Bannon Lakes Community Development District ANNUAL FINANCIAL REPORT September 30, 2022 Bannon Lakes Community Development District ANNUAL FINANCIAL REPORT September 30, 2022 TABLE OF CONTENTS Page Number FINANCIAL SECTION REPORT OF INDEPENDENT AUDITORS 1-3 MANAGEMENT’S DISCUSSION AND ANALYSIS 4-9 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position 10 Statement of Activities 11 Fund Financial Statements: Balance Sheet – Governmental Funds 12 Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities 13 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 14 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 15 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund 16 Notes to Financial Statements 17-31 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 32-33 MANAGEMENT LETTER 34-37 INDEPENDENT ACCOUNTANTS’ REPORT/COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES 38 REPORT OF INDEPENDENT AUDITORS To the Board of Supervisors Bannon Lakes Community Development District St. Johns County, Florida Report on Audit of the Financial Statements Opinion We have audited the financial statements of the governmental activities and each major fund of Bannon Lakes Community Development District (the “District”), as of and for the year ended September 30, 2022, and the related notes to financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Bannon Lakes Community Development District as of September 30, 2022, and the respective changes in financial position and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. To the Board of Supervisors Bannon Lakes Community Development District In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for one year beyond the financial statement date, including currently known information that may raise substantial doubt thereafter. Auditor’s Responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgement, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. To the Board of Supervisors Bannon Lakes Community Development District Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge 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 a report dated July 13, 2023 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 and contracts. 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 Bannon Lakes Community Development District’s internal control over financial reporting and compliance. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida July 13, 2023 Management’s discussion and analysis of Bannon Lakes Community Development District's (the “District”) financial performance provides an objective and easily readable analysis of the District’s financial activities. The analysis provides summary financial information for the District and should be read in conjunction with the District’s financial statements. OVERVIEW OF THE FINANCIAL STATEMENTS The District’s basic financial statements comprise three components; 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to financial statements. The Government-wide financial statements present an overall picture of the District’s financial position and results of operations. The Fund financial statements present financial information for the District’s major funds. The Notes to financial statements provide additional information concerning the District’s finances. The Government-wide financial statements are the statement of net position and the statement of activities. These statements use accounting methods similar to those used by the private-sector. Emphasis is placed on the net position of governmental activities and the change in net position. Governmental activities are primarily supported by special assessments. The statement of net position presents information on all assets and liabilities of the District, with the difference between assets and liabilities reported as net position. Net position are reported in three categories; 1) net investment in capital assets, 2) restricted and 3) unrestricted. Assets, liabilities, and net position are reported for all Governmental activities. The statement of activities presents information on all revenues and expenses of the District and the change in net position. Expenses are reported by major function and program revenues relating to those functions are reported, providing the net cost of all functions provided by the District. To assist in understanding the District’s operations, expenses have been reported as governmental activities. Governmental activities funded by the District include general government, physical environment, culture/recreation, and debt service. Fund financial statements present financial information for governmental funds. These statements provide financial information for the major funds of the District. Governmental fund financial statements provide information on the current assets and liabilities of the funds, changes in current financial resources (revenues and expenditures), and current available resources. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all governmental funds. A statement of revenues, expenditures, and changes in fund balances – budget and actual, is provided for the District’s General Fund. Fund financial statements provide more detailed information about the District’s activities. Individual funds are established by the District to track revenues that are restricted to certain uses or to comply with legal requirements. 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 nearterm inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the year. Such information may be useful in evaluating a government'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 statement of revenues, expenditures, and changes in fund balances provide reconciliations to facilitate this comparison between governmental funds and governmental activities. Notes to financial statements provide additional detail concerning the financial activities and financial balances of the District. Additional information about the accounting practices of the District, investments of the District, capital assets, and long-term debt are some of the items included in the notes to financial statements. Financial Highlights: The following are the highlights of financial activity for the year ended September 30, 2022. • The District’s total assets were exceeded by total liabilities by $(5,153,471) (net position). Net investment in capital assets was $(1,235,479) and restricted net position was $693,901. Unrestricted net position was $(4,611,893). • Governmental activities revenues totaled $1,881,476 while governmental activities expenses totaled $2,280,989. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Financial Analysis of the District The following schedule provides a summary of the assets, deferred outflows of resources, liabilities and net position of the District. The increase in current assets is related to revenues exceeding expenditures at the fund level in the current year. 2022 2021 Current assets $ 410,434 $ 365,066 Restricted assets 3,177,030 3,253,984 Capital assets, net of depreciation 19,178,934 17,682,591 Total Assets 22,766,398 21,301,641 Current liabilities 930,197 1,133,113 Non-current liabilities 26,989,672 24,922,486 Total Liabilities 27,919,869 26,055,599 Net position - net investment in capital assets (1,235,479) (5,975,619) Net position-restricted 693,901 894,509 Net position-unrestricted (4,611,893) 327,152 Total Net Position $ (5,153,471) $ (4,753,958) Governmental Activities The increase in capital assets is related to the increase to construction in progress in the current year. The decrease in current liabilities is mainly related to the decrease in contracts payable in the current year. The increase in non-current liabilities is related to the long-term debt issuance in the current year. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Financial Analysis of the District (Continued) The following schedule provides a summary of the changes in net position of the District. The increase in charges for services is primarily related to the increase in debt service special assessments in the current year. 2022 2021 Program Revenues Charges for services $ 1,699,966 $ 1,316,124 General Revenues Investment earnings 6,014 346 Other revenues 175,496 200 Total Revenues 1,881,476 1,316,670 Expenses General government 102,150 96,955 Physical environment 574,006 506,556 Culture and recreation 258,143 235,251 Interest and other charges 1,346,690 1,045,019 Total Expenses 2,280,989 1,883,781 Change in Net Position (399,513) ( 567,111) Net Position - Beginning of Year (4,753,958) ( 4,186,847) Net Position - End of Year $ (5,153,471) $ ( 4,753,958) Governmental Activities Change in Net Position The increase in miscellaneous revenues is related to monies received from the homeowner’s association in relation to a joint project in the current year. The increase in physical environment is related to the increase in repair and maintenance expenses in the current year. The increase in culture/recreation is primarily related to the increase in special events and amenity maintenance expenses in the current year. The increase in interest and other charges is related to the initial year of interest on the Series 2021 bonds. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Capital Assets Activity The following schedule provides a summary of the District’s capital assets as of September 30, 2022 and 2021. During the year, depreciation was $310,919 and additions to construction in progress was $1,807,262. General Fund Budgetary Highlights Description 2022 2021 Construction in progress $ 11,788,700 $ 9,981,438 Buildings and improvemnets 3,713,738 3,713,738 Infrastructure 4,721,061 4,721,061 Equipment 190,914 190,914 Accumulated depreciation (1,235,479) (924,560) Total Capital Assets (Net) $ 19,178,934 $ 17,682,591 Governmental Activities The budgeted expenditures exceeded actual expenditures primarily because reclaimed water expenditures were less than anticipated. The September 30, 2022 budget was amended because reclaimed water and amenity electric expenditures were more than originally anticipated. Debt Management Governmental Activities debt includes the following: . In January 2016, the District issued $11,850,000 Special Assessment Bonds, Series 2016. The Bonds were issued to provide funds to finance the cost of acquisition, construction, installation, and equipping of the 2016 Project. The balance outstanding at September 30, 2022 was $10,825,000. . In January 2021, the District issued $7,415,000 Special Assessment Bonds, Series 2021. The Bonds were issued to provide funds to finance the cost of acquisition, construction, installation, and equipping of the 2021 Project. The balance outstanding at September 30, 2022 was $7,265,000. . In March 2022, the District issued $9,135,000 Special Assessment Bonds, Series 2022. The Bonds were issued to provide funds to finance the cost of acquisition, construction, installation, and equipping of the 2022 Project. The balance outstanding at September 30, 2022 was $9,135,000. OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Economic Factors and Next Year’s Budget Bannon Lakes Community Development District does not expect any economic factors to have a significant effect on the financial position or the results of operations of the District in fiscal year 2023. Request for Information The financial report is designed to provide a general overview of District’s finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Bannon Lakes Community Development District, c/o Governmental Management Services, 475 West Town Place, Suite 114, St. Augustine, Florida 32092. Bannon Lakes Community Development District STATEMENT OF NET POSITION September 30, 2022 Governmental Activities ASSETS Current Assets Cash and cash equivalents $ 266,619 Investments 102,486 Due from other governments 13,184 Prepaid expenses 28,095 Deposits 50 Total Current Assets 410,434 Non-Current Assets Restricted assets Cash and investments 3,177,030 Capital assets, not being depreciated Construction in progress 11,788,700 Capital assets, being depreciated Infrastructure 4,721,061 Buildings and improvements 3,713,738 Equipment 190,914 Less: accumulated depreciation (1,235,479) Total Non-Current Assets 22,355,964 Total Assets 22,766,398 LIABILITIES Current Liabilities Accounts payable and accrued expenses 9,496 Contracts/retainage payable 87,559 Accrued interest 478,142 Bonds payable 355,000 Total Current Liabilities 930,197 Non-Current Liabilities Bonds payable, net 26,989,672 Total Liabilities 27,919,869 NET POSITION Net investment in capital assets (1,235,479) Restricted for debt service 693,901 Unrestricted (4,611,893) Total Net Position $ (5,153,471) See accompanying notes to financial statements. - 10 Bannon Lakes Community Development District STATEMENT OF ACTIVITIES For the Year Ended September 30, 2022 Net (Expense) Revenues and Program Changes in Revenues Net Position Charges for Governmental Functions/Programs Expenses Services Activities Primary government Governmental Activities General government (102,150) $ 83,601 $ $ (18,549) Physical environment (574,006) 240,268 (333,738) Culture and recreation (258,143) 186,311 (71,832) Interest and other charges (1,346,690) 1,189,786 (156,904) Total Governmental Activities $ (2,280,989) $ 1,699,966 (581,023) General Revenues Investment earnings 6,014 Miscellaneous revenues 175,496 Total General Revenues 181,510 Changes in Net Position (399,513) Net Position - October 1, 2021 (4,753,958) Net Position - September 30, 2022 $ (5,153,471) See accompanying notes to financial statements. - 11 Bannon Lakes Community Development District BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2022 Total Debt Capital Governmental General Service Projects Funds ASSETS Cash and cash equivalents $ 266,619 $ --$ 266,619 $ Investments 102,486 --102,486 Due from other funds -1,852 -1,852 Due from other governments 4,411 8,773 -13,184 Prepaid expenses 28,095 --28,095 Deposits 50 --50 Restricted assets Cash and investments -2,000,093 1,176,937 3,177,030 Total Assets $ 401,661 $ 2,010,718 $ 1,176,937 $ 3,589,316 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued expenses $ 9,496 $ --$ 9,496 $ Contracts/retainage payable --87,559 87,559 Due to other funds 1,852 --1,852 Total Liabilities 11,348 -87,559 98,907 Fund Balances: Nonspendable - prepaid expenses 28,145 --28,145 Restricted - capital projects --1,089,378 1,089,378 Restricted - debt service -2,010,718 -2,010,718 Assigned capital projects 33,766 --33,766 Unassigned 328,402 --328,402 Total Fund Balances 390,313 2,010,718 1,089,378 3,490,409 Total Liabilities and Fund Balances $ 401,661 $ 2,010,718 $ 1,176,937 $ 3,589,316 See accompanying notes to financial statements. - 12 Bannon Lakes Community Development District RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET POSTION OF GOVERNMENTAL ACTIVITIES September 30, 2022 Total Governmental Fund Balances $ 3,490,409 Amounts reported for governmental activities in the Statement of Net Position are different because: at the fund level. Capital assets, construction in progress, $11,788,700, buildings and improvements, $3,713,738, infrastructure, $4,721,061, and equipment, $190,914, net of accumulated depreciation, $(1,235,479), used in governmental activities are not financial resources and; therefore, are not reported 19,178,934 net, $(205,326), net of bond discount, net, $85,654, are not due and payable in the current period and; therefore, are not reported at the fund level. Long-term liabilities, including bonds payable, $(27,225,000), and bond premium, (27,344,672) therefore, is not reported in the funds. Accrued interest expense for long-term debt is not a current financial use and; (478,142) Net Position of Governmental Activities $ (5,153,471) See accompanying notes to financial statements. -13 Bannon Lakes Community Development District STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended September 30, 2022 Total Debt Capital Governmental General Service Projects Funds Revenues Special assessments 510,180 $ 1,189,786 $ -$ $ 1,699,966 Investment earnings 865 4,157 992 6,014 Miscellaneous revenues 175,496 --175,496 Total Revenues 686,541 1,193,943 992 1,881,476 Expenditures Current General government 102,150 --102,150 Physical environment 293,579 --293,579 Culture and recreation 227,651 --227,651 Capital outlay --1,807,262 1,807,262 Debt service Principal -395,000 6,788,205 7,183,205 Interest -858,928 -858,928 Other --349,950 349,950 Total Expenditures 623,380 1,253,928 8,945,417 10,822,725 Excess of revenues over expenditures 63,161 (59,985) (8,944,425) (8,941,249) Other Financing Sources/(uses) Issuance of long-term debt -837,704 8,297,296 9,135,000 Bond premium --127,231 127,231 Total Other Financing Sources/(Uses) -837,704 8,424,527 9,262,231 Net change in fund balances 63,161 777,719 (519,898) 320,982 Fund Balances - October 1, 2021 327,152 1,232,999 1,609,276 3,169,427 Fund Balances - September 30, 2022 390,313 $ $ 2,010,718 1,089,378 $ $ 3,490,409 See accompanying notes to financial statements. - 14 Bannon Lakes Community Development District RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2022 Net Change in Fund Balances - Total Governmental Funds $ 320,982 Amounts reported for governmental activities in the Statement of Activities are different because: as depreciation. This is the amount that depreciation, $(310,919), was exceeded by capital outlay, $1,807,262, in the current period. Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets are allocated over their estimated useful lives 1,496,343 repayments reduce long-term liabilities in the Statement of Net Position. Repayments of bond principal are expenditures in the governmental funds, but the 7,183,205 The issuance of new long-term debt, $(9,135,000) and bond premium, $(127,231) are reflected as other financing sources at the fund level, however, they increase liabilities at the government-wide level. (9,262,231) Amortization of bond premium/discount reported at the government-wide level does not require the use of current financial resources and therefore, is not reported as an expenditure at the fund level. This is the current net change. 1,840 The change in accrued interest on long-term liabilities is recorded in the Statement of Activities but not in the fund financial statements. (139,652) Change in Net Position of Governmental Activities $ (399,513) See accompanying notes to financial statements. - 15 Bannon Lakes Community Development District STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended September 30, 2022 Revenues Special assessments Developer contributions Investment earnings Miscellaneous revenues Total Revenues Expenditures Current General government Physical environment Culture and recreation Capital outlay Total Expenditures Net change in fund balances Fund Balances - October 1, 2021 Fund Balances - September 30, 2022 Original Budget $ 504,753 105,308 150 300 610,511 108,616 267,056 232,175 15,000 622,847 647,810 (12,336) 137,701 31,713 33,767 $ 19,377 Final Budget $ 504,753 105,308 150 175,300 785,511 108,616 307,019 232,175 - $ 171,468 Actual Variance with Final Budget Positive (Negative) $ 510,180 - 865 175,496 686,541 5,427 $ (105,308) 715 196 (98,970) 102,150 293,579 227,651 - 623,380 6,466 13,440 4,524 - 24,430 63,161 (74,540) 327,152 293,385 $ 390,313 218,845 $ See accompanying notes to financial statements. - 16 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District's more significant accounting policies are described below. 1. Reporting Entity The District was established on September 21, 2015, by Ordinance 2015-60 of the St. Johns County, Florida Board of County Commissioners, pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes. The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of the infrastructure necessary for community development within its jurisdiction. The District is authorized to issue bonds for the purpose, among others, of financing, funding, planning, establishing, acquiring, constructing or reconstructing, enlarging or extending, equipping, operating and maintaining water management, bridges or culverts, district roads, landscaping, street lights and other basic infrastructure projects within or without the boundaries of the Bannon Lakes Community Development District. The District is governed by a five-member Board of Supervisors who are elected for four year terms. The District operates within the criteria established by Chapter 190, Florida Statutes. As required by GAAP, these financial statements present Bannon Lakes Community Development District (the primary government) as a local unit of special-purpose government. The reporting entity for the District includes all functions of government in which the District’s Board exercises oversight responsibility including, but not limited to, financial interdependency, selection of governing authority, designation of management, significant ability to influence operations and accountability for fiscal matters. Based upon the application of the above-mentioned criteria, as set forth in Governmental Accounting Standards, the District has identified no component units. 2. Measurement Focus and Basis of Accounting The basic financial statements of the District are composed of the following: • Government-wide financial statements • Fund financial statements • Notes to financial statements NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) a. Government-wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Government-wide financial statements report all non-fiduciary information about the reporting government as a whole. These statements include all the governmental activities of the primary government. The effect of interfund activity has been removed from these statements. Governmental activities are supported by special assessments, developer contributions, intergovernmental revenues and interest. Program revenues are netted with program expenses in the Statement of Activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets, rather than reported as an expenditure. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. b. Fund Financial Statements The underlying accounting system of the District is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government’s governmental funds are presented after the government-wide financial statements. These statements display information about major funds individually. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) b. Fund Financial Statements (Continued) Governmental Funds The District implemented the Governmental Accounting Standards Board Statement 54 – Fund Balance Reporting and Governmental Fund Type Definitions. The Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications include non-spendable, restricted, committed, assigned and unassigned. The District has various policies governing the fund balance classifications. Nonspendable Fund Balance – This classification consists of amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. Restricted Fund Balance – This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation. Committed Fund Balance – This classification consists of amounts that can only be used for specific purposes pursuant to the constraints imposed by a formal action of the government’s highest level of decision making authority. Assigned Fund Balance – This classification consists of the Board of Supervisors’ intent to be used for specific purposes, but are neither restricted nor committed. The assigned fund balances can also be assigned by the District’s management company. Unassigned Fund Balance – This classification is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications. Unassigned fund balance is considered to be utilized first when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. Fund Balance Spending Hierarchy – When restricted, committed, assigned, and unassigned fund balances are combined in a fund, qualified expenditures are paid first from restricted or committed fund balance, as appropriate, then assigned and finally unassigned fund balances. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Interest associated with the current fiscal period is considered to be an accrual item and so has been recognized as revenue of the current fiscal period. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2. Measurement Focus and Basis of Accounting (Continued) b. Fund Financial Statements (Continued) Governmental Funds (Continued) Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources are expended, rather than as fund assets. In addition, the proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. Debt service expenditures are recorded only when payment is due. 3. Basis of Presentation a. Governmental Major Funds General Fund – The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Debt Service Funds – Accounts for debt service requirements to retire the special assessment bonds. The bond series are secured by a pledge of all available special assessment revenues in any fiscal year related to the improvements and a first lien on the special assessment revenues from the District lien on all acreage of benefited land. Capital Projects Fund – Accounts for construction of infrastructure improvements within the District. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. Basis of Presentation (Continued) b. Non-current Governmental Assets/Liabilities GASB Statement 34 requires that non-current governmental assets, such as infrastructure and improvements, and non-current governmental liabilities, such as general obligation bonds, be reported in the governmental activities column in the government-wide Statement of Net Position. 4. Assets, Liabilities, and Net Position or Equity a. Cash and Investments Florida Statutes require state and local governmental units to deposit monies with financial institutions classified as "Qualified Public Depositories," a multiple financial institution pool whereby groups of securities pledged by the various financial institutions provide common collateral from their deposits of public funds. This pool is provided as additional insurance to the federal depository insurance and allows for additional assessments against the member institutions, providing full insurance for public deposits. The District is authorized to invest in those financial instruments as established by Section 218.415, Florida Statutes. The authorized investments consist of: 1. Direct obligations of the United States Treasury; 2. The Local Government Surplus Funds Trust or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperative Act of 1969; 3. Interest-bearing time deposits or savings accounts in authorized qualified public depositories; 4. Securities and Exchange Commission, registered money market funds with the highest credit quality rating from a nationally recognized rating agency. Cash equivalents include time deposits and certificates of deposit with original maturities of three months or less and held in a qualified public depository as defined by Section 280.02, Florida Statutes. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4. Assets, Liabilities, and Net Position or Equity (Continued) b. Restricted Assets Certain assets of the District and a corresponding liability or portion of net position is classified as restricted assets on the statement of net position because their use is limited either by law through constitutional provisions or enabling legislation, or by restrictions imposed externally by creditors. In a fund with both restricted and unrestricted assets, qualified expenses are considered to be paid first from restricted net position and then from unrestricted net position. c. Capital Assets Capital assets, which include construction in progress, buildings and improvements, infrastructure, and equipment are reported in the governmental activities column in the government-wide statements. The District defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of two years. The valuation basis for all assets is historical cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Depreciation of capital assets is computed and recorded by utilizing the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows: Infrastructure 30 years Buildings and improvements 10-30 years Equipment 7 years d. Budgets Budgets are prepared and adopted after a public hearing for the governmental funds, pursuant to Chapter 190, Florida Statutes. The District utilizes the same basis of accounting for budgets as it does for revenues and expenditures in its various funds. The legal level of budgetary control is at the fund level. All budgeted appropriations lapse at year end. Formal budgets are adopted for the general and debt service funds. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4. Assets, Liabilities, and Net Position or Equity (Continued) e. Unamortized Bond Premium/Discount Bond premiums/discounts are presented on the government-wide financial statements. The premium/discount is amortized over the life of the bonds. For financial reporting, the unamortized bond premium/discount is netted with the applicable long-term debt. NOTE B – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS 1. Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Position “Total fund balances” of the District’s governmental funds, $3,490,409, differs from “net position” of governmental activities, $(5,153,471), reported in the Statement of Net Position. This difference primarily results from the long-term economic focus of the Statement of Net Position versus the current financial resources focus of the Governmental Fund Balance Sheet. The effect of the differences is illustrated below. Capital related items When capital assets (infrastructure and improvements that are to be used in governmental activities) are purchased or constructed, the cost of those assets is reported as expenditures in governmental funds. However, the Statement of Net Position included those capital assets among the assets of the District as a whole. Construction in progress $ 11,788,700 Buildings and improvements 3,713,738 Infrastructure 4,721,061 Equipment 190,914 Accumulated depreciation (1,235,479) Total $ 19,178,934 NOTE B – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) 1. Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Position (Continued) Long-term debt transactions Long-term liabilities applicable to the District’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position. Bonds payable $ (27,225,000) Bond discount, net 85,654 Bond premium, net (205,326) Total $ (27,344,672) Accrued interest Accrued liabilities in the Statement of Net Position differ from the amount reported in governmental funds due to the accrued interest on bonds. Accrued interest $ (478,142) 2. Explanation of Differences Between the Governmental Fund Operating Statements and the Statement of Activities The “net change in fund balances” for government funds, $320,982, differs from the “change in net position” for governmental activities, $(399,513), reported in the Statement of Activities. The differences arise primarily from the long-term economic focus of the Statement of Activities versus the current financial resources focus of the governmental funds. The effect of the differences is illustrated below. Capital related items When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation. The following is the amount of depreciation in excess of current year capital asset acquisitions: Depreciation $ (310,919) Capital outlay 1,807,262 Total $ 1,496,343 NOTE B – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) 2. Explanation of Differences Between the Governmental Fund Operating Statements and the Statement of Activities (Continued) Long-term debt transactions The issuance of new long-term debt and repayments of bond principal are reported as an other financing source or expenditures at the fund level and, thus, have the effect of affecting fund balance because current financial resources have been provided or used. Issuance of long-term debt $ (9,135,000) Bond premium (127,231) Total $ (9,262,231) Bond principal payments $ 7,183,205 Some expenses reported in the Statement of Activities do not require the use of current financial resources, therefore, are not reported as expenditures in governmental funds. Change in accrued interest payable $ (139,652) Amortization of bond premium/discount, net $ 1,840 NOTE C – CASH AND INVESTMENTS All