CCD question for the experts

[John41]

In todays Daily Sun there was an article on the CDD structure of The Villages. I have some questions.

1. The article said after about six years the residents take over running their CDD We have been living in CDD 6 for 14 years and as far as I know residents arent running it.

2. Why is CDD infrastructure financing using revenue bonds better than traditional bank financing?

3. Who is getting the amenity fee monthly?

Thank you

[dewilson58]

Expert: Village Community Development Districts (https://www.districtgov.org/)

[biker1]

The Villages regularly holds two types of classes: a couple of hour class on the CDDs and a full day class that covers multiple aspects of how The Villages functions (Resident Academy). I do not know the status of these classes during the pandemic. Pretty much everything you want to know will be covered plus you have the opportunity to ask questions.

In todays Daily Sun there was an article on the CCD structure of The Villages. I have some questions.

1. The article said after about six years the residents take over running their CCD. We have been living in CCD 6 for 14 years and as far as I know residents arent running it.

2. Why is CCD infrastructure financing using revenue bonds better than traditional bank financing?

3. Who is getting the amenity fee monthly?

Thank you

[Garywt]

My thought is I bought a house and I pay my amenities fee. Nothing else to worry about except having fun.

[Bogie Shooter]

In todays Daily Sun there was an article on the CCD structure of The Villages. I have some questions.

1. The article said after about six years the residents take over running their CCD. We have been living in CCD 6 for 14 years and as far as I know residents arent running it.

2. Why is CCD infrastructure financing using revenue bonds better than traditional bank financing?

3. Who is getting the amenity fee monthly?

Thank you

With a little effort most can be found on line.

Try starting here forDistrict 6: Village Community Development Districts (https://www.districtgov.org/yourdistrict/front.aspx?district=6)

[Marathon Man]

In todays Daily Sun there was an article on the CCD structure of The Villages. I have some questions.

1. The article said after about six years the residents take over running their CCD. We have been living in CCD 6 for 14 years and as far as I know residents arent running it.

2. Why is CCD infrastructure financing using revenue bonds better than traditional bank financing?

3. Who is getting the amenity fee monthly?

Thank you

It is CDD (Community Developement District.

1. The residents of each district elect five supervisors to sit on the CDD Board of Supervisors. Each CDD has a board and meeting are held monthly. Those supervisors represent the residents. Residents do not directly control anything. What the article likely meant is this. - The board is originally made up of five developer appointed supervisors because there are no residents when the CDD is first formed. Eventually, resident elected supervisors are voted in.

2. Good question to ask when you attend a meeting.

3. Depends where you live. AAC north, LSCDD south. Budgets are available publicly.

Give this a look: https://www.districtgov.org/yourdistrict/District%2012%20Final%20CDD.pdf

[CWGUY]

It is CDD (Community Developement District.

1. The residents of each district elect five supervisors to sit on the CDD Board of Supervisors. Each CDD has a board and meeting are held monthly. Those supervisors represent the residents. Residents do not directly control anything. What the article likely meant is this. - The board is originally made up of five developer appointed supervisors because there are no residents when the CDD is first formed. Eventually, resident elected supervisors are voted in.

2. Good question to ask when you attend a meeting.

3. Depends where you live. AAC north, LSCDD south. Budgets are available publicly.

Give this a look: https://www.districtgov.org/yourdistrict/District%2012%20Final%20CDD.pdf

:ho: "It is CDD (Community Developement District."
Thanks for saying that, I was about to. OP has some good questions..... I asked them before buying......:icon_wink:

[Goldwingnut]

It is CDD (Community Developement District.

1. The residents of each district elect five supervisors to sit on the CDD Board of Supervisors. Each CDD has a board and meeting are held monthly. Those supervisors represent the residents. Residents do not directly control anything. What the article likely meant is this. - The board is originally made up of five developer appointed supervisors because there are no residents when the CDD is first formed. Eventually, resident elected supervisors are voted in.

