SOMERSET COMMUNITY DEVELOPMENT DISTRICT BOARD OF SUPERVISORS MEETING MAY 9, 2016

SOMERSET COMMUNITY DEVELOPMENT DISTRICT BOARD OF SUPERVISORS MEETING MAY 9, 2016

SOMERSET COMMUNITY DEVELOPMENT DISTRICT AGENDA MAY 9, 2016 2:00 P.M. (CDT) To be held at the Alys Beach Office, located at 9581 County Highway 30A, Alys Beach, Florida 32413 District Board of Supervisors Chris Gent John Rosenberg George Hartley Charles Reichman Eddie Foster Chairman Vice Chairman Supervisor Supervisor Supervisor District Manager Chris Cleveland Rizzetta & Company, Inc. District Attorney Tucker Mackie Hopping Green & Sams, P.A. District Engineer Jim Martelli Innerlight Engineering All Cellular phones and pagers must be turned off while in the meeting room. The District Agenda is comprised of five different sections: The special meeting will begin promptly at 2:00 p.m. (CDT) with the first section which is called Audience Comments. The Audience Comment portion of the agenda is where individuals may comment on matters that concern the District. Each individual is limited to three (3) minutes for such comment. The Board of Supervisors or Staff is not obligated to provide a response until sufficient time for research or action is warranted. IF THE COMMENT CONCERNS A MAINTENANCE RELATED ITEM, THE ITEM WILL NEED TO BE ADDRESSED BY THE DISTRICT MANAGER OUTSIDE THE CONTEXT OF THIS METTING. The second section is called Business Administration. The Business Administration section contains items that require the review and approval of the District Board of Supervisors as a normal course of business. The third section is called Business Items. The business items section contains items for approval by the District Board of Supervisors that may require discussion, motion and votes on an item-by-item basis. Occasionally, certain items for decision within this section are required by Florida Statute to be held as a Public Hearing. During the Public Hearing portion of the agenda item, the public will be permitted to provide one comment on the issue, prior to the Board of Supervisors discussion, motion and vote. Agendas can be reviewed by contacting the Manager s office at (850) 334-9055 at least seven days in advance of the scheduled meeting. Requests to address items that are not on this agenda must be submitted in writing with an explanation to the District Manager at least fourteen (14) days prior to the date of the meeting. The fourth section is called Staff Reports. This section allows the District Manager, Engineer, and Attorney to update the Board of Supervisors on any pending issues that are being researched for Board action. The final section is called Supervisor Requests. This is the section in which the Supervisors may request Staff to prepare certain items in an effort to meet residential needs. Public workshops sessions may be advertised and held in an effort to provide informational services. These sessions allow staff or consultants to discuss a policy or business matter in a more informal manner and allow for lengthy presentations prior to scheduling the item for approval. Typically no motions or votes are made during these sessions. Pursuant to provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this meeting is asked to advise the District Office at (813) 933-5571, at least 48 hours before the meeting. If you are hearing or speech impaired, please contact the Florida Relay Service at (800) 955-8770, who can aid you in contacting the District Office. Any person who decides to appeal any decision made by the Board with respect to any matter considered at the meeting is advised that this same person will need a record of the proceedings and that accordingly, the person may need to ensure that a verbatim record of the proceedings is made, including the testimony and evidence upon which the appeal is to be based.

SOMERSET COMMUNITY DEVELOPMENT DISTRICT DISTRICT OFFICE 120 RICHARD JACKSON BLVD SUITE 220 PANAMA CITY BEACH, FL 32407 www.somersetcdd.org Board of Supervisors Somerset Community Development District Dear Board Members: April 29, 2016 The regular meeting of the Board of Supervisors of the Somerset Community Development District will be held on Monday, May 9, 2016 at 2:00 p.m. (CDT) at the Alys Beach office located at 9581 County Hwy. 30A, Alys Beach, Florida 32413. The following is the tentative agenda. 1. CALL TO ORDER/ROLL CALL 2. AUDIENCE COMMENTS 3. BUSINESS ADMINISTRATION A. Consideration of Minutes of the Board of Supervisors Regular Meeting held on August 10, 2015 Tab 1 B. Consideration of Minutes of the Board of Supervisors Special Meeting held on October 21, 2015.. Tab 2 C. Ratification of Operation and Maintenance Expenditures for July 2015 through March 2016. Tab 3 4. BUSINESS ITEMS A. Presentation of Arbitrage Rebate Calculation, Series 2005.. Tab 4 B. Announcement of Registered Voter Count Tab 5 C. Presentation of 2015 Audit. Tab 6 D. Consideration of Resolution 2016-02, Appointing Assistant Secretary Tab 7 E. Consideration of Proposal for Dissemination Agent. Tab 8 F. Presentation of Proposed Budget for Fiscal Year 2016/2017 Tab 9 1. Consideration of Resolution 2016-03, Approving Proposed Budget and Setting the Public Hearing.....Tab 10 5. STAFF REPORTS A. District Counsel B. District Engineer C. District Manager 6. SUPERVISOR REQUESTS

Somerset Community Development District Agenda for May 9, 2016 Meeting 7. ADJOURNMENT We look forward to seeing you at the meeting. In the meantime, if you have any questions, please do not hesitate to call us at 813-933-5571. Sincerely, Chris Cleveland Chris Cleveland District Manager cc: David Walker, EBSCO Gulf Coast Development, Inc. Tucker Mackie, Hopping Green & Sams, P.A. Jim Martelli, Innerlight Engineering

Tab 1

SOMERSET COMMUNITY DEVELOPMENT DISTRICT August 10, 2015 Minutes of Meeting Page 1 MINUTES OF MEETING Each person who decides to appeal any decision made by the Board with respect to any matter considered at the meeting is advised that the person may need to ensure that a verbatim record of the proceedings is made, including the testimony and evidence upon which such appeal is to be based. SOMERSET COMMUNITY DEVELOPMENT DISTRICT A regular meeting of the Board of Supervisors of the Somerset Community Development District was held on Monday, August 10, 2015 at 2:05 p.m. CDT at the Alys Beach office located at 9581 County Highway 30A, Alys Beach, Florida 32413. Present and constituting a quorum: Jason White John Rosenberg Charles Reichman Chris Gent George Hartley Also present were: Debra Anderson Tucker Mackie Board Supervisor, Chair Board Supervisor, Vice Chair Board Supervisor, Assistant Secretary Board Supervisor, Assistant Secretary Board Supervisor, Assistant Secretary District Manager, Rizzetta & Company, Inc. District Counsel, Hopping, Green & Sams Audience FIRST ORDER OF BUSINESS Call to Order Ms. Anderson called the meeting to order and performed roll call. SECOND ORDER OF BUSINESS Audience Comments Discussion ensued regarding the assessments and the function of the District. THIRD ORDER OF BUSINESS Consideration of Minutes of the Board of Supervisors' Meeting Held on May 11, 2015 On a Motion by Mr. Rosenberg, seconded by Mr. Reichman, with all in favor, the Board of Supervisors approved the Minutes of the Board of Supervisors Meeting held on May 11, 2015, for the Somerset Community Development District.

SOMERSET COMMUNITY DEVELOPMENT DISTRICT August 10, 2015 Minutes of Meeting Page 2 FOURTH ORDER OF BUSINESS Ratification of Operation and Maintenance Expenditures for April through June 2015 On a Motion by Mr. Hartley, seconded by Mr. White, with all in favor, the Board of Supervisors ratified the Operation and Maintenance Expenditures for April 2015 ($9,717.67), May 2015 ($33,437.74), and June 2015 ($4,395.03), for the Somerset Community Development District. FIFTH ORDER OF BUSINESS Public Hearing on Fiscal Year 2015/2016 Final Budget On a Motion by Mr. Reichman, seconded by Mr. Rosenberg, with all in favor, the Board of Supervisors opened the Public Hearing on Fiscal Year 2015/2016 Final Budget, for the Somerset Community Development District. Ms. Anderson said the final budget is unchanged from the proposed budget presented to the Board at their May 11, 2015 meeting. She stated that the Operation and Maintenance Budget totals $294,775.00, the Reserve Fund Budget totals $150,000.00, and the Debt Services budget totals $1,149,562.05. There was discussion regarding reallocating portions of the landscape expenses to a different line item to be more in line with the invoiced charges. Ms. Anderson stated this would not affect the total budget. No comments were received from the public regarding the Budget. SIXTH ORDER OF BUSINESS Consideration of Resolution 2015-04, Approving Annual Appropriation for Fiscal Year 2015/2016 Board. Ms. Anderson stated that this resolution formally adopts the budget as presented to the On a Motion by Mr. White, seconded by Mr. Hartley, with all in favor, the Board of Supervisors adopted Resolution 2015-04, Approving Annual Appropriation for Fiscal Year 2015/2016, for the Somerset Community Development District. On a Motion by Mr. Reichman, seconded by Mr. Gent, with all in favor, the Board of Supervisors closed the Public Hearing on Fiscal Year 2015/2016 Final Budget, for the Somerset Community Development District.

SOMERSET COMMUNITY DEVELOPMENT DISTRICT August 10, 2015 Minutes of Meeting Page 3 SEVENTH ORDER OF BUSINESS Public Hearing on Levy of Operation and Maintenance Assessments On a Motion by Mr. White, seconded by Mr. Reichman, with all in favor, the Board of Supervisors opened the Public Hearing on Levy of Operation and Maintenance Assessments, for the Somerset Community Development District. Ms. Anderson stated the public hearings were properly noticed and recited the operation and maintenance and debt services assessment portions for each parcel unit type. Ms. Mackie detailed the resolution and collection options available to the Board. No comments were received from the public regarding the proposed assessments. EIGHTH ORDER OF BUSINESS Consideration of Resolution 2015-05, Approving Levy of Non-Ad Valorem Assessments On a Motion by Mr. Gent, seconded by Mr. White, with all in favor, the Board of Supervisors adopted Resolution 2015-05, Approving Levy of Non-Ad Valorem Assessments, for the Somerset Community Development District. On a Motion by Mr. Reichman, seconded by Mr. Rosenberg, with all in favor, the Board of Supervisors closed the Public Hearing on Levy of Operation and Maintenance Assessments, for the Somerset Community Development District. NINTH ORDER OF BUSINESS Consideration of Direct Collection Agreement for Special Assessments Ms. Mackie discussed the Direct Bill Assessment portion with the Board and stated this agreement is in same form as prior years with no changes. On a Motion by Mr. Reichman, seconded by Mr. Hartley, with all in favor, the Board of Supervisors approved the Direct Collection Agreement for Special Assessments, for the Somerset Community Development District. TENTH ORDER OF BUSINESS Consideration of Amendment to Cost Share Agreement Ms. Anderson stated that Cost Share Agreement with the HOA had been amended to reflect costs under the new landscape contract. She stated that irrigation within the right of way of all roads has also been incorporated into this agreement.

