2024_CRA_Zephyrhills_Audit.pdf

Zephyrhills Community Redevelopment Agency

A Component Unit of the City of Zephyrhills, Florida

General Purpose Financial Statements For the Year Ended September 30, 2024

Zephyrhills Community Redevelopment Agency

(A Component Unit of the City of Zephyrhills, Florida)

CRA Leadership

September 30, 2024

CRA Board of Commissioners

Lance Smith Chairperson

Kenneth Burgess Vice-Chairperson

Jodi Wilkeson Board Member

Charles Proctor Board Member

Steven F. Spina, PhD Board Member

Melonie Bahr Monson Mayor City of Zephyrhills

Appointed Officials

William C. Poe Jr. City Manager

Gail Hamilton CRA Director i

Table of Contents

Table of Contents ......................................................................................................................................... i

Independent Auditors’ Report ............................................................................................................ A1-A2

Management’s Discussion and Analysis ........................................................................................... M1-M4

Basic Financial Statements Statement of Net Position

Statement of Activities

Governmental Fund Financial Statements

Balance Sheet

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

Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities

Notes to the Financial Statements ........................................................................................................ 7-11

Required Supplementary Information

CRA Fund-Budgetary Comparison Schedule

Additional Elements of Report Prepared in Accordance with Government Auditing Standards, Issued by The Comptroller General of The United States; and the Rules of The Auditor General of The State of Florida

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................... .13-14

Independent Accountants’ Report on Compliance with Section 218.415 and 163.387(6) and (7) Florida Statutes

Management Letter ....................................................................................................................... 16-17

A1

Independent Auditors’ Report

The Board of Commissioners Community Redevelopment Agency City of Zephyrhills, FL 33542

Opinions

We have audited the accompanying financial statements of the governmental activities, the major fund of the Community Redevelopment Agency (the CRA), a component unit of the City of Zephyrhills, Florida (the City) as of and for the year ended September 30, 2024, and the related notes to the financial statements, which collectively comprise the CRA’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 CRA as of September 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

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 Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the CRA 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 opinions.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair representation 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 CRA, Florida’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.

Auditors’ 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 auditors’ 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.

A2

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 CRA, Florida’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 CRA, Florida’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 on pages M1 through M4 and the required supplementary information on page 12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated May 1, 2025, on our consideration of the CRA’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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the CRA’s internal control over financial reporting and compliance.

DGPerry Zephyrhills, Florida May 1, 2025

Management’s Discussion and Analysis

(MD&A)

MANAGEMENT’S DISCUSSION AND ANALYSIS

M1

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

The Statement of Net Position presents financial information on all of the CRA's assets and liabilities, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the CRA is improving or deteriorating.

The Statement of Activities presents information showing how the CRA's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods.

The government-wide financial statements listed above distinguish functions of the CRA that are principally supported by ad-valorem taxes and intergovernmental revenues (governmental activities ) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business-type activities ) . The governmental activity of the CRA is community redevelopment.

The government-wide financial statements include only the activities of the CRA. However, the CRA is considered a blended component unit the City and, as such, the financial information of the CRA is included in the City's Comprehensive Annual Financial Report for each fiscal year.

Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The CRA uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the CRA's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the CRA's near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

M2

Special Revenue Funds

Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The CRA's expendable financial resources and the related liabilities are accounted for through a special revenue fund.

Restricted Fund Balance Fund Balance should be reported as Restricted when constraints placed on the use of resources such as enabling legislative, which authorizes the government to access, levy, charge, or otherwise mandate payment of resources. All of the CRA's fund balance is considered Restricted.

Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Required Supplementary Information (RSI) Included in this sect ion of the report is the Budgetary Comparison Schedule.

Government-Wide Financial Analysis Statement of Net Position As noted earlier, net position may serve over time as a useful indicator of the CRA's financial position. In the case of the CRA, assets exceeded liabilities by $1,760,028 as of the close of the most recent fiscal year, an increase of $617,039 in comparison with the prior year.