deposits are held in qualified public depositories and are included on the accompanying balance sheet and statement of net position as cash and investments. Custodial Credit Risk – Deposits Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned. The investment policy of the District follows the provisions of Chapter 280, Florida Statutes regarding deposits and investments. As of September 30, 2022, the District’s bank balance was $277,241 and the carrying value was $266,619. The District controls its exposure to custodial credit risk because it maintains all deposits in a qualified public depository in accordance with the provisions of Chapter 280, Florida Statutes, which means that all deposits are fully insured by Federal Depositors Insurance or collateralized under Chapter 280, Florida Statutes. The District also had $1,924,131 in restricted cash with BNY Mellon as of September 30, 2022. NOTE C – CASH AND INVESTMENTS Investments As of September 30, 2022, the District had the following investments and maturities. The District categorizes its fair value measurements within the fair value hierarchy recently established by generally accepted accounting principles. The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The District uses a market approach in measuring fair value that uses prices and other relevant information generated by market transactions involving identical or similar assets, liabilities, or groups of assets and liabilities. Assets or liabilities are classified into one of three levels. Level 1 is the most reliable and is based on quoted price for identical assets, or liabilities, in an active market. Level 2 uses significant other observable inputs when obtaining quoted prices for identical or similar assets, or liabilities, in markets that are not active. Level 3 is the least reliable and uses significant unobservable inputs that use the best information available under the circumstances, which includes the District’s own data in measuring unobservable inputs. Based on the criteria in the preceding paragraph, the investments in Dreyfus Treasury Securities Cash Management is a Level 1 assets. Investment Maturity Fair Value Dreyfuss Treasury Securities Cash Management 41 days* $ 1 ,252,900 Florida PRIME 21 days* 102,486 Total $ 1 ,355,386 * Weighted Average Maturity The District’s investment policy allows management to invest funds in investments permitted under Section 218.415, Florida Statutes. The investment in Florida PRIME is measured at amortized cost. Florida PRIME has established policies and guidelines regarding participant transactions and the authority to limit or restrict withdrawals or impose a penalty for an early withdrawal. As of September 30, 2022, there were no redemption fees, maximum transaction amounts, or any other requirement that would limit daily access to 100 percent of the account value. NOTE C – CASH AND INVESTMENTS (CONTINUED) Interest Rate Risk The District monitors investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk The District's investments in treasury funds, and government loans are limited by state statutory requirements and bond compliance. The District has no investment policy that would further limit its investment choices. the District’s investment in Dreyfus Treasury Securities Cash Management and Florida PRIME were rated AAAm by Standard & Poor’s. Concentration of Credit Risk The District places no limit on the amount it may invest in any one fund. The investment in Florida PRIME was 8% of the District's total investments as of September 30, 2022. The investment in Dreyfus Treasury Securities Cash Management was 92% of the District's investments. The types of deposits and investments and their level of risk exposure as of September 30, 2022 were typical of these items during the fiscal year then ended. The District considers any decline in fair value for certain investments to be temporary. In addition, the District has the ability to hold investments to maturity which may have fair values less than cost. The District’s investments are recorded at fair value. NOTE D – SPECIAL ASSESSMENT REVENUES Special assessment revenues recognized for the 2021-2022 fiscal year were levied in August 2021. All assessments are payable on November 1 or as soon as the assessment roll is certified and delivered to the Tax Collector. Per Section 197.162, Florida Statutes, discounts are allowed for early payment at the rate of 4% in November, 3% in December, 2% in January, and 1% in February. Assessments paid in March are without discount. All unpaid assessments become delinquent as of April 1. Virtually all unpaid assessments that were on the assessment roll certified and delivered to the Tax Collector are collected via the sale of tax certificates on or prior to June 1. For certain parcels, the District bills and collects the annual assessments. NOTE E – CAPITAL ASSETS Capital Asset activity for the year ended September 30, 2022 was as follows: Depreciation of $280,427 was charged to physical environment and $30,492 to culture/recreation during the year. Balance Balance October 1, September 30, 2021 Additions Deletions 2022 Governmental Activities: Capital assets, not being depreciated: Construction in progress $ 9,981,438 $ 1,807,262 $ - $ 1 1,788,700 Capital assets, being depreciated: Infrastructure 4,721,061 - - 4,721,061 Buildings and improvements 3,713,738 - - 3,713,738 Equipment 190,914 - - 190,914 Total Capital Assets Being Depreciated 8,625,713 - - 8,625,713 Less accumulated depreciation for: Infrastructure (472,107) (157,369) - (629,476) Buildings and improvements (371,532) (126,277) - (497,809) Equipment (80,921) (27,273) - (108,194) Total Accumulated Depreciation (924,560) (310,919) - (1,235,479) Governmental Activities Capital Assets $ 1 7,682,591 $ 1,496,343 $ - $ 1 9,178,934 NOTE F – LONG-TERM DEBT The following is a summary of activity in the long-term debt of the District for the year ended September 30, 2022: Long-term debt is comprised of the following: Long-term debt at October 1, 2021 $ 25,273,205 Issuance of long-term debt 9,135,000 Principal payments (7,183,205) Long-term debt at September 30, 2022 27,225,000 Less: bond discount, net (85,654) Plus: bond premium, net 205,326 Bonds Payable, Net at September 30, 2022 $ 27,344,672 Long-term debt for Governmental Activities is comprised of the following: $11,850,000 Special Assessment Bonds, Series 2016 due in annual principal installments beginning November 2019. Interest rates ranging from 4.50% to 5.00% is due May 1 and November 1 beginning May 2016. Current portion is $200,000. $ 10,825,000 $7,415,000 Special Assessment Bonds, Series 2021 are due in annual principal installments beginning May 2022 maturing May 2051. Interest at various rates between 2.50% and 4.00% is due May and November beginning May 2021. Current portion is $155,000. 7,265,000 $9,135,000 Special Assessment Bonds, Series 2022 are due in annual principal installments beginning May 2024 maturing May 2053. Interest at various rates between 2.875% and 4.00% is due May and November beginning May 2022. 9,135,000 Bond Payable at September 30, 2022 $ 27,225,000 NOTE F – LONG-TERM DEBT (CONTINUED) The annual requirements to amortize the principal and interest of long-term debt outstanding as of September 30, 2022 are as follows: Summary of Significant Bonds Resolution Terms and Covenants The Series 2016 Bonds are subject to redemption at the option of the District prior to their maturity, in whole or in part, at any time after November 1, 2028 at a redemption price equal to the principal amount of the Series 2016 Bonds, together with accrued interest to the date of redemption. The Series 2021 Bonds are subject to redemption at the option of the District prior to their maturity, in whole or in part, at any time after May 1, 2031 at a redemption price equal to the principal amount of the Series 2016 Bonds, together with accrued interest to the date of redemption. Year Ending September 30, Principal Interest Total 2023 $ 355,000 $ 1,143,043 $ 1,498,043 2024 535,000 1,129,943 1,664,943 2025 555,000 1,111,505 1,666,505 2026 575,000 1,092,349 1,667,349 2027 595,000 1,071,874 1,666,874 2028-2032 3,365,000 4,988,610 8,353,610 2033-2037 4,130,000 4,228,050 8,358,050 2038-2042 5,100,000 3,246,675 8,346,675 2043-2047 6,340,000 2,004,300 8,344,300 2048-2052 5,165,000 606,225 5,771,225 2053 510,000 20,400 530,400 Totals $ 27,225,000 $ 20,642,974 $ 47,867,974 The Series 2022 Bonds are subject to redemption at the option of the District prior to their maturity, in whole or in part, at any time after May 1, 2032 at a redemption price equal to the principal amount of the Series 2016 Bonds, together with accrued interest to the date of redemption. The Series 2016, 2021, and 2022 Bonds are subject to extraordinary mandatory redemption prior to maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Trust Indentures. The Trust Indentures established certain amounts be maintained in a reserve account. In addition, the Trust Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. NOTE F – LONG-TERM DEBT (CONTINUED) Depository Funds The bond resolutions establish certain funds and determines the order in which revenues are to be deposited into these funds. A description of the significant funds, including their purposes, is as follows: 1. Reserve Fund – The Series 2016, 2021, and 2022 Reserve Accounts were funded from the proceeds of the Series 2016, 2021, and 2022 Bonds, respectively, in amounts equal to 50% of the maximum annual debt service requirement for the Series 2016, 2021, and 2022 Bonds. Monies held in the reserve accounts will be used only for the purposes established in the Trust Indenture. NOTE G – 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. These risks are covered by commercial insurance from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage over the past three years. NOTE H – SUBSEQUENT EVENT Reserve Reserve Balance Requirement Series 2016 $ 371,375 $ 370,625 Series 2021 $ 207,150 $ 207,150 Series 2022 $ 260,900 $ 260,900 Special Assessment Revenue Bonds In May 2023, the District made a $5,000 prepayment on the Series 2016 Special Assessment Revenue Bonds. INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Supervisors Bannon Lakes Community Development District St. Johns 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, as listed in the table of contents, of Bannon Lakes Community Development District, as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the basic financial statements and have issued our report thereon dated July 13, 2023. Report on Internal Control Over Financial Reporting In planning and performing our audit, we considered Bannon Lakes Community Development District's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Bannon Lakes Community Development District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Bannon Lakes Community Development 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. To the Board of Supervisors Bannon Lakes Community Development District Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether Bannon Lakes Community Development District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the 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. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida July 13, 2023 MANAGEMENT LETTER To the Board of Supervisors Bannon Lakes Community Development District St. Johns County, Florida Report on the Financial Statements We have audited the financial statements of the Bannon Lakes Community Development District as of and for the year ended September 30, 2022, and have issued our report thereon dated July 13, 2023. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Florida Auditor General. Other Reporting Requirements We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and our Independent Auditor’s Report on an examination conducted in accordance with AICPA Professionals Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated July 13, 2023, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding financial audit report. There were no findings or recommendations in the preceding financial audit report. Financial Condition and Management Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether or not Bannon Lakes Community Development District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific conditions met. In connection with our audit, we determined that Bannon Lakes Community Development District did not meet any of the conditions described in Section 218.503(1) Florida Statutes. To the Board of Supervisors Bannon Lakes Community Development District Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for Bannon Lakes Community Development District. It is management’s responsibility to monitor the Bannon Lakes Community Development District’s financial condition; our financial condition assessment was based in part on the representations made by management and the review of the financial information provided by the same as of September 30, 2022. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Specific Information The information provided below was provided by management and has not been audited; therefore, we do not express an opinion or provide any assurance on the information. As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor General, the Bannon Lakes Community Development District reported: 1) The total number of district employees compensated in the last pay period of the District’s fiscal year: 0 2) The total number of independent contractors to whom nonemployee compensation was paid in the last month of the District’s fiscal year: 14 3) All compensation earned by or awarded to employees, whether paid or accrued, regardless of contingency: $924 4) All compensation earned by or awarded to nonemployee independent contractors, whether paid or accrued, regardless of contingency: $1,292,580 5) Each construction project with a total cost of at least $65,000 approved by the District that is scheduled to begin on or after October 1, 2021, together with the total expenditures for such project: The District did not have any construction projects in the current year. 6) A budget variance based on the budget adopted under Section 189.016(4), Florida Statutes, before the beginning of the fiscal year being reported if the District amends a final adopted budget under Section 189.016(6), Florida Statutes: The budget was amended, see below. As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)8, Rules of the Auditor General, the Bannon Lakes Community Development District reported: 1) The rate or rates of non-ad valorem special assessments imposed by the District: The General Fund, $882.95, and Debt Service Fund, $1,764.35 - $1,875.46. 2) The amount of special assessments collected by or on behalf of the District: Total special assessments collected was $1,699,966. 3) The total amount of outstanding bonds issued by the District and the terms of such bonds: Series 2016 Bonds, $10,825,000, maturing November 2048, Series 2021 Bonds, $7,265,000, maturing May 2051, and Series 2022 Bonds, $9,135,000 maturing May 2053. To the Board of Supervisors Bannon Lakes Community Development District Variance with Original Budget Original Positive Budget Actual (Negative) Revenues Special assessments $ 504,753 $ 510,180 $ 5 ,427 Investment earnings 1 50 8 65 7 15 Miscellaneous revenues 3 00 175,496 1 75,196 Developer contributions 1 05,308 - ( 105,308) Total Revenues 6 10,511 6 86,541 7 6,030 Expenditures Current General government 1 08,616 1 02,150 6 ,466 Physical environment 2 67,056 2 93,579 ( 26,523) Culture and recreation 2 32,175 2 27,651 4 ,524 Capital outlay 1 5,000 - 1 5,000 Total Expenditures 6 22,847 6 23,380 ( 533) Excess of revenues over expenditures ( 12,336) 6 3,161 7 5,497 Fund Balances - October 1, 2021 3 1,713 3 27,102 2 95,389 Fund Balances - September 30, 2022 $ 1 9,377 $ 3 90,263 $ 3 70,886 Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings. To the Board of Supervisors Bannon Lakes Community Development District 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. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida July 13, 2023 INDEPENDENT ACCOUNTANTS’ REPORT/COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES To the Board of Supervisors Bannon Lakes Community Development District St. Johns County, Florida We have examined Bannon Lakes Community Development District's compliance with Section 218.415, Florida Statutes during the year ended September 30, 2022. Management is responsible for Bannon Lakes Community Development District’s compliance with those requirements. Our responsibility is to express an opinion on Bannon Lakes Community Development 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 Bannon Lakes Community Development 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 Bannon Lakes Community Development District’s compliance with the specified requirements. In our opinion, Bannon Lakes Community Development District complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2022. Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL Fort Pierce, Florida July 13, 2023 7/12/2023 Prepared By: Landscape Maintenance Service Agreement For: Irrigation . Landscape . Maintenance B ANON L AKES CD 435 B ANON L AKES B LVD . S T . A UGUSTINE , FL 32092 DAVE JACKSON PROJECT DEVELOPMENT MANAGER MAIN OFICE: (386) 586 - 3321 FAX: (386) 586 - 330 35 ENTERPRISE DR. BUNEL, FL. 3210 DAVE@LANDCAREGRP.COM WW.LANDCAREGRP.COM a. Prior to mowing, remove and dispose of normal litter and debris from all landscape areas. b. St. Augustine turf shall be mowed weekly during the growing season from April 1st through October 15th and as needed during the non-growing season from October 16th through March 31st. Based on this schedule, it is estimated that the contractor will perform a minimum of 40 and a maximum of 42 mowing cycles per 12-month period in the performance of this contract. It is understood that the contractor may be required to periodically add or delete mowing cycles based on weather or other factors beyond their control. c. Bahia turf shall be mowed weekly during the growing season from April 1st through October 1st and as needed during the non-growing season from October 2nd through March 31st. Based on this schedule, it is estimated that the contractor will perform approximately 40 mowing cycles per 12-month period in the performance of this contract. It is understood that the contractor may be required to periodically add or delete mowing cycles based on weather or other factors beyond their control. d. St. Augustine and Bahia turf shall be cut with rotary mowers to maintain a uniform height. Mowing blades shall be kept sufficiently sharp and properly adjusted to provide a cleanly cut grass blade. The mowing pattern shall be varied where feasible to prevent rutting and minimize compaction. e. Mowing height for St. Augustine turf will be set at 3½” to 4”. 35 Enterprise Dr. Bunnell, Florida 32110 . Main Office: (386) 586-3321 . Fax: (386) 586-3330 . www.landcaregrp.com Landscape Maintenance Service Agreement Practical Specifications for Contract Landscape Maintenance for: Bannon Lakes CDD The work for the exterior landscape maintenance is to include the furnishing of all labor, materials, equipment, accessories and services necessary or incidental to sustain all turf and plant materials in a healthy, vigorous growing condition, free from weeds, diseases, insects, and nutritional deficiencies as well as a completely operational irrigation system. All associated planted areas are to be kept in a continuous healthy, neat, clean and debris free condition for the entire life of the contract. SCHEDULE “A” – GENERAL SERVICES A. Turf Maintenance Turf maintenance is defined as all mowing, edging, trimming and cleanup of lawn areas. 1. Mowing of Common Area f. Visible clippings that may be left following mowing operations shall be removed from the site each visit. g. Contractor will take special care to avoid allowing any clippings to be discharged or blown into stormwater ponds or drop inlets. h. Contractor will take special care to prevent damage to plant material as a result of the mowing operations. Any damage caused by contractor’s mowing equipment may result in the replacement of damaged material at the contractor’s cost. Replacement material will be of similar size to the material being replaced. 2. Edging Sidewalks, curbs, concrete slabs and other paved surfaces will be edged in conjunction with mowing operations. Edging is defined as removal of unwanted turf from the above mentioned borders by use of a mechanical edger. String trimmers will not be used for this function. It is understood that edging of beds and hard surfaces will be skipped periodically to let the turf fill in and/or thicken the vertical edge. It is also understood that growth regulators are an acceptable practice to maintain the edges during the growing season. 3. String Trimming a. String Trimming shall be performed around road signs, guard posts, trees, shrubs, utility poles, and other obstacles where mowers cannot reach. Grass shall be trimmed to the same desired height as determined by the mowing operation. Trimming shall be completed with each mowing operation. b. Maintaining grass-free areas by use of chemicals may be the preferred method in certain applications. c. Turf around the edge of all waterways shall be mowed or string trimmed to the natural water’s edge during each mowing cycle. It is understood that every effort will be made to keep clippings out of water bodies, but inevitably some clippings will get in the water with prevailing wind. It is understood that the Owner is responsible for regular lake maintenance, including spraying the water line with aquatic herbicide where it meets the turf, and cleaning out culverts, inlets, and outlets. a. When using forced air machinery to clean curbs, sidewalks and other paved surfaces, care must be taken to prevent blowing grass clippings into beds, stormwater ponds, inlets, onto vehicles or onto other hardscape surfaces. b. Contractor will be expected to blow off the boardwalks, tennis courts, pool area and all entry points and other similar amenities. 