Blackburn Creek Community

Development District

FINANCIAL STATEMENTS

September 30, 2016

Blackburn Creek Community Development District

Table of Contents

September 30, 2016

REPORT		
Independent Auditor’s 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	23	
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	24	
Management Letter	26	
Attestation Report on Compliance with Section 218.415 Florida Statutes	28	

INDEPENDENT AUDITOR'S REPORT

To the Board of Supervisors

Blackburn Creek Community Development District

Sarasota County, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and each major fund of Blackburn Creek Community Development District (hereinafter referred to as “District”), as of and for the year ended September 30, 2016, 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 and each major fund of the District as of September 30, 2016, 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 September 6, 2017, on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida

September 6, 2017

‐ 2 ‐

Management’s Discussion And Analysis

Blackburn Creek Community Development District

Management’s Discussion and Analysis

Our discussion and analysis of the Blackburn Creek Community Development District's financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2016. Please read it in conjunction with the District’s financial statements, which begin on page 8.

FINANCIAL HIGHLIGHTS

•	At September 30, 2016, the assets of the District exceed its liabilities by approximately $924,000.

•	During the fiscal year ended September 30, 2016, the District paid interest expenditures of approximately $585,000 and repaid $315,000 of outstanding long‐term bond principal.

•	During the fiscal year ended September 30, 2016, the District issued Series 2015 Bonds totaling $8,765,000. These funds were used to acquire and construct all or a portion of the 2015 project. The District incurred $157,637 of bond issue costs related to the Series 2015 issue.

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

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Blackburn Creek Community Development District

Management’s Discussion and Analysis

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 10 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. We describe the relationship (or differences) between governmental activities and governmental funds in a reconciliation with the fund financial statements.

THE DISTRICT AS A WHOLE

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

September 30,		2016		2015		Change	
Assets							
Current and other assets	$	5,568,852	$	1,736,170	$	3,832,682	
Capital assets, net		10,440,757		5,060,160		5,380,597	
Total assets	$	16,009,609	$	6,796,330	$	9,213,279	
							
Liabilities							
Current liabilities	$	1,695,706	$	709,550	$	986,156	
Other liabilities		13,375,000		5,676,513		7,698,487	
Total liabilities		15,070,706		6,386,063		8,684,643	
Deferred inflows of resources							
Deferred revenue		15,059		‐		15,059	
Total deferred inflows of resources		15,059		‐		15,059	
Net position							
Net investment in capital assets		2,688,987		2,029,044		659,943	
Restricted for:							
Debt service		518,278		123,239		395,039	
Capital projects		1,950,720		1,180,734			
Unrestricted		(4,234,141)		(2,922,750)		(1,311,391)	
Total net position		923,844		410,267		(256,409)	
Total liabilities and net position	$	16,009,609	$	6,796,330	$	8,428,234	

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

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Blackburn Creek Community Development District

Management’s Discussion and Analysis

During the fiscal year ended September 30, 2016, total assets and liabilities increased from the prior year by approximately $9.2 million and $8.7 million, respectively. The increase in both is largely the result of the addition of infrastructure under construction in the current year, which were funded primarily by the issuance of Capital Improvement Revenue Bonds, Series 2015A‐1 and Series 2015A‐ 2 in the current year.

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

Year ended September 30,		2016		2015		Change	
Revenues:							
Program revenues:							
Charges for services	$	1,601,440	$	673,445	$	927,995	
Operating grants and contributions		‐		20		(20)	
Capital grants and contributions		1,558,864		2,282,383		(723,519)	
General revenues:						‐	
Interest and other revenues		4,394		1,591		2,803	
Total revenues		3,164,698		2,957,439		207,259	
Expenses:							
General government		57,985		87,825		(29,840)	
Maintenance and infrastructure		110,088		110,088		‐	
Interest		803,490		310,222		493,268	
Bond issuance costs		333,828		‐		333,828	
Conveyance expense		1,345,730		2,989,047		(1,643,317)	
Total expenses		2,651,121		3,497,182		(846,061)	
Change in net position		513,577		(539,743)		1,053,320	
Net position, beginning		410,267		950,010		(539,743)	
Net position, ending	$	923,844	$	410,267	$	513,577	

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

Revenues increased from the prior year by approximately $207,000, while expenses decreased by approximately $846,000 from prior year. Revenues increased based on excess assessments received from the Developer in the current year. Expenses decreased due to the decrease in asset conveyances in the current year. The overall result was a $513,577 increase in net position for the fiscal year 2016.

