ST. LUCIE WEST SERVICES DISTRICT ST. LUCIE COUNTY, FLORIDA FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

ST. LUCIE WEST SERVICES DISTRICT ST. LUCIE COUNTY, FLORIDA

TABLE OF CONTENTS

	Page	
INDEPENDENT AUDITOR’S REPORT	1-2	
MANAGEMENT’S DISCUSSION AND ANALYSIS	3-7	
BASIC FINANCIAL STATEMENTS		
Government-wide Financial Statements:		
Statement of Net Position	8	
Statement of Activities	9	
Fund Financial Statements:		
Balance Sheet – Governmental Fund	10	
Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position	
11	
Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Fund	
12	
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities	
13	
Statement of Net Position – Proprietary Funds	14	
Statement of Revenues, Expenses and Changes in Net Position –
Proprietary Funds	
15	
Statement of Cash Flows – Proprietary Funds	16-17	
Notes to the Financial Statements	18-29	
REQUIRED SUPPLEMENTARY INFORMATION		
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual – General Fund	
30	
Notes to Required Supplementary Information	31	
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	

32-33	
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	

34	
MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550 OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA	
35-36	

INDEPENDENT AUDITOR’S REPORT

To the Board of Supervisors St. Lucie West Services District St. Lucie County, Florida

Report on the Financial Statements

2700 North Military Trail ▪ Suite 350
Boca Raton, Florida  33431 (561) 994-9299 ▪ (800) 299-4728
Fax (561) 994-5823
www.graucpa.com

We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of St. Lucie West Services District, St. Lucie County, Florida (the “District”) as of and for the fiscal year ended September 30, 2017, 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.

Auditor’s 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 auditor’s 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, the business-type activities and each major fund of the District as of September 30, 2017, and the respective changes in financial position, and, where applicable, cash flows thereof for the fiscal 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 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 May 23, 2018, 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 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 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.

Report on Other Legal and Regulatory Requirements
We have also issued our report dated May 23, 2018, on our consideration of the District’s compliance  with the requirements of Section 218.415, Florida Statutes, as required by Rule 10.556(10) of the Auditor General of the State of Florida. The purpose of that report is to provide an opinion based on our examination conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants.

May 23, 2018

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our discussion and analysis of St. Lucie West Services District, St. Lucie County, Florida’s (“District”) provides a narrative overview of the District’s financial activities for the fiscal year ended September 30, 2017. 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 themselves.

FINANCIAL HIGHLIGHTS

The assets plus deferred outflows of resources of the District exceeded its liabilities at the close of the most recent fiscal year resulting in a net position balance of $53,328,618.

The change in the District’s total net position in comparison with the prior fiscal year was $2,484,313, 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, 2017, the District’s governmental funds reported combined ending fund balances of
$4,641,967 a decrease of $(301,957) in comparison with the prior year. The total fund balance is nonspendable for prepaids, restricted for debt service, assigned for renewal and replacement and subsequent year’s expenditures, 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 basic financial statements. The District’s basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

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

The statement of net position presents information on all the District’s assets, deferred outflows of resources and liabilities, 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.

Both of the government-wide financial statements distinguish functions of the District that are principally supported by assessments and stormwater fees (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the District include general (management), and maintenance and operations. The business-type activities of the District include the Utility (water and sewer) operation.

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 two fund categories: governmental and proprietary 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 for external reporting. 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, water management debt service, and Cascades 2010 debt service funds, all of which are considered to be 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.

The District also adopts an annual operating budget for the utility fund. Proprietary Fund
The District maintains one type of proprietary fund, an enterprise fund. An enterprise fund is used to report  the same function presented as business-type activities in the government-wide financial statements. The District uses an enterprise fund to account for the operations of the water and sewer utility services within the District.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.

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.

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position.  In the case of the District, assets plus deferred outflows of resources exceeded liabilities at the close of the most recent fiscal year.

Key components of the District’s net position are reflected in the following table:

NET POSITION SEPTEMBER 30,
Governmental activities

Business-type activities

Total

2017	2016	2017	2016	2017	2016

Current and other assets	$	4,225,664	$	4,516,935	$	4,325,170	$	3,867,556	$	8,550,834	$	8,384,491	
Restricted assets	845,091	912,615	12,153,063	11,705,364	12,998,154	12,617,979	
Capital assets, net of depreciation	44,483,075	45,257,171	41,306,333	41,795,903	85,789,408	87,053,074	
Total assets	49,553,830	50,686,721	57,784,566	57,368,823	107,338,396	108,055,544	
Deferred outflows of resources	320,144	360,162	421,214	450,021	741,358	810,183	
Current liabilities	619,662	697,821	1,074,943	976,122	1,694,605	1,673,943	
Long-term liabilities	17,661,531	19,571,861	35,395,000	36,775,618	53,056,531	56,347,479	
Total liabilities	18,281,193	20,269,682	36,469,943	37,751,740	54,751,136	58,021,422	
Net position							
Net investment in capital assets	27,168,219	26,062,333	6,392,547	5,505,924	33,560,766	31,568,257	
Restricted	595,656	591,938	11,411,730	10,936,764	12,007,386	11,528,702	
Unrestricted	3,828,906	4,122,930	3,931,560	3,624,416	7,760,466	7,747,346	
Total net position	$   31,592,781	$  30,777,201	$  21,735,837	$  20,067,104	$  53,328,618	$ 50,844,305 
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 represents funds set aside for bond covenants related to debt service, capital projects and other, renewal and replacement and surplus and rate stabilization.

The results of this year’s operations for the District as a whole are reported in the statement of activities. The net position of the District’s governmental activities increased $815,580 and the net position of the business- type activities increased $1,668,733 in comparison with the prior year.

