HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA TABLE OF CONTENTS Page INDEPENDENT AUDITOR’S REPORT 1-2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3-6 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 7 Statement of Activities 8 Fund Financial Statements: Balance Sheet – Governmental Funds 9 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 10 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 11 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 12 Notes to Financial Statements 13-22 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 23 Notes to Required Supplementary Information 24 OTHER INFORMATION Data Elements Required by Florida Statute 218.39(3)(c) 25 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 26-27 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10) OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA 28 MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550 OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA 29-30 INDEPENDENT AUDITOR’S REPORT To the Board of Supervisors Hammock Reserve Community Development District City of Haines City, Florida Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of Hammock Reserve Community Development District, City of Haines City, Florida (“District”) as of and for the fiscal year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of September 30, 2023, and the respective changes in financial position thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Included in the Financial Report Management is responsible for the other information included in the financial report. The other information comprises the information for compliance with FL Statute 218.39 (3) (c) but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 20, 2024, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance. June 20, 2024 MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of Hammock Reserve Community Development District, City of Haines City, Florida (“District”) provides a narrative overview of the District’s financial activities for the fiscal year ended September 30, 2023. Please read it in conjunction with the District’s Independent Auditor’s Report, basic financial statements, accompanying notes and supplementary information to the basic financial statements. FINANCIAL HIGHLIGHTS • The assets of the District exceeded its liabilities at the close of the most recent fiscal year resulting in a net position balance of $1,733,128. • The change in the District’s total net position in comparison with the prior fiscal year was $854,046, an increase. The key components of the District’s net position and change in net position are reflected in the table in the government-wide financial analysis section. • At September 30, 2023, the District’s governmental funds reported combined ending fund balances of $2,647,915, a decrease of ($562,463) in comparison with the prior fiscal year. The total fund balance is restricted for debt service and capital projects, non-spendable for prepaid items, and the remainder is unassigned fund balance which is available for spending at the District’s discretion. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as the introduction to the District’s financial statements. The District’s basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all the District’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the residual amount being reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government-wide financial statements include all governmental activities that are principally supported by assessments and Developer contributions. The District does not have any business-type activities. The governmental activities of the District include the general government (management) and maintenance functions. OVERVIEW OF FINANCIAL STATEMENTS (Continued) Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District has one fund category: governmental funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a District’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains three governmental funds. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, debt service fund and capital projects funds, all of which are considered major funds. The District adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with the budget. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of an entity’s financial position. In the case of the District, assets exceeded liabilities at the close of the most recent fiscal year. GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) Key components of the District’s net position are reflected in the following table: 20232022Current and other assets2,742,497$ 5,187,966$ Capital assets, net of depreciation23,459,175 22,984,424 Total assets26,201,672 28,172,390 Current liabilities519,021 2,431,068 Long-term liabilities23,949,523 24,862,240 Total liabilities24,468,544 27,293,308 Net positionNet investment in capital assets(463,226) (434,255) Restricted 2,110,957 1,307,366 Unrestricted85,397 5,971 Total net position1,733,128$ 879,082$ NET POSITIONSEPTEMBER 30, The District’s net position reflects its investment in capital assets (e.g. land, land improvements, and infrastructure) less any related debt used to acquire those assets that is still outstanding. These assets are used to provide services to residents; consequently, these assets are not