District Bond Amortization schedule is very weird, doesn't match normal calcs

[CoachKandSportsguy]

I just built a financial model for retirement decision making, ie: When to take SS, take out IRA/ keep working, for a cash flow analysis, including federal taxes, std deduction changes, expenses, pensions, IRA balances and bond payoff along with auto replacement, insurances, roof replacements, etc. .

for the next 20 years for anyone to use. . testing it out tonight with a neighbor who just lost his job here in TV, and is 62, so needs some help making a decision. .

What i found in reproducing the Bond payoff amount by year, is that the numbers published on the district web site are pretty funky. . . doesn't fit the typical amortization schedule as presented. . its weird as the District interest and principal total is $1,790 versus the $1,824 as calculated by the excel formula, and tested out and its correct. .

Below is the comparison between excel amortization calculated schedule for the first 4 years, against the district schedule. . . I can't figure out what they are doing, and i suspect there are some cell adjustments which is why the schedule is a pdf, and the interest and principal totals are different. .

Here is the snapshot, any financial types help me out here?

Here is the link to the original schedule
https://www.districtgov.org/departments/Finance/amortization/Sumter/District%2012/S12%20-%20Unit%2020V.pdf

[Bill14564]

Just a quick guess: A two-year, interest free deferral would lead to a 28 year payoff and a payment of $1,889.36 which is pretty close to the schedule they show. EDIT: Not so close (off by $100, bad math in my head).

Also, the interest rate they are using changes from year to year. 4.13% for 2021 interest, 4.15% for 2022, and up to 4.17% for 2024. Then at the end of the schedule the interest is 3.68% for 2048 and 3.31% for 2049. Haven't figured how that makes sense yet.

[Bogie Shooter]

Seems to me it would make more sense to call these folks rather than ask for opinions on social media.

Finance Department
984 Old Mill Run
The Villages, FL 32162

4856 South Morse Boulevard
The Villages, FL 32163

Phone: 352-753-0421

[CoachKandSportsguy]

Just a quick guess: A two-year, interest free deferral would lead to a 28 year payoff and a payment of $1,889.36 which is pretty close to the schedule they show. EDIT: Not so close (off by $100, bad math in my head).

Also, the interest rate they are using changes from year to year. 4.13% for 2021 interest, 4.15% for 2022, and up to 4.17% for 2024. Then at the end of the schedule the interest is 3.68% for 2048 and 3.31% for 2049. Haven't figured how that makes sense yet.

not sure how two years interest free plays into it, as the payoff periods are still 30, count them, and there is no interest accrual on the schedule, which would be misleading.

The question would be when did they float the actual bond, and what is the schedule for interest payments to the bond holders. . . i guess that would play into this somehow. . .

things that make one go hmmmm, but not keep one up at night.

[CoachKandSportsguy]

Seems to me it would make more sense to call these folks rather than ask for opinions on social media.

Finance Department
984 Old Mill Run
The Villages, FL 32162

4856 South Morse Boulevard
The Villages, FL 32163

Phone: 352-753-0421


Thanks, but this question is not a question that I need to waste the finance departments time on, as they don't need an amateur auditor questioning their tried and true practices, and then disagreeing with them and turning it into a spreadsheet ****ing contest. I am assuming i will get the same answer as the water bill spike. . .

[GoRedSox!]

It could be as simple as a misprint in the interest rate.....it could be 4.13% instead of 4.33%.

If it isn't that, I don't have another guess.

[elevatorman]

Did you subtract the administrative fees from the payment?

[Caymus]

I just built a financial model for retirement decision making, ie: When to take SS, take out IRA/ keep working, for a cash flow analysis, including federal taxes, std deduction changes, expenses, pensions, IRA balances and bond payoff along with auto replacement, insurances, roof replacements, etc. .






Does your model include anticipated life expectancy? 😊That seems to be the big issue when deciding when to take SS.

[Carla B]

Did you subtract the administrative fees from the payment?

Bingo, that's what I thought it was, when we paid our bond off in 2011.

[bhferri85]

Change 30 to 28 and see how that works out.

[CoachKandSportsguy]

Does your model include anticipated life expectancy? 😊That seems to be the big issue when deciding when to take SS.

The model doesn't tell you when to do anything, The future is always uncertain, sometimes more uncertain than others. if you want to put a constraint on an input, then you run an optimization routine against the constraint for the best outcome of a strategy listed below.

The model tells you what happens when you plug in any date for taking social security at your current cost of lifestyle, or how much to take out of your IRA and taxable investment accounts without taking SS, or any combination of the three depending upon the size of each of the three piles:

Income from SS
Income from IRA
Cover expenses from taxable investments which doesn't drive the same tax expense impact.