Governmental activities

As noted below, and in the statement of activities, the cost of all governmental activities during the fiscal year ended September 30, 2017 was $4,587,399. As in the prior year, the majority of the costs of the Districts governmental activities were paid by program revenues. Program revenues consisted primarily of assessments and stormwater fees for the current and prior year.

Business-type activities

Business-type activities reflect the operations of the water and sewer facilities within the District. The cost of operations is covered primarily by charges to customers. The decrease in revenues is primarily due to a decrease in collection of impact fees. Expenses remained consistent with the prior year.

Key elements of the change in the District’s net position are reflected in the following table:

CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
Governmental activities	Business-type activities

Total

Revenues: Program revenues:

2017	2016	2017	2016	2017	2016

Charges for services

$	5,358,855	$

5,276,317	$

9,177,201	$

9,145,715

$ 14,536,056

$ 14,422,032

Capital grants and contributions	-	153,791	-	-	-	153,791 General revenues:
Investment earnings	2,136	1,209	16,631	7,686	18,767	8,895	
Other	41,988	42,672	34,774	1,022,629	76,762	1,065,301	
Loss on disposal of capital assets	-	(30,422)	-	(50,565)	-	(80,987)	
Total revenues	5,402,979	5,443,567	9,228,606	10,125,465	14,631,585	15,569,032	
Expenses:							
General government	495,718	492,759	-	-	495,718	492,759	
Physical environment	3,563,907	3,664,281	-	-	3,563,907	3,664,281	
Interest	527,774	637,913	-	-	527,774	637,913	
Water and sewer utilities	-	-	6,485,271	6,396,442	6,485,271	6,396,442	
Interest	-	-	1,074,602	1,114,836	1,074,602	1,114,836	
Total expenses	4,587,399	4,794,953	7,559,873	7,511,278	12,147,272	12,306,231	
Change in net position	815,580	648,614	1,668,733	2,614,187	2,484,313	3,262,801	
Net position - beginning	30,777,201	30,128,587	20,067,104	17,452,917	50,844,305	47,581,504	
Net position - ending	$   31,592,781	$  30,777,201	$  21,735,837	$  20,067,104	$  53,328,618	$ 50,844,305 

GENERAL FUND 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. The general fund budget for the fiscal year ended September 30, 2017 was amended to increase revenues by $131,334 and decrease appropriations by $172,844. Actual general fund expenditures did not exceed appropriations during the current fiscal year.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2017, the District had $72,159,749 invested in capital assets for its governmental activities. In the government-wide financial statements depreciation of $27,676,674 has been taken, which resulted in a net book value of $44,483,075. The District’s business-type activities reported net capital assets of
$41,306,333. More detailed information about the District’s capital assets is presented in the notes of the financial statements.

Capital Debt

At September 30, 2017, the District had $17,635,000 in Bonds outstanding for its governmental activities. For business-type activities, the District had Bonds outstanding of $35,335,000. More detailed information about the District’s capital debt is presented in the notes of the financial statements.

ECONOMIC FACTORS AND NEXT YEARS BUDGETS AND OTHER EVENTS

The District anticipates positive account activity trends and the recent refunding of Bonds have placed the District in a better financial position. The District staffs through efficient budgeting and innovative cost saving measures have enabled the District to keep rates the same for the past six fiscal years. The budget for fiscal year 2018 continues with the five year forecasting of the District’s financial needs. The District anticipates that the general operations will remain fairly constant. For the utility operations, the number of ERU’s is expected to remain the same in the fiscal year 2018. With no rate adjustment budgeted, the District expects revenues in most categories to remain the same per year for each of the next five years with the exception of those living in the Cascades neighborhood. During fiscal year ending 9/30/2018 they will have completely paid off the Series 2010 Cascades Bonds so those residents will see a decrease in their Non-Ad Valorem.

The District has a five year Capital Improvement Plan and additional revenues are needed to fund these projects through the District’s utility system. The District is in the process of completing a Revenue Sufficiency Analysis to aid in the adoption of rate increases in the upcoming years.

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 St. Lucie West Services District’s management services at Special District Services, Inc., 2501A Burns Road, Palm Beach Gardens, Florida 33410.

ST. LUCIE WEST SERVICES DISTRICT ST. LUCIE COUNTY, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2017

	Governmental
Activities	Business-type
Activities	
Total	
ASSETS
Cash and cash equivalents	
$	2,025,060	
$	5,134,457	
$	7,159,517	
Investments	6,208	-	6,208	
Restricted assets:
Cash and cash equivalents	
200,000	
203,492	
403,492	
Investments	645,091	11,949,571	12,594,662	
Accounts receivable, net	-	1,163,984	1,163,984	
Internal balances	2,137,866	(2,137,866)	-	
Prepaid items	56,530	159,860	216,390	
Other current assets	-	4,735	4,735	
Capital assets:				
Nondepreciable	5,219,489	4,006,638	9,226,127	
Depreciable, net	 	39,263,586	37,299,695	76,563,281 
Total assets	 	49,553,830	57,784,566	107,338,396 

DEFERRED OUTFLOWS OF RESOURCES		
Deferred charge on refunding (debit)	 	320,144	421,214	741,358 	
Total deferred outflows of resources	 	320,144	421,214	741,358 	
LIABILITIES		
Accounts payable and accrued expenses	332,509	333,610	666,119	
Accrued interest payable	190,874	537,841	728,715	
Customer deposits	96,279	203,492	299,771	
Noncurrent liabilities:				
Due within one year	1,975,000	1,450,000	3,425,000	
Due in more than one year	 	15,686,531	33,945,000	49,631,531 
Total liabilities	 	18,281,193	36,469,943	54,751,136 
NET POSITION
Net investment in capital assets	27,168,219	6,392,547	33,560,766 Restricted for:
Debt service	595,656	4,467,459	5,063,115
Capital projects and other	-	1,450,614	1,450,614
Renewal and replacement	-	2,501,334	2,501,334
Surplus  and rate stabilization			-	2,992,323	2,992,323 Unrestricted	 	3,828,906	3,931,560	7,760,466 
Total net position	$  31,592,781	$  21,735,837	$  53,328,618 