2. Good question to ask when you attend a meeting.

3. Depends where you live. AAC north, LSCDD south. Budgets are available publicly.

Give this a look: https://www.districtgov.org/yourdistrict/District%2012%20Final%20CDD.pdf

In todays Daily Sun there was an article on the CCD structure of The Villages. I have some questions.

1. The article said after about six years the residents take over running their CCD. We have been living in CCD 6 for 14 years and as far as I know residents arent running it.

2. Why is CCD infrastructure financing using revenue bonds better than traditional bank financing?

3. Who is getting the amenity fee monthly?

Thank you

Good answers from Marathon Man.

As far as question #2 goes, these are municipal bonds being issued and normally quite large (CDD13 Phase 1 bonds were $90+ million). A bank would be reluctant to lend money of these quantities to an unknown and unproven entity (CDD 13 has only existed since June 11, 2018) with no source of revenue to back up the loan. There are lots of banking rules about lending money, remember what a pain it was just to get a mortgage. The interest rate charged would be incredibly high and unaffordable.

The more attractive financing option is to get investors. If the properties would be privately held then private investors would be sought, these investors would then have a seat at the table for making decision, decisions that would be purely profit motivated. Not something desirable for a residential community.

The public bond offering allows for investors to provide the funding without having too much say in the process of usage and repayment terms except those of the bond issuing agent.

The bonds issued by the CDDs here in The Villages are highly sought after due to the long-proven track record of our CDDs and the development. Because of this record and reputation, the bonds can be issued at very competitive rates (low interest rate) which is good for the payers of the bonds - the homeowners.

[John41]

The Villages regularly holds two types of classes: a couple of hour class on the CDDs and a full day class that covers multiple aspects of how The Villages functions (Resident Academy). I do not know the status of these classes during the pandemic. Pretty much everything you want to know will be covered plus you have the opportunity to ask questions.

Thanks. We did attend those classes when we moved in
but since six years had not elapsed the question of why the residents werent running CDD 6 did not arise. With the pandemic we dont want to attend group events so I will email the POA for their response in the Bulletin.

[John41]

Expert: Village Community Development Districts (https://www.districtgov.org/)

Thanks, that was helpful info but no mention of CDD 6 that I saw.

[Goldwingnut]

All numbered CDDs supervisors north of 44 with I think of one in CDD11 are residents and elected in the general elections by the voters, I this is now also true for all the supervisors in CDD12. Only CDD 13 (Chitty Chatty, Bradford, Hawkins, StC. ect) are currently landowner elected and controlled.

The Commercial CDDs - SLCDD, VCCDD, and BWCDD - and the AAC members are all landowner elected supervisors, each landowner receives one vote for each acre or portion thereof owned. The 5 of the 6 AAC board members are residents of The Villages and represent their respective CDDs. Of course there is primarily only one land owner in the commercial CDDs.

[John41]

With a little effort most can be found on line.

Try starting here forDistrict 6: Village Community Development Districts (https://www.districtgov.org/yourdistrict/front.aspx?district=6)

Thanks for the link and it does partially answer my question. But how are the "qualified electors" chosen?
I know from dewilson 's link for district 1 that they contact someone when a vacancy arises.
__________________________________________________
Since 2012, all supervisors in District No. 6 have been elected by 'qualified electors' (registered voters) residing in the District. They are elected on a non-partisan basis on the general election ballot

[John41]

My thought is I bought a house and I pay my amenities fee. Nothing else to worry about except having fun.

Yes, that is what we have been doing for 14 years, but with some of the recent controversy I want to get more involve is how things are run.