The following table reflects a summary of the Statement of Net Position for the current and prior year:

2024 2023 Assets

Cash and Cash Equivalents 1,804,703$ 1,169,650$ Total Assets 1,804,703$ 1,169,650$

Liabilities Accounts Payable 44,675$ 26,661$

Total Liabilities 44,675 26,661

Net Position Restricted

Community Redevelopment Projects 1,760,028 1,142,989 Unrestricted - -

Total Net Position 1,760,028$ 1,142,989$

M3

Statement of Activities The following table reflects the Statement of Activities for the current and prior year:

2024 2023 Revenues

Property Taxes 999,142$ 733,999$ Miscellaneous Revenue 618 - Investment Income 197,031 123,964

Total Revenues 1,196,791 857,963

Expenditures General Government 164,798$ 124,192$ Economic Development 300,799 112,972 Capital Outlay 114,155 184,778

Total Expenditures 579,752 421,942

Net Change in Net Position 617,039 436,021

Net Position, Beginning of Year 1,142,989 706,968

Net Position, End of Year 1,760,028$ 1,142,989$

Fiscal year 2024 activities increased the CRA's net position by $617,039. This change resulted from an increase in tax increment financing revenues in the current year due to an increase in property values within the CRA District and the fact that the CRA did note spend all their appropriated funds.

Financial Analysis of the CRA's Funds

Governmental Funds The focus of the CRA’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the CRA’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

The CRA's fund balance of $1,760,028 is restricted for redevelopment projects within the CRA district .

Property taxes totaling $999,142 represented approximately 84% of all revenues. The CRA's fund balance increased by $617,039 in the current year. The increase in tax increment financing revenues received by the CRA in the current year resulted from increased property values within the CRA district.

M4

Capital Assets and Debt Administration The CRA's capital assets are considered to be property of the City and, therefore, are included as capital assets in the City's government-w ide financial statements. Capital asset activity for the year ended September 30, 2024, can be found in the City's audited financial statements.

At September 30, 2024, the CRA had no long-term debt.

Budgetary Highlights An annual budget is prepared for the CRA and approved by the Board. The legal level of control is maintained at the fund level. Budget appropriations may not be legally exceeded on a fund basis.

Appropriations lapse at the end of the fiscal year. The budget is adopted on a basis consistent with generally accepted accounting principles.

Economic Factors and Future Developments

The CRA will continue to plan projects and infrastructure improvements that align with its redevelopment priorities for the designated district. The CRA will continue to implement the community's shared development goals through its redevelopment strategies and critical tasks.

Request for Information This financial information is designed to present users with a general overview of the CRA's finances for all those with an interest in its finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Community Redevelopment Agency located at City Hall, 5335 8th Street, Zephyrhills, FL 33542.

Statement of Net Position

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

Go ve rnme nta l Ac tiv itie s

Asse ts

Curre nt Asse ts

Cash and Pooled Cash, Cash Equivalents, and Investments $ 1,804,703

Total Current Assets 1,804,703

Deferred Outflows of Resources -

T o ta l Asse ts a nd De fe rre d Outflo ws o f Re so urce s $ 1,804,703

Lia b il itie s

Curre nt Lia b il itie s Accounts Payable 39,962$ Accrued Liabilities 4,713

Total Current Liabilities 44,675

Deferred Inflows of Resources -

Total Liabilities and Deferred Inflows of Resources 44,675

Ne t Po s itio n Restricted

Community Reinvestment 1,760,028 Unrestricted -

Total Net Position 1,760,028

T o ta l Lia b il itie s a nd Ne t Po s itio n 1,804,703$

Statement of Activities

Pro g ra m Re ve nue s Functio ns /Pro g ra ms Exp e nse s Cha rg e s fo r Se rv ice s

Governmental Activities General Government (278,953)$ -$ (278,953)$ Community Redevelopment (300,799) - (300,799)

Total Governmental Activities (579,752)$ -$ (579,752)$

General Revenues:

Taxes 999,142$ Miscellaneous Revenue 618 Investment Income 197,031

Total General Revenues and Special Items 1,196,791

Change in Net Position 617,039 Net Position Beginning of Year 1,142,989 Net Position End of Year 1,760,028$

Cha ng e s in Ne t Po sitio n

Balance Sheet

Governmental Funds

General Asse ts

Cash and Pooled Cash, Cash Equivalents, and Investments 1,804,703$

Total Assets 1,804,703

Lia b il itie s a nd Fund Ba la nce s

Liabilities

Accounts Payable 39,962 Accrued Liabilities 4,713

Total Liabilities 44,675

Fund Ba la nce s

Restricted For:

Community Reinvestment 1,760,028

Undesignated/Unreserved -

Total Fund Balances 1,760,028

T o ta l Lia b il itie s a nd Fund Ba la nce s 1,804,703$

Reconciliation of the Balance Sheet to the

Statement of Net Position Governmental Funds

Fund Balances - Total Governmental Funds 1,760,028$

Amounts reported for Governmental Activities in the Statement of Net Assets are different because:

Capital Assets used in Governmental Activities are not financial resources and, therefore, are not reported in the Governmental Funds.

Governmental Capital Assets -

Less: Accumulated Depreciation - -

Long-Term Liabilities are not due and payable in the current period and, therefore, are not reported in the Governmental Funds. -

Other -

Compensated Absences - Long-Term -

Unfunded Accrued Liability - OPEB -

Net Pension Liability -

Other Deferred Inflows/Outflows - -

Net Assets of Governmental Activities 1,760,028$

Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds

General

Re ve nue s

Taxes 999,142$

Main Street Reimbursement 618

Investment Income 197,031

Total Revenues 1,196,791

Exp e nd iture s

Current

General Government 278,953

Community Redevelopment 300,799

Debt Service

Principal Retirement -

Interest and Fiscal Charges -

Total Expenditures 579,752

Excess of Revenues Over (Under) Expend. 617,039

Othe r Fina nc ing So urce s (Use s)

Transfers In -

Transfers Out -

Total Other Financing Sources (Uses) -

Net Change in Fund Balances 617,039

Fund Ba la nce s - Be g inning o f Ye a r 1,142,989

Fund Ba la nce s - End o f Ye a r 1,760,028$

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

Fund Balances of Governmental Funds to the Statement of Activities

Net Change in Fund Balance - Total Government Funds 617,039$

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

Governmental Funds report Capital Outlays as Expenditures.

However, in the Statement of Activities, the cost of those assets are depreciated over their estimated useful lives.

Expenditures for Capital Assets 114,155

Less Current Year Depreciation - 114,155

Proceeds from debt issue are financing source in the governmental funds. They are not revenue in the statement of activities; issuing debt increases long-term liabilities in the statement of net assets. -

Estimated (increase)/decrease in Net OPEB obligations -

Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as Expenditures in Governmental Funds.

Contributions of Capital Assets-City of Zephryrhills General Fund (114,155)

Other -

Change in Compensated Absences - Long-Term -

Other - Deferred Inflows/Outflows -

Increase Net Pension Liability - (114,155)

Change in Net Assets of Governmental Activities 617,039$

Note 1 - Summary of Significant Accounting Policies

The financial statements of the Zephyrhills Community Redevelopment Agency (the CRA) have been prepared in conformance with the accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted body for promulgating governmental accounting and financial reporting principles and the CRA has adopted the GASB Codification. The following is a summary of the CRA’s significant accounting policies:

Defining the Financial Reporting Entity The CRA was created on March 9, 1998, by Ordinance number 688 of the City of Zephyrhills, Florida (the City), pursuant to Florida Statute 163.387. The purpose of the CRA is to establish redevelopment priorities for the designated community redevelopment area. Since the City is financially accountable for the activities of the CRA, its governing board is the same, and its relationship to the CRA is significant. The City approves the budget, provides funding and performs all accounting functions for the CRA. The CRA is considered to be a blended component unit in the City’s financial statements, where it is also reported as a major special revenue fund.

The CRA has determined there are no component units that meet criteria for inclusion in the CRA’s financial statements.

Financial Statements These financial statements are presented for the purpose of complying with state law, specifically Florida Statutes, Section 163.387(8)(a), which requires separate audited financial statements for each Community Redevelopment Agency that has revenues or expenditures that exceed $100,000. Entity‐wide financial statements are prepared at the City‐wide level by the City and include the CRA. Copies of that report can be obtained from the City’s Office of Budget and Finance.

Basic Financial Statements - Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the CRA. The CRA only has governmental activities and does not engage in any business-type activity. Direct expenses are those that are clearly identifiable with a specific function or segment. General revenues include ad valorem taxes and interest income. Fund financial statements are presented for the CRA’s General Fund. The General Fund, which accounts for all financial operations of the CRA is considered to be a major fund and is the only fund of the CRA.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government wide-financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue when all eligibility requirements imposed by the grantor have been met.

Note 1 - Summary of Significant Accounting Policies (continued)

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the CRA considers property tax revenues to be available if they are collected withing 60 days of the end of the current period. Grants, intergovernmental revenues, charges for services, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Expenditures generally are recorded when a liability is incurred. However, expenditures related to long-term agreements are recorded only when payment is due.

Budgets and Budgetary Accounting An annual budget is prepared for all funds of the City, including the CRA. The City follows these procedures in establishing the budgetary data reflected in the financial statements.

The City Manager submits to the City Council a proposed operating budget for the ensuing fiscal year. It contains proposed expenditures and the means to finance them, including a proposed property tax millage rate.

Public hearings are conducted to obtain taxpayer comments on the proposed budget and property tax millage rate.

The budget and property tax millage rate are approved by the City Council in September.

Annual budgets are adopted for the following funds: General Fund, Special Revenue Fund, CRA Funds, and Enterprise Funds.

The City Council must approve budget amendments that affect revenue accounts or appropriations in more than one department. Expenditures may not exceed legal appropriations at the department level. Appropriations lapse at year-end. All budget amounts presented in the accompanying financial statements and supplemental information have been adjusted for revisions as approved by City Council during the year.

Formal budgetary integration is employed as a management control device during the year for the Governmental Funds.

Budgets for the Governmental Funds are adopted on a basis consistent with generally accepted accounting principles.

Assets, Liabilities, and Fund Equity The CRA participates in the City’s pooled cash and investment portfolio. The City utilizes a consolidated cash pool to account for cash, cash equivalents, and investments of all City funds, including CRA funds, other than those that are required by ordinance to be physically segregated. The consolidated cash pool concept allows each participating fund to benefit from the economies of scale and improved yield that are inherent to a larger investment pool. Formal accounting records detail the individual equities of the participating funds.

The City considers all highly liquid investments (including restricted assets), with a maturity of three months or less when purchased, to be cash equivalents. The majority of the City’s pooled investments have the general characteristics of demand deposits, in that additional funds may be deposited at any time and funds may be withdrawn at any time without prior notice or penalty. Therefore, all of the pooled investments, regardless of their maturities, are considered cash equivalents.

The City participates in the Florida Prime (formerly known as the Local Government Surplus Funds Trust Fund Investment Pool) operated by the Florida State Board of Administration. Florida Prime is considered an SEC 2a- 7 like fund pool in accordance with GASB statement No. 31 and is valued using the pooled share price which approximates fair value.

Investments Investments are reported at fair value. Investments in mutual fund type securities are valued at the net asset value of the fund based on the underlying assets held in the funds. The fair value of an investment is the amount that could reasonably be expected to be received for it in a current sale between a willing buyer and a willing seller, other than in a forced or liquidation sale.

Capital Assets Capital assets include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items). The CRA’s capital assets are considered to be property of the City and, therefore, are included as capital assets in the City’s government‐wide financial statements. Capital asset activity for the year ended September 30, 2024, can be found in the City’s audited financial statements. As the capital assets are retained by the City, the CRA contributes capital to the general fund for capital outlay related to the CRA’s redevelopment and infrastructure projects.

Payroll-Related Expenses and Liabilities The employees that manage or are involved in day‐to‐day operations of the CRA are employees of the City. Per an agreement with the City, the CRA is charged an administrative fee related to those employees. Payroll‐related activity for the year ended September 30, 2024, can be found in the City’s audited financial statements.

Net Position The government‐wide statements utilized a net position presentation. Restricted net position are unspent tax increment financing revenues that are restricted for future redevelopment projects. Unrestricted net position represents the net position of the CRA that is not restricted for any project or purpose.

Restricted This component consists of net position that has constraints placed on them either externally by third parties (creditors, grantors, and contributors) or by law through constitutional provisions of enabling legislation.

Unrestricted This component consists of net position that does not meet the definition of “invested in capital assets, net of related debt” and “restricted”. Designations of net position made by the City’s management are included in this component because these types of constraints are internal, and management can remove or modify them.

Fund Balances In fund financial statements, the governmental fund reports fund classifications that comprise a hierarchy based primarily on the extent to which the CRA is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Under GASB 54 requirements, fund balance is reported as five possible components – nonspendable, restricted, committed, assigned, and unassigned.

Nonspendable This component includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted This component includes amounts reported as restricted when constraints placed on the use of the resources are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or

(b) imposed by law through constitutional provisions or enabling legislation.

Committed This component includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority. Such amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action it employed to previously commit those amounts.

Assigned This component is used to report the government’s intent to use the amount for a specific purpose but are neither restricted, nor committed.

Unassigned This component is the residual classification for the general fund. This amount represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund.

When an expenditure is incurred for purposes for which both restricted and unrestricted resources are available, the CRA considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the CRA considers the amount to have been spent first out of committed funds, then assigned funds and finally unassigned funds, as needed.

The City Council establishes (and modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as a designation or commitment of the fund (such as for special incentives). Assigned fund balance is established by the City Council through adoption or amendment of the budget as intended for specific purpose (such as the purchase of fixed assets, construction, debt service, or for other purposes).

Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial 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 a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The CRA has no items that meet this reporting criteria.

In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The CRA has no items that meet this reporting criteria.

Interfund Transactions The City’s general fund transfers funds to the CRA for their portion of property tax increment revenue. Capital outlay is contributed by the CRA to the City’s general fund for capital outlay for the CRA’s redevelopment and infrastructure projects.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.

Accordingly, actual results could differ from those estimates.

Note 2 – Explanation of Certain Differences Between the Government-Wide and Fund Financial Statements

Statement of Net Position and Governmental Fund Balance Sheet The governmental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net position of governmental activities as reported in the government-wide statement of net position.

Statement of Activities and Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances The governmental fund statement of revenues, expenditures, and changes in fund balance includes a reconciliation between the capital outlay of the governmental fund and the capital outlay contributed to the primary government as reported in the government-wide statements.

The government-wide and fund financial statements for the year ended September 30, 2024, can be found in the City’s audited financial statements.

Note 3 - Cash and Pooled Cash, Cash Equivalents, and Investments

At September 30, 2024, the carrying amount of the CRA’s cash equivalents and investments was $1,804,703.

These funds are a part of the City’s pooled cash funds. The City’s cash deposits are held by a bank that qualifies as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. The City maintains an investment policy managing pooled cash and investments. Further information on the City’s pooled cash and investments can be found in the notes to the annual financial statements of the City.

Note 4 – Tax Increment Financing Revenue

The CRA is primarily funded through tax increment financing revenue. The tax increment revenue is calculated by applying the adopted millage rate to the increase in the current year taxable assessed valuations within the designated CRA districts, using the year in which the CRA was established as the “base year”. The City and the County are required to contribute 95% of the incremental property taxes levied each year not to exceed 30 years from the base year.

Note 5 - Contingencies

The CRA is exposed to various risks of loss related torts; theft of, damage to, and destruction of assets; errors and omissions, and natural disasters. The CRA is insured through the City’s self-insurance program for general liability, worker’s compensation, health, directors and officers, and property damage. The City has maintained levels of insurance coverage during the current year. There are no material general liability claims related to the

CRA.

Note 6 – Subsequent Events

Subsequent events have been evaluated through May 1, 2025, the date the financial statements were available to be issued.

Required Supplementary Information

Budgetary Comparison Schedule - CRA Fund

Budgeted Amount Actual

Amounts Variance with Final Budget

Budgetary Positive Re so urce s (Inflo ws) Original Final Basis (Negative)

Taxes Ad Valorem City 446,425$ 446,425$ 446,425$ -$ Ad Valorem County 543,395 543,395 552,717 9,322

Total Taxes 989,820 989,820 999,142 9,322

Miscellaneous Mainstreet Reimbursement 1,000 1,000 618 (382) Surplus Property Sales 50,000 50,000 - (50,000)

Interest Income 100,000 100,000 197,031 97,031 Total Miscellaneous 151,000 151,000 197,649 46,649

Amount Available for Appropriation 1,140,820 1,140,820 1,196,791 55,971

Cha rg e s to Ap p ro p ria tio ns (Outflo ws) Expenditures - Other Economic Environment

Personnel Services 140,555 140,555 133,840 6,715 Professional Services 52,096 52,096 197,595 (145,499) Contractual Services 81,039 81,039 84,454 (3,415) Promotional Activities 50,100 50,100 3,402 46,698 Supplies 2,550 2,550 393 2,157 Telephone and Communications 3,200 3,200 2,820 380 Training and Dues 4,000 4,000 1,768 2,232 Incentives 100,000 100,000 15,000 85,000 Building Facade Grants 200,000 200,000 18,750 181,250 Miscellaneous 7,624 7,624 7,575 49 Transfers to Other Fund - - - - Contingency and Reserves - - - -

Total General Government 641,164 641,164 465,597 175,567

Expenditures - Debt Service Debt Principal and Intrerest - - - -

Total Debt Service - - - -

Expenditures - Capital Outlay 1,425,000 1,425,000 114,155 1,310,845 Total Charges to Appropriations (Outflows) 2,066,164 2,066,164 579,752 1,486,412

Excess (Deficiency) of Resources over Charges to Appropriations (925,344) (925,344) 617,039 1,542,383

Fund Balance at Beginning of Year 925,344 925,344 1,142,989 217,645 Fund Ba la nce a t End o f Ye a r -$ -$ 1,760,028$ 1,760,028$

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards

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, the financial statements of the Zephyrhills Community Redevelopment Agency (CRA), as of and for the year ended September 30, 2024, and the related notes to the financial statements, which collectively comprise the CRA’s financial statements, and have issued our report thereon dated May 1, 2025.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the CRA’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the CRA’s internal control. Accordingly, we do not express an opinion on the effectiveness of the CRA’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the CRA’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of the Report This report is intended solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance.

This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s control and compliance. Accordingly, this communication is not suitable for any other purpose.

Independent Accountants’ Report on Compliance With Sections 218.415 and Sections 163.387 (6) and (7), Florida Statutes

Zephyrhills, Florida

We have examined the Zephyrhills Community Redevelopment Agency’s (CRA), compliance with Section 218.415, Florida Statutes, Local Government Investment Policies, and Sections 163.387(6) and (7), Florida Statutes, Redevelopment Trust Fund (collectively, the “Statutes”), for the period ended September 30, 2024, as required by Section 10.556, Rules of the Auditor General. Management is responsible for the CRA’s compliance with those requirements. Our responsibility is to express an opinion on the CRA’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA). Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the CRA complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the CRA complied with the specific requirements. The nature, timing, and extent of procedures selected depend on our judgement, including an assessment of the risk of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement.

Our examination does not provide a legal determination of the CRA’s compliance with specified requirements.

In our opinion, the CRA complied, in all material respects, with the requirements contained in Section 218.415 and Section 163.387, Florida Statutes during the year ended September 30, 2024.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the CRA board of commissioners, its management, and the City Council of the City of Zephyrhills and is not intended to be and should not be used by anyone other than these specified parties. However, this letter is a matter of public record and its distribution is not limited.

Management Letter

Zephyrhills, Florida

Report on the Financial Statements We have audited the financial statements of the Zephyrhills Community Redevelopment Agency, as of and for the fiscal year ended September 30, 2024, and have issued our report thereon dated May 1, 2025.

Auditors’ 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; Uniform Guidance and Chapter 10.650 Rules of the Auditor General, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter 10.550, Rules of the Auditor General.

Other Reporting Requirements We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants' Report on an examination conducted in accordance 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 and schedule, which are dated May 1, 2025, should be considered in conjunction with this management letter.

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

Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The legal authority for the CRA is disclosed in Note 1 of the basic 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 CRA has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific conditions met. In connection with our audit, we determined that the CRA did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

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 CRA’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

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

Special 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. In connection with our audit, we did not note any special district component units that failed to provide the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes.

Section 218.39(3)(c) and Section 10.554(1)(i)6, Rules of the Auditor General, require that we provide the information listed below:

Number of district employees compensated at 9/30/2024 1 Number of independent contractors compensated in September

Employee compensation for FYE 9/30/2024 (paid/accrued) $ 85,484 Independent contractor compensation for FYE 9/30/2024 $ 388,776 Construction projects to begin on or after October 1; (>$65K) Not applicable

Budget variance report See Variance Report in report for details

Additional Matters Section…