See notes to the financial statements

ST. LUCIE WEST SERVICES DISTRICT ST. LUCIE COUNTY, FLORIDA STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

Program Revenue

Net (Expense) Revenue and Changes in Net Position

Functions/Programs	

Expenses	Capital Grants
Charges for	and	Governmental	Business-type
Services	Contributions	Activities	Activities	Total	
Primary government:			
Governmental activities: General government	
$	495,718	
$	495,718	$	-	$	-	$	-	$	-	
Maintenance and operations	3,563,907	2,403,240	-	(1,160,667)	-	(1,160,667)	
Interest on long-term debt	527,774	2,459,897	-	1,932,123	-	1,932,123	
Total governmental activities	4,587,399	5,358,855	-	771,456	-	771,456	
Business-type activities:			
Water and sewer utilities	6,485,271	7,957,951	-	-	1,472,680	1,472,680	
Interest on long-term debt	1,074,602	1,219,250	-	-	144,648	144,648	
Total business-type activities	7,559,873	9,177,201	-	-	1,617,328	1,617,328	
Total	12,147,272	14,536,056	-	771,456	1,617,328	2,388,784	
	
General revenues:	
	Investment earnings	2,136	16,631	18,767	
	Miscellaneous	 	41,988	34,774	76,762 	
	Total general revenues	 	44,124	51,405	95,529 	
	Change in net position	 	815,580	1,668,733	2,484,313 	
	Net position - beginning	 	30,777,201	20,067,104	50,844,305 	
	Net position - ending	$	31,592,781	$	21,735,837	$	53,328,618 	

See notes to the financial statements

9

BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2017

		Major Funds		
		Water
Management	Cascades
2010	Total
Governmental	
	General	Debt Service	Debt Service	Funds	
ASSETS					
Cash and cash equivalents	$ 2,025,060	$	200,000	$	-	$ 2,225,060	
Investments	6,208	593,313	51,778	651,299	
Due from other funds	2,196,427	-	-	2,196,427	
Prepaid items	 	56,530	-	-	56,530 	
Total assets	  $   4,284,225	$	793,313	$	51,778	$ 5,129,316 	

LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and		
accrued expenses	$	332,509	$	-	$	-	$	332,509	
Due to other funds	-	52,475	6,086	58,561	
Deposits	 	96,279	-	-	96,279 	
Total liabilities	 	428,788	52,475	6,086	487,349 	

Fund balances: Nonspendable:
Prepaid items	56,530	-	-	56,530 Restricted for:
Debt service	-	740,838	45,692	786,530 Assigned:
Renewal and replacement	1,044,114	-	-	1,044,114	
Subsequent years expenditures	450,999	450,999	
Unassigned	 	2,303,794	-	-	2,303,794 	
Total fund balances	 	3,855,437	740,838	45,692	4,641,967 	
Total liabilities and fund balances	  $   4,284,225	$	793,313	$	51,778	$ 5,129,316 	

See notes to the financial statements

RECONCILIATION OF BALANCE SHEET - GOVERNMENTAL FUNDS TO STATEMENT OF NET POSITION
SEPTEMBER 30, 2017

Fund balance -  governmental funds	$	4,641,967

Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in the governmental funds. The statement of net position includes
those capital assets, net of  any  accumulated the net position of the government as a whole.
Cost of capital assets	depreciation,	in	

72,159,749		
Accumulated depreciation			    27,676,674 	44,483,075	
Deferred charges on refunding of long-term debt are shown as		
deferred outflows/inflows of resources in the government-wide		
financial statements; however, this amount is expensed in the		
governmental fund financial statements.	320,144	
Liabilities not due and payable from current available resources		
are not reported as liabilities in the governmental fund		
statements.	All liabilities, both current and long-term, are		
reported in the government-wide financial statements. Accrued interest payable	
(190,874)	
Bonds payable	(17,635,000)	
Compensated absences	 	(26,531)	(17,852,405) 	
Net position of governmental activities	  $ 31,592,781 	

See notes to the financial statements

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

REVENUES

Major Funds
Water	Cascades Management		2010
General	Debt Service Debt Service

Total Governmental Funds

Special assessments	$	1,122,932	$ 1,881,419	$	189,111	$ 3,193,462	
Stormwater fees	1,776,026	389,367	-	2,165,393	
Investment earnings	67	1,869	200	2,136	
Grant revenue	-	-	-	-	
Miscellaneous	 	41,988	-	-	41,988 
Total revenues	 	2,941,013	2,272,655	189,311	5,402,979 

EXPENDITURES
Current:
General government	343,654	50,492	-	394,146	
Maintenance and operations	2,140,332	-	-	2,140,332	
Debt service:				
Interest expense	-	495,088	13,989	509,077	
Principal expense	-	1,740,000	180,000	1,920,000	
Capital outlay	 	741,381	-	-	741,381 	
Total expenditures	 	3,225,367	2,285,580	193,989	5,704,936 	

Excess (deficiency) of revenues
over (under) expenditures	(284,354)	(12,925)	(4,678)	(301,957)

Fund balances - beginning	 	4,139,791	753,763	50,370	4,943,924 

Fund balances - ending	$	3,855,437	$	740,838	$	45,692	$  4,641,967 

See notes to the financial statements

12

RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

Net change in fund balances - total governmental funds	$	(301,957)	
Amounts reported for governmental activities in the statement of activities are different because:		
Governmental funds report capital outlays as expenditures,  however,  the cost of capital assets is eliminated in the statement of activities and capitalized in the statement of net position.	