available for future spending. Although the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The restricted portion of the District’s net position represents resources that are subject to external restrictions on how they may be used. The District’s net position increased during the most recent fiscal year. The majority of the increase represents the extent to which ongoing program revenues exceeded the cost of operations and depreciation expense. Key elements of the change in net position are reflected in the following table: 20232022Revenues: Program revenuesCharges for services3,188,479$ 784,501$ Operating grants and contributions75,200 63,400 Capital grants and contributions3,145,201 1,147,268 General revenuesMiscellaneous income21,237 - Total revenues6,430,117 1,995,169 Expenses: General government105,515 120,126 Maintenance and operations340,822 88,534 Conveyance of infrastructure3,787,470 - Parks and recreation262,348 20,678 Bond issue costs- 485,278 Interest1,079,916 676,983 Total expenses5,576,071 1,391,599 Change in net position854,046 603,570 Net position - beginning879,082 275,512 Net position - ending1,733,128$ 879,082$ CHANGES IN NET POSITIONFOR THE FISCAL YEAR ENDED SEPTEMBER 30, GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) As noted above and in the statement of activities, the cost of all governmental activities during the period ended September 30, 2023 was $5,576,071. The costs of the District’s activities were primarily funded by program revenues which were comprised of Developer contributions and assessments. Expenses increased primarily due to the increase in interest expense as new bonds were issued in the prior year, and the conveyance to other governmental entities for ownership and maintenance purposes. GENERAL BUDGETING HIGHLIGHTS An operating budget was adopted and maintained by the governing board for the District pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in preparation of the fund financial statements. The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2023. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At September 30, 2023, the District had $23,762,147 invested in capital assets for its governmental activities In the government-wide financial statements depreciation of $302,972 has been taken, which resulted in a net book value of $23,459,175. More detailed information about the District’s capital assets is presented in the notes of the financial statements. Capital Debt At September 30, 2023, the District had $23,525,000 Bonds outstanding for its governmental activities. The District also owes $254,449 related to financed purchase agreements. More detailed information about the District’s capital debt is presented in the notes of the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND OTHER EVENTS The Districts operations are expected to increase as the District is built out. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, land owners, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the financial resources it manages and the stewardship of the facilities it maintains. If you have questions about this report or need additional financial information, contact the Hammock Reserve Community Development District’s Finance Department at 219 E. Livingston Street, Orlando, Florida, 32801. HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2023 ASSETSCash and cash equivalents42,120$ Assessments receivable722,523 Due from Developer78,372 Prepaid items13,717 Restricted assets: Investments1,885,765 Capital assets: Nondepreciable15,692,563 Depreciable, net 7,766,612 Total assets26,201,672 LIABILITIES Accounts payable 18,334 Contracts and retainage payable76,248 Accrued interest payable424,439 Non-current liabilities: Due within one year498,849 Due in more than one year23,450,674 Total liabilities24,468,544 NET POSITIONNet investment in capital assets(463,226) Restricted for debt service2,110,957 Unrestricted85,397 Total net position 1,733,128$ Governmental Activities See notes to the financial statements HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY COUNTY, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 ChargesCapitalforGrants andFunctions/ProgramsExpensesServicesContributionsPrimary government: Governmental activities: General government105,515$ 105,515$ 10,785$ -$ 10,785$ Maintenance and operations340,822 171,240 - 3,145,201 2,975,619 Conveyance of infrastructure3,787,470 - - - (3,787,470) Parks and recreation262,348 262,348 - - - Interest on long-term debt1,079,916 2,649,376 64,415 - 1,633,875 Total governmental activities5,576,071 3,188,479 75,200 3,145,201 832,809 General revenues: Miscellaneous income21,237 Total general revenues21,237 Change in net position854,046 Net position - beginning 879,082 Net position - ending 1,733,128$ Program RevenuesNet (Expense) Revenue and Changes in Net PositionOperating Grants and ContributionsGovernmental Activities See notes to the financial statements HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2023 DebtGeneralServiceASSETSCash and cash equivalents41,237$ -$ 883$ 42,120$ Investments- 1,861,65024,1151,885,765 Assessments receivable48,777673,746- 722,523 Due from Developer- - 78,372 78,372 Prepaid items13,717 - - 13,717 Total assets103,731$ 2,535,396$ 103,370$ 2,742,497$ LIABILITIES AND FUND BALANCESLiabilities: Accounts payable18,334$ -$ -$ 18,334$ Contracts and retainage payable- - 76,24876,248 Total liabilities18,334 - 76,248 94,582 Fund balances: Nonspendable: Prepaid items13,717 - - 13,717 Restricted for: Debt service- 2,535,396 - 2,535,396 Capital projects - - 27,122 27,122 Unassigned71,680 - - 71,680 Total fund balances 85,397 2,535,396 27,122 2,647,915 Total liabilities and fund balances103,731$ 2,535,396$ 103,370$ 2,742,497$ Total Governmental FundsMajor FundsCapital Projects See notes to the financial statements HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2023 Fund balance - governmental funds $ 2,647,915 Amounts reported for governmental activities in the statement of net position are different because: Cost of capital assets 23,762,147 Accumulated depreciation (302,972) 23,459,175 Accrued interest payable (424,439) Original issue discount/premium (170,074) Bonds payable (23,525,000) Notes payable (254,449) (24,373,962) Net position of governmental activities $ 1,733,128 Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesand,therefore,arenotreportedasassetsinthegovernmentalfunds.Thestatementofnetpositionincludesthosecapitalassets,netofanyaccumulateddepreciation,inthenetposition of the government as a whole. Liabilitiesnotdueandpayablefromcurrentavailableresourcesarenotreportedasliabilitiesinthegovernmentalfundstatements.Allliabilities,bothcurrentandlong-term,arereportedinthegovernment-wide financial statements. See notes to the financial statements HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 DebtGeneralServiceREVENUESSpecial assessments539,103$ 2,649,376$ -$ 3,188,479$ Developer contributions10,785 - 3,127,4003,138,185 Interest earnings- 64,41517,80182,216 Miscellaneous21,237 - - 21,237 Total revenues571,125 2,713,791 3,145,201 6,430,117 EXPENDITURESCurrent: General government105,398 - 117105,515 Maintenance and operations109,379 - - 109,379 Parks and recreation190,819- - 190,819 Debt service: Principal46,852 860,000 - 906,852 Interest39,251 1,075,571- 1,114,822 Capital outlay- - 4,565,1934,565,193 Total expenditures491,699 1,935,571 4,565,310 6,992,580 Excess (deficiency) of revenuesover (under) expenditures79,426 778,220 (1,420,109) (562,463) OTHER FINANCING SOURCES (USES) Transfers in (out)- (3,670) 3,670- Total other financing sources (uses)- (3,670) 3,670 - Net change in fund balances79,426 774,550 (1,416,439) (562,463) Fund balances - beginning5,971 1,760,846 1,443,561 3,210,378 Fund balances - ending85,397$ 2,535,396$ 27,122$ 2,647,915$ Major FundsTotal Governmental FundsCapital Projects See notes to the financial statements HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 Net change in fund balances - total governmental funds $ (562,463) Amounts reported for governmental activities in the statement of activitiesare different because: 4,565,193 906,852 (3,787,470) (302,972) 34,906 $ 854,046 Governmentalfundsreportcapitaloutlaysasexpenditures;however, thecostofthoseassetsiseliminatedinthestatementofactivitiesand capitalized in the statement of net position. Repaymentoflong-termliabilitiesarereportedasexpendituresinthegovernmentalfundstatements,butsuchrepaymentsreduceliabilitiesin the statement of net position and are eliminated in the statement of activities. Depreciationoncapitalassetsisnotrecognizedinthegovernmentalfundfinancialstatements,however,theseamountsarerecognizedasexpenses in the government-wide statement of activities. Thechangeinaccruedinterestonlong-termliabilitiesbetweenthecurrentandpriorfiscalyearisrecordedinthestatementofactivitiesbut not in the governmental fund financial statements. Change in net position of governmental activities Conveyancesofinfrastructureimprovementstoothergovernmentsofpreviously capitalized capital assets is recorded as an expense in the statement of activities. See notes to the financial statements HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 1 - NATURE OF ORGANIZATION AND REPORTING ENTITY Hammock Reserve Community Development District (the "District") was established by the Board of Commissioners of City of Haines City’s approval of Ordinance No. 19-1665 effective on November 7, 2019, as amended by Ordinances No. 21-1731 and No. 22-2010 on June 3, 2021 and August 3, 2022, respectively, pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes. 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 the Board of Supervisors ("Board"), which is composed of five members. The Supervisors are elected on an at large basis by the owners of the property within the District. The Board exercises all powers granted to the District pursuant to Chapter 190, Florida Statutes. The Board has the responsibility for: 1. Allocating and levying assessments. 2. Approving budgets. 3. Exercising control over facilities and properties. 4. Controlling the use of funds generated by the District. 5. Approving the hiring and firing of key personnel. 6. Financing improvements. The financial statements were prepared in accordance with Governmental Accounting Standards Board (“GASB”) Statements. Under the provisions of those standards, the financial reporting entity consists of the primary government, organizations for which the District is considered to be financially accountable and other organizations for which the nature and significance of their relationship with the District are such that, if excluded, the financial statements of the District would be considered incomplete or misleading. There are no entities considered to be component units of the District; therefore, the financial statements include only the operations of the District. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Government-Wide and Fund Financial Statements The basic financial statements include both government-wide and fund financial statements. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; operating- type special assessments for maintenance and debt service are treated as charges for services and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not included among program revenues are reported instead as general revenues. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Assessments are recognized as revenues in the year for which they are levied. Grants and similar items are to be recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Assessments Assessments are non-ad valorem assessments on benefited property within the District. Operating and maintenance assessments are based upon the adopted budget and levied annually. Debt service assessments are levied when Bonds are issued and assessed and collected on an annual basis. The District may collect assessments directly or utilize the uniform method of collection under Florida Statutes. Direct collected assessments are due as determined by annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the uniform method are mailed by the County Tax Collector on November 1 and due on or before March 31 of each year. Property owners may prepay a portion or all of the debt service assessments on their property subject to various provisions in the Bond documents. Assessments and interest associated with the current fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. The portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. The District reports the following major governmental funds: General Fund The general fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund The debt service fund is used to account for the accumulation of resources for the annual payment of principal and interest on long-term debt. Capital Projects Fund This fund accounts for the financial resources to be used for the acquisition or construction of major infrastructure within the District. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first for qualifying expenditures, then unrestricted resources as they are needed. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position or Equity Restricted Assets These assets represent cash and investments set aside pursuant to Bond covenants or other contractual restrictions. Deposits and Investments The District’s cash and cash equivalents are considered to be cash on hand and demand deposits (interest and non-interest bearing). The District has elected to proceed under the Alternative Investment Guidelines as set forth in Section 218.415 (17) Florida Statutes. The District may invest any surplus public funds in the following: a) The Local Government Surplus Trust Funds, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act; b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; c) Interest bearing time deposits or savings accounts in qualified public depositories; d) Direct obligations of the U.S. Treasury. Securities listed in paragraph c and d shall be invested to provide sufficient liquidity to pay obligations as they come due. The District records all interest revenue related to investment activities in the respective funds. Investments are measured at amortized cost or reported at fair value as required by generally accepted accounting principles. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets Capital assets which include property, plant and equipment, and infrastructure assets (e.g., roads, sidewalks and similar items) are reported in the government activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant and equipment of the District are depreciated using the straight-line method over the following estimated useful lives: Assets Years Equipment 7 Infrastructure 15-30 Unearned Revenue Governmental funds report unearned revenue in connection with resources that have been received, but not yet earned. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position or Equity (Continued) Long-Term Obligations In the government-wide financial statements long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts are deferred and amortized over the life of the Bonds. Bonds payable are reported net of applicable premiums or discounts. Bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Fund Equity/Net Position In the fund financial statements, governmental funds report non spendable and restricted fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Assignments of fund balance represent tentative management plans that are subject to change. The District can establish limitations on the use of fund balance as follows: Committed fund balance – Amounts that can be used only for the specific purposes determined by a formal action (resolution) of the Board of Supervisors. Commitments may be changed or lifted only by the Board of Supervisors taking the same formal action (resolution) that imposed the constraint originally. Resources accumulated pursuant to stabilization arrangements sometimes are reported in this category. Assigned fund balance – Includes spendable fund balance amounts established by the Board of Supervisors that are intended to be used for specific purposes that are neither considered restricted nor committed. The Board may also assign fund balance as it does when appropriating fund balance to cover differences in estimated revenue and appropriations in the subsequent year’s appropriated budget. Assignments are generally temporary and normally the same formal action need not be taken to remove the assignment. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position or Equity (Continued) Fund Equity/Net Position (Continued) The District first uses committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. Net position is the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources. Net position in the government-wide financial statements are categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets represents net position related to infrastructure and property, plant and equipment. Restricted net position represents the assets restricted by the District’s Bond covenants or other contractual restrictions. Unrestricted net position consists of the net position not meeting the definition of either of the other two components. Other Disclosures Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. NOTE 3 - BUDGETARY INFORMATION The District is required to establish a budgetary system and an approved Annual Budget. Annual Budgets are adopted on a basis consistent with generally accepted accounting principles for the general fund. All annual appropriations lapse at fiscal year-end. The District follows these procedures in establishing the budgetary data reflected in the financial statements. a) Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1. b) Public hearings are conducted to obtain comments. c) Prior to October 1, the budget is legally adopted by the District Board. d) All budget changes must be approved by the District Board. e) The budgets are adopted on a basis consistent with generally accepted accounting principles. f) Unused appropriations for annually budgeted funds lapse at the end of the year. NOTE 4 – DEPOSITS AND INVESTMENTS Deposits The District’s cash balances were entirely covered by federal depository insurance or by a collateral pool pledged to the State Treasurer. Florida Statutes Chapter 280, "Florida Security for Public Deposits Act", requires all qualified depositories to deposit with the Treasurer or another banking institution eligible collateral equal to various percentages of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance held. The percentage of eligible collateral (generally, U.S. Governmental and agency securities, state or local government debt, or corporate bonds) to public deposits is dependent upon the depository's financial history and its compliance with Chapter 280. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. NOTE 4 – DEPOSITS AND INVESTMENTS (Continued) Investments The District’s investments were held as follows at September 30, 2023: Amortized CostCredit RiskMaturities1,885,765$ S&P AAAm1,885,765$ Weighted average of the fund portfolio: 24 daysFirst American Treasury Obligation Fd Cl Y Custodial credit risk – For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, 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. Credit risk – For investments, credit risk is generally the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Investment ratings by investment type are included in the preceding summary of investments. Concentration risk – The District places no limit on the amount the District may invest in any one issuer. Interest rate risk – The District does not have a formal policy that limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates. However, the Bond Indenture limits the type of investments held using unspent proceeds. Fair Value Measurement – When applicable, the District measures and records its investments using fair value measurement guidelines established in accordance with GASB Statements. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques. These guidelines recognize a three-tiered fair value hierarchy, in order of highest priority, as follows: • Level 1: Investments whose values are based on unadjusted quoted prices for identical investments in active markets that the District has the ability to access; • Level 2: Investments whose inputs - other than quoted market prices - are observable either directly or indirectly; and, • Level 3: Investments whose inputs are unobservable. The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the entire fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs. Money market investments that have a maturity at the time of purchase of one year or less and are held by governments other than external investment pools should be measured at amortized cost. Accordingly, the District’s investments have been reported at amortized cost above. NOTE 5 – CAPITAL ASSETS Changes in capital assets for the fiscal year ended September 30, 2023 were as follows: AdditionsReductionsGovernmental activitiesCapital assets, not being depreciatedInfrastructure under construction22,674,115$ 4,565,193$ 11,546,745$ 15,692,563$ Total capital assets, not being depreciated22,674,115 4,565,193 11,546,745 15,692,563 Capital assets, being