Towne Park Community Development District

FINANCIAL STATEMENTS

September 30, 2019

Towne Park  Community  Development District
Table of Contents September 30, 2019

REPORT
Independent Auditors' Report ..............................................................................................	1
FINANCIAL STATEMENTS
Management’s Discussion And Analysis (required supplemental information)...................	3
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position ..............................................................................................	8
Statement of Activities ...................................................................................................	9
Fund Financial Statements
Balance Sheet – Governmental Funds............................................................................	10
Reconciliation of the Balance Sheet of Governmental Funds to the Statement
of Net Position ................................................................................................................	11
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds ......................................................................................................	12
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities..........................	13
Notes to Financial Statements ..............................................................................................	14
Required Supplemental Information (other than MD&A)
Budget to Actual Comparison Schedule - General Fund....................................................	24
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...........................................................	25
Management Letter ..............................................................................................................	27
Independent Accountants’ Report on Compliance with Section 218.415 Florida Statutes ..	29

INDEPENDENT AUDITORS' REPORT

To the Board of Supervisors
Towne Park Community Development District Polk County, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and each major fund of Towne Park Community Development District (hereinafter referred to as “District”), as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of September 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 5, 2020, 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 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.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 5, 2020

Management’s Discussion And Analysis

Our discussion and analysis of the Towne Park Community Development District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2019. Please read it in conjunction with the District’s financial statements, which begin on page 8.

FINANCIAL HIGHLIGHTS

At September 30, 2019, the assets of the District exceed its liabilities by approximately $2.2 million.

During the fiscal year ended September 30, 2019, the District incurred approximately $757,000 of interest expenditures and repaid $915,000 on outstanding long-term bonds. Additionally, the District issued Special Assessment Revenue Bonds, Series 2019 totaling approximately $5.5 million.

During the fiscal year ended September 30, 2019, the District established infrastructure of approximately $14.8 million.

USING THE ANNUAL REPORT

This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities on pages 8 – 9 provide information about the activities of the District as a whole and present a longer-term view of the District’s finances. Fund financial statements start on page 10. For governmental activities, these statements tell how these services were financed in the short-term as well as what remains for future spending. Fund financial statements also report the District’s operations in more detail than the government-wide statements by providing information about the District’s most significant funds.

Reporting the District as a Whole

Our analysis of the District as a whole begins on page 4. One of the most important questions asked about the District’s finances is, “Is the District as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the District’s net position and related changes during the current year. You can think of the Districts’ 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 5. The fund financial statements begin on page 9 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,	2019	2018	Change	
Assets
Current and other assets	
$	5,971,107	
$ 12,743,236	
$ (6,772,129)	
Construction in progress	19,540,906	4,733,831	14,807,075	
Total assets	$ 25,512,013	$ 17,477,067	$	8,034,946	
Liabilities
Current liabilities	
$	2,445,912	
$	920,918	
$	1,524,994	
Other liabilities	20,890,292	16,329,932	4,560,360	
Total liabilities	23,336,204	17,250,850	6,085,354	
Net position				
Net investment in capital assets	1,220,156	(667,457)	1,887,613	
Restricted for:
Capital projects	
710,445	
62,087	
648,358	
Debt service	243,916	863,949	(620,033)	
Unrestricted	1,292	(32,362)	33,654	
Total net position (deficit)	2,175,809	226,217	1,949,592	
Total liabilities and net position	$ 25,512,013	$ 17,477,067	$	8,034,946	

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

During the fiscal year ended September 30, 2019, total assets and liabilities increased over the prior fiscal year by approximately $8 million and $6.1 million, respectively. The increase in assets and liabilities is due to the issuance of Series 2019 bonds and the additional infrastructure constructed in the current year.