THE DISTRICT’S FUNDS

As the District completed the year, its governmental funds (as presented in the balance sheet on page 10) reported a combined fund balance of approximately $4.3 million, which is an increase from prior year's balance that totaled approximately $1.2 million. Significant transactions are discussed below.

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Blackburn Creek Community Development District

Management’s Discussion and Analysis

•	The District incurred approximately $585,000 of interest expenditures and repaid $315,000 of outstanding long‐term bond principal.

•	During the fiscal year ended September 30, 2016, the District issued Series 2015 Bonds totaling $8,765,000. These funds were used to acquire and construct all or a portion of the 2015 project. The District incurred $157,637 of bond issue costs related to the Series 2015 issue.

The overall increase in fund balance for the year ended September 30, 2016 totaled approximately $3.2 million.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At September 30, 2016, the District had approximately $10.4 million invested in capital assets) net of accumulated depreciation). This amount represents an increase of approximately $5.4 million from the fiscal year 2015 total.

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

September 30,		2016		2015		Change	
Capital assets not being depreciated	$	6,807,669	$	2,418,045	$	4,389,624	
Capital assets being depreciated		3,853,264		2,752,203		1,101,061	
Total, prior to depreciation		10,660,933		5,170,248		5,490,685	
Accumulated depreciation		220,176		110,088		110,088	
Net capital assets	$	10,440,757	$	5,060,160	$	5,380,597	

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

Debt

At September 30, 2016, the District had approximately $13.5 million of bonds outstanding. This amount represents an increase of approximately $8.5 million from the fiscal year 2015 total.

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

September 30,		2016		2015		Change	
Series 2013A	$	4,850,000	$	5,045,000	$	(195,000)	
Series 2015A‐1		3,475,000		‐		3,475,000	
Series 2015A‐2		5,170,000		‐		5,170,000	
	$	13,495,000	$	5,045,000	$	8,450,000	

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Blackburn Creek Community Development District

Management’s Discussion and Analysis

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 23.

The District experienced a favorable variance expenditures as compared to the budget in the amount of $34,339, while revenues materially agreed to budget. The variance in expenditures occurred primarily due to anticipated budgeted operating expenditures that were not incurred during the year.

FUTURE FINANCIAL FACTORS

Blackburn Creek Community Development District is an independent special district that operates under the provisions of Chapter 190, Florida Statutes. The District operates under an elected Board of Supervisors, which establishes policy and sets assessment rates. Assessment rates for fiscal year 2017 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 Blackburn Creek Community Development District's management company, Fishkind & Associates, Inc., at 12051 Corporate Blvd., Orlando, Florida 32817.

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Basic Financial Statements

Blackburn Creek Community Development District	
	Statement of Net Position	
September 30,		2016		
		Governmental		
		Activities	
Assets				
Cash and cash equivalents	$	5,047,177		
Investments		373,788		
Accounts receivable		134,880		
Interest receivable		318		
Prepaid expenses		12,689		
Capital assets, net		10,440,757		
Total assets		16,009,609		
Liabilities				
Accounts payable		708,606		
Accrued interest payable		348,402		
Retainage payable		518,698		
Non‐current liabilities:				
Due within one year		120,000		
Due in more than one year		13,375,000		
Total liabilities		15,070,706		
Deferred inflows of resources				
Deferred revenue		15,059		
Total deferred inflows of resources		15,059		
Net position				
Net investment in capital assets		2,688,987		
Restricted for:				
Debt service		518,278		
Capital projects		1,950,720		
Unrestricted		(4,234,141)		
Total net position	$	923,844		

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

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Blackburn Creek Community Development District