depreciatedStormwater system- 3,354,311 - 3,354,311 Roadways- 2,511,303 - 2,511,303 Entry Features- 1,077,679 - 1,077,679 Parks and recreation- 815,982 - 815,982 Playground equipment - financed purchase310,309 - - 310,309 Total capital assets, being depreciated310,309 7,759,275 - 8,069,584 Less accumulated depreciation for: Stormwater system- 111,810 - 111,810 Roadways- 83,710 - 83,710 Entry Features- 35,923 - 35,923 Parks and recreation- 27,199 - 27,199 Playground equipment - financed purchase- 44,330 - 44,330 Total accumulated depreciation- 302,972 - 302,972 Total capital assets being depreciated310,309 7,456,303 - 7,766,612 Governmental activities capital assets, net22,984,424$ 12,021,496$ 11,546,745$ 23,459,175$ Beginning BalanceEnding Balance The infrastructure intended to serve the District has been estimated at a total cost of approximately $26,585,500 and is being completed in Phases consisting of Assessment Area One, Assessment Area Two, and Assessment Area Three. Assessment Area One is estimated to cost $5,658,000 and will be primarily funded with the proceeds of Series 2020 Bonds. Assessment Area Two is estimated to cost $4,796,000 and will be primarily funded with the proceeds of Series 2021 Bonds. Assessment Area three is estimated to cost $16,131,000 and will be primarily funded with the proceeds of Series 2022 Bonds. The infrastructure will include roadways, potable water and wastewater systems, and land improvements, entry features, parks, and recreational facilities. A portion of the project costs has been financed with the proceeds from the issuance of Bonds with the remainder to be funded by the Developer and conveyed to the District. Upon completion, the certain improvements are to be conveyed to others for ownership and maintenance responsibilities. This occurred in the current year as assets totaling $3,787,470 were conveyed to other governmental entities. Developer contributions to the capital projects fund for the current fiscal year were $3,127,400, which includes a receivable of $78,372. Depreciation expense was charged to the Parks and recreation function. NOTE 6 – LONG-TERM LIABILITIES Series 2020 On October 22, 2020, the District issued $5,380,000 of Special Assessment Bonds, Series 2020, consisting of $425,000 Term Bonds due on May 1, 2025, $610,000 Term Bonds due on May 1, 2030, $1,625,000 Term Bonds due on May 1, 2040, and $2,720,000 Term Bonds due on May 1, 2051, with fixed interest rates ranging from 2.625% to 4.00%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the Bonds is to be paid serially commencing May 1, 2022 through May 1, 2051. The Series 2020 Bonds are subject to optional redemption prior to maturity as outlined in the Bond Indenture. The Bonds are also subject to mandatory sinking fund redemption prior to their selected maturity in the manner outlined in the Bond Indenture. The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was in compliance with the requirements at September 30, 2023. Series 2021 On May 18, 2021, the District issued $4,990,000 of Special Assessment Bonds, Series 2021, consisting of $530,000 Term Bonds due on May 1, 2026, $610,000 Term Bonds due on May 1, 2031, $1,575,000 Term Bonds due on May 1, 2041, and $2,275,000 Term Bonds due on May 1, 2051, with fixed interest rates ranging from 2.375% to 4.00%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the Bonds is to be paid serially commencing May 1, 2022 through May 1, 2051. The Series 2021 Bonds are subject to optional redemption prior to maturity as outlined in the Bond Indenture. The Bonds are also subject to mandatory sinking fund redemption prior to their selected maturity in the manner outlined in the Bond Indenture. The Bonds are subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Bond Indenture. This occurred during the current fiscal year as the District collected assessments from lot closings and prepaid $5,000 of the Series 2021 Bonds. The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was in compliance with the requirements at September 30, 2023. Series 2022 On April 6, 2022, the District issued $14,235,000 of Special Assessment Bonds, Series 2022, consisting of $1,235,000 Term Bonds due on May 1, 2027, $1,535,000 Term Bonds due on May 1, 2032, $4,370,000 Term Bonds due on May 1, 2042, and $7,095,000 Term Bonds due on May 1, 2052, with fixed interest rates ranging from 4.2% to 5.00%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the Bonds is to be paid serially commencing May 1, 2023 through May 1, 2052. NOTE 6 – LONG-TERM LIABILITIES (Continued) Series 2022 (Continued) The Series 2022 Bonds are subject to optional redemption prior to maturity as outlined in the Bond Indenture. The Bonds are also subject to mandatory sinking fund redemption prior to their selected maturity in the manner outlined in the Bond Indenture. The Bonds are subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Bond Indenture. This occurred during the current fiscal year as the District collected assessments from lot closings and prepaid $420,000 of the Series 2022 Bonds. See Note 12 - Subsequent Events for additional call amounts subsequent to the fiscal year end. The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was in compliance with the requirements at September 30, 2023. Long-term Debt Activity Changes in long-term liability activity for the