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

For the year ended September 30,	2019	2018	Change	
Revenues:
Program revenues: Charges for services	
$	794,874	
$	1,306,961	
$	(512,087)	
Grants and contributions	2,545,098	79,695	2,465,403	
General revenues:				
Interest and other revenues	811	4	807	
Total revenues	3,340,783	1,386,660	1,954,123	
Expenses:				
General government	129,986	91,452	38,534	
Cost of issuance	292,750	513,250	(220,500)	
Maintenance and operations	109,321	46,415	62,906	
Interest	859,134	373,801	485,333	
Total expenses	1,391,191	1,024,918	366,273	
Change in net position	1,949,592	361,742	1,587,850	
Net position (deficit), beginning of year	226,217	(135,525)	361,742	
Net position, ending of year	$	2,175,809	$	226,217	$	1,949,592	

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

Revenues and expenses increased over the prior year by approximately $2 million and $366,000, respectively. The increase in revenues is primarily due to developer contributions for infrastructure projects as well as increases in debt service assessments and prepayment revenues in the current year related to lot sales. The increase in expenses is primarily due to the interest payments in the current year. The overall result was a $1,949,592 increase in net position for fiscal year 2019.

THE DISTRICT’S FUNDS

As the District completed the year, its governmental funds (as presented in the balance sheet on page
reported a combined fund balance of approximately $3.9 million, which is a decrease from last year’s balance that totaled approximately $12.1 million. Significant transactions are discussed below.

During the fiscal year ended September 30, 2019, the District incurred approximately $757,000 of interest expenditures and repaid principal of $915,000.

During the year ended September 30, 2019, the District incurred capital outlay of approximately
$14.8 million towards construction of infrastructure.

During the year ended September 30, 2019, the District issued Special Assessment Revenue Bonds, Series 2019 totaling approximately $5.5 million to fund the construction of infrastructure.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2019, the District had approximately $19.5 million invested in capital assets (under construction). This amount represents a net increase of approximately $14.8 million over the fiscal year 2018 total.

September 30,	2019	2018	Change	

Capital assets not being depreciated	
$ 19,540,906	
$	4,733,831	
$ 14,807,075	

Net capital assets	
$ 19,540,906	
$	4,733,831	
$ 14,807,075	

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

Debt

At September 30, 2019, the District had approximately $20.9 million of bonds outstanding. A listing of debt amounts outstanding for the current and prior year is as follows:

September 30,	2019	2018	Change	

Series 2016 bonds	
$	1,515,000	
$	2,430,000	
$	(915,000)	
Series 2018, 2B	3,365,000	3,365,000	-	
Series 2018, 3A	10,470,000	10,470,000	-	
Series 2019, 3B	5,485,000	-	5,485,000	
Due to developer	77,041	77,041	-	

Total

$ 20,912,041

$ 16,342,041

$	4,570,000

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

GOVERNMENTAL FUNDS BUDGETARY HIGHLIGHTS

An Operating budget was established by the governing board for the District pursuant to the requirements of Florida Statutes. The budget to actual comparison for the general fund, including the original budget and final adopted budget, is shown at page 24.

The District experienced a favorable variance in expenditures as compared to the budget in the amount of $44,943. The variance in expenditures occurred primarily due to anticipated budgeted operating expenditures, including certain maintenance and operations expenditures, which were not incurred during the year.

FUTURE FINANCIAL FACTORS

Towne Park 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. Developer contribution and off-roll assessment rates for fiscal year 2020 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 Towne Park Community Development District’s management company at 12051 Corporate Blvd, Orlando, Florida 32817.