741,381	
Depreciation of capital assets is not recognized in the governmental fund statements but is reported as an expense in the statement of activities.	
(1,515,477)	
Amortization of deferred outflows/inflows of resources is not recognized in the governmental fund financial statements, but is  reported as  an expense  in the statement of activities.	

(40,018)	
Repayment of long-term liabilities are reported as expenditures in the governmental fund statement but such repayments reduce liabilities in the statement of net position and are eliminated in the statement of activities.	

1,920,000	
Some expenses reported in the statement of activities do not require the		
use of current financial resources, and, therefore, are not reported as expenditures in governmental funds.
Change in compensated absences	(9,670)
Change in accrued interest	 	21,321 
Change in net position of governmental activities	$	815,580 

STATEMENT OF NET POSITION - PROPRIETARY FUND SEPTEMBER 30, 2017

	Water and
    Sewer Utility		
ASSETS		
Current assets:		
Unrestricted:		
Cash and cash equivalents	$	5,134,457	
Accounts receivable, net of allowance for uncollectibles	1,163,984	
Prepaid expenses	159,860	
Other	4,735	
Restricted:		
Cash and cash equivalents	203,492	
Investments	 	11,949,571 	
Total current assets	 	18,616,099 	
Noncurrent assets: Capital assets:
Land	1,200,000	
Building	298,026	
Construction in progress	2,806,638	
Infrastructure	58,305,195	
Equipment and furniture	2,546,283	
Less accumulated depreciation	 	(23,849,809) 	
Total capital assets, net of accumulated depreciation	 	41,306,333 	
Total noncurrent assets	 	41,306,333 	
Total assets	 	59,922,432 	
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding	
 	421,214 	
Total deferred outflows of resources	 	421,214 	
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	363,610	
Due to other funds	2,137,866	
Liabilities payable from restricted assets:		
Customer deposits	203,492	
Current portion of long-term debt	1,450,000	
Interest payable	 	537,841 	
Total current liabilities	 	4,692,809 	
Noncurrent liabilities:		
Long-term debt	 	33,915,000 	
Total noncurrent liabilities	 	33,915,000 	
Total liabilities	 	38,607,809 	
NET POSITION		
Invested in capital assets	6,392,547	
Restricted for:		
Debt service	4,467,459	
Capital projects and other	1,450,614	
Renewal and replacement	2,501,334	
Surplus and rate stabilization	2,992,323	
Unrestricted	 	3,931,560 	
Total net position	 	21,735,837 	
Total net position and liabilities	  $ 60,343,646 	

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

Water and
   Sewer Utility 

OPERATING REVENUES
Charges for sales and services:
Charges for water and sewer services	$	8,516,953	
Late fees	72,843	
Bulk water sales	560,789	
Other	 	26,616 	
Total operating revenues	 	9,177,201 	
OPERATING EXPENSES
Personnel services	
2,310,230	
Contractual services	573,436	
Water and sewer operations	1,654,454	
Repairs and maintenance	180,220	
Rent and leases	3,901	
Depreciation	1,734,223	
Amortization	 	28,807 	
Total operating expense	 	6,485,271 	

Impact fees	34,774	
Interest revenue	16,631	
Interest expense	 	(1,074,602) 	
Total non operating revenue (expenses)	 	(1,023,197) 	
Change in net position	1,668,733	
Total net position - beginning	 	20,067,104 	
Total net position - ending	  $ 21,735,837 	

Operating income (loss)	 	2,691,930 NON OPERATING REVENUES (EXPENSES)

CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users

Water and
    Sewer Utility 

$	9,085,607

Payments to suppliers of  goods and services	 	(4,595,088) Net cash provided (used)  by operating activities	 		4,490,519 

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Due to/from other funds	 	202,002 

FINANCING ACTIVITIES:		
Impact fees	34,774	
Purchases of capital assets	(1,244,653)	
Principal paid on debt	(1,405,000)	
Interest paid on debt	 	(1,094,719) 	

Net cash provided (used)  by  noncapital financing activities	 	202,002 CASH FLOWS FROM CAPITAL AND RELATED

Net cash provided (used) by capital and related
financing activities	 	(3,709,598) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments	(454,849)	
Interest earnings	 	16,631 	
Net cash provided (used) by investing activities	 	(438,218) 	
Net increase (decrease) in cash and cash equivalents	544,705	
Cash and cash equivalents - October 1	 	4,793,244 	
Cash and cash equivalents - September 30	  $	5,337,949 	

Reported as: Cash	

$	5,134,457	
Restricted cash	 	203,492 	
	  $	5,337,949 	
	(Continued)	

(Continued)		
	Water and
   Sewer Utility 	
Reconciliation of operating income (loss) to net cash provided (used) by operating activities
Operating income (loss)	

$	2,691,930	
Adjustments to reconcile operating income (loss)
to net cash provided (used) by Operating Activities: Depreciation and amortization	

1,763,030	
(Increase)/Decrease in:
Accounts receivables	
(84,444)	
Prepaids and deposits	(23,317)	
Increase/(Decrease) in:
Accounts payable and accrued expenses	
138,279	
Customer deposits	(7,150)	
Compensated absences	 	12,191 	
Total adjustments	 	1,798,589 	
Net cash provided (used) by operating activities	  $	4,490,519 	

See notes to the financial statements

NOTE 1 – NATURE OF ORGANIZATION AND REPORTING ENTITY

St. Lucie West Services District (the “District”) was created on November 21, 1989, pursuant to Chapter 190.005, Florida Statutes by which Florida Land and Water Adjudicatory Commission granted the petition of the original development corporation and adopted Rules 42-I.001, I.002, and I.003, establishing the St. Lucie West Services District. The District was established for the purpose of, among other things, construction of and/or acquiring water management and control, water supply, sewer, wastewater management, bridges or culverts, District roads, parks and recreational facilities, security facilities, control and elimination of mosquitoes and other arthropods and landscaping related to recreational amenities, roads, and surface water management, and related improvements located within and/or without the boundaries of St. Lucie West Services District.