Statement of Activities

Year ended September 30,				2016			
							Net (Expense)	
							Revenue and	
								Changes in	
				Program Revenues	Net Position	
						Capital			
			Charges for	Grants and	Governmental	
Functions/Programs		Expenses		Services	Contributions		Activities	
Primary government:									
Governmental activities:									
General government	$	(57,985)	$	92,323	$	‐	$	34,338	
Maintenance and operations		(110,088)		‐		‐		(110,088)	
Interest		(803,490)		1,509,117		1,558,864		2,264,491	
Bond issuance costs		(333,828)		‐		‐		(333,828)	
Conveyance expense		(1,345,730)		‐		‐		(1,345,730)	
Total governmental activities	$	(2,651,121)	$	1,601,440	$	1,558,864		509,183	

General revenues			
Interest and other revenues		4,394	
Change in net position		513,577	
Net position ‐ beginning of year		410,267	
Net position ‐ end of year	$	923,844	

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

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Blackburn Creek Community Development District

Balance Sheet – Governmental Funds

September 30,				2016				
								Total	
						Capital	Governmental	
	General	Debt Service		Projects		Funds	
Assets									
Cash and cash equivalents	$	101,014	$	1,240,830	$	3,705,333	$	5,047,177	
Investments		‐		365,027		8,761		373,788	
Accounts recievable				114,892		19,988		134,880	
Interest receivable		‐		94		224		318	
Prepaid expenditures		12,391		‐		298		12,689	
Total assets	$	113,405	$	1,720,843	$	3,734,604	$	5,568,852	
									
Liabilities and Fund Balances									
Liabilities									
Accounts payable	$	11,537	$	‐	$	697,069	$	708,606	
Retainage payable		‐		‐		518,698		518,698	
Total liabilities		11,537		‐		1,215,767		1,227,304	
Deferred inflows of resources									
Deferred revenue		1,232		‐		13,827		15,059	
Total deferred inflows of resources		1,232		‐		13,827		15,059	
Fund balances									
Nonspendable		12,391		‐		‐		12,391	
Restricted for debt service		‐		1,720,843		‐		1,720,843	
Assigned for capital projects		‐		‐		2,505,010		2,505,010	
Unassigned		88,245		‐		‐		88,245	
Total fund balances		100,636		1,720,843		2,505,010		4,326,489	
Total liabilities and fund balances	$	113,405	$	1,720,843	$	3,720,777	$	5,568,852	

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

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Blackburn Creek Community Development District

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of

Net Position

September 30,		2016	
Totalfund balances, governmentalfunds	$	4,326,489	
Capitalassets used in governmentalactivities arenotfinancialresources and			
thereforearenotreported in thefund financialstatements.		10,440,757	
Liabilities notdueand payablefrom currentresources, including accrued			
interest, arenotreported in thefund levelstatements.		(13,843,402)	
Totalnetposition ‐ governmentalactivities	$	923,844	

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

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Blackburn Creek Community Development District

Statement of Revenues, Expenditures and Changes in Fund Balances –

Governmental Funds

Year ended September 30,				2016					
								Total		
						Capital	Governmental		
		General	Debt Service		Projects		Funds		
Revenues										
Assessment revenue	$	92,323	$	693,767	$	‐	$	786,090		
Developer contributions		‐		815,350		1,558,864		2,374,214		
Interest and other revenues		1		648		3,745		4,394		
Total revenues		92,324		1,509,765		1,562,609		3,164,698		
Expenditures										
Current:										
General government		57,985		‐		891		58,876		
Debt service:										
Principal		‐		315,000		‐		315,000		
Interest		‐		584,817		‐		584,817		
Bond issue costs		‐		175,300		157,637		332,937		
Developer repayment		‐		‐		1,426,972		1,426,972		
Capital outlay		‐		‐		6,836,415		6,836,415		
Total expenditures		57,985		1,075,117		8,421,915		9,555,017		
Excess (deficit) of revenues over										
expenditures		34,339		434,648		(6,859,306)		(6,390,319)		
Other financing sources (uses)						(842,027)		(842,027)		
Transfers in		‐		‐						
Transfers out		‐		842,027		‐		842,027		
Bond proceeds		‐		‐		8,765,000		8,765,000		
Developer advance		‐		‐		795,459		795,459		
Total other financing sources		‐		842,027		8,718,432		9,560,459		
Net change in fund balances		34,339		1,276,675		1,859,126		3,170,140		
Fund balances, beginning of year		66,297		444,168		645,884		1,156,349		
Fund balances, end of year	$	100,636	$	1,720,843	$	2,505,010	$	4,326,489		