Basic Financial Statements

September 30,	2019	
	Governmental	
	Activities	
Assets
Cash and cash equivalents	
$	238,917	
Investments	4,989,859	
Accounts receivable	704,643	
Interest receivable	7,478	
Prepaid expenses	25,860	
Deposits	4,350	
Capital assets:
Not being depreciated	
19,540,906	
Total assets	25,512,013	

Liabilities		
Accounts payable	1,197,287	
Retainage payable	874,824	
Accrued interest payable	373,801	
Non-current liabilities:
Due to the Developer	
77,041	
Due within one year	250,000	
Due in more than one year	20,563,251	

Total liabilities	
23,336,204	

Net position		
Net investment in capital assets	1,220,156	
Restricted for:
Capital projects	
710,445	
Debt service	243,916	
Unrestricted	1,292	

Total net position	$	2,175,809

For the year ended September 30,

2019

Program Revenues

Net (Expense) Revenue and Changes in Net Position

Operating	Capital
Charges for		Grants and	Grants and Governmental Functions/Programs	Expenses	Services	Contributions Contributions	Activities Primary government:
Governmental activities:

General government Maintenance and

$	(129,986) $

280,705

$ 2,430,568	$

92,936

$ 2,674,223

operations	(109,321)	-	-	-	(109,321)
Cost of issuance	(292,750)	-	-	-	(292,750)	
Interest	(859,134)	514,169	21,594	-	(323,371)	

Total governmental activities

$ (1,391,191) $

794,874

$ 2,452,162	$

92,936

1,948,781

General revenues

Interest and other revenues	811	

Total general revenues	
811	

Change in net position	
1,949,592	
Net position - beginning of year	226,217	

Net position - end of year	
$ 2,175,809	

September 30,

2019

General	Debt Service

Capital Projects

Total Governmental Funds

Assets		
Cash and cash equivalents	$	56,234	$	182,180	$	503	$	238,917	
Investments	-	1,297,788	3,692,071	4,989,859	
Accounts receivable	154	-	704,489	704,643	
Interest receivable	-	1,847	5,631	7,478	
Prepaid expenditures	25,860	-	-	25,860	
Deposits	4,350	-	-	4,350	
Due from other funds	152	-	12,765	12,917	

Total assets

$	86,750	$

1,481,815

$	4,415,459	$

5,984,024

Liabilities and Fund balances
Liabilities
Accounts payable	$	13,896	$	-	$	1,183,391	$	1,197,287	
Retainage payable	-	-	874,824	874,824	
Due to other funds	-	12,917	-	12,917	
Total liabilities	13,896	12,917	2,058,215	2,085,028	

Fund balances
Nonspendable	25,860	-	-	25,860	
Restricted for debt service	-	1,468,898	-	1,468,898	
Restricted for capital projects	-	-	2,357,244	2,357,244	
Unassigned	46,994	-	-	46,994	
Total fund balances	72,854	1,468,898	2,357,244	3,898,996	

Total liabilities and fund balances

$	86,750	$

1,481,815

$	4,415,459	$

5,984,024

September 30,	2019	

Total fund balances, governmental funds	
$	3,898,996	
Capital assets used in governmental activities are not financial resources		
and therefore are not reported in the fund level statements.	19,540,906	
Developer advances are recorded as a liability on the Statement of Net		
Position as Due to Developer but are treated as other financing sources on		
the fund level financial statements.	(77,041)	
Liabilities not due and payable from current resources, including accrued interest, are not reported in the fund level statements.	
(21,187,052)	

Total net position - governmental activities	
$	2,175,809	

For the year ended September 30,	2019
	General	

Debt Service	
Capital Projects	Total
Governmental Funds	
Revenues
Assessment revenue	
$ 280,705	
$	124,828	
$	-	
$	405,533	
Prepayment revenue	-	389,341	-	389,341	
Developer contributions	-	-	2,430,568	2,430,568	
Interest and other revenues	811	21,594	92,936	115,341	
Total revenues	281,516	535,763	2,523,504	3,340,783	

Expenditures
Current:
General government	116,373	-	-	116,373	
Maintenace
Debt service: Principal	122,934	-	-	122,934

-	915,000	-	915,000	
Interest	-	757,319	-	757,319	
Cost of issuance	-	109,700	183,050	292,750	
Capital outlay	-	-	14,807,075	14,807,075	
Total expenditures	239,307	1,782,019	14,990,125	17,011,451	