The District is governed by the Board of Supervisors ("Board"), which is composed of five members. The Supervisors are elected by the landowners and qualified electors residing within the District, and are elected on a rotating basis for terms of four years. The District was created under Chapter 190 of the Florida Statutes and operates within the criteria established by Chapter 190.The Board of Supervisors of the District exercise all powers granted to the District pursuant to 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 employment of the general manger.
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 District. For the most part, the  effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by assessments and general revenues, are reported separately from business- type activities, which rely to a significant extent on fees and charges for support.

Government-Wide and Fund Financial Statements (Continued)
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment (Operating- type special assessments for maintenance and debt service are treated as charges for services.); and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not included among program revenues are reported instead as general revenues.

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

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 certain land and all platted lots within the District. Assessments are levied each November 1 on property of record as of the previous January. The fiscal year for which annual assessments are levied begins on October 1 with discounts available for payments through February 28 and become delinquent on April 1. For debt service assessments, amounts  collected as advance payments are used to prepay a portion of the Bonds outstanding. Otherwise, assessments are collected annually to provide funds for the debt service on the portion of the Bonds which are not paid with prepaid assessments.

Assessments, stormwater fees, licenses and permits, grant revenues and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized in revenues for 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.

Water Management 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.

Cascades 2010 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, which was used to finance the Cascades capital projects.
The District reports the following major proprietary fund: Water and Sewer Fund
The water and sewer fund accounts for the water and sewer operations of the District that are financed
and supported primarily by user charges.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the District’s enterprise fund are charges to customers for sales and services. Operating expenses of the enterprise fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are internal receivable and payable balances between governmental and business-type activities.

When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first for qualifying expenditures, then unrestricted resources as they are needed.

Assets, Liabilities and Net Position or Equity

Restricted Assets
Restricted assets in the enterprise funds consists primarily of amounts restricted for debt service, capital projects, surplus and rate stabilization, renewal and replacement which have been restricted by the bond covenants or other contractual restrictions. Restricted assets in the governmental funds consist of funds set aside to comply with bond covenants or other contractual restrictions.

Deposits and Investments
The District’s cash and cash equivalents are considered to be cash on hand and demand deposits (interest and non-interest bearing).

The District has elected to proceed under the Alternative Investment Guidelines as set forth in Section
218.415 (17) Florida Statutes. The District may invest any surplus public funds in the following:

The Local Government Surplus Trust Funds, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act;
Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency;
Interest bearing time deposits or savings accounts in qualified public depositories;
Direct obligations of the U.S. Treasury.

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.

Inventories and Prepaid Items
Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased.

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.

Interfund Receivables and Payables
Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of fiscal year are referred to as either “interfund receivables/payables” or “advances to/from other funds”. All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between governmental activities and business-type activities for internal borrowing are reported in the government-wide statements as “internal balances”.

Receivables
Accounts receivable and assessments receivable are shown net of an allowance for uncollectible amounts. These receivables will be recognized as revenue as they are collected. The Water and Sewer Utility Fund receivables are due from commercial and residential customers within the District. The District’s policy for collections is limited to collecting security deposits, the right to discontinue service and to place liens on property. For the Water and Sewer Fund, accounts receivable outstanding in excess of 120 days comprise the allowance.

Capital Assets
Capital assets, which include property, water and sewer improvements, machinery and equipment and infrastructure (roads, sidewalks, etc.) are reported in the applicable governmental or business-type activities. 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 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 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	
Infrastructure and buildings	10 – 50	
Equipment	5 – 30	

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.

Refundings of Debt
For current refundings and advance refundings resulting in the defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt is reported as a deferred outflow of resources/deferred inflow of resources and recognized ratably as a component of interest expense over the remaining life of the old debt or the life of the new debt, whichever is shorter. In connection with the refunding, $40,018 and $28,807 was recognized as a component of interest expense in the current fiscal year for the governmental and business-type activities, respectively.

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

Compensated Absences
It is the District’s policy to permit employees to accumulate earned but unused sick leave and vacation leave benefits. All sick and vacation leave is accrued when earned in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Liability for accrued compensated absences of the governmental activities is not reported in the balance sheet of the governmental funds and, accordingly, represents a reconciling item between the fund and government- wide presentations. Payments are generally paid out of the general fund.

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 method. 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 Bond 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
Deferred outflows of resources represent a consumption of net position that applies to future reporting period(s). For example, the District would record deferred outflows of resources on the statement of net position related to debit amounts resulting from current and advance refundings resulting in the defeasance of debt (i.e. when there are differences between the reacquisition price and the net carrying amount of the old debt).

Deferred inflows of resources represent an acquisition of net position that applies to future reporting period(s). For example, when an asset is recorded in the governmental fund financial statements, but the revenue is unavailable, the District reports a deferred inflow of resources on the balance sheet until such times as the revenue becomes available.

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

The District can establish limitations on the use of fund balance as follows:

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

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

The District first uses committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.

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

Other Disclosures

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

NOTE 3 – BUDGETARY INFORMATION

The District is required to establish a budgetary system and an approved Annual Budget.  Annual Budgets are adopted on a basis consistent with generally accepted accounting principles for 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.

Each year the General Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.
Public hearings are conducted to obtain public comments.
Prior to October 1, the budget is legally adopted by the District Board.
All budget changes must be approved by the District Board.
The budgets are adopted on a basis consistent with generally accepted accounting principles.
Unused appropriation for annually budgeted funds lapse at the end of the year.

The District also prepares annual operating budgets for the water and sewer utility fund.

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.