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

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Blackburn Creek Community Development District

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund

Balances of Governmental Funds to the Statement of Activities

Year ended September 30,		2016	
Net change in fund balances ‐ governmental funds	$	3,170,140	
Capital outlay, reported as expenditures in the governmental funds, is			
shown as capital assets on the Statement of Net Assets, whereas the			
conveyanceof fixed assets is recordedas anexpenseontheStatementof			
Activities, but not in the fund financial statements.		5,490,685	
Depreciation on capital assets is not recognized in the fund financial			
statements but is reported as an expense in the Statement of Activities.		(110,088)	
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.		315,000	
The change in accrued interest between the current and prior year is			
recorded on the Statement of Activities but not on the fund level			
statements.		(218,673)	
Activity with developer advances arereported as other financing sources			
and expenditures in thegovernmental funds, but impact liability balances			
in the Statement of Net Assets.		631,513	
Bond proceeds which are reported as other financing sources in the			
governmental funds are recognized as long‐term liabilities in the			
Statement of Net Assets.		(8,765,000)	
Change in net position of governmental activities	$	513,577	

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

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 1: NATURE OF ORGANIZATION

The Blackburn Creek Community Development District (the “District”) was established on November 9, 2010 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, by Sarasota County Ordinance 2010‐070. The Act provides among other things, the power to manage basic services for community development, power to borrow money and issue bonds, and to levy and assess non‐ad valorem assessments for the financing and delivery of capital infrastructure. The District was expanded by approximately 190 acres in December 2014 by Ordinance 2014‐094.

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. The Board of Supervisors of the District exercises all powers granted to the District pursuant to Chapter 190, Florida Statutes. At September 30, 2016 certain Board members were affiliated with Resource Conservation of Sarasota, LLC (“the Developer”).

The Board has the final responsibility for:

1.	Assessing and levying assessments.

2.	Approving budgets.

3.	Exercising control over facilities and properties.

4.	Controlling the use of funds generated by the District.

5.	Approving the hiring and firing of key personnel.

6.	Financing improvements.

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) in statements No. 14 and No. 61. 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.

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, 2016, the District did not have any significant business‐type activities. Therefore, no business‐type activities are reported. Assessments and other items not properly included as program revenues (i.e., charges to customers or applicants who purchase, use, or directly benefit from goods or services) are reported as general revenues.

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

Measurement Focus, Basis of Accounting and Basis of Presentation

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

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

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

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Assessments 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.

Capital Project Fund – This fund accounts for the financial resources to be used for the acquisition or construction of major infrastructure within the District.

For the year ended September 30, 2016, 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 United States 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.

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long‐Term Obligations

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

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

Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any of this type of item at September 30, 2016.

In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District recorded $15,059 of this type of item at September 30, 2016.

Fund Equity

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

Governmental fund equity is classified as fund balance. Fund balance is further classified as nonspendable, restricted, committed, assigned, or unassigned. Nonspendable fund balance cannot be spent because of its form. Restricted fund balance has limitations imposed by creditors, grantors, or contributors or by enabling legislation or constitutional provisions. Committed fund balance is a limitation imposed by the District board through approval of resolutions. Assigned fund

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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:

A.	Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.

B.	A public hearing is conducted to obtain comments.

C.	Prior to October 1, the budget is legally adopted by the District Board.

D.	All budget changes must be approved by the District Board.

E.	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 and similar instruments in which shares are owned in the fund rather than the underlying investments. In accordance with GASB 72, Fair Value Measurement and Application, these amounts are reported at amortized cost.

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

September 30,		2016	Credit Risk	Maturities	
FirstAmerican GovernmentObligations	$	373,788	S&P AAAm	25 days	
	$	373,788			

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 3: INVESTMENTS (Continued)

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, 2016, 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 following is a summary of changes in the capital assets for the year ended September 30, 2016:

		Beginning		Disposals/		Ending	
		Balance	Additions	Transfers		Balance	
Governmental Activities:							
Capitalassets not being depreciated							
Infrastructure underconstruction	$	2,418,045	$ 6,836,415	$ (2,446,791)	$	6,807,669	
Total capital assets, not being							
depreciated		2,418,045	6,836,415	(2,446,791)		6,807,669	
Capitalassets being depreciated							
Infrastructure		2,752,203	‐	1,101,061		3,853,264	
Total capital assets, being							
depreciated		2,752,203	‐	1,101,061		3,853,264	
Less accumulated depreciation							
Infrastructure		110,088	110,088	‐		220,176	
Total accumulated depreciation		110,088	110,088	‐		220,176	
Total capital assets, being							
depreciated, net		2,642,115	(110,088)	1,101,061		3,633,088	
Governmental activities capital							
assets, net	$	5,060,160	$ 6,726,327	$ (1,345,730)	$	10,440,757	

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 4: CAPITAL ASSETS (Continued)

Depreciation expense of $110,088 was allocated to maintenance and operations on the accompanying Statement of Activities.

The total projected cost of the infrastructure has been estimated at approximately $33 million, of which approximately $13.5 million is expected to be financed with the proceeds from the issuance of Bonds with the remainder to be funded by the Developer. The infrastructure will include potable water and wastewater systems, storm water drainage system improvements, offsite road improvements and utility extensions. Upon completion certain assets will be conveyed to other entities for ownership and/or maintenance.

During the year ended September 30, 2016, the District conveyed approximately $1.3 million to Sarasota County.

NOTE 5: BONDS PAYABLE

On March 28, 2013 the District issued $5,455,000 of Special Assessment Bonds, Series 2013A due on May 1, 2043 with a fixed interest rate of 6.00%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the Bonds is to be paid serially commencing May 1, 2014 through May 1, 2043.

On October 14, 2015, the District issued $8,765,000 of Special Assessment Bonds, Series 2015 consisting of $1,575,000 Series 2015A‐1 Term Bonds, $1,945,000 Series 2015A‐1 Term Bonds and $5,245,000 of Series 2015A‐2 with interest rates of 6.25%, 6.50% and 6.25%, respectively. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal on the $1,575,000 Term Bonds is to be paid serially commencing May 1, 2016 through May 1, 2035. Principal on the $1,945,000 Term Bonds is to be paid serially commencing May 1, 2016 through May 1, 2045. Principal on the $5,245,000 Term Bonds is to be paid serially commencing May 1, 2016 through May 1, 2045.

Long‐term liability activity for the year ended September 30, 2016, was as follows:

		Beginning						Ending	Due Within	
		Balance		Additions		Reductions		Balance		One Year	
Governmental Activities											
Bonds Payable:											
Series 2013A	$	5,045,000	$	‐	$	(195,000)	$	4,850,000	$	75,000	
Series 2015A‐1		‐		3,520,000		(45,000)		3,475,000		45,000	
Series 2015A‐2		‐		5,245,000		(75,000)		5,170,000		‐	
	$	5,045,000	$	8,765,000	$	(315,000)	$	13,495,000	$	120,000	

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 5: BONDS PAYABLE (Continued)

At September 30, 2016, the scheduled debt service requirements on long‐term debt were as follows:

						Total Debt	
Year Ending September 30,		Principal		Interest		Service	
2017	$	120,000	$	881,163	$	1,001,163	
2018		195,000		828,850		1,023,850	
2019		210,000		816,863		1,026,863	
2020		220,000		803,950		1,023,950	
2021		235,000		790,425		1,025,425	
2022 ‐ 2026		1,415,000		3,715,975		5,130,975	
2027 ‐ 2031		1,930,000		3,222,113		5,152,113	
2032 ‐ 2036		2,620,000		2,548,525		5,168,525	
2037 ‐ 2041		3,555,000		1,629,100		5,184,100	
2042 ‐ 2043		2,995,000		440,925		3,435,925	
	$	13,495,000	$	15,677,889	$	29,172,889	

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

The Bond Indenture requires that the District maintain adequate funds in reserve accounts to meet the debt service reserve requirements as defined in the Indenture. The requirements have been met for the fiscal year ended September 30, 2016

NOTE 6: RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District maintains commercial insurance coverage to mitigate the risk of loss. Coverage may not extend to all situations. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in the previous three years.

