal	220,706

‐	174,111

19,237	46,595
‐
(19,237)	
Interest	‐	10,535	(10,535)	
Total expenditures	366,228	302,548	63,680	

Excess of revenue over expenditures	
$	‐	
$	66,252	
$	66,252	

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
Highland Meadows West Community Development District Polk County, Florida

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of Highland Meadows West Community Development District (hereinafter referred to as the “District”), as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated June 2, 2023.

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 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 the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

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

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 2, 2023

MANAGEMENT LETTER

To the Board of Supervisors
Highland Meadows West Community Development District Polk County, Florida

Report on the Financial Statements

We have audited the financial statements of the Highland Meadows West Community Development District (“District”) as of and for the fiscal year ended September 30, 2022, and have issued our report thereon dated June 2, 2023.

Auditors’ Responsibility

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

Other Reporting Requirements

We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards and Independent Accountant’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 2, 2023, should be considered in conjunction with this management letter.

Prior Audit Findings

Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations made in the preceding annual audit report.

Official Title and Legal Authority

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

Financial Condition and Management

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

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

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

Specific Information

As required by section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor General, the Highland Meadows West Community Development District reported:

The total number of district employees compensated in the last pay period of the district’s fiscal year as 0.

The total number of independent contractors to whom nonemployee compensation was paid in the last month of the district’s fiscal year as 0.

All compensation earned by or awarded to employees whether paid or accrued, regardless of contingency as $0.

All compensation earned by or awarded to nonemployee independent contractors, whether paid or accrued, regardless of contingency as $3,800.

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 of the fiscal year being reported, together with the total expenditures for such project as $0.

The District did not amend its final adopted budget under Section 189.016(6).

As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)7, Rules of the Auditor General, the Highland Meadows West Community Development District reported:

The rate or rates of non‐ad valorem special assessments posed by the district as $2,195 for single family residential units.

The total amount of special assessment collected by or on behalf of the district as $907,401.

The total amount of outstanding bonds issued by the District as $8,355,000.

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 which 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 Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Board of Supervisors, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 2, 2023

INDEPENDENT ACCOUNTANTS’ REPORT

To the Board of Supervisors
Highland Meadows West Community Development District Polk County, Florida

We have examined Highland Meadows West Community Development District ’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2022. Management of the District is responsible for the District’s compliance with the specified requirements. Our responsibility is to express an opinion on the District’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and performed the examination to obtain reasonable assurance about whether the District complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the District complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the District’s compliance with specified requirements.

In our opinion, the District complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2022.

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

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 2, 2023