SOMERSET COMMUNITY DEVELOPMENT DISTRICT August 10, 2015 Minutes of Meeting Page 4 On a Motion by Mr. White, seconded by Mr. Reichman, with all in favor, the Board of Supervisors approved the Amendment to the Cost Share Agreement with the HOA, for the Somerset Community Development District. ELEVENTH ORDER OF BUSINESS Consideration of Resolution 2015-06, Setting the Meeting Schedule for Fiscal Year 2015/2016 Ms. Anderson stated that traditionally the Board has met quarterly on the second Monday of the month at 2:00 p.m. (central time), except for the November meeting which is held the third Monday of November due to the Veterans Day holiday, at the at the Alys Beach office located at 9581 County Highway 30A, Alys Beach, Florida 32413. On a Motion by Mr. Reichman, seconded by Mr. Rosenberg, with all in favor, the Board of Supervisors adopted Resolution 2015-06, Setting the Meeting Schedule for Fiscal Year 2015/2016 for quarterly meetings held on November 16, 2015, February 8, 2016, May 9, 2016 and August 8, 2016 at 2:00 p.m. (central time) at the Alys Beach office located at 9581 County Highway 30A, Alys Beach, Florida 32413, for the Somerset Community Development District. TWELFTH ORDER OF BUSINESS Consideration of Addendum to Compliance Services Agreement Ms. Mackie stated the District is required by the SEC to post certain information relating to the District on a web service known as EMMA. This positing is preformatted by a dissemination agent. Digital Assurance Certification, LLC is the District s current dissemination agent. Ms. Anderson stated that this is an addendum requested by the current provider to increase their fee for this service. On a Motion by Mr. Rosenberg, seconded by Mr. Hartley, with all in favor, the Board of Supervisors approved the Addendum to Compliance Services Agreement (Digital Assurance Certification, LLC), for the Somerset Community Development District. THIRTEENTH ORDER OF BUSINESS Staff Reports A. District Counsel No report. B. District Engineer was not present. C. District Manager Ms. Anderson stated that the next regular Board of Supervisors meeting will be held on November 16, 2015. She stated that work is continuing on the District website which is

expected to be live by October 1, 2015, as required. SOMERSET COMMUNITY DEVELOPMENT DISTRICT August 10, 2015 Minutes of Meeting Page 5 FOURTEENTH ORDER OF BUSINESS Supervisor Requests There were no requests from the Supervisors. FIFTEENTH ORDER OF BUSINESS Adjournment On a Motion by Mr. Rosenberg, seconded by Mr. Hartley, with all in favor, the Board of Supervisors adjourned the meeting at 2:45 p.m. (CDT), for the Somerset Community Development District. Secretary/Assistant Secretary Chairman/Vice Chairman

Tab 2

SOMERSET COMMUNITY DEVELOPMENT DISTRICT October 21, 2015 Minutes of Meeting Page 1 MINUTES OF MEETING Each person who decides to appeal any decision made by the Board with respect to any matter considered at the meeting is advised that the person may need to ensure that a verbatim record of the proceedings is made, including the testimony and evidence upon which such appeal is to be based. SOMERSET COMMUNITY DEVELOPMENT DISTRICT A special meeting of the Board of Supervisors of the Somerset Community Development District was held on Wednesday, October 21, 2015 at 11:01 a.m. CDT at the Alys Beach office located at 9581 County Highway 30A, Alys Beach, Florida 32413. Present and constituting a quorum: John Rosenberg Charles Reichman Chris Gent George Hartley Also present were: Pete Williams Tucker Mackie Jim Martelli Board Supervisor, Vice Chairman Board Supervisor, Assistant Secretary Board Supervisor, Assistant Secretary Board Supervisor, Assistant Secretary District Manager, Rizzetta & Company, Inc. District Counsel, Hopping, Green & Sams (via phone) InnerLight Engineering Audience FIRST ORDER OF BUSINESS Call to Order Mr. Williams called the meeting to order and performed roll call. SECOND ORDER OF BUSINESS Audience Comments There were no audience comments. THIRD ORDER OF BUSINESS Acceptance of Resignation of Jason White Mr. Williams briefly reviewed the resignation of Jason White. He asked for a motion to accept the resignation. On a Motion by Mr. Gent, seconded by Mr. Rosenberg, with all in favor, the Board of Supervisors accepted the resignation of Jason White for the Somerset Community Development District. FOURTH ORDER OF BUSINESS Consideration of Appointment of Board

SOMERSET COMMUNITY DEVELOPMENT DISTRICT October 21, 2015 Minutes of Meeting Page 2 Supervisor to Vacant Seat 5, Term Ending November 2018 Mr. Williams discussed the need to now replace Mr. White, and asked for any appointees the Board may have. A motion was made to appoint James Pate by George Hartley, seconded by John Rosenberg. During the administration of the Oath of Office, it was discovered that Mr. Pate is not a citizen of the State of Florida. After discussion, Mr. Williams asked Mr. Hartley to amend his motion for another appointee. Mr. Hartley amended his motion to appoint Mr. Eddie Foster. Mr. Rosenberg amended his second, with all in favor, Mr. Foster was appointed to the Board. On a Motion by Mr. Hartley, seconded by Mr. Rosenberg, with all in favor, the Board of Supervisors appointed Eddie Foster (Seat #5), for the Somerset Community Development District. Mr. Williams administered the Oath of Office to Mr. Foster who swore to and affirmed to the oath. Mr. Foster waived compensation for CDD meetings. FIFTH ORDER OF BUSINESS Consideration of Resolution 2016-01, Re- Designating Officers Mr. Williams reviewed the need to re-designate Officers of the District. During discussion, it was recommended by Board members that they appoint Chris Gent as Chairman, John Rosenberg as Vice Chairman, and the remaining members of the Board as Assistant Secretaries. On a Motion by Mr. Rosenberg, seconded by Mr. Hartley, with all in favor, the Board of Supervisors adopted Resolution 2016-01, re-designating officers for the Somerset Community Development District. SIXTH ORDER OF BUSINESS Supervisor Requests There were no Supervisor requests. SEVENTH ORDER OF BUSINESS Adjournment On a Motion by Mr. Hartley, seconded by Mr. Rosenberg, with all in favor, the Board of Supervisors adjourned the meeting for the Somerset Community Development District. Secretary/Assistant Secretary Chairman/Vice Chairman

Tab 3

SOMERSET COMMUNITY DEVELOPMENT DISTRICT DISTRICT OFFICE 120 RICHARD JACKSON BLVD SUITE 220 PANAMA CITY BEACH, FLORIDA 32407 Operation and Maintenance Expenditures July 2015 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from July 1, 2015 through July 31, 2015. This does not include expenditures previously approved by the Board. The total items being presented: $16,337.33 Approval of Expenditures: Chairman Vice Chairman Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures July 1, 2015 Through July 31, 2015 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood 001965 05312015 Rip's Maint 05/15 and Other Invoices 05/15 $ 10,384.45 Association Gulf Power Company 001966 42245-97026 06/15 9954 E Cty Hwy 30A Irrigation 06/15 $ 87.12 Gulf Power Company 001966 89919-91030 06/15 9396 E Cty Hwy 30A Irrigation 06/15 $ 214.33 Hopping Green & Sams 001963 82347 General/Monthly Legal Services 05/15 $ 1,526.00 Hopping Green & Sams 001967 82959 General/Monthly Legal Services 06/15 $ 142.10 Rizzetta & Company, Inc. 001964 1795 District Management Fees 07/15 $ 3,983.33 Report Total $ 16,337.33

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SOMERSET COMMUNITY DEVELOPMENT DISTRICT DISTRICT OFFICE 120 RICHARD JACKSON BLVD SUITE 220 PANAMA CITY BEACH, FLORIDA 32407 Operation and Maintenance Expenditures August 2015 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from August 1, 2015 through August 31, 2015. This does not include expenditures previously approved by the Board. The total items being presented: $17,309.54 Approval of Expenditures: Chairman Vice Chairman Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures August 1, 2015 Through August 31, 2015 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood Association 001969 06302015 Rip's Maint 06/15 and Other Invoices 06/15 $ 8,892.86 Charles E. Reichman 001974 CR081015 Board of Supervisors Meeting 08/10/15 $ 200.00 George Hartley 001972 GH081015 Board of Supervisors Meeting 08/10/15 $ 200.00 Gulf Power Company 001971 42245-97026 07/15 9954 E Cty Hwy 30A Irrigation 07/15 $ 83.70 Gulf Power Company 001971 89919-91030 07/15 9396 E Cty Hwy 30A Irrigation 07/15 $ 324.85 Halifax Media Group, Northwest Florida 001970 2029916-0815 Legal Advertising 07/15 $ 1,338.30 Hopping Green & Sams 001976 83438 General/Monthly Legal Services 07/15 $ 1,386.50 Innerlight Engineering Corporation 001973 2105 Engineering Services 05/15-08/15 $ 700.00 John Rosenberg 001975 JR081015 Board of Supervisors Meeting 08/10/15 $ 200.00 Rizzetta & Company, Inc. 001968 1908 District Management Fees 08/15 $ 3,983.33 Report Total $ 17,309.54

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SOMERSET COMMUNITY DEVELOPMENT DISTRICT DISTRICT OFFICE 120 RICHARD JACKSON BLVD SUITE 220 PANAMA CITY BEACH, FLORIDA 32407 Operation and Maintenance Expenditures September 2015 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from September 1, 2015 through September 30, 2015. This does not include expenditures previously approved by the Board. The total items being presented: $90,313.72 Approval of Expenditures: Chairman Vice Chairman Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures September 1, 2015 Through September 30, 2015 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood 001978 07312015 Rip's Maint 07/15 and Other Invoices $ 72,131.95 Association 07/15 Egis Insurance Advisors LLC 001981 P-2015-08-000717 Property/Gen Liability & PO Insurance $ 8,254.00 10/15-10/16 Gulf Power Company 001979 42245-97026 08/15 9954 E Cty Hwy 30A Irrigation 08/15 $ 68.33 Gulf Power Company 001979 89919-91030 08/15 9396 E Cty Hwy 30A Irrigation 08/15 $ 301.81 LLS Tax Solutions, Inc. 001980 000775 Arbitrage Rebate Calculation PE $ 650.00 07/11/15 Mills Supply 001983 5847 Pump Station Maintenance 09/15 $ 200.00 Rizzetta & Company, Inc. 001977 2021 District Management Fees 09/15 $ 3,983.33 US Bank 001982 4067962 Trustee Fees Series 2005 08/01/15-07/31/16 $ 4,724.30 Report Total $ 90,313.72