Excess (deficit) of revenues over expenditures	

42,209	

(1,246,256)	

(12,466,621)	

(13,670,668)	
Other Financing Sources (Uses)
Debt proceeds	
-	
629,011	
4,855,989	
5,485,000	
Bond discount	-	(10,104)	-	(10,104)	
Total other financing sources (uses)	-	618,907	4,855,989	5,474,896	

Net change in fund balances	
42,209	
(627,349)	
(7,610,632)	
(8,195,772)	
Fund balances, beginning of year	30,645	2,096,247	9,967,876	12,094,768	

Fund balances, end of year	
$	72,854	
$ 1,468,898	
$	2,357,244	
$	3,898,996	

For the year ended September 30,	2019
Net change in fund balances - governmental funds	$	(8,195,772)

as capital assets on the Statement of Net Position.

Bond proceeds, which are recorded as other financing source in the governmental fund statements, are recognized as long-term liabilities in		
the Statement of Net Position.	(5,474,896)	
Amortization of original issue discount is not recognized in the		
governmental statement but is reported as an expense in the Statement of		
Activities.	(464)	
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.	(101,351)	
Repayment of bond principal is an expenditure in the governmental funds,		
but the repayment reduces long-term liabilities in the Statement of Net
Position.	
915,000	

Change in net position of governmental activities	
$	1,949,592	

Capital outlay, reported as expenditures in the government funds, is shown

14,807,075

The Towne Park Community Development District (the “District”) was established on November 3, 2014 pursuant to Chapter 190, Florida Statutes, by Polk County Ordinance 5476. The District has among other things, the power to manage basic services for community development, power to borrow money and issue bonds, and the power to levy ad valorem taxes and assess non-ad valorem assessments for the financing and delivery of capital infrastructure.

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

The District is governed by a Board of Supervisors (“Board”), which is comprised of five members. The Supervisors are elected on an at large basis by the owners of the property within the District. Certain supervisors are affiliated with the Developer of the District, TP II, 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, 2019, 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 within60 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 with begins October 1st and ends 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 described in each resolution imposing the special assessment for each series of bonds issued by the District.

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 Series 2016 and 2018 Bonds.

Capital Projects Fund – The Capital Projects Fund accounts for the financial resources to be used in the acquisition or construction of major infrastructure within the District.

For the year ended September 30, 2019, the District does not report any proprietary funds. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.

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

Cash, Deposits and Investments

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

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

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

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 will be depreciated using the straight-line method over the estimated useful lives. Estimated lives for financial reporting purposes will be determined once items are placed into service.

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.

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. Due to developer amounts represent developer advances that are expected to be repaid upon the issuance of long-term bonds.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, 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 are reported as other financing uses. Issuance costs, whether or note from the actual debt proceeds received, are reported as current period expenditures.

Deferred Outflows/Inflows of Resources

In addition to assets, the accompanying statements will sometimes include 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, 2019.

In addition to liabilities, the accompanying statements 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, 2019.

Fund Equity

Net position in the government-wide financial statements is categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets represents net assets related to infrastructure and property, plant and equipment net of any related debt. Restricted net position represents the net position 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.

Prepaid Expenses

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid expense on the Statement of Net Position. These items will be expensed over the applicable usage period.

Budgets

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

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

Estimates

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

NOTE 3: 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 GAAP, these amounts are reported at amortized cost.

The following is a summary of the District’s investments:
September 30,	2019	Credit Risk Maturities

First America Government Class Y Fund

$	4,989,859

S&P AAAm	27 Days

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, 2019, 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.

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

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.

NOTE 4: CAPITAL ASSETS

The total projected cost of the infrastructure has been estimated at approximately $21.2 million, of which approximately $16.3 million was expected to be financed with the proceeds from the 2016, 2018 and 2019 Bond Series with the remainder to be funded by the Developer. The infrastructure will include stormwater management, water and sewer facilities, roadways, landscaping and hardscaping and amenities. Upon completion certain assets will be conveyed to other entities for ownership and/or maintenance.