The District’s investments were held as follows at September 30, 2017:

Investment	Amortized cost	Credit Risk	Maturities	
US Bank Commercial Paper Manual Sweep	$	645,091	A-1	N/A	
US Bank Mmkt 5 - Ct	11,949,571	Not Available	Not Available	

Florida prime	
 	6,208 	
S&P AAAm	Weighted average of the fund portfolio: 51 days	
Total Investments	  $	12,600,870 			

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 – RESTRICTED CASH

Restricted cash in the water and sewer fund at September 30, 2017 were held as follows:

Restricted investments:
Debt service reserve	
$	2,524,602	
Debt service	2,480,698	
Renewal and replacement	2,501,334	
Rate stabalization	581,903	
Water and sewer connection	1,450,614	
Surplus	 	2,410,420 	
	  $	11,949,571 	

Interfund receivables and payables at September 30, 2017 were as follows:

Governmental Funds	Receivable	Payable	
General	$	2,196,427	$	-
Debt service	-	52,475
Debt service (Cascades)	-	6,086
Proprietary Funds		-		- Water and sewer	 	-	2,137,866 
Total	$	2,196,427	$	2,196,427 
The outstanding balances between funds result primarily from the time lag between the dates that transactions are recorded in the accounting system and payments between funds are made.

NOTE 7 – RECEIVABLES

Accounts receivable in the water and sewer fund are reported net of uncollectible amounts. Total accounts receivable and uncollectible amounts at September 30, 2017 are as follows:

Gross billed accounts receivable	$	541,243	
Gross unbilled accounts receivable	677,741	
Uncollectibles	 	(55,000)	
Net receivable	  $	1,163,984 	

NOTE 8 – CAPITAL ASSETS

Capital asset activity for governmental activities for the fiscal year ended September 30, 2017 was as follows:

Governmental activities
Capital assets, not being depreciated

Beginning
Balance	Additions	Reductions

Ending Balance

Land	$	4,441,000	$	-	$	-	$	4,441,000	
Construction in progress	 	1,179,207	461,078	(861,796)	778,489 	
Total capital assets, not being depreciated	 	5,620,207	461,078	(861,796)	5,219,489 	

Capital assets, being depreciated
Buildings	309,068	-	-	309,068	
Infrastructure	64,126,899	861,796	-	64,988,695	
Equipment and furniture	 	1,362,194	280,303	-	1,642,497 	
Total capital assets, being depreciated	65,798,161	1,142,099	-	66,940,260	
Less accumulated depreciation for:		
Buildings	47,701	10,302	-	58,003	
Infrastructure	25,139,405	1,423,575	-	26,562,980	
Equipment and furniture	 	974,091	81,600	-	1,055,691 	
Total accumulated depreciation	 	26,161,197	1,515,477	-	27,676,674 	
Total capital assets, being depreciated, net	 	39,636,964	(373,378)	-	39,263,586 	
Governmental activities capital assets, net	   $   45,257,171	$	87,700	$	(861,796) $ 44,483,075 	

Depreciation expense was charged to function/programs as follows:

General government	$	91,902	
Maintenance and operations	 	1,423,575 	
	  $	1,515,477 	

Capital asset activity for business-type activities for the fiscal year ended September 30, 2017 was as follows:

Beginning	Ending

Business-type Activities
Capital assets, not being depreciated

 	Balance	Additions	Reductions	Balance	

Land

$	1,200,000	$	-	$

-	$	1,200,000

Construction in progress	 	2,134,291	953,758	(281,411)	2,806,638 
Total capital assets, not being depreciated	 	3,334,291	953,758	(281,411)	4,006,638 

Capital assets, being depreciated		
Buildings	298,026	-	-	298,026	
Infrastructure/Improvements	58,023,784	281,411	-	58,305,195	
Equipment and furniture	 	2,255,388	290,895	-	2,546,283 	
Total capital assets, being depreciated	 	60,577,198	572,306	-	61,149,504 	

Less accumulated depreciation for:		
Buildings	50,610	9,263	-	59,873	
Infrastructure/Improvements	20,570,167	1,592,760	-	22,162,927	
Equipment and furniture	 	1,494,809	132,200	-	1,627,009 	
Total accumulated depreciation	 	22,115,586	1,734,223	-	23,849,809 	
Total capital assets, being depreciated, net	 	38,461,612	(1,161,917)	-	37,299,695 	
Business-type activities capital assets, net	   $   41,795,903	$	(208,159)    $	(281,411) $ 41,306,333 	
NOTE 9 – LONG-TERM LIABILITIES		

Cascades, Series 2010
On April 21, 2010, the District issued $1,320,000 of Cascades Capital Improvement Revenue Refunding Bonds, Series 2010 due on May 1, 2018 with a fixed interest rate of 3.78%. 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, 2011 through May 1, 2018.

The Cascades Series 2010 Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Bond Indenture.

The Bond Indenture established a debt service reserve requirement as well as other restrictions. 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, 2017.

Utility Revenue Refunding, Series 2011
On October 25, 2011, the District issued $24,000,000 of Utility Revenue Refunding Bonds, Series 2011 due on October 1, 2031 with a fixed interest rate of 2.85%. Interest is to be paid semiannually on each April 1 and October 1. Principal on the Bonds is to be paid serially commencing October 1, 2012 through October 1, 2031. The source of repayment or security for the Series 2011 Bonds is a pledge of certain utility revenues collected by the District.

The Series 2011 Bonds are subject to redemption as defined in the Bond Indenture. The Bond Indenture also established a debt service reserve requirement as well as other restrictions. The District was in compliance with the requirements at September 30, 2017.

Special Assessment Refunding, Series 2013
On April 24, 2013, the District issued $19,025,000 of Water Management Benefit Special Assessment Refunding Bonds, Series 2013 due on May 1, 2025 with a fixed interest rate of 2.44%. 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, 2014 through May 1, 2025.

The Series 2013 Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Bond Indenture.

The Bond Indenture established a debt service reserve requirement as well as other restrictions. 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, 2017.