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SOMERSET COMMUNITY DEVELOPMENT DISTRICT DISTRICT OFFICE 120 RICHARD JACKSON BLVD SUITE 220 PANAMA CITY BEACH, FLORIDA 32407 Operation and Maintenance Expenditures October 2015 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from October 1, 2015 through October 31, 2015. This does not include expenditures previously approved by the Board. The total items being presented: $36,069.87 Approval of Expenditures: Chairman Vice Chairman Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures October 1, 2015 Through October 31, 2015 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood 001985 083115 Alys Rip's Maint 07/15-08/15 and Other $ 17,937.39 Association Invoices 08/15 Culligan Filter Service 001992 327038 Value Soft Solar Salt 09/01/15 $ 342.82 Culligan Filter Service 001988 327416 Well System Maintenance 09/15 $ 342.80 Culligan Filter Service 001992 328150 Value Soft Solar Salt 09/17/15 $ 413.49 Culligan Filter Service 001992 328825 Value Soft Solar Salt 09/29/15 $ 472.38 DeFuniak Springs Herald-Breeze, Inc. 001989 168W Legal Advertising 10/15 $ 30.38 Gulf Power Company 001990 42245-97026 09/15 9954 E Cty Hwy 30A Irrigation 09/15 $ 73.20 Gulf Power Company 001990 89919-91030 09/15 9396 E Cty Hwy 30A Irrigation 09/15 $ 323.08 Hopping Green & Sams 001986 84022 General/Monthly Legal Services 08/15 $ 1,720.28 Hopping Green & Sams 001993 84457 General/Monthly Legal Services 09/15 $ 299.05 Mills Supply 001995 5871 Pump Station Maintenance 10/15 $ 200.00 Mills Supply 001995 5881 Pump Station Service Work $ 2,500.00 Rizzetta & Company, Inc. 001984 2248 District Management Fees 10/15 $ 4,125.00 Rizzetta & Company, Inc. 001991 2358 Assessment Roll FY 15/16 $ 5,000.00 Rizzetta Technology Services, LLC. 001987 0000000404 Website Hosting Services 10/15 $ 1,600.00 Stone Scapes, Inc. 001996 5928 Paver Repair $ 650.00 The Lake Doctors, Inc. 001994 195818 Monthly Monitoring/Inspection 10/15 $ 40.00 Report Total $ 36,069.87

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SOMERSET COMMUNITY DEVELOPMENT DISTRICT DISTRICT OFFICE 120 RICHARD JACKSON BLVD SUITE 220 PANAMA CITY BEACH, FLORIDA 32407 Operation and Maintenance Expenditures November 2015 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from November 1, 2015 through November 30, 2015. This does not include expenditures previously approved by the Board. The total items being presented: $6,496.33 Approval of Expenditures: Chairperson Vice Chairperson Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures November 1, 2015 Through November 30, 2015 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount Charles E. Reichman 002000 CR102115 Board of Supervisors Meeting 10/21/15 DeFuniak Springs Herald-Breeze, Inc. Department of Economic Opportunity $ 200.00 002002 244W Legal Advertising 11/15 $ 34.88 002003 34074 Special District Fee FY 15/16 $ 175.00 George Hartley 001999 GH102115 Board of Supervisors Meeting 10/21/15 $ 200.00 Gulf Power Company 002004 42245-97026 10/15 9954 E Cty Hwy 30A Irrigation 10/15 $ 73.20 Gulf Power Company 002004 89919-91030 10/15 9396 E Cty Hwy 30A Irrigation 10/15 $ 261.78 John Rosenberg 002001 JR102115 Board of Supervisors Meeting 10/21/15 $ 200.00 Rip's Professional Lawn Care, Inc. 002005 39063 Irrigation Repairs 04/15 $ 1,126.47 Rizzetta & Company, Inc. 001997 2448 District Management Fees 11/15 $ 4,125.00 Rizzetta Technology Services, LLC. 001998 INV0000000493 Website Hosting Services 11/15 $ 100.00 Report Total $ 6,496.33

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Operation and Maintenance Expenditures December 2015 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from December 1, 2015 through December 31, 2015. This does not include expenditures previously approved by the Board. The total items being presented: $19,806.63 Approval of Expenditures: Chairperson Vice Chairperson Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenses December 1, 2015 Through December 31, 2015 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood Association 002006 093015 Alys Rip's Maint 09/15 and Lake Doctors $ 7,032.00 ALYS Beach Neighborhood Association 002006 103115 Alys Rip's Maint 10/15 and Lake Doctors $ 6,992.00 Culligan Filter Service 002007 329389 Pump Station Maintenance $ 85.78 Gulf Power Company 002011 42245-97026 11/15 9954 E Cty Hwy 30A Irrigation 11/15 $ 105.45 Gulf Power Company 002011 89919-91030 11/15 9396 E Cty Hwy 30A Irrigation 11/15 $ 348.73 Hopping Green & Sams 002008 84871 General/Monthly Legal Services 10/15 $ 1,017.67 Rizzetta & Company, Inc. 002009 2558 District Management Fees 12/15 $ 4,125.00 Rizzetta Technology Services, LLC. 002010 INV0000000817 Website Hosting Services 12/15 $ 100.00 Report Total $ 19,806.63

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Operation and Maintenance Expenditures January 2016 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from January 1, 2016 through January 31, 2016. This does not include expenditures previously approved by the Board. The total items being presented: $68,252.02 Approval of Expenditures: Chairperson Vice Chairperson Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures January 1, 2016 Through January 31, 2016 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood Association 002014 11302015 Rip's Maint 11/15 and Lake Doctors $ 49,551.84 Culligan Filter Service 002015 330186 Value Soft Solar Salt 10/15/15 $ 484.16 Culligan Filter Service 002015 332199 Value Soft Solar Salt 11/12/15 $ 531.28 Culligan Filter Service 002015 332942 Value Soft Solar Salt 11/24/15 $ 307.49 Culligan Filter Service 002015 333541 Well Repair $ 6,755.00 Culligan Filter Service 002025 334107 Value Soft Solar Salt 12/31/15 $ 404.46 Culligan Filter Service 002022 334716 Value Soft Solar Salt 12/22/15 $ 85.78 Culligan Filter Service 002025 334840 Value Soft Solar Salt 12/31/15 $ 331.04 Gulf Power Company 002023 42245-97026 9954 E Cty Hwy 30A Irrigation $ 142.73 12/15 12/15 Gulf Power Company 002023 89919-91030 9396 E Cty Hwy 30A Irrigation $ 322.04 12/15 12/15 Hoover Pumping Systems 002026 122369 Annual Service 01/16 $ 1,200.00 Hopping Green & Sams 002024 85593 General/Monthly Legal Services $ 995.00 11/15 Innerlight Engineering Corporation 002016 2212 Engineering Services 08/15-12/15 $ 990.00 McHenry Electric, Inc. 002018 19765 Service Call $ 591.34 Mills Supply 002019 5897 Pump Station Maintenance 11/15 $ 200.00 Mills Supply 002019 5915 Disk Filter $ 224.86 Mills Supply 002019 5916 Service Work - Replace Filter $ 390.00 Housing Mills Supply 002019 5928 Pump Station Maintenance 12/15 $ 200.00 Mills Supply 002028 5947 Pump Station Maintenance 01/16 $ 200.00 Rizzetta & Company, Inc. 002020 2667 District Management Fees 01/16 $ 4,125.00 Rizzetta Technology Services, LLC. 002021 INV0000000979 Website Hosting Services 01/16 $ 100.00 The Lake Doctors, Inc. 002017 200832 Monthly Monitoring/Inspection 11/15 The Lake Doctors, Inc. 002017 205540 Monthly Monitoring/Inspection 12/15 The Lake Doctors, Inc. 002027 210195 Monthly Monitoring/Inspection 01/16 $ $ $ 40.00 40.00 40.00 Report Total $ 68,252.02

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Operation and Maintenance Expenditures February 2016 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from February 1, 2016 through February 29, 2016. This does not include expenditures previously approved by the Board. The total items being presented: $24,257.15 Approval of Expenditures: Chairperson Vice Chairperson Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures February 1, 2016 Through February 29, 2016 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood Association 002031 1231115 Rip's Maint 12/15 $ 6,992.00 Carr, Riggs & Ingram, LLC 002034 16085546 Progress Billing Fin Stmts 09/30/15 $ 4,750.00 Culligan Filter Service 002032 335783 Service Call - Collegiate Pool Well $ 165.00 Culligan Filter Service 002032 336402 Replacement Drives on Wells $ 7,327.00 Gulf Power Company 002035 42245-97026 01/16 9954 E Cty Hwy 30A Irrigation 01/16 $ 111.24 Gulf Power Company 002035 89919-91030 01/16 9396 E Cty Hwy 30A Irrigation 01/16 $ 206.18 Hopping Green & Sams 002033 86048 General/Monthly Legal Services 12/15 $ 480.73 Rizzetta & Company, Inc. 002029 2779 District Management Fees 02/16 $ 4,125.00 Rizzetta Technology Services, LLC. 002030 INV0000001061 Website Hosting Services 02/16 $ 100.00 Report Total $ 24,257.15

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Operation and Maintenance Expenditures March 2016 For Board Approval Attached please find the check register listing the Operation and Maintenance expenditures paid from March 1, 2016 through March 31, 2016. This does not include expenditures previously approved by the Board. The total items being presented: $14,466.05 Approval of Expenditures: Chairperson Vice Chairperson Assistant Secretary

Somerset Community Development District Paid Operation & Maintenance Expenditures March 1, 2016 Through March 31, 2016 Vendor Name Check Number Invoice Number Invoice Description Invoice Amount ALYS Beach Neighborhood Association 002036 013116 Rip's Maint 01/16 $ 8,664.48 Culligan Filter Service 002037 335734 Value Soft Solar Salt 01/07/16 $ 314.75 Culligan Filter Service 002037 336637 Value Soft Solar Salt 01/19/16 $ 331.04 Culligan Filter Service 002041 338237 Value Soft Solar Salt 02/11/16 $ 85.78 Culligan Filter Service 002043 339298 Well System Repairs $ 236.05 Gulf Power Company 002042 42245-97026 02/16 9954 E Cty Hwy 30A Irrigation 02/16 $ 67.72 Gulf Power Company 002042 89919-91030 02/16 9396 E Cty Hwy 30A Irrigation 02/16 $ 178.76 Hopping Green & Sams 002038 86354 General/Monthly Legal Services 01/16 $ 362.47 Rizzetta & Company, Inc. 002039 2910 District Management Fees 03/16 $ 4,125.00 Rizzetta Technology Services, LLC. 002040 INV0000001142 Website Hosting Services 03/16 $ 100.00 Report Total $ 14,466.05

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Somerset Community Development District FINANCIAL STATEMENTS September 30, 2015

Somerset Community Development District Table of Contents September 30, 2015 REPORT Independent Auditors Report 1 FINANCIAL STATEMENTS Management s Discussion And Analysis (required supplemental information) 3 Basic Financial Statements Government Wide Financial Statements Statement of Net Position 8 Statement of Activities 9 Fund Financial Statements Balance Sheet Governmental Funds 10 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 11 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 12 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 13 Notes to Financial Statements 14 Required Supplemental Information (other than MD&A) Budget to Actual Comparison Schedule General Fund 23 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 24 Management Letter 26 Independent Accountant s Report Compliance with Section 218.415 Florida Statutes 28