The following is a summary of changes in the capital assets for the year ended September 30, 2019:

	Beginning
Balance	
Additions	Ending
Reductions	Balance	
Governmental Activities:
Capital assets not being depreciated
Construction in progress	

$ 4,733,831	

$ 14,807,075	

$	-	$19,540,906	
Total capital assets, not being depreciated	4,733,831	14,807,075	-	19,540,906	

Governmental activities capital assets, net	
$ 4,733,831	
$ 14,807,075	
$	-	$19,540,906	

NOTE 5: LONG-TERM LIABILITIES				

On June 13, 2016, the District issued $2,960,000 of Special Assessment Bonds, Series 2016 consisting of
$675,000 2016 Term Bonds due on November 1, 2028 with a fixed interest rate of 5.00%, and $2,285,000 of 2016 Term Bonds due on November 1, 2046 with a fixed interest rate of 5.75%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is paid semiannually on each May 1 and November 1. Principal is paid serially commencing on November 1, 2017 through November 1, 2046.

On June 8, 2018, the District issued $13,835,000 of Special Assessment Bonds, Series 2018 consisting of
$3,365,000 2018 Term Bonds due on May 1, 2049 with interest rates ranging from 4.00% to 5.50%, and
$10,470,000 of 2018 Term Bonds due on May 1, 2049 with interest rates ranging from 4.00% to 5.50%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is paid semiannually on each May 1 and November 1. Principal is paid serially commencing on May 1, 2020 through May 1, 2049.

On July 22, 2019, the District issued $5,485,000 of Special Assessment Bonds, Series 2019 with interest rates ranging from 3.5% to 6.625%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is paid semiannually on each May 1 and November 1. Principal is paid serially commencing on May 1, 2021 through May 1, 2050.

The Bond Indentures have certain restrictions and requirements relating principally to the use of proceeds to pay for 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 debt service reserve requirement. The District is in compliance with the requirements of the Bond Indentures.

The Bond Indentures require that the District maintain adequate funds in the 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, 2019.

The balance of the Bonds at September 30, 2019 is summarized as follows:		
September 30,	2019	
Series 2016	$	1,515,000	
Series 2018, 2B	3,365,000	
Series 2018, 3A	10,470,000	
Series 2019, 3B	5,485,000	
Less unamortized bond discount	(21,749)	
Net balance	$	20,813,251	

Long-term liability activity for the year ended September 30, 2019 was as follows:

Beginning			Ending	Due Within	
Balance	Additions	Reductions	Balance	One Year	
Governmental Activities
Bonds Payable:
Series 2016	$ 2,430,000	$	-	$	(915,000)	$	1,515,000	$	45,000	
Series 2018, 2B	3,365,000	-	-	3,365,000	50,000	
Series 2018, 3A	10,470,000	-	-	10,470,000	155,000	
Series 2019, 3B	-	5,485,000	-	5,485,000	-	
Due to Developer	77,041	-	-	77,041	-

 	$16,342,041	$	5,485,000	$	(915,000)  $	20,912,041	$	250,000 

At September 30, 2019 , the scheduled debt service requirements on bonds payable were as follows:

For the year Ending
September 30,	
Principal	
Interest	Total Debt
Service	
2020	$	250,000	$	1,065,264	$	1,315,264	
2021	355,000	1,122,194	1,477,194	
2022	365,000	1,107,769	1,472,769	
2023	380,000	1,092,919	1,472,919	
2024	400,000	1,076,169	1,476,169	
2025-2029	2,305,000	5,072,847	7,377,847	
2030-2034	2,960,000	4,422,809	7,382,809	
2035-2039	3,765,000	3,525,344	7,290,344	
2040-2044	4,230,000	2,196,513	6,426,513	
2045-2049	5,500,000	949,238	6,449,238	
2050	325,000	15,031	340,031	
	$	20,835,000	$	21,646,095	$	42,481,095	

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. The District has not incurred any losses or received any insurance claims exceeding the commercial coverage in the previous three years.