4. Blowing c. When blowing by garages or front doors forced air should be aimed to push debris away from all entries. 5. Damage Prevention/Repair Special care shall be taken to protect building foundations, light poles, sign posts and other hardscape elements from mowing, edging or string trimming equipment damage. Contractor will agree to have repairs made by specialized contractors or reimburse the association or homeowners within 30 days for any damage to property caused by their crew members or equipment. Mulch beds are recommended in areas where equipment may come in contact with the above stated items. B. Detail The detailing process will include trimming, pruning, and shaping of all shrubbery, ornamental trees and groundcover, removal of tree suckers, structural pruning of select varieties of plant material and ornamental grasses as directed, as well as the defining of bed lines, tree saucers and the removal of all unwanted vegetation. 1. Pruning a. Prune trees, shrubs, and groundcovers to encourage healthy growth and create a natural appearance. Prune to control the new plant growth, maintain the desired plant shape and remove dead, damaged, or diseased portions of the plant. b. Pruning of trees up to a height of 8 feet is included in the scope of the work. If pruning is required above the height of 8 feet contractor shall propose an extra service to management and acquire approval prior to performing the work. The branching height of trees shall be raised to 8 feet only for the following reasons: • Provide clearance for pedestrians, small vehicles, mowers, and buildings. • Maintain clearance from shrubs in bed areas. • Improve visibility in parking lots and around entries. c. Prune trees to remove weak branching patterns and provide corrective pruning for proper development. Cut back to branch collar without leaving stubs. Provide clean and flush cut with no tearing of the tree bark. d. Prune all shrubbery in accordance with the architectural intent as it relates to adjacent plantings and intended function. e. Prune to contain perimeter growth within intended bed areas. Established groundcover shall be maintained 4” to 6” away from adjacent hardscape and turf. Mature groundcover shall be maintained at a consistent, level height to provide a smooth and even appearance and separation from adjacent plant material. f. Crape Myrtles are to be trimmed once per year in the winter months. Trimming should include removal of old blooms, sucker growth and any cross branching. Trimming should be done in such a way that cuts are no less than 12” away from previous year’s cuts. “Hat Racking” will not be permitted unless directed otherwise by management. Pruning of Crape Myrtles up to a height of 8 feet is included in the scope of work. g. Major cut-backs at wood lines of groundcover, shrubs, or trees are not included in the scope of this Agreement, and would be proposed as an additional charge to Owner if requested. In addition, if there is a major loss of plant life due to freeze, the pruning of those materials would also be an additional charge. 2. Weed Control a. Bed areas are to be sprayed after each detail service. Pre and post-emergent chemicals are acceptable means of control. b. Hardscape cracks and expansion joints are to be sprayed in conjunction with the detail cycle to control weeds. C. General 1. Policing/Special Maintenance a. Contractor will police the grounds on each service visit to remove trash, debris and fallen tree litter less than 2” in diameter. Contractor is not responsible for removal of excessive storm debris which would be performed with prior approval. b. Contractor will dedicate personnel and specialized equipment for the removal of seasonal leaf drop from all landscape and hardscape areas during the months of November through March. 2. Communication a. The Contractor will communicate with management for any landscape issues requiring immediate attention. b. Contractor agrees to take part in monthly inspections of the property to ensure their performance of this agreement meets the standards required herein and protects the overall well-being of the property’s landscape. Contractor also agrees to complete any work that appears on punch lists resulting from inspections or reviews within three weeks of receiving them. Contractor will have their Account Manager participate on its behalf and have their Lawn and Ornamental and Irrigation Managers or Technicians available if needed. c. Contractor will be required to maintain an interactive web site or a customer service work order system (software) that will allow management to make direct contact for service requests and/or extra work. The web site also must be set up to alert property management when requests become delinquent. 3. Staffing a. The Contractor shall have a well-experienced Account Manager. This person should have extensive knowledge of horticultural practices and be capable of properly supervising others. The Account Manager will communicate with the property’s staff. In order to maintain continuity, the same Account Manager shall direct the scheduled maintenance operations throughout the year. Any anticipated changes in supervisory personnel shall be brought to the attention of management prior to any such change. This will assure Management that maintenance personnel remain familiar with the maintenance specifications, the Property and any changing conditions. b. The crew members should be properly trained to carry out their assigned task, and should work in a safe, professional manner. Each crew member should be in full uniform at all times to include all rain, cold weather gear and hats. c. Contractor is expected to staff the property with trained personnel experienced in commercial landscape maintenance. All personnel applying fertilizers, insecticides, herbicides, and fungicides must be certified by the FL Department of Agriculture and Consumer Services. These individuals should be Best Management Practices Certified and hold a Limited Certification for Urban Landscape Commercial Fertilizer or a Certified Pest Control Operator or an employee with an ID card working under the supervision of a CPCO. d. Contractor agrees to screen all crew members for criminal background, advise Management and not employ persons for this Contract that have been convicted of or pled guilty to a felony crime. Also, Contractor agrees to follow all applicable government guidelines for hiring and to maintain an I-9 or other required documents on each employee. e. Holidays observed that do not require staffing include New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Normal working hours are from 7:00 AM until 5:00 PM. Saturdays will be made available for makeup work due to inclement weather from 8:00 AM until 5 PM. SCHEDULE “B” TURF PEST CONTROL & FERTILIZATION PROGRAM (ST. AUGUSTINE) A. Application Schedule Month Application January: Late winter fertilization, broadleaf weed and disease control March: Spring granular fertilization, broadleaf weed control, insect and disease control May: Early summer liquid fertilization with Arena and weed control July: Insect and weed control September: Late summer fertilization, insect and disease control November: Fall fertilization and broadleaf weed/disease control Note: Some applications will be combined for efficiency. Applications can be added or deleted based on soil samples, availability of products or inclement weather. B. Application Requirements 1. Fertilization a. Annual program will include a minimum of 5 lbs. of N/1000 square feet with a minimum of 30% slow release and a high Potassium blend in the fall fertilization to promote root development unless soil samples indicate the presence of sufficient Potassium. b. All fertilizers utilized under this program are to be custom blended with a balanced nutrient package. A complete minor and trace element package will be included with each application to ensure that all the requirements of grasses are met. If soil samples indicate a high pH, all fertilizers utilized will be Sulphur coated products. c. All hardscape surfaces are to be blown off immediately following a fertilizer application to prevent staining. d. The irrigation system will be fully operational prior to any fertilizer application. e. Soils shall be tested at a reliable testing facility twice per year to monitor for pH and chemical makeup. The results will be provided to management along with the contractor’s recommendation as to any changes in the turf care program based on these results. 2. Insect/Disease Control a. The reduction of irrigation water during the winter season will dramatically reduce the potential for fungus/disease problems. Contractor will be responsible to manage settings of irrigation timers. b. Supplemental insecticide applications will be provided in addition to the normal preventive program as needed to provide control. 3. Weed Control a. Weed control will be limited to the broadleaf variety under this program. b. Contractor shall alert management of outbreaks of Sedge, invasive Bermuda, or Crabgrass. 4. Warranty If the grass covered under this turf care program dies due to insect infestation, disease or improper fertilizer application, the affected grass will be replaced at no charge. Contractor will not be held responsible for turf loss due to conditions beyond their control. This includes nematodes, diseases such as Take-All Root Rot and weeds such as Crabgrass which are untreatable with currently available chemicals, high traffic areas, drainage problems, or acts of God. In the event these conditions are pre-existing, the contractor is responsible to employ whatever cultural practices can be reasonably performed to extend the life of the affected material. SCHEDULE “B1” TURF PEST CONTROL & FERTILIZATION PROGRAM (BAHIA) A. Application Schedule Month Application March: Complete liquid 18-0-8 N-P-K fertilizer and broadleaf weed control to include blanket pre-emergent herbicide application. June: Chelated Iron application and Mole Cricket control. September: Chelated Iron application and Insect control. October: Complete liquid 18-0-8 N-P-K fertilizer and broadleaf weed control to include blanket pre-emergent herbicide application. Note: Some applications will be combined for efficiency. Applications can be added or deleted based on soil samples, availability of products or inclement weather. B. Application Requirements 1. Fertilization a. Annual program will include a minimum of 2 lbs of N/1000 square feet with a minimum of 30% slow release and a high Potassium blend in the October fertilization to promote root development unless soil samples indicate the presence of sufficient potassium. b. All fertilizers utilized under this program are to be custom blended with a balanced nutrient package. A complete minor and trace element package will be included with each application to ensure that all the requirements of grasses are met. If soil samples indicate a high pH, all fertilizers utilized will be Sulphur coated products. c. All hardscape surfaces are to be blown off immediately following a fertilizer application to prevent staining. d. The irrigation system will be fully operational prior to any fertilizer application. 