Bella Collina

Community Development District

ANNUAL FINANCIAL REPORT

September 30, 2017

Bella Collina Community Improvement District

ANNUAL FINANCIAL REPORT

Fiscal Year Ended September 30, 2017

TABLE OF CONTENTS		
	Page	
	Number	
FINANCIAL SECTION		
REPORT OF INDEPENDENT AUDITORS	1-2	
MANAGEMENT’S DISCUSSION AND ANALYSIS	3-8	
BASIC FINANCIAL STATEMENTS		
Government-wide Financial Statements		
Statement of Net Position	9	
Statement of Activities	10	
Fund Financial Statements		
Balance Sheet – Governmental Funds	11	
Reconciliation of Total Governmental Fund Balances		
to Net Position of Governmental Activities	12	
Statement of Revenues, Expenditures and Changes in		
Fund Balances – Governmental Funds	13	
Reconciliation of the Statement of Revenues, Expenditures and		
Changes in Fund Balances of Governmental Funds to the		
Statement of Activities	14	
Statement of Revenues, Expenditures and Changes in Fund		
Balances – Budget and Actual – General Fund	15	
Statement of Fund Net Position – Water and Sewer Fund	16	
Statement of Revenues, Expenses and Changes in Fund		
Net Position – Water and Sewer Fund	17	
Statement of Cash Flows – Water and Sewer Fund	18	
Notes to Financial Statements	19-35	
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	36-37	
MANAGEMENT LETTER	38-39	
INDEPENDENT ACCOUNTANT’S REPORT/COMPLIANCE WITH		
SECTION 218.415, FLORIDA STATUTES	40	

Bella Collina Community Development District

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

Management’s discussion and analysis of Bella Collina Community Development District (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 private-sector companies. Emphasis is placed on the net position of governmental activities and business-type activities and the change in net position. Governmental activities are primarily supported by special assessments. Business-type activities are supported by charges to the users of those activities, such as water and sewer service charges.

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 is 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 separate from the assets, liabilities, and net position of business-type 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 or business-type activities. Governmental activities financed by the District include general government, physical environment, and interest on long-term debt. Business-type activities financed by user charges include water and sewer services.

Fund financial statements present financial information for the governmental fund and enterprise fund. 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. The enterprise funds financial statements provide information on all assets and liabilities of the funds, changes in the economic resources (revenues and expenses), and total economic resources.

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Bella Collina Community Development District

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

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. For the Water and Sewer fund, a statement of fund net position, a statement of revenues, expenses, and changes in fund net position; and a statement of cash flows are presented. 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.

The government-wide financial statements and the fund financial statements provide different pictures of the District. The government-wide financial statements provide an overall picture of the District’s financial standing, split between Governmental Activities and Business-type Activities. These statements are comparable to private- sector companies and give a good understanding of the District’s overall financial health and how the District paid for the various activities, or functions, provided by the District. All assets of the District, including buildings, land, and roads are reported in the statement of net position. All liabilities, including principal outstanding on bonds, and future employee benefits obligated but not paid by the District, are included. The statement of activities includes depreciation on all long lived assets of the District, but transactions between the different functions of the District have been eliminated in order to avoid “doubling up” the revenues and expenses. The fund financial statements provide a picture of the major funds of the District. In the case of governmental activities, outlays for long lived assets are reported as expenditures and long term liabilities, such as general obligation bonds, are not included in the fund financial statements. To provide a link from the fund financial statements to the government-wide financial statements, a reconciliation is provided from the fund financial statements to the government-wide financial statements.

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 and investments of the District 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, 2017.

♦	The District’s total assets exceeded total liabilities by $1,781,236. Unrestricted net position for Governmental Activities was $413,150 and for Business-type Activities was $959,080. Net investment in capital assets for Governmental Activities was $82,805, and for Business-type Activities was $(1,057,664). Restricted net position for Governmental Activities was $1,272,471 and for Business-type Activities was $111,394.

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Bella Collina Community Development District

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Financial Highlights (Continued)

♦	Governmental activities revenues totaled $1,757,361 while governmental activities expenses totaled $1,631,719. Business-type revenues totaled $1,814,275 while business-type expenses totaled $776,600.

Financial Analysis of the District

The following schedule provides a summary of the assets, liabilities and net position of the District. It is not intended to be a complete presentation of government-wide financial activity.

Net Position

			Governmental Activities				Business-type Activities				Total		
			2017			2016				2017						2016				2017			2016	
Current assets	$	3,271,000	$	3,257,750	$	1,134,914		$	862,400	$	4,405,914	$	4,120,150	
Capital assets, net		15,762,605			16,224,132				5,895,871						6,079,891				21,658,476			22,304,023	
Total Assets			19,033,605			19,481,882				7,030,785						6,942,291				26,064,390			26,424,173	
Current liabilities		955,179			939,098				64,440						17,797				1,019,619			956,895	
Non-current liabilities		16,310,000			16,900,000				6,953,535						7,949,389				23,263,535			24,849,389	
Total Liabilities			17,265,179			17,839,098				7,017,975						7,967,186				24,283,154			25,806,284	
Net Position																							
Net investment in capital																							
assets		82,805			23,532				(1,057,664)						(1,449,824)				(974,859)			(1,426,292)	
Restricted for debt service		1,272,471			1,243,429				111,394						111,968				1,383,865			1,355,397	
Unrestricted		413,150			375,823				959,080						312,991				1,372,230			688,814	
Total Net Position		$	1,768,426		$	1,642,784		$	12,810			$	(1,024,865)		$	1,781,236		$	617,919	

The decrease in capital assets for governmental activities and for business-type activities was primarily due to depreciation.

The decrease in non-current liabilities for governmental activities and business type activities was primarily due to principal payments on bonds in the current year.

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Bella Collina Community Development District

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

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 and is presented at the government-wide level for comparison purposes. It is not intended to be a complete presentation of District-wide financial activity.

Financial Activity

		Governmental	Activities			Business-type Activities			Total			
Revenues		2017			2016			2017			2016			2017			2016		
	$	1,745,673	$	1,746,079	$	1,811,409	$	751,422	$	3,557,082	$	2,497,501		
Program revenues														
General revenues		11,688			3,835			2,866			1,468			14,554			5,303		
Total Revenues		1,757,361			1,749,914			1,814,275			752,890			3,571,636			2,502,804		
Expenses																			
General government		102,406			104,897			-			-			102,406			104,897		
Physical environment		510,025			510,025			-			-			510,025			510,025		
Interest		1,019,288			1,049,586			-			-			1,019,288			1,049,586		
Water and sewer		-			-			776,600			703,607			776,600			703,607		
Total Expenses		1,631,719			1,664,508			776,600			703,607			2,408,319			2,368,115		
Change in Net Position		125,642			85,406			1,037,675			49,283			1,163,317			134,689		
Net Position -														617,919			483,230		
Beginning of Year		1,642,784			1,557,378			(1,024,865)			(1,074,148)								
Net Position -												$	1,781,236	$	617,919		
End of Year	$	1,768,426	$	1,642,784	$	12,810	$	(1,024,865)						

The increase in program revenues for business-type activities was primarily due to a large connection payment received from a developer in the current year.

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Bella Collina Community Development District

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Capital Assets Activity

The following schedule provides a summary of the District’s capital assets at September 30, 2017.

		Governmental		Business-type				
Description			Activities			Activities			Total	
Land and improvements	$	4,500,000	$	-	$	4,500,000	
Infrastructure			14,954,821			7,465,728			22,420,549	
Equipment			-			71,650			71,650	
Less: accumulated depreciation			(3,692,216)			(1,641,507)			(5,333,723)	
Total Capital Assets (Net)	$	15,762,605	$	5,895,871	$	21,658,476	

During the year, business-type equipment additions were $7,663 and depreciation was $461,527 for governmental activities and $191,683 for business-type activities.

General Fund Budgetary Highlights

The budget exceeded governmental expenditures primarily because the budgeted contingency and reserves were not needed.

There were no amendments to the September 30, 2017 budget.

Debt Management

Governmental Activities debt includes the following:

•	In December 2004, the District issued $22,780,000 Special Assessment Revenue Bonds, Series 2004. These bonds were issued to finance the acquisition and construction of certain improvements within the District. The balance outstanding at September 30, 2017 was $16,860,000.

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Bella Collina Community Development District

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Debt Management (Continued)

Business-type Activities debt includes the following:

•	On September 1, 2016, the District issued $2,346,216 Utility System Bonds, Series 2016 to restructure the Series 2004 Utility Bonds outstanding balance of $2,005,000. The Series 2016 Utility Bonds include an initial principal amount of $2,346,216. Accreted interest will result in a matured amount of $3,595,000 due by November 1, 2024. The total balance of bonds payable at September 30, 2017 was $1,360,081.

Economic Factors and Next Year’s Budget

The District does not anticipate any economic factors to affect operations for the year ended September 30, 2018

Request for Information

The financial report is designed to provide a general overview of Bella Collina Community Development 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 the District Manager, Governmental Management Services – CF, LLC, 135 West Central Blvd., Suite 320, Orlando, FL 32801.

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Bella Collina Community Development District

STATEMENT OF NET POSITION

September 30, 2017

	Governmental		Business-type					
ASSETS		Activities			Activities			Total		
										
Current Assets										
Cash and equivalents	$	63,839	$	679,475	$	743,314		
Investments		336,523			203,273			539,796		
Accounts receivable		596			27,426			28,022		
Asessments receivable		8,989			718			9,707		
Prepaid expenses		12,481			16,968			29,449		
Restricted investments		2,848,572			207,054			3,055,626		
Total Current Assets		3,271,000			1,134,914			4,405,914		
Non-current Assets										
Capital assets, not being depreciated										
Land and improvements		4,500,000			-			4,500,000		
Capital assets, being depreciated										
Infrastructure		14,954,821			7,465,728			22,420,549		
Equipment		-			71,650			71,650		
Less: accumulated depreciation		(3,692,216)			(1,641,507)			(5,333,723)		
Total Non-current Assets		15,762,605			5,895,871			21,658,476		
Total Assets		19,033,605			7,030,785			26,064,390		
LIABILITIES										
Current Liabilities										
Accounts payable and accrued expenses		1,241			64,440			65,681		
Accrued interest payable		403,938			-			403,938		
Bonds payable		550,000			-			550,000		
Total Current Liabilities		955,179			64,440			1,019,619		
Non-current Liabilities										
Due to developer		-			5,593,454			5,593,454		
Bonds payable		16,310,000			1,360,081			17,670,081		
Total Non-current Liabilities		16,310,000			6,953,535			23,263,535		
Total Liabilities		17,265,179			7,017,975			24,283,154		
NET POSITION										
Net investment in capital assets		82,805			(1,057,664)			(974,859)		
Restricted for debt service		1,272,471			111,394			1,383,865		
Unrestricted		413,150			959,080			1,372,230		
Total Net Position	$	1,768,426		$	12,810		$	1,781,236		

See accompanying notes to financial statements.

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Bella Collina Community Development District

STATEMENT OF ACTIVITIES

For the Year Ended September 30, 2017

													Net (Expenses) Revenues and				
						Program Revenues					Changes in Net Position				
					Charges for		Capital				Governmental		Business-type						
Functions/Programs		Expenses		Services		Contributions				Activities			Activities			Total		
Primary government																						
Governmental Activities																						
General government	$	(102,406)		$	125,454	$	-	$	23,048	$	-	$	23,048			
Physical environment			(510,025)			59,413			-				(450,612)			-			(450,612)			
Interest on long-term debt			(1,019,288)			1,560,806			-				541,518			-			541,518			
Total Governmental Activities			(1,631,719)			1,745,673			-				113,954			-			113,954			
Business-type Activities			(776,600)			1,811,396			13							1,034,809			1,034,809			
Water and sewer													-									
Total Primary Government		$	(2,408,319)		$	3,557,069		$	13				113,954			1,034,809			1,148,763			
		General Revenues																
		Investment earnings							11,688			2,866			14,554			
			Change in Net Position							125,642			1,037,675			1,163,317			
		Net Position - October 1, 2016							1,642,784			(1,024,865)			617,919			
		Net Position - September 30, 2017			$	1,768,426		$	12,810		$	1,781,236			

See accompanying notes to financial statements.

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Bella Collina Community Development District

BALANCE SHEET

GOVERNMENTAL FUNDS

September 30, 2017

								Total		
							Governmental		
ASSETS		General		Debt Service			Funds		
										
Cash and equivalents	$	63,839	$	-	$	63,839		
Investments		336,523			-			336,523		
Accounts receivable		596			-			596		
Asessments receivable		952			8,037			8,989		
Prepaid expenses		12,481			-			12,481		
Restricted assets										
Investments		-			2,848,572			2,848,572		
Total Assets	$	414,391		$	2,856,609		$	3,271,000		
LIABILITIES AND FUND BALANCES										
										
Liabilities:										
Accounts payable and accrued expenses	$	1,241	$	-	$	1,241		
Fund Balances:										
Nonspendable - prepaid expenses		12,481			-			12,481		
Restricted - debt service		-			2,856,609			2,856,609		
Unassigned		400,669			-			400,669		
Total Fund Balances		413,150			2,856,609			3,269,759		
Total Liabilities and Fund Balances	$	414,391	$	2,856,609	$	3,271,000		

See accompanying notes to financial statements.

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Bella Collina Community Development District

RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES

TO NET POSITION OF GOVERNMENTAL ACTIVITIES

September 30, 2017

Total Governmental Fund Balances

Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets not being depreciated (land and improvements) in governmental activities are not current financial resources and therefore, are not reported at the fund level.

Capital assets being depreciated, infrastructure, $14,954,821, net of accumulated depreciation, $(3,692,216), used in governmental activities are not
current financial resources and therefore, are not reported at the fund level.

Long-term liabilities, including bonds payable are not due and payable in the current period and, therefore, are not reported at the fund level.

Accrued interest expense for long-term debt is not a current financial use and; therefore, is not reported at the fund level.

Net Position of Governmental Activities

$  3,269,759

4,500,000

11,262,605

(16,860,000)

(403,938)

$  1,768,426

See accompanying notes to financial statements.

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Bella Collina Community Development District

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - GOVERNMENTAL FUNDS

For the Year Ended September 30, 2017

							Total		
						Governmental		
Revenues		General		Debt Service			Funds		
									
Special assessments	$	184,867	$ 1,560,806	$	1,745,673		
Investment earnings		3,364	8,324			11,688		
Total Revenues		188,231		1,569,130			1,757,361		
Expenditures									
Current									
General government		102,406	-			102,406		
Physical environment		48,498	-			48,498		
Debt Service									
Principal		-	560,000			560,000		
Interest		-	1,001,650			1,001,650		
Other		-	31,055			31,055		
Total Expenditures		150,904		1,592,705			1,743,609		
Net change in fund balances		37,327	(23,575)			13,752		
Fund Balances - October 1, 2016		375,823		2,880,184			3,256,007		
Fund Balances - September 30, 2017	$	413,150	$ 2,856,609	$	3,269,759		

See accompanying notes to financial statements.
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Bella Collina 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, 2017

Net Change in Fund Balances - Total Governmental Funds

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation. This is the amount of depreciation in the current period.

Repayments of bond principal are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.

In the Statement of Activities, interest is accrued on outstanding bonds; whereas in governmental funds, interest expenditures are reported

when due. This is the net change in accrued interest in the current period.

Change in Net Position of Governmental Activites

$	13,752

(461,527)

560,000

13,417

$  125,642

See accompanying notes to financial statements.
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Bella Collina Community Development District

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND

For the Year Ended September 30, 2017

									Variance with		
									Final Budget		
	Original			Final					Positive		
Revenues		Budget		Budget		Actual		(Negative)		
												
Special assessments	$	183,158	$	183,158	$ 184,867	$	1,709		
Investment earnings		-			-	3,364			3,364		
Total Revenues		183,158			183,158		188,231			5,073		
Expenditures												
Current												
General government		106,483			106,483	102,406			4,077		
Physical environment		123,674			123,674	48,498			75,176		
Total Expenditures		230,157			230,157		150,904			79,253		
Excess of revenues over (under)												
expenditures		(46,999)			(46,999)	37,327			84,326		
Other Financing Sources (Uses)												
Transfer Out		(40,000)			(40,000)		-			40,000		
Net change in fund balance		(86,999)			(86,999)	37,327			124,326		
Fund Balances - October 1, 2016		86,999			86,999		375,823			288,824		
Fund Balances - September 30, 2017	$	-	$	-	$ 413,150	$	413,150		

See accompanying notes to financial statements.
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Bella Collina Community Development District

STATEMENT OF FUND NET POSITION - WATER AND SEWER FUND

September 30, 2017

ASSETS			
Current Assets			
Cash and equivalents	$	679,475	
Investments		203,273	
Accounts receivable		27,426	
Assessments receivable		718	
Prepaid expenses		16,968	
Restricted investments		207,054	
Total Current Assets		1,134,914	
Non-current Assets			
Infrastructure		7,465,728	
Equipment		71,650	
Less: accumulated depreciation		(1,641,507)	
Total Non-current Assets		5,895,871	
Total Assets		7,030,785	
LIABILITIES			
Current Liabilities			
Accounts payable and accrued expenses		64,440	
Non-current Liabilities			
Due to developer		5,593,454	
Bonds payable		1,360,081	
Total Non-current Liabilities		6,953,535	
Total Liabilities		7,017,975	
NET POSITION			
Net investment in capital assets		(1,057,664)	
Restricted for debt service		111,394	
Unrestricted		959,080	
Total Net Position	$	12,810	

See accompanying notes to financial statements.
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Bella Collina Community Development District

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION -

WATER AND SEWER FUND

For the Year Ended September 30, 2017

Operating Revenues:			
Charges for services	$	1,671,902	
Special assessments		139,494	
Miscellaneous revenues		13	
Total Operating Revenues		1,811,409	
Operating Expenses:			
General and administrative		51,041	
Plant operations		440,991	
Depreciation		191,683	
Total Operating Expenses		683,715	
Operating Income (Loss)		1,127,694	
Non-Operating Revenues (Expenses):			
Other debt service costs		(5,000)	
Interest earnings		2,866	
Interest expense		(87,885)	
Total non-operating revenues/(expenses)		(90,019)	
Change in Net Position		1,037,675	
Net Position - October 1, 2016		(1,024,865)	
Net Position - September 30, 2017	$	12,810	

See accompanying notes to financial statements.
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Bella Collina Community Development District

STATEMENT OF CASH FLOWS - WATER AND SEWER FUND

For the Year Ended September 30, 2017

CASH FLOWS FROM OPERATING ACTIVITIES				
Receipts from customers	$	1,671,317		
Receipts from special assessments		138,776		
Payments to suppliers for goods and services		(445,359)		
Net Cash Provided by Operating Activities		1,364,734		
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES				
Acquisition and construction of fixed assets		(7,663)		
Debt service cost		(5,000)		
Bond and loan principal payments		(995,854)		
Bond and loan interest payments		(87,885)		
Net Cash Used by Investing Activities		(1,096,402)		
CASH FLOWS FROM INVESTING ACTIVITIES				
Sale of investments		1,109,109		
Purchase of investments		(1,206,379)		
Interest on investments		2,866		
Net Cash Used by Investing Activities		(94,404)		
Net Increase in Cash and Cash Equivalents		173,928		
Cash and cash equivalents - October 1, 2016		505,547		
Cash and cash equivalents - September 30, 2017	$	679,475		
RECONCILIATION OF OPERATING INCOME TO NET				
				
CASH PROVIDED BY OPERATING ACTIVITIES				
Operating income	$	1,127,694		
Adjustments to reconcile operating income to net cash				
provided by operating activities:				
Depreciation		191,683		
Increase in assessments receivable		(718)		
Increase in accounts receivable		(598)		
Increase in accounts payable and accrued expenses		46,673		
Net Cash Provided by Operating Activities	$	1,364,734		

See accompanying notes to financial statements.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Bella Collina Community Development District (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 June 14, 2004 by the Lake County Board of Commissioners pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, and was established under Rule 4200-1.001 by the Florida Land and Water Adjudicatory Commission under the name of Pine Island Community Development District. The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for the community development within the District. On May 4, 2017, the District changed its name to Bella Collina Community Development District through a technical amendment to Rule Chapter 4200-1, F.A.C.

	The District is governed by a five-member Board of Supervisors (the “Board”), who are elected on an at large basis by owners of the property within the District. Among the primary powers, which the Act provides, the Board may exercise are the power to manage basic service for community development, the power to borrow money and issue bonds, and to levy and assess non-ad valorem assessments for the financing and delivery of capital infrastructure, subject to the approval of applicable State administrative agencies.

	As required by GAAP, these financial statements present the Bella Collina Community Development District (the primary government), as a stand-alone government. The reporting entity for the District includes all functions of government in which the District’s Board exercises oversight responsibility which includes, but is 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 by the Governmental Accounting Standards Board, 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

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.	Measurement Focus and Basis of Accounting (Continued)

a.	Government-wide Financial Statements

	Government-wide financial statements report all non-fiduciary information about the reporting government as a whole. These statements include separate columns for the governmental and business-type activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements.

	Governmental activities, which normally are supported by special assessments and interest, are reported separately from business-type activities. Program revenues include charges for services and special assessments. 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 or expenses, as appropriate. 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.

	Governmental Funds

	The District classifies fund balance according to 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.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.	Measurement Focus and Basis of Accounting (Continued)

b.	Fund Financial Statements (Continued) Governmental Funds (Continued)

	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 contractual obligations which require formal approval from the Board of Supervisors. This type of fund balance can only be removed by the Board of Supervisors through the same approval process.

	Assigned Fund Balance – This classification consists of the Board of Supervisors’ intent to be used for specific purposes, but are neither restricted nor committed.

	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 – For all governmental funds except special revenue funds, 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. Revenues are considered to be available when they are collected within the current period or soon thereafter to pay liabilities of the current period. For this purpose the district considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

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 decreases (expenditures) 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 were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability.

	Debt service expenditures, as well as expenditures related to compensated absences, are recorded only when payment is due.

	Enterprise Funds

	In the fund financial statements, the enterprise fund is presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, enterprise funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or non-current) associated with their activity are included on their balance sheets. Enterprise fund operating statements present increases (revenues) and decreases (expenses) in total net position. The District applies all GASB pronouncements as well as all FASB Statements and Interpretations, APB Opinions and Accounting Research Bulletins, issued on or before November 30, 1989, which do not conflict with, or contradict, GASB pronouncements.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.	Measurement Focus and Basis of Accounting (Continued)

b.	Fund Financial Statements (Continued) Enterprise Funds (Continued)

	Enterprise fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as investment earnings, result from non-exchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the fund financial statements, rather than reported as expenditures. Proceeds of long-term debt are recorded as a liability in the fund financial statements, rather than as other financing sources.

	Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liabilities, rather than as an expense.

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 Fund – The Debt Service Fund accounts for debt service requirements for the District’s Outstanding Special Assessment Revenue Bonds, Series 2004.

b.	Enterprise Major Fund

	Water and Sewer Fund – The Enterprise Fund accounts for the operations of the water and sewer utility system within the District.

c.	Non-Current Governmental Assets/Liabilities

	GASB Statement 34 requires that non-current governmental assets, such as land and buildings, and non-current governmental liabilities, such as general obligation bonds, due to developer and accrued compensated absences be reported in the governmental activities column in the government-wide Statement of Net Position.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less and held in a qualified public depository as defined by Section 280.02, Florida Statutes.

b.	Receivables and Payables

	Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds”. Any residual balances outstanding between the governmental activities and business-type activities are reported as “internal balances”.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.	Assets, Liabilities, and Net Position or Equity (Continued)

c.	Restricted Net Position

	Certain net position of the District are classified as restricted 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 net position, qualified expenses are considered to be paid first from restricted net position and then from unrestricted net position.

d.	Capital Assets

	Capital assets, which include land, buildings, infrastructure, equipment and construction in progress, are reported in the applicable governmental or business-type activities column.

	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 one year. 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:

Equipment	5-10 years	
Infrastructure	30-40 years	

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.	Assets, Liabilities, and Net Position or Equity (Continued)

e.	Budgets

	Budgets are prepared and adopted after public hearings for the governmental funds, pursuant to the requirements of the 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. As a result, deficits in the budget columns of the accompanying financial statements may occur.

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, $3,269,759, differs from “net position” of governmental activities, $1,768,426, 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 (land, buildings, infrastructure and equipment 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.

Land and improvements	$	4,500,000	
Infrastructure			14,954,821	
Accumulated depreciation			(3,692,216)	
Total		$	15,762,605	

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

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. Balances at September 30, 2017 were:

Bonds payable	$  (16,860,000)	

Accrued interest

Accrued liabilities in the Statement of Net Position differ from the amount reported in governmental funds due to accrued interest on bonds.

Accrued interest	$	(403,938)

2.	Explanation of Differences Between the Governmental Fund Operating Statements and the Statement of Activities

	The “net changes in fund balances” for government funds, $13,752, differs from the “change in net position” for governmental activities, $125,642, 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 as follows.

	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 and reported as depreciation. As a result, fund balances decrease by the amount of financial resources expended, whereas, net position decrease by the amount of depreciation charged for the year.

Depreciation	$	(461,527)

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

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

Repayments of bond principal are reported as expenditures in the governmental funds and, thus, have the effect of reducing fund balance because current financial resources have been used.

Bond principal payments	$	560,000

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.

Net change in accrued interest payable	$	13,417

NOTE C – CASH AND INVESTMENTS

All deposits are held in qualified public depositories and are included on the accompanying balance sheet 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 to it. The District does not have a formal deposit policy for custodial credit risk, however, they follow the provisions of Chapter 280, Florida Statutes regarding deposits and investments. As of September 30, 2017, the District's bank balance was $751,314 and the carrying value was $743,314. Exposure to custodial credit risk was as follows. The District 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.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE C – CASH AND INVESTMENTS (CONTINUED)

As of September 30, 2017, the District had the following investments and maturities:

Investment	Maturities		Fair Value	
Fidelity Government Portfolio Class III Fund	33 Days*	$	3,055,626	
Local Gov't Surplus Trust Fund - FL Prime Fund	51 Days*		539,796	
Total		$	3,595,422	
* Weighted Average Maturity

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 uses 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 investment in Fidelity Government Portfolio Class III Fund is a Level 1 asset.

Investments

The District’s investment policy allows management to invest funds in investments permitted under Section 218.415, Florida Statutes. Among other investments, the policy allows the District to invest in the State Board of Administration Local Government Surplus Trust Funds.

Interest Rate Risk

The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE C – CASH AND INVESTMENTS (CONTINUED)

Credit Risk

The District's investments in 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 Local Government Surplus Funds Trust is an authorized investment under Section 218.415, Florida Statutes. The District's investments in the state investment pool and government loans are limited by state statutory requirements and bond compliance. As of September 30, 2017, the District's investments in the Fidelity Government Portfolio Class III Fund were rated as AAAm by Standard & Poor's.

Concentration of Credit Risk

The investments in Fidelity Institutional Funds are 85% of the District’s total investments. The remaining investments in Local Government Surplus Funds are 15% of the District’s total investments.

The types of deposits and investments and their level of risk exposure as of September 30, 2017 were typical of these items during the fiscal year then ended.

NOTE D – SPECIAL ASSESSMENT REVENUES

Assessments are non-ad valorem assessments on benefitted property within the District. Operating and Maintenance Assessments are based upon adopted budget and levied annually. Debt Service Assessments are levied when bonds are issued and collected annually. The District may collect assessments directly or utilize the uniform method of collection (Chapter 197.3632, Florida Statutes). Direct collected assessments are due as determined by annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the uniform method are mailed by County Tax Collector on November 1 and due on or before March 31 of each year. Property owners may prepay a portion or all of the Debt Service Assessments on their property subject to various provisions in the bond documents.

Assessments and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE E – CAPITAL ASSETS

Capital Asset activity for Governmental Activities for the year ended September 30, 2017 was as follows:

		Balance									Balance	
		10/1/2016		Additions		Deletions			9/30/2017	
Governmental Activities:												
Capital assets, not being depreciated:												
Land and improvements	$	4,500,000	$	-	$	-	$	4,500,000	
Capital assets, being depreciated:												
Infrastructure		14,954,821			-			-			14,954,821	
Less accumulated depreciation for:												
Infrastructure		(3,230,689)			(461,527)			-			(3,692,216)	
Total Capital Assets Depreciated, Net		11,724,132			(461,527)			-			11,262,605	
Governmental Activities Capital Assets, Net	$	16,224,132	$	(461,527)	$	-	$	15,762,605	

Depreciation of $461,527 was charged to physical environment.

Capital asset activity for Business-type Activities for the year ended September 30, 2017 was as follows:

		Balance									Balance	
Business-type Activities:		10/1/2016			Additions		Deletions			9/30/2017	
Capital assets, being depreciated:												
Infrastructure	$	7,465,728	$	-	$	-	$	7,465,728	
Equipment		63,987			7,663			-			71,650	
Total Capital Assets, Being Depreciated		7,529,715			7,663			-			7,537,378	
Less accumulated depreciation for:												
Infrastructure		(1,399,031)			(186,643)			-			(1,585,674)	
Equipment		(50,793)			(5,040)			-			(55,833)	
Total Accumulated Depreciation		(1,449,824)			(191,683)			-			(1,641,507)	
Business-type Activities Capital Assets	$	6,079,891	$	(184,020)	$	-	$	5,895,871	

Depreciation of $191,683 was charged to water and sewer.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE F – LONG-TERM DEBT

The following is a summary of the long-term debt activity of the Governmental Activities for the year ended September 30, 2017:

Special Assessment Revenue Bonds payable at September 30, 2017 are comprised of the following:

$22,780,000 Special Assessment Revenue Bonds,		
Series 2004 due in annual principal installments		
beginning May 1, 2010. Interest at 5.75% is due		
in May and November.	$  16,860,000	

The Special Assessment Revenue Bonds are secured primarily from special assessment taxes levied by the District.

The annual requirements to amortize the principal and interest of governmental activity debt outstanding for the next five years and thereafter are as follows:

Year Ending												
September 30,			Principal				Interest				Total	
2018	$	550,000	$	969,450	$	1,519,450	
2019			585,000				937,826				1,522,826	
2020			615,000				904,188				1,519,188	
2021			655,000				868,826				1,523,826	
2022			690,000				831,162				1,521,162	
2023-2027			4,125,000				3,510,376				7,635,376	
2028-2032			5,495,000				2,176,088				7,671,088	
2033-2035			4,145,000				485,588				4,630,588	
Totals		$	16,860,000			$	10,683,504			$	27,543,504	

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE F – LONG-TERM DEBT (CONTINUED)

Special Assessment Revenue Bonds, Series 2004

Summary of Significant Bond Resolution Terms and Covenants

Depository Funds

The bond resolution established certain funds and determines the order in which revenues are to be deposited in these funds. A description of these funds, including their purpose, is as follows:

1.	Bond Reserve Fund – Series 2004 - for deposit of an amount equal to 7% of the deemed outstanding principal at defined measurement dates. The monies in the reserve account are only available for the payment of the principal and interest on the bonds.

The following is a schedule of required reserve deposits as of September 30, 2017:

Reserve	Reserve

Requirement	Balance

Series 2004 Special Assessment Revenue Bonds	$	1,180,200	$   1,217,600

The following is a summary of the long-term debt activity of the Business-type Activities for the year ended September 30, 2017:

Utility System Bonds, Series 2004

In December 2004, the District issued $8,030,000 Series 2004 Utility System Bonds were due in one balloon payment on November 1, 2010. The Bonds have a fixed interest rate of 5.30% due in May and November.

The Series 2004 Utility System Bonds are secured by a pledge of revenues under the Indenture, which are defined as net revenues received from the water and sewer system for connection fees, user fees, standby fees, and payments from the Developer pursuant to the Utility Development Agreement. The Developer defaulted on this agreement in a prior year and, as a result, the Series 2004 Utility System Bonds were not fully redeemed upon maturity in 2010. To cure the default on the Series 2004 Utility System Bonds, the matured bonds, payable in the amount of $2,005,000, were restructured with the issuance of the Series 2016 Utility System Bonds.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE F – LONG-TERM DEBT (CONTINUED)

Utility System Bonds, Series 2016

In September 2016, the District issued $2,346,216 Series 2016 Utility System Bonds due in one balloon payment on November 1, 2024 inclusive of the respective applicable accreted interest. The Series 2016 Utility System Bonds matured balance shall amount to $3,595,000 per the bond restructuring agreement and the trust indenture amendment. The bonds have a fixed interest rate of 5.30%. The Series 2016 Utility System Bonds outstanding balance as of September 30, 2017 is $1,360,081.

The annual requirements to amortize the principal payments, accreted interest, and bonds payable of the business-type activity debt outstanding for the next five years and thereafter are as follows:

Year Ending				Principal					Accreted			Bonds	
September 30,				Payments					Interest			Payable	
2018	$	181,749	$	68,163	$	1,217,110	
2019				-					65,362			1,282,472	
2020				-					68,872			1,351,344	
2021				-					72,570			1,423,914	
2022				-					76,467			1,500,381	
2023-2024				1,710,000					209,619			-	
Totals		$	1,891,749		$	561,053				

Summary of Significant Bond Resolution Terms and Covenants

1.	Series 2016 Bonds shall not be subject to optional or mandatory redemption. The Series 2016 Bonds are subject to an extraordinary mandatory redemption, in whole or in part, prior to maturity by the District on each February 1, May 1, August 1, and November 1, from moneys deposited into the Connection Payment account of the redemption funds following the payment of Connection Fees per the first supplemental indenture.

2.	There are established within the bond fund held by the trustee: (i) a 2016 Interest Subaccount within the interest account, (ii) a 2016 principal subaccount within the principal account, and (iii) a 2016 reserve subaccount within the reserve account which shall be held solely for the benefits of all of the Series 2016 bonds.

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Bella Collina Community Development District

NOTES TO FINANCIAL STATEMENTS

September 30, 2017

NOTE G – DEVELOPER TRANSACTIONS

In prior years, the District entered into a Standard Potable Water and Wastewater Development Agreement with the Developer (Utility Development Agreement). In connection with this agreement, the District received a total of $5,059,983 in refundable advance fees (RAF), minimum Equivalent Residential Connections (ERC), and Allowance for Funds Prudently Invested (AFPI) Fees from the Developer. The Developer failed to make certain payments under the agreement and, as a result, the District withdrew approximately $464,779 from the RAF and Shortfall escrow accounts funded by the Developer in prior years. During the 2016 Bond restructuring, the agreement was amended. The total balance remaining in the escrow accounts was $68,941 at September 30, 2017. During previous years, a new developer purchased most of the assets of the old developer. The total amount due to the new developer under the amended utility development agreement dated September 1, 2017 may not exceed $5,593,454.

NOTE H – RISK MANAGEMENT

The government is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance.

NOTE I – SUBSEQUENT EVENT

In November 2017 and May 2018, in accordance with the extraordinary mandatory redemption provisions in the trust indenture, the District prepaid $124,808 and $58,941, respectively, of the Series 2016 Utility System Bonds.

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