INDEPENDENT AUDITORS REPORT To the Board of Supervisors Somerset Community Development District Walton County, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of Somerset Community Development District (hereinafter referred to as District ), as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of September 30, 2015, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 13, 2016, on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control over financial reporting and compliance. Miramar Beach, Florida January 13, 2016 2

Management s Discussion And Analysis

Somerset Community Development District Management s Discussion and Analysis Our discussion and analysis of the Somerset Community Development District s financial performance provides an overview of the District s financial activities for the fiscal year ended September 30, 2015. Please read it in conjunction with the District s financial statements, which begin on page 8. FINANCIAL HIGHLIGHTS At September 30, 2015, the liabilities of the District exceed its assets by approximately $5.4 million (deficit). During the fiscal year ended September 30, 2015, the District incurred approximately $793,000 of interest expenditures and repaid principal of $365,000. USING THE ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities on pages 8 9 provide information about the activities of the District as a whole and present a longer term view of the District s finances. Fund financial statements start on page 10. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the District s operations in more detail than the government wide statements by providing information about the District s most significant funds. Reporting the District as a Whole Our analysis of the District as a whole begins on page 4. One of the most important questions asked about the District s finances is, Is the District as a whole better off or worse off as a result of the year s activities? The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the District s net position and related changes during the current year. You can think of the District s net position the difference between assets and liabilities as one way to measure the District s financial health, or financial position. Over time, increases or decreases in the District s net position is one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the District s assessment base and the condition of the District s infrastructure, to assess the overall health of the District. 3

Reporting the District s Most Significant Funds Somerset Community Development District Management s Discussion and Analysis Our analysis of the District s major funds begins on page 6. The fund financial statements begin on page 10 and provide detailed information about the most significant funds not the District as a whole. Some funds are required to be established by State law and by bond covenants. All of the District s funds are governmental fund types. Governmental funds All of the District s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend that are available for spending. The governmental fund statements provide a detailed short term view of the District s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. THE DISTRICT AS A WHOLE The following table reflects the condensed Statement of Net Position and is compared to the prior year. September 30, 2015 2014 Change Assets Current and other assets $ 1,516,204 $ 1,616,874 $ (100,670) Capital assets, net 8,005,429 8,442,030 (436,601) Total assets $ 9,521,633 $ 10,058,904 $ (537,271) Liabilities Current liabilities $ 740,031 $ 721,420 $ 18,611 Other liabilities 14,230,000 14,635,000 (405,000) Total liabilities 14,970,031 15,356,420 (386,389) Net position Net investment in capital assets (2,039,927) (1,871,321) (168,606) Restricted for: Debt service 124,782 115,404 9,378 Unrestricted (3,533,253) (3,541,599) 8,346 Total net position (deficit) (5,448,398) (5,297,516) (150,882) Total liabilities and net position $ 9,521,633 $ 10,058,904 $ (537,271) For more detailed information, see the accompanying Statement of Net Position. 4

Somerset Community Development District Management s Discussion and Analysis During the fiscal year ended September 30, 2015, total assets and liabilities decreased by approximately $537,000 and $386,000, respectively. The decrease in assets is primarily a result of depreciation on capital assets. The decrease in liabilities is primarily due to the repayment of outstanding long term bond principal. The following schedule compares the Statement of Activities for the current and previous fiscal year. Year ended September 30, 2015 2014 Change Revenues: Program revenues: Charges for services $ 1,367,319 $ 1,366,482 $ 837 General revenues: Interest 147 311 (164) Total revenues 1,367,466 1,366,793 673 Expenses: General government 87,925 92,789 (4,864) Maintenance and operations 645,205 642,396 2,809 Interest 785,218 804,120 (18,902) Total expenses 1,518,348 1,539,305 (20,957) Change in net position (150,882) (172,512) 21,630 Net position (deficit), beginning of year (5,297,516) (5,125,004) (172,512) Net position (deficit), end of year $ (5,448,398) $ (5,297,516) $ (150,882) For more detailed information, see the accompanying Statement of Activities. Revenues and expenses did not change significantly from the prior year. The overall result was a $150,882 decrease in net position for fiscal year 2015. 5

Somerset Community Development District Management s Discussion and Analysis THE DISTRICT S FUNDS As the District completed the year, its governmental funds (as presented in the balance sheet on page 10) reported a combined fund balance of approximately $1.5 million, which is a decrease from last year s balance that totaled approximately $1.6 million. Significant transactions are discussed below. During the fiscal year ended September 30, 2015, the District incurred approximately $793,000 of interest expenditures and repaid principal of $365,000. The overall decrease in fund balance for the year ended September 30, 2015 totaled approximately $87,000. Capital Assets CAPITAL ASSET AND DEBT ADMINISTRATION At September 30, 2015, the District had approximately $8 million invested in capital assets (net of accumulated depreciation). This amount represents a net decrease of approximately $437,000 from the fiscal year 2014 total. A listing of capital assets by major category for the current and prior year follows: September 30, 2015 2014 Change Capital assets being depreciated $ 10,915,038 $ 10,915,038 $ Accumulated depreciation (2,909,609) (2,473,008) (436,601) Net capital assets $ 8,005,429 $ 8,442,030 $ (436,601) More information about the District s capital assets is presented in Note 4 to the financial statements. 6

Somerset Community Development District Management s Discussion and Analysis Debt At September 30, 2015, the District had approximately $14.6 million of bonds outstanding. This amount represents a decrease of $365,000 from the fiscal year 2014 total. A listing of debt amounts outstanding for the current and prior year is as follows: September 30, 2015 2014 Change Series 2005 bonds $ 14,615,000 $ 14,980,000 $ (365,000) More information about the District s long term debt is presented in Note 5 to the financial statements. GOVERNMENTAL FUNDS BUDGETARY HIGHLIGHTS An Operating budget was established by the governing board for the District pursuant to the requirements of Florida Statutes. The budget to actual comparison for the general fund, including the original budget and final adopted budget, is shown at page 23. The District experienced a favorable variance in revenues as compared to the budget in the amount of $1,661 and an unfavorable variance in expenditures of $63,655. The variance in expenditures occurred primarily due to unanticipated maintenance expenditures that were incurred during the year. FUTURE FINANCIAL FACTORS Somerset Community Development District is an independent special district that operates under the provisions of Chapter 190, Florida Statutes. The District operates under an elected Board of Supervisors, which establishes policy and sets assessment rates. Assessment rates for fiscal year 2016 were established to provide for the operations of the District. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide a general overview of the District s finances. If you have questions about this report or need additional financial information, contact the Somerset Community Development District s finance department at 3434 Colwell Avenue, Suite 200, Tampa, Florida 33614. 7

Basic Financial Statements

Somerset Community Development District Statement of Net Position September 30, 2015 Governmental Activities Assets Cash and cash equivalents $ 57,249 Investments 1,446,764 Prepaid expenses 12,191 Capital assets, net 8,005,429 Total assets 9,521,633 Liabilities Accounts payable 20,000 Accrued expenses payable 12,283 Accrued interest payable 322,748 Non current liabilities: Due within one year 385,000 Due in more than one year 14,230,000 Total liabilities 14,970,031 Net position Net investment in capital assets (2,039,927) Restricted for: Debt service 124,782 Unrestricted (3,533,253) Total net position (deficit) $ (5,448,398) The accompanying notes are an integral part of these financial statements. 8

Somerset Community Development District Statement of Activities Year ended September 30, 2015 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Charges for Grants and Governmental Functions/Programs Expenses Services Contributions Activities Primary government: Governmental activities: General government $ (87,925) $ 62,086 $ $ (25,839) Maintenance and operations (645,205) 147,302 (497,903) Interest (785,218) 1,157,931 372,713 Total governmental activities $ (1,518,348) $ 1,367,319 $ (151,029) General revenues Interest 147 Change in net position (150,882) Net position (deficit) beginning of year (5,297,516) Net position (deficit) end of year $ (5,448,398) The accompanying notes are an integral part of these financial statements. 9

Somerset Community Development District Balance Sheet Governmental Funds September 30, 2015 General Debt Service Total Governmental Funds Assets Cash and cash equivalents $ 57,249 $ $ 57,249 Investments 1,446,764 1,446,764 Prepaid expenditures 12,191 12,191 Due from other funds 3,231 3,231 Total assets $ 72,671 $ 1,446,764 $ 1,519,435 Liabilities and Fund Balances Liabilities Accounts payable $ 20,000 $ $ 20,000 Accrued expenditures payable 12,283 12,283 Due to other funds 3,231 3,231 Total liabilities 32,283 3,231 35,514 Fund balances Nonspendable 12,191 12,191 Restricted for debt service 1,443,533 1,443,533 Assigned for capital reserves 10,024 10,024 Unassigned 18,173 18,173 Total fund balances 40,388 1,443,533 1,483,921 Total liabilities and fund balances $ 72,671 $ 1,446,764 $ 1,519,435 The accompanying notes are an integral part of these financial statements. 10

Somerset Community Development District Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position September 30, 2015 Total fund balances, governmental funds $ 1,483,921 Capital assets used in governmental activities are not financial resources and therefore are not reported in the fund financial statements. 8,005,429 Liabilities not due and payable from current resources, including accrued interest, are not reported in the fund financial statements. (14,937,748) Total net position (deficit) governmental activities $ (5,448,398) The accompanying notes are an integral part of these financial statements. 11

Somerset Community Development District Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year ended September 30, 2015 General Debt Service Total Governmental Funds Revenues Assessments $ 209,388 $ 1,157,931 $ 1,367,319 Interest 147 147 Total revenues 209,535 1,157,931 1,367,466 Expenditures Current: General government 87,925 87,925 Maintenance and operations 208,604 208,604 Debt service: Principal 365,000 365,000 Interest 793,278 793,278 Total expenditures 296,529 1,158,278 1,454,807 Excess (deficit) of revenues over expenditures (86,994) (347) (87,341) Fund balances, beginning of year 127,382 1,443,880 1,571,262 Fund balances, end of year $ 40,388 $ 1,443,533 $ 1,483,921 The accompanying notes are an integral part of these financial statements. 12

Somerset Community Development District Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year ended September 30, 2015 Net change in fund balances governmental funds $ (87,341) Depreciation on capital assets is not recognized in the fund financial statements but is reported as an expense in the Statement of Activities. (436,601) Governmental funds report principal payments on bonds when debt is paid, whereas these payments are eliminated in the Statement of Activities and recognized as a decrease in bonds payable in the Statement of Net Position. 365,000 The change in accrued interest between the current and prior year is recorded on the Statement of Activities but not on the fund financial statements. 8,060 Change in net position of governmental activities $ (150,882) The accompanying notes are an integral part of these financial statements. 13