Utility Revenue Refunding, Series 2013
On April 24, 2013, the District issued $5,470,000 of Utility Revenue Refunding Bonds, Series 2013, due on October 1, 2032 with a fixed interest rate of 2.43%. Interest is to be paid semiannually on each April 1 and October 1. Principal on the Bonds is to be paid serially commencing October 1, 2013 through October 1, 2032. The source of repayment or security for the Series 2013 Bonds is a pledge of certain utility revenues collected by the District.

The Series 2013 Bonds are subject to redemption as defined in the Bond Indenture. The Bond Indenture also established a debt service reserve requirement as well as other restrictions. The District was in compliance with the requirements at September 30, 2017.

Utility Revenue Refunding, Series 2014
In August 2014, the District issued $12,025,000 of Utility Revenue Refunding Bonds, Series 2014, due on October 1, 2035 with a fixed interest rate of 3.6%. Interest is to be paid semiannually on each April 1 and October 1. Principal on the Bonds is to be paid serially commencing October 1, 2014 through October 1, 2035. The source of repayment or security for the Series 2014 Bonds is a pledge of certain utility revenues collected by the District.

The Series 2014 Bonds are subject to redemption as defined in the Bond Indenture. The Bond Indenture also established a debt service reserve requirement as well as other restrictions. The District was in compliance with the requirements at September 30, 2017.

Stormwater Utility Revenue Bonds, Series 2014
On December 22, 2014, the District issued $4,810,000 of Stormwater Utility Revenue Bonds, Series 2014 due on February 1, 2030 with a fixed interest rate of 3.05%. The Bonds were issued to for the purpose of acquiring land from Martin Memorial. The land was purchased with the intent to put a retainage pond on the land for excess storm water storage. Interest is to be paid semiannually on each February 1 and August 1. Principal on the Bonds is to be paid serially commencing February 1, 2015 through February 1, 2030.

The Series 2014 Bonds are subject to redemption at the option of the District prior to their maturity. The Bond Indenture established a debt service reserve requirement as well as other restrictions. The District and the City of Port St. Lucie have entered into an agreement whereby the City will transfer approximately
$400,000 of Stormwater utility fees to the District to cover the debt service on the Bonds. The District was in compliance with the requirements at September 30, 2017.

Long-term debt activity
Changes in long-term liability activity for the fiscal year ended September 30, 2017 were as follows:

	Beginning
Balance	
Additions	Reductions	Ending
Balance	Due Within
One Year	
Governmental activities
Bonds payable:					
Series 2010 (Cascades)	$	365,000	$	-	$	(180,000)	$	185,000	$	185,000	
Series 2013	14,780,000	-	(1,485,000)	13,295,000	1,525,000	
Series 2014	4,410,000	-	(255,000)	4,155,000	265,000	
Total bonds payable	19,555,000	-	(1,920,000)	17,635,000	1,975,000	
Compensated absences	16,861	9,670	-	26,531	-	
Total	$ 19,571,861	$	9,670	$	(1,920,000)	$ 17,661,531	$ 1,975,000	
Business-type activities					
Bonds payable:
Series 2011	
$	20,195,000	
$	-	$	(1,015,000)  $	19,180,000	
$	1,045,000	
Series 2013	4,915,000	-	(235,000)	4,680,000	245,000	
Series 2014	11,630,000	-	(155,000)	11,475,000	160,000	
Total bonds payable	36,740,000	-	(1,405,000)	35,335,000	1,450,000	
Compensated absences	17,809	12,191	-	30,000	-	
Total	$    36,757,809	$	12,191	$	(1,405,000)   $   35,365,000	$ 1,450,000 

At September 30, 2017, the scheduled debt service requirements on the long-term debt were as follows:
Governmental Activities

Year ending
 	September 30:	Principal	Interest	Total	
2018	$	1,975,000	$	458,097	$	2,433,097	
2019	1,830,000	405,411	2,235,411	
2020	1,880,000	359,215	2,239,215	
2021	1,930,000	311,222	2,241,222	
2022	1,980,000	262,085	2,242,085	
2023-2027	6,925,000	575,170	7,500,170	
2028-2030	 	1,115,000	58,388	1,173,388 
Total	$	17,635,000	$	2,429,588	$	20,064,588 

Business-type Activities

Year ending
September 30:	Principal	Interest	Total
2018	$	1,450,000	$	1,053,845	$	2,503,845	
2019	1,490,000	1,011,736	2,501,736	
2020	1,530,000	968,470	2,498,470	
2021	1,575,000	923,975	2,498,975	
2022	1,620,000	878,143	2,498,143	
2023-2027	8,825,000	3,655,628	12,480,628	
2028-2032	10,170,000	2,293,199	12,463,199	
2033-2036	 	8,675,000	603,240	9,278,240 
Total	$	35,335,000	$	11,388,236	$	46,723,236 

The District entered an interconnect agreement with the Reserve Community Development District (“the Reserve”) for the bulk sale of water from the District to the Reserve in 1993. In the agreement, the Reserve shall pay a connection charge of $1,000 per water ERC, which equals 250 gallons per day, for each unit served through the interconnect. The District later amended the agreement, on November 12, 2003, to provide an additional 500,000 gallons per day, representing 2,000 ERC’s of potable water and 400,000 gallons per day, representing 2,000 ERC’s of sanitary sewer services to be phased in over a period not beyond October 1, 2015. During a prior fiscal year, on May 1, 2013, the District signed an amendment to the prior agreement, which revised the water and sewer service capacity to be purchased by the Reserve and also revised the monthly “take or pay” gallonage charges to be paid to the Utility for the potable water and sanitary sewer services received by the Reserve. Pursuant to the amended agreement, the Reserve purchased an additional 700 sewer ERC’s in May 2013, and shall now pay a connection charge of $900 per sewer ERC. During the current fiscal year the District collected $34,774 of connection fees which are shown as impact fees on the financial statements. The District also collected
$560,789 in wholesale water and sewer fees from the Reserve during the current fiscal year.