2. Insect/Disease Control a. The reduction of irrigation water during the winter season will dramatically reduce the potential for fungus/disease problems. Contractor will be responsible to manage settings of irrigation timers. b. Supplemental insecticide applications will be provided in addition to the normal preventive program as needed to provide control. 3. Weed Control a. Weed control will be limited to the broadleaf variety under this program. b. Contractor shall alert management of outbreaks of Sedge, invasive Bermuda, or Crabgrass. 4. Warranty There is no warranty for Bahia turf. SCHEDULE “B2” TURF PEST CONTROL & FERTILIZATION PROGRAM (BERMUDA) A. Application Schedule Month Application January: Disease & Insect Control February: Fertilization 18-0-8 Ammonium Sulfate Barricade/Potash 0-0-22 March: Fertilization 13-3-13 w/ Ronstar or equivalent product. April: Sedge & Broadleaf Weed Control/Disease & Insect Control May: Fertilization 14-0-14, TopChoice Application June: Disease & Insect Control as Needed. August: Sedge & Broadleaf Weed Control/Disease & Insect Control October: Fertilization 18-0-8 November: Disease & Insect Control December: Potash 0-0-62 Note: Some applications will be combined for efficiency. Applications can be added or deleted based on soil samples, availability of products or inclement weather. B. Application Requirements 1. Fertilization a. All fertilizers utilized under this program are to be custom blended with a balanced nutrient package. A complete minor and trace element package will be included with each application to ensure that all the requirements of grasses are met. If soil samples indicate a high pH, all fertilizers utilized will be Sulphur coated products. b. All hardscape surfaces are to be blown off immediately following a fertilizer application to prevent staining. c. The irrigation system will be fully operational prior to any fertilizer application. d. Soils shall be tested at a reliable testing facility twice per year to monitor for pH and chemical make-up. The results will be provided to management along with the contractor’s recommendation as to any changes in the turf care program based on these results. 2. Insect/Disease Control a. The reduction of irrigation water during the winter season will dramatically reduce the potential for fungus/disease problems. Contractor will be responsible to manage settings of irrigation timers. b. Supplemental insecticide applications will be provided in addition to the normal preventive program as needed to provide control. 3. Weed Control Sedge control is included as a part of this program. 4. Warranty If the grass covered under this turf care program dies due to insect infestation, disease or improper fertilizer application, the affected grass will be replaced at no charge. Contractor will not be held responsible for turf loss due to conditions beyond their control. This includes nematodes, high traffic areas, drainage problems, or acts of God. In the event these conditions are pre-existing, the contractor is responsible to employ whatever cultural practices can be reasonably performed to extend the life of the affected material. SCHEDULE “C” TREE & SHRUB PEST CONTROL & FERTILIZATION PROGRAM A. Application Schedule Month Application February: Spring granular fertilization and insect/disease control as needed March/April: Insect/disease control/fertilization as needed May/June: Insect/disease control/fertilization as needed July/August: Insect/disease control/fertilization as needed October: Fall granular fertilization and insect/disease control as needed December: Insect/disease control as needed Note: Some applications will be combined for efficiency. Applications can be added or deleted based on soil samples, availability of products or inclement weather. B. Application Requirements 1. Fertilization a. Fertilizers selected must be appropriate for the plant material to be fertilized such as an acid forming fertilizer for Azaleas which require a lower soil pH. b. Annual program will include a minimum of 30% slow release Nitrogen and a high Potassium blend in the fall fertilization to promote root development unless soil sample results indicate the presence of sufficient Potassium. c. All fertilizers utilized under this program are to be custom blended with a balanced nutrient package. A complete minor and trace element package will be included with each application to ensure that all the requirements of plant material are met. If soil samples indicate a high pH, all fertilizers utilized will be Sulphur coated products. d. This program covers fertility requirements on shrubs, trees, and palms up to 15’ overall height. All native trees or trees over 15’ in overall height will require special consideration and are therefore excluded from this program. e. Fertilizer will be distributed evenly under the drip zone of each plant. Special care will be taken not to “clump” fertilizer neither at the base nor in the crown of plants. f. The irrigation system will be fully operational prior to any fertilizer application. g. Soils shall be tested at a reliable testing facility once per year to monitor for pH, Nematodes, Take All Root Rot and chemical make-up. The results will be provided to management along with the contractor’s recommendation as to any changes in the Tree/Shrub care program based on these results. 2. Insect/Disease Control a. Insect and disease control is intended to mean a thorough inspection of all plantings for the presence of insect or disease activity and the appropriate treatment applied. Most insect and disease infestations require follow-up applications for control and are included in this program. b. Contractor is responsible for the continuous monitoring for the presence of damaging insects or disease. Any problems noted between regularly scheduled visits will be treated as a service call. Service calls due to active infestations are included in this program. c. This program covers most disease and Insect activity on shrubs, trees, and palms up to 15’ overall height. All native trees or existing trees over 15’ in overall height will require special consideration and are therefore excluded from this program. d. Contractor will be required to apply all pesticides in accordance with labeled directions including the use of any Personal Protective Equipment. 3. Warranty If a plant or tree dies from insect or disease damage while under this Tree/Shrub Care Program, it will be replaced with one that is reasonably available. Exclusions to this warranty would be pre-existing conditions, freeze damage, nematodes, borers, locusts, and diseases such as Verticillium, Fusarium Wilt, and Ganoderma Butt Rot that are untreatable with currently available chemicals, Texas Phoenix Palm Decline (“TPPD”), or lethal bronzing, soil contamination, drainage problems or conditions that prevent the contractor from providing proper irrigation, such as Water Management District restrictions or unapproved irrigation repairs, and Acts of God. In the event these conditions exist, the contractor is responsible to employ whatever cultural practices can be reasonably performed to extend the life of the affected material. SCHEDULE “D”- SPECIAL SERVICES A. Flower Beds The nature and purpose of “Flower Beds” is to draw attention to the display. The highest level of attention should be placed on their on-going care. 1. Schedule a. All flower beds on the property will be changed out four (4) times per year. b. Contractor recognizes that flower beds are intended to highlight and beautify high profile areas and should be selected for profusion of color and display. 2. Installation a. 2,050 Plants are to be installed utilizing a triangular spacing of 8”-10” O.C. (depending on type) between plants. b. Annually, prior to the Spring change out, existing soil will be removed to a depth of 6” in all annual beds and replaced with clean growing medium composed of 60% peat and 40% fine aged pine bark. c. All beds will be cleaned and hand or machine cultivated to a depth of 6” prior to the installation of new plants. d. Create a 2” trench where the edge of the bed is adjacent to turf or hardscape. e. A granular time-release fertilizer and a granular systemic fungicide will be incorporated into the bedding soil at the time of installation. f. Follow-up applications of fertilizer, fungicide and insecticide are provided as needed and are included in the scope of work. 3. Maintenance a. Flower beds, pots and urns will be reviewed at each service visit for the following: • Removal of all litter and debris. • Removal of weeds. • Inspect for the presence of insect or disease activity and treat immediately. b. Pre-emergent herbicides are not to be used in annual beds. a. Customer acknowledges that payment for each of the four (4) flower installations per contract year, in the quantities stated above, shall be included in the monthly payment, but the portion of each monthly payment attributed to flower installation is prorated in accordance with the schedule below. Should the contract be cancelled for any reason, by either party, prior to the end of the term, Customer is still responsible for any remaining payments due for future months that pertain to any flower installation that has already occurred prior to the cancellation in accordance with this schedule. 4. Warranty Contractor guarantees the survivability and performance of all annual plantings for a period of 90 days. Any plant that fails to perform during this period due to insect damage or disease will be replaced under warranty. Exclusions to this warranty would be freeze damage, theft, vandalism, rabbits, deer, or conditions beyond their control. Rabbit and deer repellant are not included in this contract and will be installed at an additional charge. 