Somerset Community Development District Notes to Financial Statements NOTE 1 NATURE OF ORGANIZATION The Somerset Community Development District (the District ) was established on April 1, 2005 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes, by Walton County Ordinance No. 05 04. The Act provides, among other things, the power to manage basic services for community development, power to borrow money and issue bonds, and to levy and assess non ad valorem assessments for the financing and delivery of capital infrastructure. The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for community development within the District. The District is governed by a Board of Supervisors ( Board ), which is comprised of five members. The Supervisors are elected on an at large basis by landowners of the District. As of September 30, 2015, certain Supervisors were affiliated with the Developer of the community, EBSCO Gulf Coast Development, Inc. The Board of Supervisors of the District exercises all powers granted to the District pursuant to Chapter 190, Florida Statutes. The Board has the final responsibility for: 1. Allocating and levying assessments. 2. Approving budgets. 3. Exercising control over facilities and properties. 4. Controlling the use of funds generated by the District. 5. Approving the hiring and firing of key personnel. 6. Financing improvements. In evaluating how to define the government, for financial reporting purposes, management has considered all potential component units. The decision to include or exclude a potential component unit in the reporting entity was made by applying the criteria set forth by Generally Accepted Accounting Principles (GAAP) as defined by the Governmental Accounting Standards Board (GASB) in statements No. 14 and No. 61. Based on the foregoing criteria, no potential component units were found. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the District conform to GAAP as applicable to governments in accordance with those promulgated by GASB. The following is a summary of the more significant policies: Government wide and Fund Financial Statements The basic financial statements include both government wide and fund financial statements. 14

Somerset Community Development District Notes to Financial Statements NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The government wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all the non fiduciary activities of the primary government. Governmental activities, which normally are supported by assessments, are reported separately from business type activities, which rely to a significant extent on fees and charges for support. The business type activities are reported separately in government wide financial statements; however, at September 30, 2015, the District did not have any significant business type activities. Therefore, no business type activities are reported. Assessments and other items not properly included as program revenues (i.e., charges to customers or applicants who purchase, use, or directly benefit from goods or services) are reported as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting and Basis of Presentation The government wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Assessments are recognized as revenues in the year for which they are levied. Grants and other similar items are to be recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Assessments, including debt service assessments along with operation and maintenance assessments, are non ad valorem special assessments imposed on all lands located within the District and benefited by the District s activities, operation and maintenance. Operation and maintenance assessments are levied and certified for collection and debt assessments are certified for collection by the District prior to the start of the fiscal year which begins October 1 st and ends on September 30 th. Operation and maintenance special assessments are imposed upon all benefited lands located in the District. Debt service special assessments are imposed upon certain lots and lands as described in each resolution imposing the special assessment for each series of bonds issued by the District. 15

Somerset Community Development District Notes to Financial Statements NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assessments and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the District. The District reports the following major governmental funds: General Fund The General Fund is the primary operating fund of the District. It is used to account for all financial resources except those required to be accounted for in other funds. Debt Service Fund The Debt Service Fund is used to account for the accumulation of resources for the annual payment of principal and interest on long term debt. For the year ended September 30, 2015, the District does not report any proprietary funds. As a general rule, the effect of interfund activity has been eliminated from the government wide financial statements. When both restricted and unrestricted resources are available for use, it is the District s policy to use restricted resources first, then unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use in the governmental fund financial statements, it is the government s policy to use committed resources first, followed by assigned resources, then unassigned resources as needed. Cash, Deposits and Investments The District maintains deposits with "Qualified Public Depositories" as defined in Chapter 280, Florida Statutes. All Qualified Public Depositories must place with the Treasurer of the State of Florida securities in accordance with collateral requirements determined by the State s Chief Financial Officer. In the event of default by a Qualified Public Depository, the State Treasurer will pay public depositors all losses. Losses in excess of insurance and collateral will be paid through assessments between all Qualified Public Depositories. Under this method, all the District's deposits are fully insured or collateralized at the highest level of security as defined by GASB, Statement Number 40, Deposits and Investment Disclosures (An Amendment of GASB, Statement Number 3). The District is authorized to invest in financial instruments as established by Section 218.415, Florida Statutes. The authorized investments include among others negotiable direct or indirect obligations which are secured by the United States Government; the Local Government Surplus Trust Funds as created by Section 218.405, Florida Statutes; SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency; and interestbearing time deposits or savings accounts in authorized financial institutions. 16

Somerset Community Development District Notes to Financial Statements NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital Assets Capital assets, which include primarily infrastructure assets (e.g., roads, sidewalks, water management systems and similar items), are reported in the governmental activities column in the government wide financial statements. Capital assets are defined by the District as assets with an initial/individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost and estimated historical cost if purchased or constructed. Donated assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant and equipment of the primary government are depreciated using the straight line method over the following estimated useful lives: erosion control structures: 25 years; surface water treatment: 25 years. In the governmental fund financial statements, amounts incurred for the acquisition of capital assets are reported as fund expenditures. Depreciation expense is not reported in the governmental fund financial statements. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Long Term Obligations In the government wide financial statements, long term debt and other long term obligations are reported as liabilities in the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight line or effective interest method. Bonds payable are reported net of these premiums or discounts. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as current period expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 17

Somerset Community Development District Notes to Financial Statements NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District does not have any of this type of item at September 30, 2015. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District does not have any of this type of item at September 30, 2015. Fund Equity Net position in the government wide financial statements represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources and is categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets represents assets related to infrastructure and property, plant and equipment, net of any related debt. Restricted net position represents the assets restricted by the District s bond covenants. Governmental fund equity is classified as fund balance. Fund balance is further classified as nonspendable, restricted, committed, assigned, or unassigned. Nonspendable fund balance cannot be spent because of its form. Restricted fund balance has limitations imposed by creditors, grantors, or contributors or by enabling legislation or constitutional provisions. Committed fund balance is a limitation imposed by the District board through approval of resolutions. Assigned fund balance is a limitation imposed by a designee of the District board. Unassigned fund balance in the General Fund is the net resources in excess of what can be properly classified in one of the above four categories. Negative unassigned fund balance in other governmental funds represents excess expenditures incurred over the amounts restricted, committed, or assigned to those purposes. Budgets The District is required to establish a budgetary system and an approved annual budget. Annual budgets are legally adopted on a basis consistent with GAAP for the General Fund. Certain revisions to the budget must be approved by the District Board. The budgets are compared to actual expenditures. In instances where budget appropriations and estimated revenues have been revised during the year, budget data presented in the financial statements represent final authorization amounts. During fiscal year ended September 30, 2015, actual expenditures exceeded budgeted appropriations. 18

Somerset Community Development District Notes to Financial Statements NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The District follows these procedures in establishing the budgetary data reflected in the financial statements: A. Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1. B. A public hearing is conducted to obtain comments. C. Prior to October 1, the budget is legally adopted by the District Board. D. All budget changes must be approved by the District Board. District manager can approve certain changes to line item appropriation within the fund. E. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. NOTE 3 INVESTMENTS All investments held at September 30, 2015 are reported at fair value based on quoted market prices, which approximates amortized cost. The following is a summary of the District s investments: September 30, 2015 Credit Risk Maturities Short term Money Market Funds $ 1,446,764 S&P AAAm 43 days Total investments $ 1,446,764 Custodial credit risk For an investment, custodial credit risk is the risk that the District will not be able to recover the value of the investments or collateral securities that are in the possession of an outside party. The District has no formal policy for custodial risk. At September 30, 2015, the money market funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form. Concentration risk The District s investment policy requires diversification, but does not specify limits on types of investments. Interest rate risk The District does not have a formal policy for addressing interest rate risk; however, investments are made with discretion, to seek reasonable returns, preserve capital, and in general, avoid speculative investments. The District manages its exposure to declines in fair values from interest rate changes by reviewing the portfolio on an ongoing basis for changes in effective yield amounts. 19

Somerset Community Development District Notes to Financial Statements NOTE 4 CAPITAL ASSETS The following is a summary of changes in the capital assets for the year ended September 30, 2015: Beginning Balance Additions Governmental Activities: Capital assets being depreciated Erosion control structures $ 933,321 Transfers and Conveyances Ending Balance $ $ $ 933,321 Surface water treatment 9,981,717 9,981,717 Total capital assets, being depreciated 10,915,038 10,915,038 Less accumulated depreciation Erosion control structures 261,331 37,333 298,664 Surface water treatment 2,211,677 399,268 2,610,945 Total accumulated depreciation 2,473,008 436,601 2,909,609 Total capital assets, being depreciated, net 8,442,030 (436,601) 8,005,429 Governmental activities capital assets, net $ 8,442,030 $ (436,601) $ $ 8,005,429 Depreciation expense of $436,601 was allocated to maintenance and operations on the accompanying Statement of Activities. NOTE 5 BONDS PAYABLE On July 12, 2005, the District issued $21,045,000 of Capital Improvement Revenue Bonds, Series 2005 consisting of $2,875,000 Series 2005 Term Bonds and $18,170,000 of Series 2005 Term Bonds with a fixed interest rate of 5% and 5.3%, and maturing May 1, 2015 and May 1, 2037, respectively. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the property within the District. Interest is paid semiannually on each May 1 and November 1. Principal is paid serially commencing on May 1, 2008 through May 1, 2037. The 2005 Bonds maturing in May 2037 may, at the option of the District, be called for redemption as a whole, at any time, or in part on any interest payment date on or after May 1, 2015 at a redemption price set forth in the Bond Indenture. The Bond Indentures for all series have certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agreed to levy special assessments in annual amounts adequate to provide payment of debt service. The District is in compliance with the requirements of the Bond Indenture. 20

Somerset Community Development District Notes to Financial Statements NOTE 5 BONDS PAYABLE (CONTINUED) The Bond Indentures require that the District maintain adequate funds in reserve accounts to meet the debt service reserve requirements as defined in the Indentures. The requirements have been met for the fiscal year ended September 30, 2015. Long term liability activity for the year ended September 30, 2015, was as follows: Ending Balance Due Within One Year Beginning Balance Additions Reductions Governmental Activities Bonds Payable: Series 2005 $ 14,980,000 $ $ (365,000) $ 14,615,000 $ 385,000 The remaining scheduled debt service requirements on long term debt are as follows: Total Debt Year Ending September 30, Principal Interest Service 2016 $ 385,000 $ 773,933 $ 1,158,933 2017 380,000 754,190 1,134,190 2018 400,000 734,050 1,134,050 2019 425,000 712,850 1,137,850 2020 445,000 690,325 1,135,325 2021 2025 2,615,000 3,071,085 5,686,085 2026 2030 3,410,000 2,298,610 5,708,610 2031 2035 4,445,000 1,290,550 5,735,550 2036 2037 2,110,000 168,540 2,278,540 $ 14,615,000 $ 10,494,133 $ 25,109,133 NOTE 6 RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District maintains commercial insurance coverage to mitigate the risk of loss. Coverage may not extend to all situations. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. The District has not filed any claims under this commercial coverage during the last three years. 21

Somerset Community Development District Notes to Financial Statements NOTE 7 MANAGEMENT COMPANY The District has contracted with a management company to perform management advisory services, which include financial and accounting advisory services. Certain employees of the management company also serve as officers (Board appointed non voting positions) of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, and other administrative costs. NOTE 8 RELATED PARTY TRANSACTIONS During the year ended September 30, 2015, the District directly assessed the Developer $142,927 and $790,396 for the General and Debt Service Funds, respectively. In addition, the Developer was assessed $38,146 and $210,950 for the General and Debt Service Funds, respectively, through the local tax collector. During the year ended September 30, 2015, the District incurred $198,473 in landscape and other miscellaneous maintenance expenses with ALYS Beach Neighborhood Association, Inc. (the Association ), the homeowners association located in the District. At September 30, 2015, the District owed the Association approximately $25,000, which is included in Accounts payable and Accrued expenditures payable on the accompanying Statement of Net Position and Balance Sheet Governmental Funds. A significant portion of the District s activity is dependent upon the continued involvement of the Developer, the loss of which could have a material adverse effect on the District s operations. 22

Required Supplemental Information (Other Than MD&A)

Somerset Community Development District Budget to Actual Comparison Schedule General Fund Year ended September 30, 2015 Original and Final Budget Actual Amounts Variance with Final Budget Revenues Assessments $ 207,874 $ 209,388 $ 1,514 Interest 147 147 Total revenues 207,874 209,535 1,661 Expenditures General government 96,550 87,925 8,625 Maintenance and operations 136,324 208,604 (72,280) Total expenditures 232,874 296,529 (63,655) Excess (deficit) of revenues over expenditures (25,000) (86,994) (61,994) Fund balance, beginning of year 25,000 127,382 102,382 Fund balance, end of year $ $ 40,388 $ 40,388 23

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 Supervisors Somerset Community Development District Walton County, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of Somerset Community Development District (hereinafter referred to as the District ), as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the District s basic financial statements, and have issued our report thereon dated January 13, 2016. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District s internal control. Accordingly, we do not express an opinion on the effectiveness of the District s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. 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. 24

Compliance and Other Matters As part of obtaining reasonable assurance about whether the District s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Miramar Beach, Florida January 13, 2016 25

MANAGEMENT LETTER To the Board of Supervisors Somerset Community Development District Walton County, Florida Report on the Financial Statements We have audited the financial statements of Somerset Community Development District ( District ) as of and for the fiscal year ended September 30, 2015, and have issued our report thereon dated January 13, 2016. 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; and Chapter 10.550, Rules of the Florida Auditor General. Other Reports and Schedule We have issued our Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards and Independent Accountant s Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in these reports, which are dated January 13, 2016, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no recommendations made in the preceding annual audit report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The information required is disclosed in the notes to the financial statements. 26

Financial Condition Sections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, requires a statement be included as to whether or not the local governmental entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the District did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management s responsibility to monitor the District s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Annual Financial Report Sections 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, requires that we determine whether the annual financial report for the District for the fiscal year ended September 30, 2015, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2015. In connection with our audit, we determined that these two reports were in agreement. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. Miramar Beach, Florida January 13, 2016 27

INDEPENDENT ACCOUNTANT S REPORT To the Board of Supervisors Somerset Community Development District Walton County, Florida We have examined Somerset Community Development District s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2015. 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 and, accordingly, included examining, on a test basis, evidence about the District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the District s compliance with specified requirements. In our opinion, the District complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2015. This report is intended solely for the information and use of management and the State of Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties. Miramar Beach, Florida January 13, 2016 28

Tab 7

RESOLUTION 2016-02 A RESOLUTION OF THE BOARD OF SUPERVISORS OF SOMERSET COMMUNITY DEVELOPMENT DISTRICT REDESIGNATING AN ASSISTANT SECRETARY OF THE DISTRICT, AND PROVIDING FOR AN EFFECTIVE DATE WHEREAS, Somerset Community Development District (hereinafter the District ) is a local unit of special-purpose government created and existing pursuant to Chapter 190, Florida Statutes, being situated entirely within Walton County, Florida; and WHEREAS, the Board of Supervisors (hereinafter the Board ) previously designated Debra Anderson as an Assistant Secretary pursuant to Resolution 2015-02; and WHEREAS, the Board now desires to re-designate an Assistant Secretary. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF SOMERSET COMMUNITY DEVELOPMENT DISTRICT: Section 1. Section 2. Chris Cleveland is appointed as Assistant Secretary. This Resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED THIS 9 th DAY OF MAY, 2016. SOMERSET COMMUNITY DEVELOPMENT DISTRICT ATTEST: CHAIRMAN SECRETARY

Tab 8

Tab 9

Somerset Community Development District Budget Proposal Packet for Fiscal Year 2016/2017 Presented by: Rizzetta & Company, Inc. Panama City Beach Office 120 Richard Jackson Blvd; Suite 220 Panama City Beach, FL 32407 850.334.9055 rizzetta.com

The following are enclosed in this Budget Proposal Packet: Proposed General Fund Budget, Reserve Fund Budget, Enterprise Fund Budget & Debt Service Fund Budget worksheets for Fiscal Year 2016/2017. Assessment Charts for current Fiscal Year 2015/2016 and Assessment Charts for Fiscal Year 2016/2017 if budget were to be adopted as proposed. General Fund Budget & Debt Service Fund Account Category Descriptions for Fiscal Year 2016/2017. THE BUDGET PROPOSAL PACKET FOR FISCAL YEAR 2016/2017 IS SIMPLY A PROPOSED BUDGET AND PROPOSED LEVEL OF ASSESSMENTS WHICH ARE DONE AS PART OF THE BUDGET PROCESS. THESE ARE NOT FINAL AND SHOULD NOT BE CONSTRUED AS FINAL, UNTIL AFTER THE BOARD OF SUPERVISORS HAS HELD A PUBLIC HEARING ON THE BUDGET AND ADOPTED THE FINAL BUDGET AND LEVIED ASSESSMENTS.

Somerset Somerset Community Development District Enterprise Fund Fiscal Year 2015/2016 Chart of Accounts Classification Actual YTD through 03/31/16 1 2 REVENUES 3 14 Special Assessments 15 Tax Roll* 106,450 16 Street Light Assessment - 17 Off Roll* 188,880 31 32 TOTAL REVENUES 295,330 33 34 Balance Forward from Prior Year - 35 36 TOTAL REVENUES AND BALANCE 295,330 37 38 39 40 EXPENDITURES - ADMINISTRATIVE 41 42 Legislative 43 Supervisor Fees 600 44 Financial & Administrative 45 Administrative Services 2,250 46 District Management 12,500 47 District Engineer 990 48 Disclosure Report - 49 Trustees Fees 3,937 50 Assessment Roll - 51 Financial Consulting Services 7,500 52 Accounting Services 7,500 53 Auditing Services 4,750 54 Arbitrage Rebate Calculation - 58 Travel - 59 Public Officials Liability Insurance 2,750 60 Legal Advertising 65 61 Bank Fees - 62 Dues, Licenses & Fees 175 63 Miscellaneous Fees - 66 Website Fees & Maintenance 600 67 Legal Counsel 68 District Counsel 3,755 73 74 Administrative Subtotal 47,372 75 76 EXPENDITURES - FIELD OPERATIONS 77 90 Electric Utility Services 92 Street Lights - 95 Utility-Irrigation 2,118 111 Stormwater Control 114 Fountain Service Repairs & Maintenance 4,595 115 Lake/Pond Bank Maintenance - 116 Wetland Monitoring & Maintenance - 117 Mitigation Area Monitoring & Maintenance - 118 Aquatic Maintenance Plant Replacement 40 119 Stormwater System Maintenance - 124 Miscellaneous Expense/Pond Liner Repair - 125 Other Physical Environment 130 General Liability Insurance 5,504 135 Landscape Maintenance 65,191 136 Ornamental Lighting & Maintenance - 143 Irrigation Maintenance - 144 Irrigation Repairs 1,200 145 Landscape - Mulch - 146 Landscape Miscellaneous Palm Trees - 147 Landscape Replacement Plants, Shrubs, Trees 40,370 153 Road & Street Facilities 156 Street Light Decorative Light Maintenance - 161 Roadway Repair & Maintenance - 162 Parks & Recreation 218 Contingency 220 Miscellaneous Contingency - 223 224 Field Operations Subtotal 119,018 225 226 Contingency for County TRIM Notice 227 Projected Annual Totals 2015/2016 Annual Budget for 2015/2016 Projected Budget variance for 2015/2016 Budget for 2016/2017 Budget Increase (Decrease) vs 2015/2016 $ $ 212,900 $ 105,895 $ 107,005 $ 105,895 $ - $ $ - $ - $ - $ - $ - $ $ - $ 188,880 $ - $ 188,880 $ - $ $ 212,900 $ 294,775 $ 107,005 $ 294,775 $ - $ $ - $ - $ - $ - $ - $ $ 212,900 $ 294,775 $ 107,005 $ 294,775 $ - *Allocation of assessments between the Tax Roll and Off Roll are estimates only and subject to change prior to certification. $ $ 1,200 $ 2,400 $ - $ 2,400 $ - Comments $ $ 4,500 $ 4,500 $ - $ 4,500 $ - $ $ 25,000 $ 25,000 $ - $ 25,000 $ - $ $ 1,980 $ 3,600 $ 1,620 $ 3,600 $ - $ $ - $ 500 $ 500 $ 500 $ - $ $ 7,874 $ 6,500 $ (1,374) $ 6,500 $ - $ $ - $ - $ - $ - $ - $ $ 10,000 $ 10,000 $ - $ 10,000 $ - $ $ 15,000 $ 15,000 $ - $ 15,000 $ - $ $ 550 $ 4,200 $ 3,650 $ 4,200 $ - $ $ - $ 650 $ - $ 650 $ - $ $ - $ 500 $ - $ 500 $ - $ $ 5,000 $ 5,000 $ - $ 5,000 $ - Maybe reduced when final $ $ 1,800 $ 1,800 $ - $ 1,800 $ - $ $ 250 $ 250 $ - $ 250 $ - $ $ 175 $ 175 $ - $ 175 $ - $ $ - $ 500 $ - $ 500 $ - $ $ 1,200 $ 2,600 $ 1,400 $ 2,600 $ - $ $ 7,510 $ 12,000 $ 4,490 $ 12,000 $ - $ $ 82,039 $ 95,175 $ 13,136 $ 95,175 $ - $ $ - $ 27,000 $ 27,000 $ 27,000 $ - Place holder for transfer of lights $ $ 4,236 $ 7,500 $ 3,264 $ 7,500 $ - $ $ 9,190 $ 8,500 $ (690) $ 8,500 $ - $ $ - $ 3,600 $ 3,600 $ 3,600 $ - $ $ - $ - $ - $ - $ - $ $ - $ - $ - $ - $ - $ $ 80 $ 500 $ 420 $ 500 $ - $ $ - $ 5,000 $ 5,000 $ 5,000 $ - potential for future needs $ $ - $ 2,500 $ 2,500 $ 2,500 $ - $ $ 5,504 $ 5,000 $ (504) $ 6,500 $ 1,500 Potential increase at renewal $ $ 84,100 $ 84,100 $ - $ 84,100 $ - $ $ - $ 500 $ 500 $ 500 $ - $ $ - $ - $ - $ - $ - $ $ 2,400 $ 25,000 $ 22,600 $ 25,000 $ - Maybe reduced when final $ $ - $ 1,500 $ 1,500 $ 1,500 $ - $ $ - $ 15,400 $ 15,400 $ 15,400 $ - Maybe reduced when final $ $ 40,370 $ 1,500 $ (38,870) $ 70,000 $ 68,500 May add 10-12 Medjools Palms $ $ - $ 8,500 $ 8,500 $ 8,500 $ - $ $ - $ 2,000 $ 2,000 $ 2,000 $ - $ $ - $ 1,500 $ 1,500 $ 1,500 $ - $ $ 145,880 $ 199,600 $ 53,720 $ 269,600 $ 70,000

Somerset Somerset Community Development District Enterprise Fund Fiscal Year 2015/2016 Chart of Accounts Classification Actual YTD through 03/31/16 Projected Annual Totals 2015/2016 Annual Budget for 2015/2016 Projected Budget variance for 2015/2016 Budget for 2016/2017 Budget Increase (Decrease) vs 2015/2016 $ 228 TOTAL EXPENDITURES $ 166,390 $ 227,919 $ 294,775 $ 66,856 $ 364,775 70,000 229 230 EXCESS OF REVENUES OVER $ 128,940 $ (15,019) $ - $ 40,149 $ (70,000) $ (70,000) 231 Comments

Budget Template Somerset Community Development District Debt Service Fiscal Year 2016/2017 Chart of Accounts Classification Series 2005 Budget for 2016/2017 REVENUES Special Assessments Net Special Assessments $ 1,149,558.91 $ 1,149,558.91 TOTAL REVENUES $ 1,149,558.91 $ 1,149,558.91 EXPENDITURES Administrative Financial & Administrative Bank Fees 0 Debt Service Obligation $ 1,149,558.91 $ 1,149,558.91 Administrative Subtotal $ 1,149,558.91 $ 1,149,558.91 TOTAL EXPENDITURES $ 1,149,558.91 $ 1,149,558.91 EXCESS OF REVENUES OVER EXPENDITURES 0 0 Collection and Discount % applicable to the county: 7.0% Gross assessments $ 1,236,084.85 Notes: 1. Tax Roll Collection Costs for Walton County is 7.0% of Tax Roll. Budgeted net of tax roll assessments. See Assessment Table.

Somerset Community Development District FISCAL YEAR 2016/2017 O&M & DEBT SERVICE ASSESSMENT SCHEDULE 2016/2017 O&M Budget $444,775.00 Walton Co. 7% Collection Cost: 7% $33,477.69 2016/2017 Total: $478,252.69 $478,252.69 2015/2016 O&M Budget $444,775.00 2016/2017 O&M Budget $444,775.00 Total Difference: $0.00 PER UNIT ANNUAL ASSESSMENT Proposed Increase / Decrease 2015/2016 2016/2017 $ % Debt Service - Commercial $1,217.02 $1,217.02 $0.00 0.00% Operations/Maintenance - Commercial $470.88 $470.88 $0.00 0.00% Total $1,687.90 $1,687.90 $0.00 0.00% Debt Service - Hotel/Inn $811.35 $811.35 $0.00 0.00% Operations/Maintenance - Hotel/Inn $313.92 $313.92 $0.00 0.00% Total $1,125.27 $1,125.27 $0.00 0.00% Debt Service - Single Family $1,622.69 $1,622.69 $0.00 0.00% Operations/Maintenance - Single Family $627.83 $627.83 $0.00 0.00% Total $2,250.52 $2,250.52 $0.00 0.00%

SOMERSET COMMUNITY DEVELOPMENT DISTRICT FISCAL YEAR 2016/2017 O&M & DEBT SERVICE ASSESSMENT SCHEDULE TOTAL O&M BUDGET COLLECTION COSTS @ TOTAL O&M ASSESSMENT $364,775.00 7.0% $27,456.18 $392,231.18 UNITS ASSESSED TOTAL SERIES 2005 ALLOCATION OF O&M ASSESSMENT SERIES 2005 DEBT TOTAL % TOTAL TOTAL DEBT SERVICE SERIES 2005 LU LOT SIZE O&M SERVICE (1) EAU FACTOR EAU's EAU's O&M BUDGET ASSESSMENT O&M DEBT SERVICE (2) TOTAL (3) 0 PLATTED LOTS 0 0 0 SF SINGLE FAMILY 261 261 1.00 261.00 34.26% $134,390.99 $423,522.09 $514.91 $1,622.69 $2,137.60 Total Platted 261 261 261.00 34.26% $134,390.99 $423,522.09 PER LOT ANNUAL ASSESSMENT UNPLATTED LOTS C COMMERICAL 177 177 1K sf 0.75 132.75 17.43% $68,354.04 $215,412.54 $386.18 $1,217.02 $1,603.20 H HOTEL/INN 60 60 0.50 30.00 3.94% $15,447.24 $48,681.00 $257.45 $811.35 $1,068.80 SF SINGLE FAMILY 338 338 1.00 338.00 44.37% $174,038.91 $548,469.22 $514.91 $1,622.69 $2,137.60 Total Unplatted 575 575 500.75 65.74% $257,840.19 $812,562.76 TOTAL COMMUNITY 836 836 761.75 100.00% $392,231.18 $1,236,084.85 LESS: Walton County Collection Costs and Early Payment Discount Costs ($27,456.18) ($86,525.94) Net Revenue to be Collected $364,775.00 $1,149,558.91 PER ACRE ASSESSMENTS - UNPLATTED O&M DEBT SERVICE TOTAL UNPLAT BY ACREAGE (4) 97.69 97.69 $257,840.19 $812,562.76 $2,639.37 $8,317.77 $10,957.14 (1) Reflects the number of total lots with Series 2005 debt outstanding. (2) Annual debt service assessment per lot adopted in connection with the Series 2005 bond issue. Annual assessment includes principal, interest, Walton County collection costs and early payment discount costs. (3) Annual assessment that will appear on November 2016 Walton County property tax bill. Amount shown includes all applicable collection costs. Property owner is eligible for a discount of up to 4% if paid early. (4) Assessments are allocated on an equal assessment per acre basis until lots are platted.

GENERAL FUND BUDGET ACCOUNT CATEGORY DESCRIPTION The General Fund Budget Account Category Descriptions are subject to change at any time depending on its application to the District. Please note, not all General Fund Budget Account Category Descriptions are applicable to the District indicated above. Uses of the descriptions contained herein are intended for general reference. REVENUES: Operations & Maintenance Assessments: The District levies Non-Ad Valorem Assessments on all of the assessable property within the District to pay for operating expenditures incurred during the Fiscal Year. The assessments may be collected in two ways. The first is by placing them on the County s Tax Roll, to be collected with the County s Annual Property Tax Billing. This method is only available to land properly platted within the time limits prescribed by the County. The second is for lands not on the tax roll and that is by way of a direct bill from the District to the appropriate property owner. Funding Agreement: The District may enter into funding agreements to provide for a source of revenue for certain expenditures. Developer Contribution: The District may, similar to a funding agreement, receive certain prescribed dollars from the Developer to off-set expenditures of the District. Facility Rental: The District may receive monies for the rental of certain facilities by outside sources, for such items as office space, snack bar/restaurants etc. Event Rental: The District may receive monies for event rentals for such things as weddings, birthday parties, etc. Interlocal Agreement: The District may enter into interlocal agreements with other governmental entities to provide for revenue for certain expenditures. Miscellaneous: The District may receive monies for the sale or provision of electronic access cards, entry decals etc. EXPENDITURES ADMINISTRATIVE: Supervisor Fees: The District may compensate its supervisors within the appropriate statutory limits of $200.00 maximum per meeting within an annual cap of $4,800.00 per supervisor. Administrative Services: The District will incur expenditures for the day to today operation of District matters. These items include but are not limited to mailing and preparation of agenda packages, overnight deliveries, facsimiles and long distance phone calls. Also, each Board Supervisor and the District Staff are entitled to reimbursement for travel expenses per Florida Statutes 190.006(8). Finally, this line item also includes a cost for the storage of all the District s official records, supplies and files.

District Manager: The District as required by statute, will contract with a firm to provide for management and administration of the District s day to day administrative needs. The cost to maintain the minutes of all Board meetings, preparing various resolutions and all other secretarial duties requested by the District throughout the year is also reflected in this amount. Disclosure Report: The District is required to file quarterly and annual disclosure reports, as required in the District s Trust Indenture, with the specified repositories. This is contracted out to a third party in compliance with the Trust Indenture. Trustee s Fees: The District will incur annual trustee s fees upon the issuance of bonds for the oversight of the various accounts relating to the bond issues. Financial Consulting Services: The District will contract with a firm to maintain the assessment roll and annually levy a Non-Ad Valorem assessment for operating and debt service expenses. Also, additional financial consulting services include, but are not limited to responding to bondholder questions, prepayment analysis, long term pay-offs and true-up analysis. This line item also includes the fees incurred for a Collection Agent to collect the funds for the principal and interest payment for its short-term bond issues and any other bond related collection needs. These funds are collected as prescribed in the Trust Indenture. The Collection Agent also provides for the release of liens on property after the full collection of bond debt levied on particular properties. Accounting Services: The District has contracted for maintenance of accounting records. These services include, but are not limited to accounts payable, accounts receivable and preparation of financial reports for the district. This also includes all preparations necessary for the fiscal year end audits to be done. Auditing Services: The District is required annually to conduct an audit of its financial records by an Independent Certified Public Accounting firm, once it reaches certain revenue and expenditure levels, or has issued bonds and incurred debt. Arbitrage Rebate Calculation: The District is required to calculate the interest earned from bond proceeds each year pursuant to the Internal Revenue Code of 1986. The Rebate Analyst is required to verify that the District has not received earnings higher than the yield of the bonds. District Engineer: The District s engineer provides general engineering services to the District. Among these services are attendance at and preparation for monthly board meetings, review of construction invoices and all other engineering services requested by the district throughout the year. Public Officials Liability Insurance: The District will incur expenditures for public officials liability insurance for the Board and Staff. Legal Advertising: The District will incur expenditures related to legal advertising. The items for which the District will advertise include, but are not limited to meeting schedules, special meeting notices, and public hearings, bidding etc. for the District based on statutory guidelines Bank Fees: The District will incur bank service charges during the year.

Dues, Licenses & Subscriptions: The District is required to pay an annual fee to the Department of Economic Opportunity, along with other items which may require licenses or permits, etc. Miscellaneous: The District could incur miscellaneous throughout the year, which may not fit into any standard categories. Website Development and Maintenance: The District may incur fees as they relate to the development and ongoing maintenance of its own website. District Counsel: The District s legal counsel provides general legal services to the District. Among these services are attendance at and preparation for monthly board meetings, review of operating and maintenance contracts and all other legal services requested by the district throughout the year. EXPENDITURES - FIELD OPERATIONS: Electric Utility Services: The District will incur electric utility expenditures for general purposes such as irrigation timers, lift station pumps, fountains, etc. Electric Service-Recreation Facility: The District may budget separately for its recreation and or amenity electric separately. Street Lights: The District may have expenditures relating to street lights throughout the community. These may be restricted to main arterial roads or in some cases to all street lights within the District s boundaries. Gas-Recreation Facility: The District may incur gas utility expenditures related to district operations at its facilities such as pool heat etc. Garbage Collection-Recreation Facility: The District will incur expenditures related to the removal of garbage and solid waste. Solid Waste Assessment Fee: The District may have an assessment levied by another local government for solid waste, etc. Water Utility Services: The District will incur water/sewer utility expenditures related to district operations. Water-Reclaimed: The District may incur expenses related to the use of reclaimed water for irrigation. Water-Recreation Facility: The District may incur water and sewer charges for its recreation facilities Water-Pool: The District may incur charges for water for its pool if metered separately.

Fountain Service Repairs & Maintenance: The District may incur expenses related to maintaining the fountains within throughout the Parks & Recreational areas Lake/Pond Bank Maintenance: The District may incur expenditures to maintain lake banks, etc. for the ponds and lakes within the Districts boundaries, along with planting of beneficial aquatic plants, stocking of fish, mowing and landscaping of the banks as the District determines necessary. Aquatic Contract: Expenses related to the care and maintenance of the lakes and ponds for the control of nuisance plant and algae species. Mitigation Monitoring & Maintenance: The District may be required to provide for certain types of monitoring and maintenance activities for various wetlands and waterways by other governmental entities. Lake/Pond Repair: Expense related to repair and maintenance for inlet pipes, outfalls and weir structures for the storm water drainage system. Aquatic Plant Replacement: The expenses related to replacing beneficial aquatic plants, that may or may not have been required by other governmental entities. Employee-Salaries: The District may incur salary expenses for a field manager of site superintendent who oversees daily activity within the field operations of the District s facilities. Employee-P/R Taxes: This is the employer s portion of employment taxes such as FICA etc. Employee-Workers Comp: Fees related to obtaining workers compensation insurance. Employee-Health Insurance: Expenses related to providing health insurance coverage if the District elects to offer same. General Liability Insurance: The District will incur fees to insure items owned by the District for its general liability needs Property Casualty Insurance: The District will incur fees to insure items owned by the District for its property needs Entry and Walls Maintenance: The District will incur expenditures to maintain the entry monuments and the fencing. Landscape Maintenance: The District will incur expenditures to maintain the rights-of-way, median strips, recreational facilities including pond banks, entryways, and similar planting areas within the District. These services include but are not limited to monthly landscape maintenance, fertilizer, pesticides, annuals, mulch and irrigation repairs. Irrigation Repairs & Maintenance: The District will incur expenditures related to the maintenance of the irrigation systems. Clock Maintenance Contract: Expenses incurred for such things as entry clocks if they exist.

Landscape Replacement: Expenditures related to replacement of turf, trees, shrubs etc. Miscellaneous Fees: The District may incur miscellaneous expenses that do not readily fit into defined categories in field operations. Gate Phone: The District will incur telephone expenses if the District has gates that are to be opened and closed. Street Sweeping: The District may incur expenses related to street sweeping for roadways it owns or are owned by another governmental entity, for which it elects to maintain. Gate Maintenance: Expenses related to the ongoing repairs and maintenance of gates owned by the District if any. Roadway Repair & Maintenance: Expenses related to the repair and maintenance of roadways owned by the District if any. Sidewalk Repair & Maintenance: Expenses related to sidewalks located in the right of way of streets the District may own if any. Miscellaneous Maintenance: Expenses which may not fit into any defined category in this section of the budget. Employees-Salaries: The District may incur expenses for employees/staff members needed for the recreational facilities such as Clubhouse Staff. Employees P/R Taxes: Expenses related to an employers portion of payroll taxes such as FICA, etc. Employee-Workers Comp: Expenses related to Workers Comp Insurance Employees-Health Insurance: Expenses related to health insurance coverage for employees if the District elects to over same. Management Contract: The District may contract with a firm to provide for the oversight of its recreation facilities. Clubhouse Facility Maintenance: The District may incur expenses to maintain its recreation facilities. Clubhouse Telephone, Fax, Internet: The District may incur telephone, fax and internet expenses related to the recreational facilities. Clubhouse Facility Landscaping: The District may wish to budget separately for this item from its other landscaping needs. Clubhouse Office Supplies: The District may have an office in its facilities which require various office related supplies.

Clubhouse Facility Janitorial Service: Expenses related to the cleaning of the facility and related supplies. Clubhouse Facility Irrigation: The District may wish to budget separately for this item from its other irrigation needs. Pool/Water Park/Fountain Repairs and Maintenance: Expenses related to the repair and maintenance of swimming pools and other water features to include service contracts, repair and replacement Security System: The District may wish to install a security system for the clubhouse Clubhouse Miscellaneous: Expenses which may not fit into a defined category in this section of the budget Athletic/Park Court/Field Repairs: Expense related to any facilities such as tennis, basketball etc. Trail/Bike Path Maintenance: Expenses related to various types of trail or pathway systems the District may own, from hard surface to natural surfaces. Off Duty Deputy Services: The District may wish to contract with the local police agency to provide security for the District. Security Contract: The District may incur expenses for providing security at entries, neighborhood patrols etc. Guard & Gate Facility Maintenance: The District may choose to have its entry gates manned with personnel. Also, any ongoing gate repairs and maintenance would be included in this line item. Special Events: Expenses related to functions such as holiday events for the public enjoyment Miscellaneous Contingency: Monies collected and allocated for expenses that the District could incur miscellaneous throughout the year, which may not fit into any standard categories. Capital Improvements: Monies collected and allocated for various projects as they relate to public improvements. Capital Reserve: Monies collected and allocated for the future repair and replacement of various capital improvements such as club facilities, swimming pools, athletic courts, roads, etc.

RESERVE FUND BUDGET ACCOUNT CATEGORY DESCRIPTION The Reserve Fund Budget Account Category Descriptions are subject to change at any time depending on its application to the District. Please note, not all Reserve Fund Budget Account Category Descriptions are applicable to the District indicated above. Uses of the descriptions contained herein are intended for general reference. REVENUES: Operations & Maintenance Assessments: The District levies Non-Ad Valorem Assessments on all of the assessable property within the District to pay for operating expenditures incurred during the Fiscal Year. The assessments may be collected in two ways. The first is by placing them on the County s Tax Roll, to be collected with the County s Annual Property Tax Billing. This method is only available to land properly platted within the time limits prescribed by the County. The second is for lands not on the tax roll and that is by way of a direct bill from the District to the appropriate property owner. Funding Agreement: The District may enter into funding agreements to provide for a source of revenue for certain expenditures. Developer Contribution: The District may, similar to a funding agreement, receive certain prescribed dollars from the Developer to off-set expenditures of the District. Facility Rental: The District may receive monies for the rental of certain facilities by outside sources, for such items as office space, snack bar/restaurants etc. Event Rental: The District may receive monies for event rentals for such things as weddings, birthday parties, etc. Interlocal Agreement: The District may enter into interlocal agreements with other governmental entities to provide for revenue for certain expenditures. Miscellaneous: The District may receive monies for the sale or provision of electronic access cards, entry decals etc. EXPENDITURES - FIELD OPERATIONS:

Capital Reserve: Monies collected and allocated for the future repair and replacement of various capital improvements such as club facilities, swimming pools, athletic courts, roads, etc. Capital Outlay: Monies collected and allocated for various projects as they relate to public improvements. DEBT SERVICE FUND BUDGET ACCOUNT CATEGORY DESCRIPTION The Debt Service Fund Budget Account Category Descriptions are subject to change at any time depending on its application to the District. Please note, not all Debt Service Fund Budget Account Category Descriptions are applicable to the District indicated above. Uses of the descriptions contained herein are intended for general reference. REVENUES: Debt Service Assessments: The District may levy special assessments to repay the debt incurred by the sale of bonds to raise working capital for certain public improvements. The assessments may be collected in the same fashion as described in the Operations and Maintenance Assessments. EXPENDITURES: Bank Fees: The District may incur bank service charges during the year. Interest Payment: The District may incur interest payments on the debt related to its various bond issues. Principal Payment: This would be the portion of the payment to satisfy the repayment of the bond issue debt.

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RESOLUTION 2016-03 A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE SOMERSET COMMUNITY DEVELOPMENT DISTRICT APPROVING PROPOSED BUDGETS FOR FISCAL YEAR 2016/2017 AND SETTING A PUBLIC HEARING THEREON PURSUANT TO FLORIDA LAW; ADDRESSING TRANSMITTAL, POSTING AND PUBLICATION REQUIREMENTS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the District Manager has heretofore prepared and submitted to the Board of Supervisors of the Somerset Community Development District ( Board ) prior to June 15, 2016, proposed budgets for Fiscal Year 2016/2017; and WHEREAS, the Board has considered the proposed budgets and desires to set the required public hearing thereon. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE SOMERSET COMMUNITY DEVELOPMENT DISTRICT: 1. BUDGETS APPROVED. The budgets proposed by the District Manager for Fiscal Year 2016/2017 attached hereto as Exhibit A are hereby approved as the basis for conducting a public hearing to adopt said budgets. 2. SETTING A PUBLIC HEARING. A public hearing on said approved budgets is hereby declared and set for the following date, hour and location: DATE: May 8, 2016 HOUR: LOCATION: 2:00 P.M. (CDT) Alys Beach office 9581 County Hwy. 30A Alys Beach, Florida 32413 3. TRANSMITTAL OF BUDGETS TO LOCAL GENERAL PURPOSE GOVERNMENT. The District Manager is hereby directed to submit a copy of the proposed budgets to Walton County at least 60 days prior to the hearing set above. 4. POSTING OF BUDGETS. In accordance with Section 189.016, Florida Statutes, the District s Secretary is further directed to post the approved budgets on the District s website at least two days before the budget hearing date as set forth in Section 2. If the District does not yet have its own website, the District's Secretary is directed to transmit the approved budgets to the manager or administrator of Walton County for posting on Walton County s website.

5. PUBLICATION OF NOTICE. Notice of this public hearing shall be published in the manner prescribed in Florida law. 6. EFFECTIVE DATE. This Resolution shall take effect immediately upon adoption. PASSED AND ADOPTED THIS 9th DAY OF MAY, 2016. ATTEST: SOMERSET COMMUNITY DEVELOPMENT DISTRICT Secretary By: Its: Exhibit A: Fiscal Year 2016-2017 Budget