[Goldwingnut]

Thanks for the link and it does partially answer my question. But how are the "qualified electors" chosen?
I know from dewilson 's link for district 1 that they contact someone when a vacancy arises.
__________________________________________________
Since 2012, all supervisors in District No. 6 have been elected by 'qualified electors' (registered voters) residing in the District. They are elected on a non-partisan basis on the general election ballot

It's just a fancy term, Qualified Electors are Florida registered voters that reside within the given CDD. If you are a non-Florida resident that owns a home in a CDD you can vote in Landowner Elections but not general elections.

[Goldwingnut]

Yes, that is what we have been doing for 14 years, but with some of the recent controversy I want to get more involve is how things are run.

Not sure what recent controversaries you are referring to, there is a lot of misunderstanding and misinformation put out recently but there have been no issues.

One point of disagreement in today's paper was about CDD-7 wanting to exit the project wide agreement (PWA). Once again they mention that 7, as well as the other districts south of 466 pay into the fund, what keeps getting omitted is what that money does and what each district receives in return. The collective buying power of all the CDDs combined make for larger and more economical contracts, as 7 is finding out with the cost of getting a lawyer. The PWA also brings consistency across the community. Risk mitigation is another huge factor that is overlooked. Districts north of 466 don't have a joint management agreement and are on their own for infrastructure costs. The residents of CDD4 felt the sting of the cost of the sink hole in that are 2 years ago with a 30% increase in their maintenance assessment, which would not have happened south of 466 because of the PWA.

[John41]

:ho: "It is CDD (Community Developement District."
Thanks for saying that, I was about to. OP has some good questions..... I asked them before buying......:icon_wink:

Yes, it is always best to ask questions before one buys a house but better late than never. Previously we lived in a senior community on the SE coast of Florida with 1000 homes. We knew all the board member and the election was in house, not on a public ballot. So The Villages governing structure in somewhat complicated to me with all the different personalities. I am taking notes on all the info provided and making an outline for myself. There are still a few unanswered questions I will research on my own.

[John41]

Good answers from Marathon Man.

As far as question #2 goes, these are municipal bonds being issued and normally quite large (CDD13 Phase 1 bonds were $90+ million). A bank would be reluctant to lend money of these quantities to an unknown and unproven entity (CDD 13 has only existed since June 11, 2018) with no source of revenue to back up the loan. There are lots of banking rules about lending money, remember what a pain it was just to get a mortgage. The interest rate charged would be incredibly high and unaffordable.

The more attractive financing option is to get investors. If the properties would be privately held then private investors would be sought, these investors would then have a seat at the table for making decision, decisions that would be purely profit motivated. Not something desirable for a residential community.

The public bond offering allows for investors to provide the funding without having too much say in the process of usage and repayment terms except those of the bond issuing agent.

The bonds issued by the CDDs here in The Villages are highly sought after due to the long-proven track record of our CDDs and the development. Because of this record and reputation, the bonds can be issued at very competitive rates (low interest rate) which is good for the payers of the bonds - the homeowners.

Thanks for the info.on financing. I also read a previous post of yours on the governing structure of The Villages. You clarified why revenue bonds were used and I never did understand the IRS challenging that except as harassing businessmen. Glad the IRS lost.

[Goldwingnut]

Thanks for the info.on financing. I also read a previous post of yours on the governing structure of The Villages. You clarified why revenue bonds were used and I never did understand the IRS challenging that except as harassing businessmen. Glad the IRS lost.

In a nutshell, as I understand it from all my reading, the VCCCD issued tax free bonds, the problem was basically that the VCCDD is a commercial entity as it represented all the landowners (one - the developer) that are all businesses, so the tax-free bonds were issued to further businesses and not a community/municipality. The IRS and the cdd went back and forth for several years before finally coming to an agreement and ending the issue. Obviously, it is much more complex and confusing than this and there are a lot of salient facts that I've left out, but you get the general idea.

The issue is now in the past, but I'm sure the IRS is watching closely on further bond issuances. The numbered CDDs development bonds are not and have not been in question.