5. Payment Proration Approx. September 2023 AUGUST 2023 $1,264.17 SEPTEMBER 2023 $1,264.17 OCTOBER 2023 $1,264.16 Due from Customer for 1st Flower Installation: $3,792.50 Approx. December 2023 b. Due to national material shortages and higher than average prices, Contractor retains the right to adjust the above amounts should the contractor’s cost for these materials increase. The contract may then be equitably adjusted by written notice from Contractor to Owner, and subsequent Amendment to this Agreement. NOVEMBER 2023 $1,264.17 DECEMBER 2023 $1,264.17 JANUARY 2024 $1,264.16 Due from Customer for 2nd Flower Installation: $3,792.50 Approx. March 2024 FEBRUARY 2024 $1,264.17 MARCH 2024 $1,264.17 APRIL 2024 $1,264.16 Due from Customer for 3rd Flower Installation: $3,792.50 Approx. June 2024 MAY 2024 $1,264.17 JUNE 2024 $1,264.17 JULY 2024 $1,264.16 Due from Customer for 4th Flower Installation: $3,792.50 B. Monthly Reports Landcare Group, Inc. will submit to the Owner’s Representative, a monthly report detailing what was done to the various areas of the property, including details for turf areas, trees and shrubs, the irrigation system, and any additional noteworthy areas of the property. The report is to be sent via email on a monthly basis, for the prior month of service, and shall provide information regarding any plans of action for the future. SCHEDULE “E” – IRRIGATION MAINTENANCE A. Frequency of Service Contractor will perform the following itemized services under “Specifications” on a monthly basis. B. Specifications 1. Activate each zone of the system. 2. Visually check for any damaged heads or nozzles needing repair. 3. Clean, straighten, or adjust any heads not functioning properly. 4. Report any valve or valve box that may be damaged in any way. 5. Leave areas in which repairs or adjustments are made free of debris. 6. Adjust controller to the watering needs as dictated by weather conditions and seasonal requirements including adjustment of rain sensor. C. Qualifying Statements 1. Repairs a. Repairs that become necessary that are over and above the routine maintenance contract will be done on a time and material basis at the rates of $38.00/hr. for a technician and $65.00/hr. for a specialist. b. It is understood that time is of the essence for repairs so that sod, plants and trees do not die. Therefore, a not to exceed price of $1,000.00 is approved without a formal proposal so that the contractor can proceed in a timely manner. 2. Service Calls a. While there is no minimum service call charge for requests of service during normal business hours, any repairs required between scheduled visits will be billed on a time and material basis at the rates of $38.00/hr. for a technician and $65.00/hr. for a specialist. b. Service calls that occur after hours on weekdays, on national holidays, or weekends, which are of an emergency nature will be billed on a time and material basis of $65.00/hr. for a technician and $95.00/hr. for a specialist. c. When not an emergency, request for authorization must be submitted in written form to management for approval when the costs will exceed $1,000.00. A description of the problem, its location and estimated cost should be included. 3. Contractor will pay special attention during irrigation maintenance inspections to ensure that sprinkler heads are positioned so that water does not spray directly onto buildings, windows or parking areas and to adjust any heads that are found to be out of position. 4. Damage resulting from contractor’s crews working on the property (i.e., mower and edger cuts) will be repaired at no charge to the owner. 5. Contractor shall not be held responsible for any system failure caused by lightning, construction work, preexisting conditions, freeze, acts of God, or conditions beyond their control. 6. Contractor shall not be held responsible for damage to the landscape caused by mandatory water restrictions placed on the property by the governing water management district. SCHEDULE “F” - EXCLUSIONS & EXTRA SERVICES A. Exclusions All work restricted specifically to the described areas as listed in our scope of work. Mulch replenishment is not included in this Agreement but can be proposed as an additional cost upon Owner’s request. No under brushing or any natural vegetation is included unless otherwise specified. No vines or material will be pruned away from property lines, this is an additional service. No cut-backs due to freeze are included. This is an additional service and would be billed accordingly. This does not include any brush trimming in center of canals/ponds or areas inaccessible to normal mowing conditions. Also excludes removal of large logs or anything two men cannot physically (within reason) pick up. Any damage to screen enclosures not protected by landscape borders or kick plates. Damage from dog urine, freezes, high winds, hail, hurricanes, tornado, floods, tsunami, lightning, fire, restrictions by governmental agencies including state or local watering restrictions, regulations, or mandates, acts of God, or any act of nature. Pests, fungi, disease, or anything imported to or created in the United States that has no immediate control such as, but not limited to; Asian Cycad Scale, Bonder Nesting Whitefly, Borers, Chilli Thrips, Fig Whitefly, Fusarium Wilt, Ganoderma Butt Rot, Pink Hibiscus Mealy Bug, Rugose Spiraling Whitefly, Sri Lanka Weevil, and Take-All Root Rot. New pests are introduced into the United States every year and this list is subject to change without notice. Damage caused by faulty irrigation controllers, timers, valves, solenoids, line breaks or anything affiliated with irrigation components restricting or stopping irrigating. This does not include any maintenance or replacement to weathered items including sign repair, fence posts, timber retaining ties, or any other item that has deteriorated due to normal conditions. Any replacement of such items done by the Contractor will be done in the form of a written proposal to be paid by the Owner, and signed and dated by both parties prior to any additional work. B. Extra Services Mulch Replenishment: The quantity estimated to replenish the Brown mulch in the areas included in the scope of this Agreement as of the date of this Agreement is approximately 315 cubic yards. The quantity estimated of Certified Playground Mulch is 65 cubic yards. The quantity estimated to replenish the Pine Straw is 350 bales. The anticipated price to install the Brown mulch is currently $46.00 per yard. The price to install the Certified Playground Mulch is $64.00 per yard. The price to install the Pine Straw is $7.00 per bale. However, Contractor retains the right to adjust this figure, should Contractor’s cost increase more than anticipated. Therefore, the price to replenish the above referenced mulch one time is estimated to be $21,100.00. This amount is not included in this Agreement and would be due from Owner to Contractor in addition to the regular monthly maintenance payments upon completion of installation and receipt of Contractor’s invoice. Palm Pruning: As of the date of this Agreement, the property has a total of 11 Phoenix variety palms and 22 non-Phoenix variety palms. The anticipated price to prune each Phoenix palm is $100.00 each, and $50.00 each per non-Phoenix variety. However, Contractor retains the right to adjust this figure, should Contractor’s cost increase more than anticipated. Therefore, the price to prune all palms one time is estimated to be $2,200.00. This amount is not included in this Agreement and would be due from Owner to Contractor in addition to the regular monthly maintenance payments upon completion of installation and receipt of Contractor’s invoice. Logo Description automatically generated 35 Enterprise Dr. Bunnell, Florida 32110 . Main Office: (386) 586-3321 . Fax: (386) 586-3330 . www.landcaregrp.com TERMS & COMPENSATION This Agreement, is entered into on ____________, 2023 by and between Landcare Group, Inc., hereafter referred to as “Contractor”, and Bannon Lakes Community Development District, the owner or designated owner’s representative, hereinafter referred to as “Owner”. The Contractor and Owner wish to enter into an agreement that defines the terms and conditions in which the Contractor will provide grounds maintenance, pest control and fertilization, and irrigation services as stated in “Practical Specifications for Contract Landscape Maintenance”, which is attached to this agreement. Services: The Contractor agrees to perform landscape maintenance services for the Owners property, located at, Bannon Lakes CDD Common Area, lakes, front median easement, Duran Drive Bahia area, and Amenity Center at 435 Bannon Lakes Blvd., Saint Augustine, FL, hereinafter referred to as “Property”, as put forth in the “Practical Specifications for Contract Landscape Maintenance”. Term of Contract: The Contractor shall render landscape maintenance services for the term of one (1) year(s) commencing on August 1, 2023 and ending on July 31, 2024, unless terminated by either party by providing thirty (30) days written notice prior to the end of the current term. Compensation: The Owner shall pay to the Contractor for services rendered, the sum of: Thirteen thousand, one hundred ten dollars and zero cents ($13,110.00) per month, or One hundred fifty-seven thousand, three hundred twenty dollars and zero cents ($157,320.00) per year To be paid within thirty (30) days of receipt of each monthly invoice sent via email. The Owner agrees to pay any and all expenses incurred by Contractor in the collection of due compensation. Price Escalation: This Agreement is conditioned upon the ability of the Contractor to complete the services and provide the materials stated herein at the present prices for material and at the existing scale of wages for labor. If at any time during the contract term, and for any reason, Contractor is unable to provide these materials and services, at the prices and labor rates occurring at the time the Agreement commenced, the Compensation stated herein, and/ or the contract requirements of the Contractor may be equitably adjusted by written notice to Owner, and subsequent Amendment to this Agreement. Early Termination: In the event that the Contractor fails to provide services as described herein, the Owner may terminate this agreement by giving thirty (30) days written notice by email or facsimile transmission letter. Contractor may also terminate this agreement in the same manner, or immediately if Owner refuses or fails to pay Contractor according to the terms of this agreement. SIGNATURES ON FOLLOWING PAGE. Owner Name: BANNON LAKES COMMUNITY DEVELOPMENT DISTRICT Contractor Name: Landcare Group, Inc., a Florida corporation Signature: Signature: Print Name: Print Name: David Jackson Title: Title: Project Development Manager Date: Date: