LAKE APOPKA NATURAL GAS DISTRICT

WINTER GARDEN, FLORIDA

SEPTEMBER 30, 2023

LAKE APOPKA NATURAL GAS DISTRICT

WINTER GARDEN, FLORIDA

TABLE OF CONTENTS

Page

Number

Independent Auditor’s Report .............................................................................................1

Management’s Discussion and Analysis .............................................................................4

Statement of Net Position..................................................................................................15

Statement of Revenues, Expenses and Changes in Net Position.......................................17

Statement of Cash Flows ...................................................................................................18

Notes to the Financial Statements ....................................................................................20

Required Supplementary Information ...............................................................................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 .....................................39

Independent Auditor’s Management Letter.......................................................................41

Independent Accountant’s Report .....................................................................................44

INDEPENDENT AUDITOR’S REPORT

To the Board of Commissioners of the

Lake Apopka Natural Gas District

Winter Garden, Florida

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of the Lake Apopka Natural Gas District (the

District) as of and for the fiscal year ended September 30, 2023, and the related notes to the financial

statements, which collectively comprise the District’s basic financial statements, as listed in the table of

contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the

respective financial position of the District as of September 30, 2023, and the respective change in financial

position and its cash flows for the fiscal year then ended in conformity with accounting principles generally

accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing Standards,

issued by the Comptroller General of the United States. 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 audit. 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 accor-

dance 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.

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 twelve months beyond the financial statement date, including any currently known

information that may raise substantial doubt shortly thereafter.

To the Board of Commissioners of the

Lake Apopka Natural Gas District

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

opinions. 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 generally accepted auditing standards 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 would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing

Standards, we:

• Exercise professional judgment 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 judgment, 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.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s

Discussion and Analysis and the required supplementary information, as listed in the table of contents, be

presented to supplement the basic financial statements. Such information, although not a part of the basic

financial statements, is required by the Governmental Accounting Standards Board, who considers it to be

an essential part of financial reporting for placing the basic financial statements in an appropriate

operational, economic, or historical context. We have applied certain limited procedures to the required

supplementary information in accordance with auditing standards generally accepted in the United States of

America, which consisted of inquiries of management about the methods of preparing the information and

comparing the information for consistency with management’s responses to our inquiries, the basic financial

statements, and other knowledge we obtained during our audit of the basic financial statements. We do not

express an opinion or provide any assurance on the information because the limited procedures do not

provide us with sufficient evidence to express an opinion or provide any assurance.

To the Board of Commissioners of the

Lake Apopka Natural Gas District

her Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 12, 2024,

on our consideration of the District’s internal control over financial reporting and on our tests of its

compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is to describe the scope of our testing of internal control over financial reporting

and compliance and the results of that testing, and not to provide an opinion on internal control over

financial reporting or on compliance. That report is an integral part of an audit performed in accordance

with Government Auditing Standards in considering the District’s internal control over financial reporting

and compliance.

rtified Public Accountants

Orlando, Florida

March 12, 2024

Management’s Discussion and Analysis

Our discussion and analysis of the Lake Apopka Natural Gas District’s (the District) financial

performance provides an overview of the District’s financial activities for the fiscal year ended

September 30, 2023. Please read it in conjunction with the financial statements and disclosures that

follow.

Financial Highlights

The District’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of

resources by $52,004,593 (total net position) for the fiscal year 2023. This is consistent with the previous

fiscal year when assets and deferred outflows of resources exceeded liabilities and deferred inflows of

resources by $48,249,979.

The District’s total revenues were $24,056,334, including interest income, compared to $25,556,219 last

year, or a year-over-year decrease of $1,499,885. The primary reason for the decrease in revenue is due

to 2023 being the hottest year on record, which negatively impacted consumption by lowering the need

for customers to use their natural gas appliances and equipment. Total consumption dropped from

21,665,342 therms in 2022, to 21,093,029 therms in fiscal year 2023, while the natural gas prices fell

from an average cost of $0.78 per therm in 2022 to $0.58 per therm in 2023. Natural gas costs are a pass

through that is reflected in revenues and expenses. Although total expenses grew slightly from

$20,209,212 in fiscal year 2022 to $20,301,720 in 2023, there were two expense categories that had

significant year over year increases in their balances. Natural gas expense dropped from $8,847,076 to

$7,128,523, or by $1,718,553 (19%) due to the drop in consumption and the decline in the price, and

personnel services expense increased from $5,765,758 to $7,164,098, or by $1,398,340 or 24% due

mainly to the growth in employee compensation, Florida State Retirement benefits, life and health

insurance and retiree health insurance subsidy plan expenses.

In 2023, the District executed and recorded ten new residential subdivision developer agreements in

Orange and Lake Counties. The builders/developers will build 887 new homes in our service area that

should generate an estimated 254,682 annual therms. The District executed residential agreements for

the following subdivisions: in Orange County – Bargrove Phase 2 with 67 lots, Emerson Pointe with 97

lots, Palms of Windermere with 57 lots, Bronson Peaks Phase 1A, 1B and 1C with 116 lots, Oaks at

Kelly Park Phase 3A and 3B with 142 lots, Oakland Park Parcel 17 with 10 lots, Foothills of Mount

Dora Phase 1A and 1B with 52 lots, Wolf Lake Ranch with 61 lots and Winter Grove with 87 lots; in

Lake County – Del Webb at Minneola Phase 1 and 2 with 198 lots. The communities are being built by

Pulte Homes, Landsea Homes (formerly Hanover Families Builders, LLC.), MI Homes, Dream Finders

Homes, Toll Brothers, and J and J Builders, LLC. The world is back from the pandemic and countries

are operating, trading, and growing their communities and cultures for the benefit of all people. Lake

Apopka Natural Gas District will do the same. We are committed to continuing our growth by seeking

new development opportunities and growth opportunities in unserved areas of our service territory.

Central Florida lacks affordable residential housing. We will continue to reach out to those developers

to educate them on providing energy choice to residents. There are hundreds of multi-family projects

being planned and developed, and many of these projects have apartments, condominiums, single family

homes and retail space that we will make every effort to capture for the District. These developments

are called walkable communities.

The new residential developer agreements and commercial accounts that were placed in service during

the 2023 fiscal year increased the District’s financial performance with our customer base growing to

serve 28,411 customers as of September 30, 2023. The Marketing Department converted 66 competitive

fuel commercial accounts to natural gas during 2023, with an estimated annual consumption of 1,109,983

therms. The District’s largest anticipated commercial load will come from the opening of the new

Advent Health Hospital on Hancock Road in Minneola, with an estimated annual load of 336,000 therms.

The hospital will operate 24 hours a day 365 days a year. Central Florida’s tourism and entertainment

districts and business are thriving and growing. We consistently receive information on new commercial

business developments coming to our service area.

In fiscal year 2023, the District decided to expand its distribution main to reach the Hiawassee system,

which was supplied by TECO. District management decided to eliminate TECO's gas supply source and

directly serve our customers in this area.

The District used $5,245,469 in cash flow to acquire additional capital assets, compared to $4,509,054

for the previous year. We added 23 miles of gas mains and 930 service lines to our existing distribution

system in fiscal year 2023, along with several major capital expenditures to upgrade and expand the

system. For system improvement, the District completed the following projects:

 Hiawassee 4-Inch Poly Main Extension (Ocoee)

We completed 6,870 feet of 4-inch poly main extension along Dorscher Road and Old Winter

Garden Road. This project objective was to eliminate TECO’s check meter (gas supply) feeding

the Hiawassee steel system in Ocoee and serve those customers directly through our gas

distribution system.

 SR 19 4-Inch H.P. Steel Main Extension Phase 2 (Groveland)

We completed Phase 2 of 4-inch high-pressure steel main extension (10,432 feet) on SR19 in

Groveland. This project enhanced system pressure in this area to be able to serve the new

industrial and commercial customers being built on SR 19 and South Obrien Road and capture

new subdivisions and commercial firms in the vicinity.

 Citrus Grove (Phase 4) 6-Inch Poly Main Extension (Minneola):

We completed 3,850 feet of 6-inch poly main extension on Citrus Grove Road. This extension

is a system improvement to our distribution system. It connected our gas main on Citrus Grove

Road and Highway 27 with Citrus Grove Road and Grassy Lake. The huge area along this route

is forecasted to be developed in the near future.

 Binion Road 6-Inch Poly Main Extension Phase 3 - Railroad & SR429 Crossing (Apopka):

We finished 4,490 feet of 6-inch poly main expansion across SR 429 on Binion Road and the

railroad in Apopka. This extension operates as a back feed loop between the Apopka area, Winter

Garden and Ocoee, providing services to the predicted expanding population in Apopka.

 Avalon Road & New Independence Parkway 6-Inch Steel Main Extension Phase 1 (Winter

Garden):

We completed 7,110 feet of a 6-inch steel main extension on Avalon Road and New

Independence Pkwy. This main extension is one of the five-year plan projects that will provide

services to the expected population growth in Winter Garden.

 Ponkan Road 4-Inch Poly Main Extension (Apopka):

We completed 1,580 feet of a 4-inch poly main extension on Ponkan Road. This main extension

is one of the five-year plan projects that will provide services to the expected population growth

in Apopka.

 Jason Dwelley Pkwy 4-Inch Poly Main Extension (Apopka):

We completed 8,395 feet of a 4-inch poly main extension on Jason Dwelley Parkway. This main

extension is one of the projects on the five-year plan that will provide services to the expected

population growth in Apopka.