The District entered an interlocal agreement with the City of Port St. Lucie (the City) for maintenance of the stormwater management system in 1996. The City levies stormwater fees and then charges the District a 25% fee for administrative charges and maintaining main lines for storm runoff and remits the remaining 75% of stormwater fees collected from the District’s residents to the District for maintenance of the stormwater facilities owned by the District. For the year ended September 30, 2017, the City remitted approximately $1,776,026 fees to the District.

In 2014 the District entered in another interlocal agreement with the City of Port St. Lucie (the City) for the payment of the debt service on the Series 2014 Bonds used to purchase land for the purpose of stormwater drainage. The City will pay the District approximately $400,000 annually to cover the entire debt service payment for the life of the bond.

NOTE 11 – EMPLOYEE PENSION PLAN

The District has established a Simplified Employee Pension Plan (SEP), which is classified as a defined contribution plan. The District contributed 9% of eligible employees’ salaries during the fiscal year ended September 30, 2017. In order to be eligible, an employee must be at least 21 years of age and employed for at least one year.

The District also has a 457 deferred compensation plan for which employees are eligible for upon hiring. This plan allows the employee to make tax deferred contribution direct to an investment account. Contributions are limited based on statutory limitations. There are no District contributions to this plan.

Pension expense was approximately $92,000 in the general fund and $135,000 in the water and sewer fund for the fiscal year ended September 30, 2017. The District, at its sole discretion, has the authority to terminate these pension plans; however, the District does not have the intention to do so.

NOTE 12 – MANAGEMENT COMPANY

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

NOTE 13 – 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 during the past three years.

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

	

 		Budgeted Amounts	 Original	Final	

Actual Amounts	Variance with Final Budget - Positive
(Negative)	
REVENUES				
Assessments	$  1,130,890	$ 1,122,932	$ 1,122,932	$	-	
Stormwater fees	2,090,490	2,165,393	1,776,026	(389,367)	
Grant revenue	-	-	-	-	
Interest income	-	-	67	67	
Miscellaneous revenue	 	6,999	71,388	41,988	(29,400) 
Total revenues	 	3,228,379	3,359,713	2,941,013	(418,700) 

EXPENDITURES
Current:
General government	1,451,479	1,542,558	343,654	1,198,904
Maintenance and operations	1,961,501	1,697,975	2,140,332	(442,357)
Capital outlay	 	67,088	66,691	741,381	(674,690) 
Total expenditures	 	3,480,068	3,307,224	3,225,367	81,857 

Excess (deficiency) of revenues over (under) expenditures

  $	(251,689)	$	52,489 

(284,354) $

(336,843)

Fund balance - beginning	 	4,139,791 

Fund balance - ending	$  3,855,437 

See notes to required supplementary information

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

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

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. The general fund budget for the fiscal year ended September 30, 2017 was amended to increase revenues by $131,334 and decrease appropriations by $172,844. Actual general fund expenditures did not exceed appropriations during the current fiscal year.

2700 North Military Trail ▪ Suite 350
Boca Raton, Florida  33431 (561) 994-9299 ▪ (800) 299-4728
Fax (561) 994-5823
www.graucpa.com

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

To the Board of Supervisors St. Lucie West Services District St. Lucie 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, the business-type activities and each major fund of St. Lucie West Services District, St. Lucie County, Florida (“District”) as of and for the fiscal year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our opinion thereon dated May 23, 2018.

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 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.
May 23, 2018

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 St. Lucie West Services District St. Lucie County, Florida

We have examined St. Lucie West Services District, St. Lucie County, Florida (“District”) compliance with the requirements of Section 218.415, Florida Statutes, in accordance with Rule 10.556(10) of the Auditor General of the State of Florida during the fiscal year ended September 30, 2017. 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 and, accordingly, included examining, on a test basis, evidence about District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on District’s compliance with specified requirements.

In our opinion, the District complied, in all material respects, with the aforementioned requirements for the fiscal year ended September 30, 2017.

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 St. Lucie West Services District, St. Lucie County, Florida and is not intended to be and should not be used by anyone other than these specified parties.
May 23, 2018

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

To the Board of Supervisors St. Lucie West Services District St. Lucie County, Florida

Report on the Financial Statements

We have audited the accompanying basic financial statements of St. Lucie West Services District, St. Lucie County, Florida (the "District") as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated May 23, 2018.

Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the United States of America; 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 Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters based on an audit of the financial statements performed in accordance with Government Auditing Standards; and Independent Accountant’s Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated May 23, 2018, should be considered in conjunction with this management letter.

Purpose of this Letter

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

Current year findings and recommendations.
Status of prior year findings and recommendations.
Compliance with the Provisions of the Auditor General of the State of Florida.

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

We wish to thank St. Lucie West Services District, St. Lucie County, Florida and the personnel associated with it, for the opportunity to be of service to them in this endeavor as well as future engagements, and the courtesies extended to us.

May 23, 2018

REPORT TO MANAGEMENT

CURRENT YEAR FINDINGS AND RECOMMENDATIONS

None

PRIOR YEAR FINDINGS AND RECOMMENDATIONS AND CURRENT YEAR STATUS 2016-01 Bank Reconciliations: Recommendation has been implemented.
COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA

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

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

There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2016, except as shown above.

Any recommendations to improve the local governmental entity's financial management.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2017.

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, 2017.

The name or official title and legal authority of the District are disclosed in the notes to the financial statements.

The financial report filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes agrees with the September 30, 2017 financial audit report.

The District has not met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes.

We applied financial condition assessment procedures pursuant to Rule 10.556(7) and no deteriorating financial conditions were noted as of September 30, 2017. 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.