fiscal year ended September 30, 2023 were as follows: AdditionsReductionsGovernmental activitiesBonds: Series 20205,280,000$ -$ 105,000$ 5,175,000$ 110,000$ Oiginal Issuance Premium24,093 - 803 23,290 - Series 20214,870,000 - 110,000 4,760,000 105,000 Original Issuance Premium82,315 - 2,744 79,571 - Series 202214,235,000 - 645,000 13,590,000 230,000 Original Issuance Premium69,531 - 2,318 67,213 - Note payable - financed purchase301,301 - 46,852 254,449 53,849 Total24,862,240$ -$ 912,717$ 23,949,523$ 498,849$ Beginning BalanceEnding BalanceDue Within One Year At September 30, 2023, the scheduled debt service requirements on the long-term debt were as follows: PrincipalInterestTotal2024445,000$ 1,018,653$ 1,463,653$ 2025460,000 1,003,613 1,463,613 2026475,000 988,033 1,463,033 2027495,000 971,183 1,466,183 2028515,000 952,913 1,467,913 2029-20332,885,000 4,451,893 7,336,893 2034-20383,545,000 3,801,812 7,346,812 2039-20434,395,000 2,976,861 7,371,861 2044-20485,495,000 1,899,700 7,394,700 2049-20524,815,000 539,650 5,354,650 23,525,000$ 18,604,311$ 42,129,311$ Governmental ActivitiesYear ending September 30: NOTE 7 – FINANCED PURCHASE ASSETS The District entered into financed purchase agreements for the use of certain playground equipment. The agreements will expire in 2027 and required monthly fixed payments is $7,175. The District has the option to purchase the equipment prior to the expiration of the agreement term. The scheduled payments for years ending after September 30, 2023 are as follows: PrincipalInterestTotal202453,849$ 32,254$ 86,103$ 202561,891 23,305 85,196 202671,133 14,970 86,103 202767,576 4,467 72,043 Total254,449$ 74,996$ 329,445$ Year ending September 30: NOTE 8 - DEVELOPER TRANSACTIONS The Developer has agreed to fund a portion of the general operations of the District. In connection with that agreement, Developer contributions to the general fund were $10,785 as of September 30, 2023. The Developer owns a portion of land within the District; therefore, assessment revenues in the general and debt service funds include the assessments levied on those lots owned by the Developer. NOTE 9 - CONCENTRATION The District’s activity is dependent upon the continued involvement of the Developer and major landowners, the loss of which could have a material adverse effect on the District’s operations. NOTE 10 - MANAGEMENT COMPANY The District has contracted with a management company to perform services which include financial and accounting advisory services. Certain employees of the management company also serve as officers of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, computer and other administrative costs. NOTE 11 - RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District has obtained commercial insurance from independent third parties to mitigate the costs of these risks; coverage may not extend to all situations. There were no settled claims since inception of the District. NOTE 12 – SUBSEQUENT EVENTS Bond Payments Subsequent to fiscal year end, the District prepaid a total of $845,000 of the Series 2022 Bonds. The prepayments were considered extraordinary mandatory redemptions as outlined in the Bond Indenture. HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 Original & FinalREVENUESSpecial assessments534,403$ 539,103$ 4,700$ Developer contributions- 10,785 10,785 Miscellaneous- 21,237 21,237 Total revenues534,403 571,125 36,722 EXPENDITURESCurrent: General government150,413 105,398 45,015 Maintenance and operations224,440 109,379 115,061 Parks and recreation157,050 190,819 (33,769) Debt service: Principal- 46,852 (46,852) Interest- 39,251 (39,251) Capital outlay2,500 - 2,500 Total expenditures534,403 491,699 42,704 Excess (deficiency) of revenuesover (under) expenditures-$ 79,426 79,426$ Fund balance - beginning5,971 Fund balance - ending85,397$ Variance with Final Budget - Positive (Negative) Actual AmountsBudgeted Amounts See notes to required supplementary information HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The District is required to establish a budgetary system and an approved Annual Budget for the general fund. The District’s budgeting process is based on estimates of cash receipts and cash expenditures which are approved by the Board. The budget approximates a basis consistent with accounting principles generally accepted in the United States of America (generally accepted accounting principles). The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2023. HAMMOCK RESERVE COMMUNITY DEVELOPMENT DISTRICT CITY OF HAINES CITY, FLORIDA OTHER INFORMATION – DATA ELEMENTS REQUIRED BY FLORIDA STATUTE 218.39(3)(C) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 UNAUDITED ElementCommentsNumber of District employees compensated in the last pay period of the District’s fiscal year being reported.0Number of independent contractors compensated to whom nonemployee compensation was paid in the last month of the District’s fiscal year being reported. 13Employee compensation0Independent contractor compensation$4,987,074.33Construction projects to begin on or after October 1; ($65K)Not applicableBudget variance reportSee the Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General FundAd Valorem taxesNot applicableNon ad valorem special assessments; Special assessment rateOperations and maintenance - $952.41Debt service - $1,407 - $1,452Special assessments collected$3,188,479.00Outstanding Bonds:see Note 6 for details 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 Hammock Reserve Community Development District City of Haines City, 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 Hammock Reserve Community Development District, Orange County, Florida (“District”) as of and for the fiscal year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our opinion thereon dated June 20, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. June 20, 2024 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10) OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA To the Board of Supervisors Hammock Reserve Community Development District City of Haines City, Florida We have examined Hammock Reserve Community Development District, City of Haines City, Florida’s (“District”) compliance with the requirements of Section 218.415, Florida Statutes, in accordance with Rule 10.556(10) of the Auditor General of the State of Florida for the fiscal year ended September 30, 2023. Management is responsible for District’s compliance with those requirements. Our responsibility is to express an opinion on District’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the District complied, in all material respects, with the specified requirements referenced in Section 218.415, Florida Statutes. An examination involves performing procedures to obtain evidence about whether the District complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the District’s compliance with specified requirements. We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the examination engagement. In our opinion, the District complied, in all material respects, with the aforementioned requirements for the fiscal year ended September 30, 2023. This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, management, and the Board of Supervisors of Hammock Reserve Community Development District, City of Haines City, Florida and is not intended to be and should not be used by anyone other than these specified parties. June 20, 2024 MANAGEMENT LETTER PURSUANT TO THE RULES OF THE AUDITOR GENERAL FOR THE STATE OF FLORIDA To the Board of Supervisors Hammock Reserve Community Development District City of Haines City, Florida Report on the Financial Statements We have audited the accompanying basic financial statements of Hammock Reserve Community Development District, City of Haines City, Florida ("District") as of and for the fiscal year ended September 30, 2023, and have issued our report thereon dated June 20, 2024. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor General. Other Reporting Requirements We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Auditor’s Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated June 20, 2024, should be considered in conjunction with this management letter. Purpose of this Letter The purpose of this letter is to comment on those matters required by Chapter 10.550 of the Rules of the Auditor General for the State of Florida. Accordingly, in connection with our audit of the financial statements of the District, as described in the first paragraph, we report the following: I. Current year findings and recommendations. II. Status of prior year findings and recommendations. III. Compliance with the Provisions of the Auditor General of the State of Florida. Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, as applicable, management, and the Board of Supervisors of Hammock Reserve Community Development District, City of Haines City, Florida and is not intended to be and should not be used by anyone other than these specified parties. We wish to thank Hammock Reserve Community Development District, City of Haines City, Florida and the personnel associated with it, for the opportunity to be of service to them in this endeavor as well as future engagements, and the courtesies extended to us. June 20, 2024 REPORT TO MANAGEMENT I. CURRENT YEAR FINDINGS AND RECOMMENDATIONS None II. PRIOR YEAR FINDINGS AND RECOMMENDATIONS None III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA Unless otherwise required to be reported in the auditor’s report on compliance and internal controls, the management letter shall include, but not be limited to the following: 1. A statement as to whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2022. 2. Any recommendations to improve the local governmental entity's financial management. There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2023. 3. Noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. There were no such matters discovered by, or that came to the attention of, the auditor, to be reported, for the fiscal year ended September 30, 2023. 4. The name or official title and legal authority of the District are disclosed in the notes to the financial statements. 5. The District has not met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes. 6. We applied financial condition assessment procedures and no deteriorating financial conditions were noted as of September 30, 2023. It is management’s responsibility to monitor financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. 7. Management has provided the specific information required by Section 218.39(3)(c) in the Other Information section of the financial statements on page 25.