 Boy Scout Road 6-Inch Poly Main Extension (Zellwood):

We completed 4,525 feet of a 6-inch poly main extension on Boy Scout Road to provide services

to the anticipated population growth in Zellwood. This main extension would also serve as a

back feed loop that extends our gas main from South Binion Road down Boy Scout Road to

Ocoee Apopka Road.

 Stoneybrook Hills Pkwy 4-Inch Poly Main Extension Phase 1 & 2 (Mount Dora):

We completed 8,145 feet of a 4-inch poly main extension on Stoneybrook Hills Parkway to serve

the new Stoneybrook Hills subdivision in Mount Dora.

 Villa City Road 2-Inch and 6-Inch Phase 1 & 2 Poly Main Extension (Groveland):

We completed 1,330 feet of a 2-inch and 14,580 feet of 6-inch poly main extension on Villa City

Road in Groveland. This main extension is one of the five-year plan projects that will provide

services to the new Villa City subdivision.

In addition to the system enhancements, the District replaces legacy black plastic, Aldyl-A pipes, and

copper services in the distribution system on an annual basis to reduce liability. The District detected

about 3,450 feet of 2-inch Aldyl-A pipe in the system, which is projected to be replaced in fiscal year

2024. PHMSA has granted the District $3,125,000 in funding to replace vintage steel and vintage plastic

Aldyl-A polyethylene pipe in the Apopka and Ocoee areas with modern polyethylene. Replacing the

Aldyl-A pipe is one of the projects in the PHMSA Grant Proposal.

Other capital investments were for system expansions within the District to reach industrial areas,

residential and commercial customers:

Winter Garden:

 Boyd Street (alley) 1-Inch Poly Main Extension @ 419 N. Boyd Street.

 Hamlin Groves Trail 2-Inch Poly Main Extension @ Taco Bell - 5201 Hamlin Groves Trail.

 Daniels Road 2-Inch Poly Main Extension @ 1200 Daniels Road.

 Main Street 1-Inch Poly Main Extension @ 318 Main Street.

 SR 50 2-Inch Poly Main Extension @ 12615 W. Colonial Drive.

Windermere:

 Marqueses Court. 2-Inch Poly Main Extension @ 2951 Marqueses Court.

 Lake Butler Blvd. 2-Inch Poly Main Extension.

 Tilden Groves 2-Inch Poly Main Extension @ 5126 Tilden Groves Boulevard.

 Conroy Windermere Road 2-Inch Poly Main Extension @ 7753 Conroy Windermere.

Clermont:

 SR 50 2-Inch Poly Main Extension @ 2901 SR 50.

 Desoto Street 2-Inch Poly Main Relocation @ 844 E. Desoto Street.

 SR 50 2-Inch & 4-Inch Poly Steel Main Extension @ Plaza Collina/Costco & Floor Decor.

 Citrus Tower 2-Inch Poly and Steel Main Extension @ 3238 Citrus Tower Boulevard (Domino's

Pizza).

Groveland:

 American Way 6-Inch Poly Main Extension @ 7815 American Way.

Apopka:

 Semoran Boulevard 2-Inch Poly Main Extension @ 2488 E. Semoran Boulevard.

 Main Street 2-Inch Poly Main Extension @ 611 Main Street (Winn Dixie).

 Foxden Road 2-Inch Poly Main Extension @ 1204 Foxden Road.

 Ocoee Apopka Road 4-Inch & 2-Inch Poly Main Extension @ Harmon Center.

 Shelby Industrial Dr & General Electric Road: 6-inch HP steel main extension to serve Loews

Laundry.

 Clarcona Ocoee Road 2-Inch Poly Main Extension @ 2860 & 2870 Clarcona Ocoee Road.

There were also several new subdivisions and new phases opened in existing subdivisions due to the

continued resurgence of our homebuilding market. We continued to expand our infrastructure into a

number of new subdivisions, due to newly executed agreements with home builders along with main

extensions for commercial customers. We met all schedules for home closings and all deadlines for

commercial turn-ons.

For homebuilders/developers, we added new phases to our growing list of single-family residential

subdivisions:

 Winding Meadows (Apopka).

 Willow Ridge Phase 1 (Montverde).

 Park View @ The Hills Phase 1 & 3 (Minneola).

 Ivy Trail (Apopka).

 Avalon Ridge (Winter Garden).

 Bargrove Estates Phase 2 (Zellwood).

 Del Webb Phase 1 (Minneola).

 Bronson Peak Phase 1-A & 1-B (Apopka).

 Oakland Park X17 (Oakland).

 Foothills of Mt. Dora Phase 4-1A (Mount Dora).

As always, we have relocated several existing pipelines due to local road work and other municipal

improvements that caused the District to expend resources to relocate pipelines. The primary projects

to relocate the gas mains in fiscal year 2023 were:

 Golden Gem Road 440 feet of 4-Inch Poly Main Replacement (Apopka).

 SR 50 520 feet of 6-Inch HP Steel Main Offset for Johns Lake Landing (Clermont).

 US 27 300 feet of 2-Inch Poly Main Relocation (Clermont).

 Desoto Street 372 feet of 2-Inch Poly Main Replacement (Clermont).

 Collina Terrace 1,170 feet of 4-Inch Poly Main Relocation (Clermont).

Overview of the Financial Statements

Management’s Discussion and Analysis introduces the District’s financial statements. The District was

established as an independent special district by the Florida legislature on June 20, 1959, to provide

natural gas services to potential customers in Orange and Lake Counties. On June 20, 2019, the District

celebrated its 60

year of existence. The District accounts for its activities as a single proprietary fund,

which is used to report business-type activities. The accompanying notes to the financial statements

provide additional information essential to a full understanding of the financial statements.

Financial Analysis of the District

The District’s net position at year-end was $52,004,593. This is an increase of $3,754,614 over last

year’s net position of $48,249,979. Net position measures the difference between the assets the District

owns and deferred outflows of resources over the liabilities it owes and deferred inflows of resources.

The following table provides a summary of the District’s net position:

Summary of Net Position

2022 2023

Current Assets $ 17,522,773 $ 18,254,359

Noncurrent Assets 44,846,095 48,027,398

Total Assets 62,368,868 66,281,757

Deferred Outflows 1,229,877 1,087,038

Current Liabilities 7,940,007 7,743,731

Long-Term Liabilities 7,176,223 7,376,915

Total Liabilities 15,116,230 15,120,646

Deferred Inflows 232,536 243,556

Net Position:

Invested in Capital Assets, Net of Related Debt 42,617,226 46,315,491

Unrestricted 5,632,753 5,689,102

Total Net Position $ 48,249,979 $ 52,004,593

Comparative data is presented to assist in the analysis of the District’s operating performance. The

following table provides a summary of the District’s changes in net position:

Summary of Changes in Net Position

2022 2023

Revenues:

Charges for services

$ 25,491,681

$ 23,

493,432

Other operating revenues

29,780

87,272

Other non

operating revenues

34,758

475,630

Total Revenues

25,556,219

24,

056,334

Expenses:

Natural gas costs

8,847,076

7,128,523

Personnel services

5,765,758

7,164,098

Advertising and marketing

657,560

727,239

Repairs and maintenance

656,582

736,945

Other operating expenses

2,067,503

2,227,172

Depreciation

1,944,497

2,064,166

Other non

operating expenses

270,236

253,577

Total Expenses

20,209,212

20,301,720

Change in Net Position

5,347,007

3,754,614

Net Position

Beginning

42,902,972

48,249,979

Net Position

End of Year

$ 48,249,979

52,

004

593

The District’s revenues decreased by $1,499,885 and expenses increased by $92,508. The $1,998,249

decrease in charge for services revenue was primarily due to lower natural gas costs, increases in

customer base and significantly lower natural gas consumption in 2023. The cost of natural gas is a

pass-through that is reflected as part of revenue and natural gas expenses. Annual increases in natural

gas costs increase revenue, while decreases erode revenue. The decreases in the price of natural gas

were passed on to the consumers. Revenues were controlled by using the gas stabilization fund to

mitigate the financial impact from over and under recovery collections of gas supply costs on the monthly

financial statements. When collections from customers exceed the cost of gas, the fund is increased, and

when collections are less than the cost of gas, the fund is reduced. Recovery collections are evaluated

monthly to maintain process consistency. The primary reason for the slight increase in total expenses is

the increase in the cost of personnel services, which was partly offset by the decline in the cost of natural

gas. In fiscal year 2023, natural gas costs decreased by $1,718,553 from $8,847,076 to $7,128,523, or

19%. The District’s average price per therm for natural gas decreased from $0.78 in 2022 to $0.58 in

fiscal year 2023, or by $.20 or 26%. The decrease in natural gas expense was aided by a 572,3137 drop

in therms consumption in 2023. The increase of $1,398,340 in personnel service expenses is primarily

due to a 10% increase in the cost of the District’s health plan, 6% payroll increases for cost of living and

merit raises up to 3% of an employee’s salary. All the other expense categories experienced moderate

year-over-year changes.

Capital Assets and Debt Administration

Capital Assets

The District’s investment in capital assets, net of accumulated depreciation, on September 30, 2023, was

$48,027,398. This represents an increase of $3,181,303 over the previous year, primarily due to the

$3,115,384 increased investment in the gas distribution system.

Capital Assets

Net of Accumulated Depreciation

2022 2023

Non-depreciable Assets:

Land $ 282,229 $ 282,229

Depreciable Assets:

Buildings 1,161,315 1,186,590

Gas distribution system 42,186,050 45,301,434

Furniture, machinery, and equipment 1,216,501 1,257,145

Total $ 44,846,095 $ 48,027,398

Long-Term Debt

On December 14, 2016, the District secured a $5,000,000 note payable at an interest rate of 2.14% for a

10-year period with TD Bank. The District also secured a $3,000,000 credit line with Regions Bank for

a three-year term commencing on February 19, 2020, at a monthly interest rate of LIBOR plus 125 basis

points. The District decided not to renew the line of credit when it expired on February 19, 2023. At the

end of the fiscal year, the note payable balance outstanding was $1,711.907 and there was no outstanding

balance on the revolving line of credit. The District pledged the net revenues of the natural gas system

as security for the notes.

Long-Term Debt

2022 2023

$ 2,228,869 $ 1,711,907

The District’s other long-term obligations include accrued employee benefits for vacation, sick leave,

Other Post-Employment Benefits, and State of Florida pension and health insurance supplemental plans.

More detailed information about the District’s long-term liabilities is presented in Note 6 of the financial

statements.

Economic Factors

The 2023 housing market forecast by local, state, and national economists indicates the housing market

had not seen the efforts of a slowdown or a recession as economic forecasters had predicted. Florida is

leading the country in the percentage of housing starts compared to other states in the United States. The

global supply chain disruption or slowdown in receiving goods and materials began to improve by mid-

2023. The seller’s market price for houses has started to slowly reverse in some areas of the country.

The housing market is still very robust in Florida, but the problem was the mortgage interest rates were

rising so quickly, that many first-time homebuyers were priced out of the market to purchase a new or

existing home. The United States Treasury raised interest rates 11 times from March 2022 to July 2023,

with mortgage interest rates as high as seven percent on the 30-year mortgage. The objective was to slow

down the economy, fight off a recession and decrease the rate of inflation. This slowdown caused a few

builders to temporarily postpone building new subdivisions at the start of 2023 until the economic

lookout for 2023 was brighter. One or two builders advised the District they were moving forward on

subdivisions they had committed to installing natural gas after the first quarter economic reports were

reviewed.

There is still a shortage of existing homes for sale, but there are plenty of available new homes by the

second quarter of 2023 and sales were steady. The constant need for apartments and affordable housing

continues to plague Central Florida and the country as the average low to moderate income workers were

priced out of the new home market. We are seeing rent to own or RTO developments in the District, but

none were convinced to install natural gas due to piping and appliance costs. All homes are built with

electricity by federal rules, although operationally natural gas is cheaper on a family’s energy budget.

Central Florida averages about 1,000 new residents a week and Florida added a total of 315,000 new

residents in 2023. Economists and population growth analysts show Central Florida’s growth is

unprecedented with the rural areas seeing an explosion in population growth and homes being built to

accommodate the growth. The make-up of the Orlando Metropolitan Statistical Area includes Lake,

Orange, Osceola, and Seminole Counties, saw a growth rate of 1.62% in 2023 to reach a population of

over 2 million people. As retiring baby boomers and millennials move from other parts of the United

States to Florida for the warmer climate as well as career opportunities, the population grows faster than

some areas can keep up. According to the 2020 United States Census, Florida is the third largest state

with a population of 22 million people, with Texas ranking second and California ranking first.

In 2023, Central Florida area saw the average new single family home rise to $377,816 and existing

homes to $359,000 per home. The prices rose by 2.36% in 2023. According to the National Association

of Realtors, the median time to contract for single-family homes in Florida in 2023 was 69 days,

compared to 49 days or less in 2022. Overall sales decreased by 20.1% from 2022 to 2023 and home

inventory 4.11 months compared to 3.65 months in 2022. The price of homes has started to decrease

slightly with the increase of mortgage rates in 2023.

The District updated its Five-Year Strategic Growth Main Extension Expansion Plan for residential and

business development areas of its service territory based on independent research and forecasts from the

cities in our District. The Plan was updated by the Leadership Team and key personnel and the costs

for fiscal year 2024 were incorporated into the 2024 budget.

Economists are surprised by the resiliency the US economy had as it battled through and beyond the

pandemic. We have seen historic increases in the cost of goods, services, and raw materials. People still

must have food, housing and means of transportation and everyone is finding ways to cut back where

possible. According to Rent.com the median rent in Orlando is $2,153 and averaging over $3,000 in

south Florida. The median rent in the United States in 2023 was $1,967. Lake Apopka Natural Gas

District provides residential and commercial customers with a reasonable natural gas rate. We have a

rebate program for new and existing residential customers, and rebates for our commercial businesses

which we review on a case-by-case basis for those business selecting or converting to natural gas. Natural

gas has proven to be the most desirable source of energy for homes, businesses, and electric generation.

This is due to its domestic availability, affordability, reliability, resiliency during storm outages and has

three times the efficiency in appliances than its non-gas counterparts. With the demographic changes in

Florida and more residents from areas where natural gas was readily available, many Floridians want

energy choice to operate appliances and equipment in their homes and businesses. The revolutionary

change to horizontal hydraulic fracturing became the predominate method of extracting natural gas in

early 2011, opened a vast amount of shale play areas in North America. This boom/increase of natural

gas our supply provided available supply for more than 100 years. Now renewable natural gas is adding

to our supply and further reduces greenhouse gas emissions and decreases global climate warming.

Governments around the world are pressing the energy industry for a more carbon neutral and net zero

carbon emissions energy footprint. The natural gas industry overwhelmingly increased its research and

technology funding for manufacturers to develop appliances and equipment to address emission and

increase efficiency concerns.

The District’s Marketing and Business Development staff constantly communicates with area developers

and builders. We added 1,065 new customers in 2023. We supply educational marketing information

via traditional print, digital, Facebook and LinkedIn social media platforms to continually educate the

public on the direct use of natural gas as a balanced energy choice for homes and businesses. The energy

that natural supplies through its vast pipeline infrastructure will for decades contribute to our country’s

future goal of obtaining zero carbon emissions for consumers.

The District continued improving its Information Systems in areas, such as reliable customer service,

automation of service activities, technology enhancements, and professional development. We

completed over 100 Information Systems projects during the year and a few examples follow. To

provide reliable customer service we implemented a new Leak Call queue in our phone system. Our

work order system, Elements, is key to planning, tracking, and automating our service activities and we

performed a major upgrade in August after months of development and testing. We routinely patched

and upgraded our minor systems to improve our technology foundation. We implemented multi-factor

authentication for our virtual private network connectivity improving our security posture. We trained

all personnel on security attacks with weekly phishing testing and often video training. Our internal

efforts to train team members continued with IS leading classes on various topics throughout the year.

The District relies on Gas South for natural gas purchasing and scheduling. The District also works with

Energy Vision, which provides market oversight, hedging and risk management to the District.

Safety Program and Awards

The District continues to be proactive in safety and damage prevention. Things have returned to pre-

pandemic modes in training, though we continue to use Teams meetings as needed. Most employees are

working on-site full-time but, in limited cases, we are offering employees the opportunity to work

remotely for medical reasons or other specified situations, for a limited period. The District’s COVID-

19 guidelines have been revised to mirror those of the CDC. We continue to provide appropriate PPE,

and needed cleaning supplies, along with regular professional cleaning. We have offered many training

opportunities throughout the year both in-person (off-site and on-site) and virtually on a variety of topics,

including stress management, Florida Fuel Gas Code, OSHA Competent Person Training, Respirator

Training, First Aid/CPR/AED Training, Defensive Driving Training through the National Safety Council

and wellness presentations by our EAP provider. In addition, our field employees have attended classes

offered by Gas Training Institute (GTI). We also had our workers compensation representative come on-

site to complete an ergonomic review of our work areas and offer suggestions. The District continues

to administer a Safety Recognition Program, which recognizes employees who show a commitment to

safety in the performance of their job duties and a safety suggestion box for employees to submit safety

concerns and comments. Safety committee members meet quarterly to review pertinent safety topics.

The District received the American Public Gas Association’s Safety Award for the 13th consecutive

year, which acknowledges our excellent safety record. The District remains committed to making the

safety of our employees, customers, and the public our highest priority.

Training and Community Involvement

Our Leadership Team encourages employees to participate in industry associations and its training

programs to increase their technical skills and competency in the natural gas industry. Employees

participate and hold leadership positions on the Board of Directors and Committees of the American

Public Gas Association, Florida Natural Gas Association, and the Florida Municipal Natural Gas

Association. District employees receive training in all elements of the natural gas industry to keep abreast

of new developments, regulations and disaster preparedness. We provided support as needed for disaster

storm restorations by our participation at the Orange and Lake County Emergency Management centers,

including providing support when multiple hurricanes affected our area in fiscal Years 2022 and 2023.

The District was active in the community when we partnered with local fire departments to develop

training materials, and shared safety awareness information regarding Mercaptan odorant and natural

gas safety practices to schools in the area. The District also donated smoke and carbon monoxide

detectors to fire departments in Winter Garden, Clermont, and Apopka for them to distribute to

residential and commercial businesses in their areas. We work with community fire departments to

educate children on the value of natural gas. We hold monthly to quarterly meetings with the Orange

County Emergency Operation Center, and we participated in the Orange Countywide Hurricane

Conference held in Orlando, Florida. We also sent a representative to the Common Ground Alliance

International Conference in 2023. The District adheres to the safety standards established by the Florida

Public Service Commission for natural gas utilities. Additionally, the District has an active Public

Awareness and a Damage Prevention Program.

The District communicated to the local community by publishing advertorials in local newspapers,

public service radio advertisements, local community event participation, safety mailing brochures, and

distributing other educational materials to the public.

Contacting the District’s Financial Management

This financial report is designed to provide an overview of the District’s finances and to demonstrate the

District’s commitment to public accountability for all interested parties. If you have questions about this

report or need additional financial information, contact the District’s Chief Financial Officer at 1320

Winter Garden-Vineland Road, Winter Garden, Florida 34787.

LAKE APOPKA NATURAL GAS DISTRICT

WINTER GARDEN, FLORIDA

STATEMENT OF NET POSITION

SEPTEMBER 30, 2023

Current Assets:

Cash and cash equivalents 10,848,299$

Restricted cash and cash equivalents 4,150,588

Accounts receivable (net of allowance for uncollectibles) 1,754,744

Inventory 1,130,121

Prepaid expenses 370,607

Total Current Assets 18,254,359

Noncurrent Assets:

Capital Assets:

Land 282,229

Buildings 2,480,805

Gas distribution system 68,904,893

Machinery and equipment 3,549,200

Less: accumulated depreciation (27,189,729)

Total Noncurrent Assets 48,027,398

TOTAL ASSETS 66,281,757

Deferred outflows related to pensions 1,087,038

Total Deferred Outflows 1,087,038

ASSETS

DEFERRED OUTFLOWS

The independent auditor's report and notes to the financial statements are an integral part of this statement.

Current Liabilities (Payable From Current Assets):

Accounts payable 1,616,577$

Due to other governments 452,203

Accrued wages and benefits payable 379,183

Accrued taxes payable 210,030

Current portion of note payable 528,134

Gas rate stabilization 407,016

Total Current Liabilities (Payable From Current Assets) 3,593,143

Current Liabilities (Payable From Restricted Assets):

Customer deposits 4,037,969

Developer deposits 112,619

Total Current Liabilities (Payable From Restricted Assets) 4,150,588

Noncurrent Liabilities:

FRS net pension liability 3,695,158

HIS net liability 1,681,617

Total OPEB liability 131,091

Note payable 1,183,773

Accrued benefits payable 685,276

Total Noncurrent Liabilities 7,376,915

TOTAL LIABILITIES 15,120,646

Deferred inflows related to pensions 243,556

Total Deferred Inflows 243,556

Invested in capital assets, net of related debt 46,315,491

Unrestricted 5,689,102

TOTAL NET POSITION 52,004,593$

LIABILITIES

DEFERRED INFLOWS

NET POSITION

LAKE APOPKA NATURAL GAS DISTRICT

WINTER GARDEN, FLORIDA

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

FOR THE YEAR ENDED SEPTEMBER 30, 2023

Operating Revenues:

Charges for services 23,493,432$

Other operating revenues 87,272

Total Operating Revenues 23,580,704

Operating Expenses:

Natural gas purchases 7,128,523

Personal services 7,164,098

Insurance 241,161

Repairs and maintenance 736,945

Professional services 414,823

Advertising and marketing 727,239

Bad debt expense 36,000

Travel and per diem 60,535

Gas, oil and fuel 124,275

Freight and postage 147,321

Materials 142,262

Communication services 63,743

Utilities 99,387

Supplies 69,802

Bank charges 447,322

Dues and subscriptions 60,006

Other operating expenses 320,535

Depreciation 2,064,166

Total Operating Expenses 20,048,143

Operating Income 3,532,561

Nonoperating Revenues (Expenses):

Interest income 475,630

Interest expense (42,647)

Intergovernmental transfers (210,930)

Total Nonoperating Revenues (Expenses) 222,053

Change in Net Position 3,754,614

Total Net Position - Beginning 48,249,979

Total Net Position - Ending 52,004,593$

The independent auditor's report and notes to the financial statements are an integral part of this statement.

LAKE APOPKA NATURAL GAS DISTRICT

WINTER GARDEN, FLORIDA

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED SEPTEMBER 30, 2023

Cash Flows From Operating Activities:

Cash received from customers 24,647,332$

Cash payments to suppliers for goods and services (11,784,302)

Cash payments to employees for services (6,218,528)

Net Cash Provided By Operating Activities 6,644,502

Cash Flows From Capital and Related Financing Activities:

Acquisition and construction of capital assets (5,245,469)

Principal paid on note payable (516,962)

Interest paid on note payable (42,647)

Net Cash Used In Capital and Related Financing Activities (5,805,078)

Cash Flows From Investing Activities:

Interest 475,630

Net Increase in Cash and Cash Equivalents 1,315,054

Cash and Cash Equivalents at October 1 13,683,833

Cash and Cash Equivalents at September 30 (1)

14,998,887$

(1) Cash - Unrestricted Assets 10,848,299$

Cash and Cash Equivalents - Restricted Assets 4,150,588

14,998,887$

The independent auditor's report and notes to the financial statements are an integral part of this statement.

Reconciliation of Operating Income to Net

Cash Provided by Operating Activities:

Operating income 3,532,561$

Adjustments to Reconcile Operating Income to

Net Cash Provided by Operating Activities:

Depreciation 2,064,166

Changes in Assets and Liabilities:

(Increase) decrease in receivables 774,981

(Increase) decrease in inventory (185,131)

(Increase) decrease in prepaid expenses (6,382)

Increase (decrease) in accounts payable (772,910)

Increase (decrease) in accrued wages and benefits 74,429

Increase (decrease) in taxes payable (39,876)

Increase (decrease) in net customer/developer deposits 217,351

Increase (decrease) in gas rate stabilization 114,172

Increase (decrease) in net pension liability/deferrals 878,164

Increase (decrease) in total OPEB liability (7,023)

Net Cash Provided By Operating Activities 6,644,502$

Supplemental disclosure of noncash investing, capital and financing activities:

The District recognized $210,930 Dividend's Payable.

Lake Apopka Natural Gas District

Notes to the Financial Statements

Note 1 – Summary of Significant Accounting Policies:

A. Reporting Entity – Lake Apopka Natural Gas District (the District) was established pursuant to the

provisions of Chapter 59-556, Laws of Florida, Acts of 1959, which became law on June 20, 1959, to

provide natural gas service within its defined area of service. The District operates under a commission

form of government with the commissioners being appointed by the District’s member municipalities of

Apopka, Winter Garden and Clermont. The District does not have any reporting requirements for a

component unit.

B. Fund Financial Statements – The District is accounted for as a proprietary fund. Proprietary funds are used

to account for activities similar to those found in the private sector, where the determination of net income

is necessary or useful to sound financial administration. Activities are generally financed in whole or in

part with fees charged to customers.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation – The accounting and

reporting policies of the District conform to the accounting rules prescribed by the Governmental

Accounting Standards Board (GASB).

The financial statements report uses the economic resources measurement focus and the accrual basis of

accounting. Revenues are recorded when billed to the customer and expenses are recorded when a liability

is incurred, regardless of the timing of related cash flows.

Operating income reported in proprietary fund financial statements includes revenues and expenses related

to the primary, continuing operations of the fund. Principal operating revenues for proprietary funds are

charges to customers for sales or service. Principal operating expenses are the costs of providing goods or

services and include administrative expenses and depreciation of capital assets. Other revenues and

expenses are classified as nonoperating in the financial statements.

D. Assets, Deferred Outflows, Liabilities, Deferred Inflows and Net Position

1. Cash and Cash Equivalents – Cash includes amounts in demand deposits, as well as short-term

investments with an original maturity date of three months or less. For purposes of reporting cash

flows, all highly liquid investments (including restricted assets) with an original maturity date of three

months or less are considered to be cash equivalents.

2. Accounts Receivable – Customer accounts receivable are presented at estimated net realizable value.

Unbilled revenues for services delivered during the last month of the fiscal year are accrued based on

meter readings for September consumption. The allowance method is used for determining estimated

uncollectible accounts. The allowance for uncollectible accounts is based on a percentage of gross

sales to cover anticipated losses. The allowance account is adjusted periodically to cover manage-

ment’s estimate of anticipated losses of its current accounts receivable. Receivables are written off

against the allowance for uncollectible accounts when management feels any additional collection

efforts would be unproductive.

3. Inventories – The inventories are stated at the lower of cost or market. Cost is determined on a first-in,

first-out basis.

Lake Apopka Natural Gas District

Notes to the Financial Statements

4. Prepaid Expenses – Payments made to vendors for services that will benefit future reporting periods.

5. Restricted Assets – The restricted assets shown on the statement of financial position represent those

assets which are earmarked for specific purposes. The corresponding liability designated as payable

from restricted assets represents the current maturities for which the restricted assets are accumulated.

When both restricted and unrestricted resources are available for use, it is the government’s policy to

use restricted resources first, then unrestricted resources as they are needed.

6. Capital Assets – All capital assets are stated at historical cost. Capital assets are defined by the District

as assets with an initial individual cost of more than $1,000 and an estimated useful life in excess of one

year. Depreciation is computed on the straight-line method over the estimated useful lives of the assets.

Land is the only capital asset not depreciated. Estimated useful lives are as follows:

Buildings

–

50 years

Gas

distribution system

–

50 years

Machinery and equipment

–

15 years

7. Employee Benefits – Accumulated unpaid vacation, sick pay, and other employee benefit amounts are

accrued when incurred.

8. Deferred Outflow/Inflow of Resources – In addition to assets, the statement of net position reports a

separate section for deferred outflows of resources. This separate financial statement element, deferred

outflows of resources, represents a consumption of net position that applies to future periods and will

not be recognized as an outflow of resources (expense/expenditure) until that time.

The deferred outflows related to pensions are an aggregate of items related to pensions, as calculated in

accordance with Generally Accepted Accounting Principles (GAAP). The deferred outflows related to

pensions will be recognized as either pension expense or a reduction in the net pension liability in

future reporting years. Details on the composition of the deferred outflows related to pensions are

further discussed in Note 10.

In addition to liabilities, the statement of net position will sometimes report a separate section for

deferred inflows of resources. This separate financial statement element, deferred inflows of resources,

represents an acquisition of net position that applies to future periods and will not be recognized as an

inflow of resources (revenue) until that time. The District has one item that qualifies for reporting as

deferred inflows of resources.

The deferred inflows related to pensions are an aggregate of items related to pensions, as calculated in

accordance with GAAP. The deferred inflows related to pensions will be recognized as a reduction to

pension expense in future reporting years. Details on the composition of the deferred outflows related

to pensions are further discussed in Note 10.

Lake Apopka Natural Gas District

Notes to the Financial Statements

9. Pensions/Net Pension Liability – In the statement of net position, net pension liability represents the

District’s proportionate share of the net pension liability of the cost-sharing pension plans in which it

participates. This proportionate amount represents a share of the present value of projected benefit

payments to be provided through the cost-sharing pension plans to current active and inactive

employees that is attributed to those employees’ past periods of service (total pension liability), less the

amount of the cost-sharing pension plan’s fiduciary net position.

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows

of resources related to pensions, and pension expense, benefit payments (including refunds of employee

contributions) are recognized when due and payable in accordance with the benefit terms. Investments

are reported at fair value.

10. Employee Benefits and Other Post-Employment Benefits (OPEB) – Employees earn annual vacation

leave based upon the following schedule:

Length of Service Hours per Year

1-2 Years 84 hours

3-5 Years 96 hours

6-8 Years 108 hours

9-10 Years 120 hours

11-13 Years 132 hours

14-16 Years 144 hours

17-19 Years 156 hours

20-24 Years 168 hours

25 Years 200 hours

Employees can accumulate up to 10 vacation days over the amount earned for one year. Employees are

paid for all outstanding vacation time accumulated when they leave the District’s employment,

provided they submit adequate written notice and are not being terminated for misconduct.

Employees earn sick leave at the rate of 4 hours per month during the first year of service and 8 hours

per month after the first year of service. Sick leave can be accumulated up to a maximum of 1040

hours. Employees are paid for accrued sick leave up to a maximum of 480 hours when they leave the

District’s employment.

OPEB refers to post-employment benefits other than pension benefits and includes postemployment

healthcare benefits and life insurance. Like pensions, OPEB arises from an exchange of salaries and

benefits for employees rendered and constitute part of compensation for those services. The amounts

are accrued when incurred in the statement of net position.

11. Use of Restricted Resources – The District’s policy is to spend unrestricted funds only after all of the

applicable restricted resources have been depleted.

Lake Apopka Natural Gas District

Notes to the Financial Statements

E. Revenues and Expenses

1. Revenues and Expenses – The District distinguishes operating revenue and expenses from non-

operating items. Operating revenues and expenses generally result from providing services and

producing and delivering in connection with the District’s ongoing operations. The principal operating

revenues of the District are charges for services to customers for natural gas services. The significant

expenses of the District consist of costs associated with the purchase and distribution of services,

advertising and marketing, and depreciation on capital assets. All revenues and expenses not meeting

these definitions are reported as non-operating revenues and expenses.

F. 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; injuries to employees; and natural disasters. The District purchases commercial

insurance for the risks of losses to which it is exposed. Settled claims have not exceeded this commercial

coverage for the current year or the three prior years.

G. Net Position

Net position represents the difference between assets and liabilities in the statement of net position. Net

invested in capital assets is reduced by the outstanding balances of any borrowing used for the acquisition,

construction or improvement of those assets. Net position is reported as restricted when there are legal

limitations imposed on their use.

H. Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates

and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Actual results may differ from those estimates.

Note 2 – Cash and Cash Equivalents:

Deposits:

The Florida Security for Depositors Act identifies those financial institutions that have deposited the required

collateral in the name of the Treasurer of the State of Florida as qualified public depositories. The District only

places deposits with qualified public depositories. Therefore, all deposits are entirely insured by FDIC or

Florida’s Multiple Financial Institution Collateral Pool.

Lake Apopka Natural Gas District

Notes to the Financial Statements

Investments:

Investments are reported at fair value. Fair value is the price that would be received to sell an asset in an

orderly transaction between market participants and the measurement date. Fair value determinations are made

based upon a hierarchy that prioritizes the inputs to valuation techniques. The hierarchy gives the highest

priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurement) and the lowest

priority to unobservable inputs (Level 3 measurements).

 Level 1 – Investments reflect unadjusted quoted prices in active markets for identical assets.

 Level 2 – Investments reflect prices that are based on inputs that are either directly or indirectly

observable for an asset (including quoted prices for similar assets), which may include inputs in

markets that are not considered to be active.

 Level 3 – Investments reflect prices based upon unobservable inputs for an asset.

The categorization of investments within the hierarchy is based upon the pricing transparency of the instrument

and should not be perceived as the particular investment’s risk.

Debt securities classified as Level 2 are evaluated prices from the custodian bank’s external pricing vendor.

The pricing methodology involves the use of evaluation models, such as matrix pricing, which is based on the

securities’ relationship to benchmark quoted prices.

As of September 30, 2023, the District has the following investments and maturities:

2023 Fair

Value

Weighted

Average

Maturity

(Days)

Hierarchy

Level

Investment by fair value level

Debt securities

U.S. Treasury

Bills

10,438,742

The treasury bills had a maturity of three months at the date of purchase; therefore they are recorded as cash

and cash equivalents in the statement of net position.

Note 3 – Receivables:

Accounts receivable have been reported, net of allowance for uncollectible accounts. The allowance for

uncollectible accounts at September 30, 2023 was $144,374. The allowance is based upon management’s

specific identification of receivables that may become uncollectible.

Lake Apopka Natural Gas District

Notes to the Financial Statements

Note 4 – Capital Assets:

A summary of changes in the District’s capital assets is as follows:

Balance

9/30/

Additions

Deletions

Balance

9/30/

Land

282,229

Buildings

2,367,584

113,221

2,480,805

Gas distribution system

64,082,552

4,822,336

8,904,890

Office

furniture and equipment

146,109

1,709

(

4,902

)

2,916

Computer equipment

694,559

54,743

(

109,247

)

40,055

Transportation equipment

1,509,107

110,053

(

45,638

)

1,5

73,522

Tools and work equipment

1,000,223

60,885

1,061,108

Communication equipment

57,941

82,520

(

11,653

)

128,808

Other equipment

2,795

Totals

70,143,099

5,245,469

(

171,440

)

75,217,128

Less: Accumulated

depreciation

(25,297,004

)

(

2,064,166

)

171,440

(

27,189,730

)

Net

44,846,095

3,181,303

48,027,398

Note 5 – Other Post-Employment Benefits:

Plan Description:

The District’s Retiree Health Care Plan (the Plan) is a single-employer defined benefit postemployment health

care plan that covers eligible retired employees of the District. The Plan, which is administered by the District,

allows employees who retire and meet retirement eligibility requirements under one of the District’s retirement

plans to continue medical insurance coverage as a participant in the Plan.

Plan Membership as of October 1, 2022:

Inactive Plan Member or Beneficiaries Currently Receiving Benefits 1

Inactive Plan Member Entitled to But Not Yet Receiving Benefits 0

Active Plan Members 59

Benefits Provided:

The benefits provided are the same as those provided for active employees. Spouses and dependents of eligible

retirees are also eligible for medical coverage. All employees of the District are eligible to receive post-

employment health care benefits. All retiree and dependent coverage is at the expense of the retiree.

Lake Apopka Natural Gas District

Notes to the Financial Statements

Total OPEB Liability:

The measurement date is September 30, 2023.

The measurement period for the OPEB expense was October 1, 2022 to September 30, 2023.

The reporting period is October 1, 2022 through September 30, 2023.

The District’s Total OPEB Liability was measured as of September 30, 2023.

Actuarial Assumptions:

The Total OPEB Liability was determined by an actuarial valuation as of October 1, 2022 using the following

actuarial assumptions:

Inflation 2.50%

Salary Increases 2.50%

Discount Rate 4.87%

Initial Trend Rate 7.25%

Ultimate Trend Rate 4.00%

Years to Ultimate 52

For all lives, mortality rates were PubG-2010 Mortality Tables projected to the valuation date using Projection

Scale MP-2019.

Discount Rate:

Given the District’s decision not to fund the program, all future benefit payments were discounted using a

high-quality municipal bond rate of 4.87%. The high-quality municipal bond rate was based on the

measurement date of the S&P Municipal Bond 20 Year High Grade Rate Index as published by the S&P Dow

Jones Indices. The S&P Municipal 20 Year High Grade Rate Index consists of bonds in the S&P Municipal

Bond Index with a maturity of 20 years. Eligible bonds must be rated at least AA by Standard and Poor’s

Rating Services, Aa2 by Moody’s or AA by Fitch. If there are multiple ratings, the lowest rating is used.

OPEB Expense:

For the fiscal year ended September 30, 2023, the District will recognize OPEB Expense of $4,274.

Lake Apopka Natural Gas District

Notes to the Financial Statements

Changes in Total OPEB Liability:

Changes of assumptions reflect a change in the discount rate from 4.77% for the fiscal year ended

September 30, 2022, to 4.87% for the fiscal year ended September 30, 2023.

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate:

The following presents the Total OPEB Liability of the District, as well as what the District’s Total OPEB

Liability would be if it were calculated using a discount rate that is one-percentage-point-lower or one-

percentage-point-higher than the current discount rate:

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates:

The following presents the Total OPEB Liability of the District, as well as what the District’s Total OPEB

Liability would be if it were calculated using healthcare cost trend rates that are one -percentage-point-lower or

one-percentage-point-higher than the current healthcare cost trend rates:

Lake Apopka Natural Gas District

Notes to the Financial Statements

Note 6 – Long-Term Debt:

On December 14, 2016, the District secured a $5,000,000 note payable at an interest rate of 2.14% for a ten -

year period, and a revolving line of credit for $2,500,000 at a monthly interest rate of LIBOR plus 1.25% for a

minimum of three years. The revolving line of credit for $2,500,000 with TD Bank was replaced with a

$3,000,000 credit line with Regions Bank with a three-year term commencing on February 19, 2020 at a

monthly interest rate of LIBOR plus 125 basis points. The District did not renew the line of credit when it

expired on February 19, 2023. At the end of the fiscal year, the note payable balance outstanding was

$1,711,907 and the revolving line of credit balance was $0.

The District has pledged the net revenues generated by the overall system for payment of the note and

revolving line of credit issued. The note and revolving line of credit are payable solely from the District’s

customers’ net revenues payable through fiscal year 2027. Annual principal and interest payments on the note

are currently expected to require approximately 7% of net revenues. The total principal and interest remaining

on the note, as noted below under Debt Service Requirements, is $ 1,772,093. Principal and interest paid for

the current year and total customer net revenues were $559,609 and $6,072,357, respectively.

The following is a summary of changes in long-term debt for the fiscal year ended September 30, 2023:

The annual debt service requirements for the note payable and revolving line of credit outstanding as of

September 30, 2023 are as follows:

Year Ending

September 30,

Principal

Interest

2024

528,134

31,475

2025

39,547

20,061

2026

51,207

8,401

202

93,0

Total Payments

1,711,907

60,186

Lake Apopka Natural Gas District

Notes to the Financial Statements

Note 7 – Gas Rate Stabilization:

Gas rate stabilization represents the District’s liability to customers for excess costs collected over costs

incurred for natural gas.

Note 8 – Dividend Payable:

At their September 25, 2017 meeting, the District’s Board of Commissioners (the Board) approved the

establishment of a Dividend Payable account to accumulate funds equal to one (1) cent for each therm of

natural gas billed to customers each month for potential distribution to member cities.

On October 23, 2023, the Board approved resolution number 2023-03, entitled A Resolution of Lake Apopka

Natural Gas District Establishing Parameters for Future Member Dividend Distribution, Providing For Future

Review and Revision As Best Meets The Needs Of The District, And Providing An Effective Date. The

resolution states that a recalculated dividend shall be paid, in equal proportions to each of the three member

municipalities, for the fiscal years 2022-2023 and 2023-2024, in an amount equal to thirty three percent (33%)

of the year end net revenues, or five hundred thousand dollars ($500,000), whichever is less, or such lesser

amount as may be permitted by the precise language of the charter; and, further, provided that, at all time, there

shall remain, after such distribution, a minimum amount of net revenues in each fiscal year sufficient to pay the

sum total of the then outstanding covenanted, or otherwise contracted to dispose of, obligations and liabilities

of the District. The District paid dividends to member municipalities totaling $0 during the fiscal year ended

September 30, 2023. The Dividend Payable balance was $452,203 at September 30, 2023 and is reported as

Due to Other Governments in the Statement of Net Position.

Note 9 – Contingencies:

The District is not aware of any pending or threatened litigation, which would not be covered by insurance.

Note 10 – Other Matters:

The District’s current pipeline capacity contracts require the District to purchase a minimum volume of pipe-

line capacity on a monthly basis. Currently, the District’s sales volume is less than the required purchase

volume during the November through April contract period. The District’s asset manager, Infinite Energy,

markets the excess capacity.

Lake Apopka Natural Gas District

Notes to the Financial Statements

Note 11 – Florida Retirement System Pension Plan:

Plan Description: The District contributes to the Florida Retirement System (FRS), a cost-sharing, multiple-

employer public employee retirement system (PERS) administered by the Florida Division of Retirement. The

FRS offers a choice between a defined benefit plan (Pension Plan) and a defined contribution plan (Investment

Plan). Employees also participated in the Retiree Health Insurance Subsidy (HIS Plan), which is a defined

benefit plan. Florida Statutes, Chapter 121, assigns the District to administer the Pension Plan to the Division

of Retirement. The Florida Legislature establishes and amends benefit provisions and contribution levels.

The Pension Plan provides for vesting of benefits after 6 to 8 years of creditable service. Normal retirement

benefits are available to employees who retire at or after age 62 to 65 with 6 or 8 or more years of service.

Early retirement is available after 6 to 8 years of service with a 5% reduction of benefits for each year prior to

the normal retirement age. Retirement benefits are based upon age, average compensation and years-of-service

credit, where average compensation is computed based on an individual’s 5 to 8 highest years of earnings.

Benefits also include disability and survivor’s benefits, as established by Florida Statutes.

Pension Plan members may participate in a Deferred Retirement Option Plan (DROP), after reaching eligibility

for normal retirement or through the available deferral period for eligible members. This plan allows

employees to defer receipt of retirement benefits, while continuing employment with a FRS employer for up to

96 months. Accumulated system benefits earn 1.3% interest compounded monthly. The employer continues to

contribute to the FRS on behalf of the employee.

The Investment Plan provides for vesting after one year of creditable service. Under this plan, the employer

makes contributions to a participant’s account and the participant directs where the contributions are invested

among the plan’s investment funds. Upon termination, vested participants may receive amounts accumulated

in their investment accounts.

Lake Apopka Natural Gas District

Notes to the Financial Statements

The HIS Plan is established in accordance with Section 112.363, Florida Statutes. The benefit is a monthly

payment to assist retirees in paying their health insurance costs. Current benefits are based on $5 per year of

service, ranging from $30 - $150 per month. To be eligible, retirees must provide proof of health insurance

coverage, which may include Medicare.

Funding Policy: The District is required to contribute at an actuarially determined rate. The current rate for

regular members, senior management, and DROP participants is 13.57%, 34.52%, and 21.13%, respectively, of

annual covered payroll, which includes the HIS Plan rate of 2.0%. The contribution requirements of the

District are established and may be amended by the Florida Legislature. The District’s contributions to the

FRS for the years ended September 30, 2023, 2022, and 2021 were $505,740, $457,799, and $392,969,

respectively. Employees were required to begin contributing 3% to the retirement system effective July 1,

2011.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources

Related to Pension – At September 30, 2023, the District reported a liability of $3,695,158 and $1,681,617 for

its proportionate share of the Pension Plan and HIS Plan’s net pension liability, respectively. The net pension

liability was measured as of June 30, 2023, and the total pension liability used to calculate the net pension

liability was determined by an actuarial valuation as of July 1, 2023. The District’s proportionate share of the

net pension liability was based on the District’s 2022-23 fiscal year contributions relative to the 2022-23 fiscal

year contributions of all participating members. At June 30, 2023, the District’s proportionate share for the

Pension Plan was .00927340%, which was a decrease of .00001269% from its proportionate share measured as

of June 30, 2022. At June 30, 2023, the proportionate share for the HIS Plan was .01058863%, which was an

decrease of .00031648% from its proportionate share measured as of June 30, 2022.

For the fiscal year ended September 30, 2023, the District recognized pension expense of $791,158 for the

Pension Plan, and $23,585 for the HIS Plan.

Lake Apopka Natural Gas District

Notes to the Financial Statements

The deferred outflows of resources and deferred inflows of resources related to the Pension Plan are as follows:

Deferred Outflows Deferred Inflows

Description of Resources of Resources

Difference between expected

and actual experience $ 346,943 $ -

Change of assumptions 240,881 -

Net difference between projected

and actual earnings on Pension

Plan investments 154,320 -

Changes in proportion and

differences between District

Pension Plan contributions and

proportionate share of contributions 104,617 51,014

District Pension Plan contributions

subsequent to the measurement

date 136,667 -

Total $ 983,428 $ 53,014

The deferred outflows of resources and deferred inflows of resources related to the HIS Plan are as follows:

Deferred Outflows Deferred Inflows

Description of Resources of Resources

Difference between expected

and actual experience $ 24,618 $ 3,947

Change of assumptions 44,209 145,718

Net difference between projected

and actual on HIS Plan investments 868 -

Changes in proportion and

differences between District

HIS Plan contributions and

proportionate share of contributions 10,330 40,877

District HIS Plan contributions

subsequent to the measurement

date 23,585 -

Total $ 103,610 $ 190,542

Lake Apopka Natural Gas District

Notes to the Financial Statements

The deferred outflows of resources related to the Pension Plan and HIS Plan, totaling $136,667 and $23,585,

respectively, resulting from District contributions to the Plans subsequent to the measurement date, will be

recognized as a reduction of the new pension liability in the fiscal year ended September 30, 2024. Other

amounts reported as deferred outflows of resources and deferred inflows of resources related to the Pension

Plan will be recognized in pension expense as follows:

Fiscal Year Ending Pension Plan HIS Plan

September 30, Amount Amount

2024 $ 126,126 $ (20,107)

2025 (16,684) (14,168)

2026 621,211 (20,513)

2027 48,619 (32,800)

2028 14,475 (20,084)

Thereafter - (2,845)

Total $ 793,747 $ (110,517)

Pension Plan Actuarial Assumptions – The total pension liability in the June 30, 2023 actuarial valuation was

determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.40%

Salary increases 3.25%, average, including inflation

Investment rate of return 6.70%, net of Pension Plan investment expense

Mortality PUB2010 base table varies by member category and sex

The actuarial assumptions used in the July 1, 2023 valuation were based on the results of an actuarial

experience study for the period July 1, 2013 through June 30, 2018.