NOTE 7: COMMITMENTS

The District has $3,919,169 remaining on contracts for various construction projects. The original amount totaled for $6,787,201. The District expects the project to be completed in 2017.

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Blackburn Creek Community Development District

Notes to Financial Statements

NOTE 8: 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 9: RELATED PARTY TRANSACTIONS

A significant portion of the District’s activity is dependent upon the continued involvement of the Developer. The loss of significant involvement could have a material adverse effect on the District’s operations.

During the year ended September 30, 2016, the Developer was assessed $25,775 and $434,759 for operations and maintenance and debt service costs, respectively. The Developer also contributed $2,374,214 to the District during the year.

The Developer also advanced $795,459 during the year to help fund infrastructure construction. These amounts plus prior amounts, which together totaled approximately $1.4 million, were repaid in full subsequent to the issuance of the Series 2015 Bonds.

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Required Supplemental Information

(Other Than MD&A)

Blackburn Creek Community Development District

Budget to Actual Comparison Schedule – General Fund

Year ended September 30,			2016			
		Original and	Actual	Variance with	
	Final Budget	Amounts	Final Budget	
Revenues						
Assessmentrevenue	$	91,475	$  92,323	$	848	
Interestand other revenues		‐	1		1	
Totalrevenues		91,475	92,324		849	
Expenditures						
Generalgovernment		91,475	57,985		33,490	
Totalexpenditures		91,475	57,985		33,490	
Excess of revenues over expenditures		‐	34,339		34,339	

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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

Blackburn Creek Community Development District

Sarasota 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 Blackburn Creek Community Development District (hereinafter referred to as the “District”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated September 6, 2017.

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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did identify a deficiency in internal control, described below, that we consider to be a material weakness.

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IC2016‐001: Unrecorded Capital Projects Fund Expenditures

•	Condition: As part of our audit procedures, we identified approximately $201,000 of capital expenditures that were not accrued on the District's financial statements as of September 30, 2016.

•	Criteria: Generally Accepted Account Principles requires that expenditures be recognized when incurred and not when paid.

•	Cause: The capital expenditures appear to be overlooked when District staff was preparing its annual financial report.

•	Effect: Capital project expenditures and related liabilities on the fund‐level financial statements were understated by approximately $201,000.

•	Recommendation: We recommend the District review capital expenditures activity to ensure all expenditures and liabilities are identified and recorded.

The District's response to the finding identified in our audit described above. We did not audit the District's Response and, accordingly, we express no opinion on it.

•	Management Response: The District has already taken further steps in its year‐end financial close process to ensure that this oversight is avoided in the future.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the 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 District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida

September 6, 2017

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MANAGEMENT LETTER

To the Board of Supervisors

Blackburn Creek Community Development District

Sarasota County, Florida

Report on the Financial Statements

We have audited the financial statements of the Blackburn Creek Community Development District (“District”) as of and for the fiscal year ended September 30, 2016, and have issued our report thereon dated September 6, 2017.

Auditor’s Responsibility

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

Other 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 this report, which is dated September 6, 2017, should be considered in conjunction with this management letter.

Prior Audit Findings

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

Official Title and Legal Authority

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

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Financial Condition

Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not the District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of 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.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. 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.

Annual Financial Report

Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, requires that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the District for the fiscal year ended September 30, 2016, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2016. In connection with our audit, we determined that these two reports were in agreement.

Other Matters

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

Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address 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

September 6, 2017

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INDEPENDENT ACCOUNTANT’S REPORT

To the Board of Supervisors

Blackburn Creek Community Development District

Sarasota County, Florida

We have examined Blackburn Creek Community Development District’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2016. Management of Blackburn Creek Community Development District is responsible for the District’s compliance with the specified requirements. Our responsibility is to express an opinion on the District’s compliance with the specified requirements 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's complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the District complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

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

In our opinion, the District complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2016.

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

CARR, RIGGS & INGRAM, LLC

Miramar Beach, Florida

September 6, 2017

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