NOTE 7: 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 8: DEVELOPER TRANSACTIONS

A significant portion of the District’s activity going forward is dependent upon the continued involvement of the Developer TP II, LLC, which currently owns the majority of the assessable property located within the District boundaries. The loss of support could potentially have a material adverse effect on the District’s operations.

During the current year, the Developer was directly assessed approximately $250,000 to the District for operations and maintenance costs and approximately $79,000 for debt service expenditures. The Developer also contributed approximately $2.4 million for capital expenditures, of which approximately
$704,000 is receivable at year end. As of September 30, 2019, a total of $77,041 is due to the Developer. The due to Developer amount is related to long-term developer advances to fund the construction of infrastructure. The advances are non-interest bearing and have no scheduled repayment terms. The activity for the year is detailed in Note 5.

NOTE 9: COMMITMENTS

At September 30, 2019, the District had outstanding infrastructure construction contracts totaling approximately $11.9 million, of which approximately $3.2 million remains unfinished at year-end. In addition, subsequent to year-end, the District entered into contracts for the construction of Phase 3C totaling approximately $5.3 million.

In March 2020, the World Health Organization made the assessment that the outbreak of a novel coronavirus (COVID-19) can be characterized as a pandemic. As a result, uncertainties have arisen that may have a significant negative impact on the operating activities and results of the District. The occurrence and extent of such an impact will depend on future developments, including (i) the duration and spread of the virus, (ii) government quarantine measures, (iii) voluntary and precautionary restrictions on travel or meetings, (iv) the effects on the financial markets, and (v) the effects on the economy overall, all of which are uncertain.

Required Supplemental Information (Other Than MD&A)

Towne Park Community Development District Budget to Actual Comparison Schedule – General Fund

For the year ended September 30,			2019		
	Original		Actual	Variance with	
	Budget	Final Budget	Amounts	Final Budget	
Revenues
Assessments	
$	284,250	
$	284,250	
$	280,705	
$	(3,545)	
Interest and other revenues	-	-	811	811	
Total revenues	284,250	284,250	281,516	(2,734)	

Expenditures
General government	

95,850	

137,500	

116,373	

21,127	
Maintenance and operations	188,400	146,750	122,934	23,816	
Total expenditures	284,250	284,250	239,307	44,943	

Excess of revenues over expenditures	

$	-	

$	-	

$	42,209	

$	42,209	

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

To the Board of Supervisors
Towne Park 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 Towne Park Community Development District (hereinafter referred to as the “District”), as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report dated June 5, 2020.

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 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 of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result 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.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 5, 2020

MANAGEMENT LETTER

To the Board of Supervisors
Towne Park Community Development District Polk County, Florida

Report on the Financial Statements

We have audited the financial statements of Towne Park Community Development District (“District”) as of and for the fiscal year ended September 30, 2019, and have issued our report thereon dated June 5, 2020.

Auditors’ Responsibility

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

Other Reports and Schedule

We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards and Independent Accountants’ Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated June 5, 2020, 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. IC2018-01 was corrected in the current year.

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 communicate the results of whether or not the District 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.

Other 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 have any such findings.

Purpose of this Letter

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

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida June 5, 2020

INDEPENDENT ACCOUNTANTS’ REPORT

To the Board of Supervisors
Towne Park Community Development District Polk County, Florida

We have examined Towne Park Community Development District’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2019. Management is responsible for the District’s compliance with those requirements. Our responsibility is to express an opinion on the District’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform 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 depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe 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, 2019.

This report is intended solely for the information and use of Board of Supervisors, 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 5, 2020