The long-term expected rate of return on Pension Plan investments was not based on historical returns, but

instead is based on a forward-looking capital market economic model. The allocation policy’s description of

each asset class was used to map the target allocation to the asset classes shown below. Each asset class

assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation

assumption.

The target allocation (as outlined in the Pension Plan’s Investment Policy) and best estimates of arithmetic and

geometric real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation Annual Arithmetic Return

Cash 1.0 % 2.9 %

Fixed income 19.8 4.5

Global equity 54.0 8.7

Real estate 10.3 7.6

Private equity 11.1 11.9

Strategic investments 3.8 6.3

Total 100.0 %

Lake Apopka Natural Gas District

Notes to the Financial Statements

Pension Plan Discount Rate – The discount rate used to measure the total pension liability was 6.70%. The

prior year discount rate was also 6.70%. The Pension Plan’s fiduciary net position was projected to be

available to make all projected future benefit payments of current active and inactive employees. Therefore,

the discount rate for calculating the total pension liability is equal to the long-term expected rate of return.

HIS Plan Actuarial Assumptions – The total pension liability in the July 1, 2023, actuarial valuation was

determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.40%

Salary increases 3.25%, average, including inflation

Municipal Bond Rate 3.65%

Mortality Generational RP-2000 with Projection Scale BB

HIS Plan Discount Rate – The discount rate used to measure the total pension liability was 3.65%. The prior

year discount rate was 3.54%. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the

depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal

bond rate selected by the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond

Index was adopted as the applicable municipal bond index.

Sensitivity of the District’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate –

The following represents the District’s proportionate share of the net pension liability calculated using the

current discount rate and what it would be if it were calculated using a discount rate that is one-percentage-

point-lower and one-percentage-point-higher:

Current

1% Decrease Discount Rate 1% Increase

(5,70%) (6.70%) (7.70%)

Pension Plan proportionate share

of the net pension liability $ 6,312,083 $ 3,695,158 $ 1,505,788

Current

1% Decrease Discount Rate 1% Increase

(2.65%) (3.65%) (4.65%)

HIS Plan proportionate share

of the net pension liability $ 1,918,462 $ 1,681,617 $ 1,485,288

The FRS issues a publicly available financial report that includes financial statements and required

supplementary information for the plan. Detailed information regarding the FRS and HIS Plan’s fiduciary net

position is available in the separately issued FRS Pension Plan and Other State-Administered Systems Annual

Comprehensive Financial Report for the fiscal year ended June 30, 2023.

That report can be obtained by contacting the Division of Retirement at:

Department of Management Services

Division of Retirement

Bureau of Research and Member Communications

P.O. Box 9000, Tallahassee, FL 32315-9000

Reporting Period Ending 9/30/2023 9/30/2022 9/30/2021 9/30/2020 9/30/2019 9/30/2018

Measurement Date 9/30/2023 9/30/2022 9/30/2021 9/30/2020 9/30/2019 9/30/2018

Total OPEB Liability

Service Cost 9,155$ 9,028$ 9,330$ 10,096$ 9,007$ 8,787$

Interest 6,973 4,371 3,913 5,332 6,006 5,450

Difference Between Expected and Actual Experienc

2,873 - (2,772) - (12,287) -

Change of Assumptions (18,027) (43,024) (9,723) 27,766 9,718 (9,056)

Benefit Payments (7,997) (6,203) (6,132) (5,401) (11,113) (11,707)

Net Change in Total OPEB Liability (7,023) (35,828) (5,384) 37,793 1,331 (6,526)

Total OPEB Liability - Beginning 138,114 173,942 179,326 141,533 140,202 146,728

Total OPEB Liability - Ending 131,091$ 138,114$ 173,942$ 179,326$ 141,533$ 140,202$

Covered Employee Payroll 4,359,596$ 4,090,095$ 3,990,336$ 3,565,134$ 3,478,180$ 3,202,204$

Total OPEB Liability as a percentage of

Covered Employee Payroll 3.01% 3.38% 4.36% 5.03% 4.07% 4.38%

Notes to Schedule:

Fiscal Year Ended September 30, 2023: 4.87%

Fiscal Year Ended September 30, 2022: 4.77%

Fiscal Year Ended September 30, 2021: 2.43%

Fiscal Year Ended September 30, 2020: 2.14%

Fiscal Year Ended September 30, 2019: 3.58%

Fiscal Year Ended September 30, 2018: 4.18%

Fiscal Year Ended September 30, 2017: 3.64%

Change of assumptions. Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period. The

following are the discount rates used in each period:

Lake Apopka Natural Gas District

Schedule of Changes in the District's Total OPEB Liability and Related Ratios

The District implemented GASB Statement No. 75 for the fiscal year ended September 30, 2018, information for prior years is not available.

Required Supplementary Information

FRS Contributions

District's FRS in Relation to the FRS FRS

Fiscal Year Contractually Contractually Contribution District's Contributions as

Ended Required Required Deficiency Covered a Percentage of

Sept. 30, Contribution Contribution (Excess) Payroll Covered Payroll

2023 505,740$ 505,740$ -$ 4,286,937$ 11.80%

2022 457,799$ 457,799$ -$ 4,169,934$ 10.98%

2021 392,969$ 392,969$ -$ 3,867,727$ 10.16%

2020 293,172$ 293,172$ -$ 3,764,787$ 7.79%

2019 297,921$ 297,921$ -$ 3,699,919$ 8.05%

2018 250,266$ 250,266$ -$ 3,586,313$ 6.98%

2017 229,868$ 229,868$ -$ 3,431,192$ 6.70%

2016 211,132$ 211,132$ -$ 3,326,467$ 6.35%

2015 219,757$ 219,757$ -$ 2,949,736$ 7.45%

2014 197,434$ 197,434$ -$ 2,016,036$ 9.79%

HIS Contributions

District's HIS in Relation to the HIS HIS

Fiscal Year Contractually Contractually Contribution District's Contributions as

Ended Required Required Deficiency Covered a Percentage of

Sept. 30, Contribution Contribution (Excess) Payroll Covered Payroll

2023 85,739$ 85,739$ -$ 4,169,934$ 2.06%

2022 69,188$ 69,188$ -$ 4,169,934$ 1.66%

2021 64,204$ 64,204$ -$ 3,867,727$ 1.66%

2020 62,256$ 62,256$ -$ 3,764,787$ 1.65%

2019 61,419$ 61,419$ -$ 3,699,919$ 1.66%

2018 59,111$ 59,111$ -$ 3,586,313$ 1.65%

2017 58,272$ 58,272$ -$ 3,431,192$ 1.70%

2016 54,924$ 54,924$ -$ 3,326,467$ 1.65%

2015 40,320$ 40,320$ -$ 2,949,736$ 1.37%

2014 34,717$ 34,717$ -$ 2,016,036$ 1.72%

Retiree Health Insurance Subsidy (HIS) Program Defined Benefit Pension Plan

Schedule of Contributions

Lake Apopka Natural Gas District

Florida Retirement System (FRS) Defined Benefit Pension Plan

Required Supplementary Information

District's

Proportionate FRS Plan

District's District's Share of the Fiduciary Net

District's Plan Sponsor Proportion Proportionate FRS Net Pension Position as a

Fiscal Year Measurement of the FRS Net Share of the FRS District's Liability as a Percentage of

Ended Date Pension Net Pension Covered Percentage of Total Pension

Sept. 30, June 30, Liability Liability Payroll Covered Payroll Liability

2023 2023 0.0093% 3,695,158$ 4,286,937$ 86.20% 82.38%

2022 2022 0.0094% 3,497,444$ 4,169,934$ 83.87% 82.89%

2021 2021 0.0095% 716,898$ 3,867,727$ 18.54% 96.40%

2020 2020 0.0088% 3,824,316$ 3,764,787$ 101.58% 78.85%

2019 2019 0.0089% 3,070,310$ 3,699,919$ 82.98% 82.61%

2018 2018 0.0088% 2,645,041$ 3,586,313$ 73.75% 84.26%

2017 2017 0.0088% 2,611,870$ 3,431,192$ 76.12% 83.89%

2016 2016 0.0086% 2,186,079$ 3,326,467$ 65.72% 84.88%

2015 2015 0.0090% 1,164,215$ 2,949,736$ 39.47% 92.00%

2014 2014 0.0074% 1,266,714$ 2,016,036$ 62.83% 96.09%

District's

Proportionate HIS Plan

District's District's Share of the Fiduciary Net

District's Plan Sponsor Proportion Proportionate HIS Net Pension Position as a

Fiscal Year Measurement of the HIS Net

Share of the HIS D

istrict's Liability as a Percentage of

Ended Date Pension Net Pension Covered Percentage of Total Pension

Sept. 30, June 30, Liability Liability Payroll Covered Payroll Liability

2023 2023 0.0106% 1,681,617$ 4,286,937$ 39.23% 4.12%

2022 2022 0.0109% 1,155,026$ 4,169,934$ 27.70% 4.81%

2021 2021 0.0109% 1,333,294$ 3,867,727$ 34.47% 3.56%

2020 2020 0.0108% 1,319,108$ 3,764,787$ 35.04% 3.00%

2019 2019 0.0109% 1,229,646$ 3,699,919$ 33.23% 2.63%

2018 2018 0.0109% 1,153,673$ 3,586,313$ 32.17% 2.15%

2017 2017 0.0110% 1,177,327$ 3,431,192$ 34.31% 1.64%

2016 2016 0.0105% 1,248,843$ 3,326,467$ 37.54% 0.97%

2015 2015 0.0107% 1,075,160$ 2,949,736$ 36.45% 0.50%

2014 2014 0.0101% 966,589$ 2,016,036$ 47.95% 0.99%

Required Supplementary Information

Schedule of the District's Proportionate Share of the Net Pension Liability

Florida Retirement System (FRS) Defined Benefit Pension Plan

Lake Apopka Natural Gas District

Retiree Health Insurance Subsidy (HIS) Program Defined Benefit Pension Plan

Lake Apopka Natural Gas District

Notes to Required Supplementary Information -

Schedules of the District's Proportionate Share of the Net Pension Liability

and Schedules of District Contributions

Florida Retirement System

NOTE 1 - CHANGES IN BENEFIT TERMS

FRS Pension Plan:

2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014:

No significant changes.

HIS Program:

2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014:

No significant changes.

NOTE 2 - CHANGES IN ASSUMPTIONS

FRS Pension Plan:

2023:

No significant changes.

2022:

The long-term expected rate of return was decreased from 6.80% to 6.70%, and the active member

2021:

No significant changes.

2020:

The long-term expected rate of return was decreased from 6.90% to 6.80%, and the active member

mortality assumption was updated.

2019:

The long-term expected rate of return was decreased from 7.00% to 6.90%, and the active member

mortality assumption was updated.

2018:

The long-term expected rate of return was decreased from 7.10% to 7.00%, and the active member

mortality assumption was updated.

2017:

The long-term expected rate of return was decreased from 7.60% to 7.10%, and the active member

mortality assumption was updated.

2016:

The long-term expected rate of return was decreased from 7.65% to 7.60%, and the active member

mortality assumption was updated.

HIS Program:

The municipal rate used to determine total pension liability changed each year:

2023: 3.65%

2022: 3.54%

2021: 2.16%

2020: 2.21%

2019: 3.50%

2018: 3.87%

2017: 3.58%

2016: 2.85%

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Commissioners of the

Lake Apopka Natural Gas District

Winter Garden, 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 basic financial statements, as listed in the

table of contents, of the Lake Apopka Natural Gas District (the District) as of and for the fiscal year ended

September 30, 2023, and have issued our report thereon dated March 12, 2024.

Repo

rt on Internal Control over Financial Reporting

In pl

anning and performing our audit of the financial statements, we considered the 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 opinion on the financial statements, but

not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over

financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal

control.

A deficiency in internal control exists when the design or operation of a control does not allow manage-

ment 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 District’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 weak-

nesses may exist that have not been identified.

To the Board of Commissioners of the

Lake Apopka Natural Gas District

Report on Compliance an

d Other Matters

As par

t of obtaining reasonable assurance about whether the District’s financial statements are free of

material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,

contracts and grant agreements, noncompliance with which could have a direct and material effect on the

financial statements. 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.

We noted certain matters that we reported to the District’s management, in a separate letter dated

March 12, 2024.

rpose of this Report

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

and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal

control or on compliance. This report is an integral part of an audit performed in accordance with

Government Auditing Standards in considering the District’s internal control and compliance.

Accordingly, this communication is not suitable for any other purpose.

rtified Public Accountants

Orlando, Florida

March 12, 2024

INDEPENDENT AUDITOR’S MANAGEMENT LETTER

To the Board of Commissioners of the

Lake Apopka Natural Gas District

Winter Garden, Florida

Report on the Financial Statements

We have audited the basic financial statements of the Lake Apopka Natural Gas District (the District) as

of and for the fiscal year ended September 30, 2023, and have issued our report thereon dated March 12,

2024.

Audit

or’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the United States of

America, the standards applicable to financial audits contained in Government Auditing Standards issued

by the Comptroller General of the United States of America, and Chapter 10.550, Rules of the 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 on Financial Statements Performed in Accordance with

Government Auditing Standards; Independent Accountant’s Report on an examination conducted with

AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance

with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated

March 12, 2024, should be considered in conjunction with this management letter.

Prior Audit Findings

Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective

actions have been taken to address findings and recommendations made in the preceding annual financial

audit report. In connection with the preceding audit, there were no findings or recommendations.

ficial Title and Legal Authority

Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal

authority for the primary government and each component unit of the reporting entity be disclosed in this

management letter, unless disclosed in the notes to the financial statements. The legal authority is dis-

closed in the notes to the financial statements.

Financial Condition and Management

Sections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate

procedures and report the results of our determination as to whether or not the District has met one or

more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific

condition(s) met. In connection with our audit, we determined that the District did not meet any of the

conditions described in Section 218.503(1), Florida Statutes.

To the Board of Commissioners of the

Lake Apopka Natural Gas District

Financ

ial Condition and Management (Continued)

Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial

condition assessment procedures. It is management’s responsibility to monitor the District’s financial

condition, and our financial condition assessment was based, in part, on representations made by manage-

ment and the review of financial information provided by same.

ction 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.

Spec

ial District Component Units

Section 10.554(1)(i)5.c., Rules of the Auditor General, requires, if appropriate, that we communicate the

failure of a special district that is a component unit of a county, municipality, or special district, to

provide the financial information necessary for proper reporting of the component unit within the audited

financial statements of the county, municipality, or special district in accordance with Section

218.39(3)(b), Florida Statutes. There were no special district component units that were required to

provide financial information to the District for the fiscal year ended September 30, 2023.

required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor

General, the District reported:

a. The

total number of district employees compensated in the last pay period of the District’s

fiscal year as 60.

b. The total number of independent contractors to whom nonemployee compensation was paid

in the last month of the district’s fiscal year as 3.

c. All compensation earned by or awarded to employees, whether paid or accrued, regardless of

contingency as $4,189,186.

d. All compensation earned by or awarded to nonemployee independent contractors, whether

paid or accrued, regardless of contingency as $2,684,148.

e. 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 of the fiscal year being reported, together with the

total expenditures for such project as listed below:

• Citrus Grove PH 4, 6” Poly Main Ext.

$81,020

• Willow

Ridge PH 1, Montverde $84,056

• Winding Meadows, Plymouth, Sorrento Rd. $93,584

• Loew’s Laundry, 6” Steel Main Ext., Apopka $235,729

• Dell Web, Ph 1&2 @ Hamock & CR 561-A, Minneola $96,274

• Avalon Rd. – New Independence to Schlofield, PH 1 $448,421

• Jason Dwelley, 4” Loop $170,815

• Villa City Rd., Main Ext. $282,177

f. 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, as $0.

To the Board of Commissioners of the

Lake Apopka Natural Gas District

Addit

ional Matters

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

provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred,

that have an effect on the financial statements that is less than material but which warrants the attention of

those charged with governance. In connection with our audit, we did not have any such findings.

rpose 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 District’s Board, and applicable management, and is not

intended to be, and should not be, used by anyone other than these specified parties.

rtified Public Accountants

lando, Florida

March 12, 2024

INDEPENDENT ACCOUNTANT’S REPORT

To t

he Board of Commissioners of the

Lake Apopka Natural Gas District

Winter Garden, Florida

have examined the compliance of the Lake Apopka Natural Gas District (the District) with the

requirements of Section 218.415, Florida Statutes, during the fiscal year ended September 30, 2023.

Management is responsible for the District’s compliance with those requirements. Our responsibility is

to express an opinion on the District’s compliance based on our examination.

Our

examination was conducted in accordance with attestation standards established by the American

Institute of Certified Public Accountants. Those standards require that we plan and perform the exam-

ination to obtain reasonable assurance about whether the District complied with the aforementioned

requirements in all material respects. An examination involves performing procedures to obtain evidence

about the District’s compliance with those requirements, in all material respects. The nature, timing, and

extent of the procedures selected depend on our judgment, including an assessment of the risks of

material misstatement of the District’s compliance with those requirements, whether due to fraud or error.

We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for

our opinion.

We are required to be independent and to meet our ethical responsibilities in accordance with relevant

ethical requirements relating to the examination engagement. Our examination does not provide a legal

determination on the District’s compliance with the specified requirements.

In o

ur opinion, the District complied, in all material respects, with the aforementioned requirements for

the fiscal year ended September 30, 2023.

rtified Public Accountants

Orlando, Florida

March 12, 2024