I'm sure the $352M in bonds that were issued by the SLCDD for the purchase of the amenities between 466 and 44 were carefully and properly structured (I painfully read all the documents in the fall of 2016 when they came out) to prevent any future issues with the IRS.

[Beyond The Wall]

Classes have been postphones

[Dr Winston O Boogie jr]

My thought is I bought a house and I pay my amenities fee. Nothing else to worry about except having fun.

This!!!

[ctmurray]

Not sure what recent controversaries you are referring to, there is a lot of misunderstanding and misinformation put out recently but there have been no issues.

One point of disagreement in today's paper was about CDD-7 wanting to exit the project wide agreement (PWA). Once again they mention that 7, as well as the other districts south of 466 pay into the fund, what keeps getting omitted is what that money does and what each district receives in return. The collective buying power of all the CDDs combined make for larger and more economical contracts, as 7 is finding out with the cost of getting a lawyer. The PWA also brings consistency across the community. Risk mitigation is another huge factor that is overlooked. Districts north of 466 don't have a joint management agreement and are on their own for infrastructure costs. The residents of CDD4 felt the sting of the cost of the sink hole in that are 2 years ago with a 30% increase in their maintenance assessment, which would not have happened south of 466 because of the PWA.

Interesting point about CDD4 and a joint management agreement. But also, CDD4 is in Marion County and we own our roads and infrastructure, not the county. All the roads in Sumter and Lake county (except Villa roads) are owned by the county. This is one reason the Villages in those counties can't be truly gated communities (CDD4 could but there are other reasons why not to do this). So, I thought this difference in who owns the roads and infrastructure may have been the reason we in CDD4 got this increase. But thanks for mentioning joint management agreement, I will ask around about this.

[dewilson58]

In a nutshell, as I understand it from all my reading, the VCCCD issued tax free bonds, the problem was basically that the VCCDD is a commercial entity as it represented all the landowners (one - the developer) that are all businesses, so the tax-free bonds were issued to further businesses and not a community/municipality. The IRS and the cdd went back and forth for several years before finally coming to an agreement and ending the issue. Obviously, it is much more complex and confusing than this and there are a lot of salient facts that I've left out, but you get the general idea.


That B the nutshell. Nicely done.


The bonds were issued in "the gray area" of tax law.
Advisors play in the gray area and the tax payor determines if they want to play or not.
Calculated risk.


:popcorn:

[rockyhyder]

CDD has 5 elected Supervisors who manage the CDD budget, approve contracts for construction and services, and resolve community standards issues. I believe that is what the article is referring to as running the CDD.
Bonds are used to finance infrastructure because it is usually cheaper in terms of interest rate and it allows the CDD to pay the bond back over time using the proceeds generated from the infrastructure.

[John41]

CDD has 5 elected Supervisors who manage the CDD budget, approve contracts for construction and services, and resolve community standards issues. I believe that is what the article is referring to as running the CDD.
Bonds are used to finance infrastructure because it is usually cheaper in terms of interest rate and it allows the CDD to pay the bond back over time using the proceeds generated from the infrastructure.

Thanks for the info. There has been some controversy since the tax increase in Sumter and the fairness of the impact fee. The financing and governing structure of The Villages looks sound and well thought out. Would love to see an independent cost analysis of the Sumter tax increase and impact fee undertaken by the newly elected commissioners rather than trade pro/anti developer unsupported accusations back and forth.

[John41]

In a nutshell, as I understand it from all my reading, the VCCCD issued tax free bonds, the problem was basically that the VCCDD is a commercial entity as it represented all the landowners (one - the developer) that are all businesses, so the tax-free bonds were issued to further businesses and not a community/municipality. The IRS and the cdd went back and forth

When municipalities issue bonds for industrial parks to attract businesses, I wonder if the IRS allows them to be tax free. Seems a possible double standard.

[dewilson58]

When municipalities issue bonds for industrial parks to attract businesses, I wonder if the IRS allows them to be tax free. Seems a possible double standard.
If you want to know:
CDFA - CDFA Spotlight: The Basics of Industrial Development Bonds (https://www.cdfa.net/cdfa/cdfaweb.nsf/0/BE597705BA591F2588257936005F06C3)

[laboutj]

Speaking of the bonds, do they ever get refinanced? I'm in CDD 9 and looked at my bond amortization schedule, it says my interest rate is 6.963%. One would think that with the current interest rates that the bonds could be refinanced down to something a little more reasonable in regards to interest rate or term.

[CWGUY]

Speaking of the bonds, do they ever get refinanced? I'm in CDD 9 and looked at my bond amortization schedule, it says my interest rate is 6.963%. One would think that with the current interest rates that the bonds could be refinanced down to something a little more reasonable in regards to interest rate or term.

Yes they do. :ho:

I would also add not all Residential Units and Villas in CDD 9 are that high..... depends on when they were built I would think. But yes they do refinance them periodically.

[John41]

If you want to know:
CDFA - CDFA Spotlight: The Basics of Industrial Development Bonds (https://www.cdfa.net/cdfa/cdfaweb.nsf/0/BE597705BA591F2588257936005F06C3)

Thanks. Very interesting article. So the IDB can be tax exempt but only for manufactures and limited to $10 million which is much less than the $93 million goldwingnut said was needed for The Villages. Someone must burn the midnight oil making sure that the bond issue meets IRS regulations.

[John41]

Speaking of the bonds, do they ever get refinanced? I'm in CDD 9 and looked at my bond amortization schedule, it says my interest rate is 6.963%. One would think that with the current interest rates that the bonds could be refinanced down to something a little more reasonable in regards to interest rate or term.

I think some bonds might not be refinanced because of the call restrictions.

[Goldwingnut]

Speaking of the bonds, do they ever get refinanced? I'm in CDD 9 and looked at my bond amortization schedule, it says my interest rate is 6.963%. One would think that with the current interest rates that the bonds could be refinanced down to something a little more reasonable in regards to interest rate or term.

Yes, they can and are refinanced, there is however a minimum time the bond must be in affect before it can be refinanced. The CDDs south of 466a have not reached this point yet. This done to protect the investors. A scenario that this precludes is something like: the bond is issued at a high rate of return, this makes it very attractive and sells quickly, shortly after the bond sale the bond is refinanced and starts paying at a significantly lower rate, not the higher rate the investors purchased. This helps the bond issuer but shortchanges the investors on their return. The minimum hold time before refinancing helps protect the investors investment and return.

Almost all the bonds north of 466a have now been reissued (refinanced) at a lower rate. The Assistant District Manager, Kenny Blocker, oversees these activities and watches the markets closely. As soon as a bond is eligible for reissue and the market timing is right, he works with the bond fund managers and the CDD Supervisors to expedite the process. When the bonds are reissued you will see a reduction in your annual bond assessment in the annual county property tax bill.

[laboutj]

Yes, they can and are refinanced, there is however a minimum time the bond must be in affect before it can be refinanced. The CDDs south of 466a have not reached this point yet. This done to protect the investors. A scenario that this precludes is something like: the bond is issued at a high rate of return, this makes it very attractive and sells quickly, shortly after the bond sale the bond is refinanced and starts paying at a significantly lower rate, not the higher rate the investors purchased. This helps the bond issuer but shortchanges the investors on their return. The minimum hold time before refinancing helps protect the investors investment and return.

Almost all the bonds north of 466a have now been reissued (refinanced) at a lower rate. The Assistant District Manager, Kenny Blocker, oversees these activities and watches the markets closely. As soon as a bond is eligible for reissue and the market timing is right, he works with the bond fund managers and the CDD Supervisors to expedite the process. When the bonds are reissued you will see a reduction in your annual bond assessment in the annual county property tax bill.

Thank you for the insight into how it works. Glad it isn't up to the individual CDD boards to work on.