There are several ways to optimize the model, which requires keeping a certain lifestyle, and then optimizing on one or more of the several dimensions over time:

Maximum asset value (minimizing asset withdrawals)
Minimizing your tax expense (doesn't care about amount of assets)
Minimizing the tax effect post your death on your beneficiaries (doesn't care about your assets nor your taxes)

Keep in mind that your lifestyle and the wrong strategy given the size of each pile can bankrupt you before your dirt nap.

but still doesn't answer the impact of the admin fee. . adding or subtracting, but that doesn't answer the question of why the principal repayment values are different than the standard loan amortization schedule, but still totals the loan total. ie, their schedule they publish as gospel manipulates the numbers slightly to pay for their staff to manage the money stream and accounting / auditing requirements.

[smcmahon2002]

There's an annual management fee. If I recall correctly (not a safe assumption) it's $149/yr.

[BobGraves]

Does the admin fee get deducted from the principle?

[nancymiller217@yahoo.com]

I just built a financial model for retirement decision making, ie: When to take SS, take out IRA/ keep working, for a cash flow analysis, including federal taxes, std deduction changes, expenses, pensions, IRA balances and bond payoff along with auto replacement, insurances, roof replacements, etc. .

for the next 20 years for anyone to use. . testing it out tonight with a neighbor who just lost his job here in TV, and is 62, so needs some help making a decision. .

What i found in reproducing the Bond payoff amount by year, is that the numbers published on the district web site are pretty funky. . . doesn't fit the typical amortization schedule as presented. . its weird as the District interest and principal total is $1,790 versus the $1,824 as calculated by the excel formula, and tested out and its correct. .

Below is the comparison between excel amortization calculated schedule for the first 4 years, against the district schedule. . . I can't figure out what they are doing, and i suspect there are some cell adjustments which is why the schedule is a pdf, and the interest and principal totals are different. .

Here is the snapshot, any financial types help me out here?

Here is the link to the original schedule
https://www.districtgov.org/departments/Finance/amortization/Sumter/District%2012/S12%20-%20Unit%2020V.pdf

Former accountant here-

I believe the interest rate given is the APR, which would have included the amortization of fees. On the original bond.

If you back into the rate by dividing the interest vs. the balance you get something closer to 4.1308, which is much closer.

[Maker]

One year of interest percentage = interest / principal (x100)
Looking at the next few years' numbers shows nonsense. Interest percentage value is changing yearly.
Oddly, the admin fee changes slightly every year. So does the total payment amount. This must be some sort of new math.

1252.40 / 30318.37 = 4.13083%
1234.64/29780.71 = 4.14577%
1216.28/29225.45 = 4.16172%
1195.63/28650.99 = 4.17308%

and in 2031... 1010.5 / 23968.9 = 4.2158%
and in 2049... 113.34 / 3429.17 3.30517%

[Bill14564]

One year of interest percentage = interest / principal (x100)
Looking at the next few years' numbers shows nonsense. Interest percentage value is changing yearly.
Oddly, the admin fee changes slightly every year. So does the total payment amount. This must be some sort of new math.

1252.40 / 30318.37 = 4.13083%
1234.64/29780.71 = 4.14577%
1216.28/29225.45 = 4.16172%
1195.63/28650.99 = 4.17308%

and in 2031... 1010.5 / 23968.9 = 4.2158%
and in 2049... 113.34 / 3429.17 3.30517%

The admin fee appears to be a fixed percentage of the payment (principal+interest). It comes out to 7.07% for unit 20V but the percentage on my bond is less.

You would expect the fee to be a fixed amount because you would expect the payment to be a fixed amount. But as you show here, the effective interest rate varies, the payment varies, and therefore the admin fee varies.

[RRGuyNJ]

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

[Bill14564]

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

While there is a monthly amenity fee, the Villages CDDs are significantly different from an HOA.

The bond is simply a way for the Developer to keep the list price of a home lower while still collecting the cost of infrastructure. You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees. The home is "affordable," the infrastructure gets paid for, and the Developer makes a profit both on the home and on the Admin fees.

The same costs are there in other developments, they are just rolled into the price of the home (and likely affect the total profit).

At 3,000 to 4,000 new home sales per year, the bond has not been much of a hindrance to home sales.

[Stu from NYC]

Other than a monthly amenity fee, the Villages is nothing like an HOA.

The bond is simply a way for the Developer to keep the list price of a home lower while still collecting the cost of infrastructure. You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees. The home is "affordable," the infrastructure gets paid for, and the Developer makes a profit both on the home and on the Admin fees.

The same costs are there in other developments, they are just rolled into the price of the home (and likely affect the total profit).

At 3,000 to 4,000 new home sales per year, the bond has not been much of a hindrance to home sales.

They did find a very clever way to sell homes, that is for sure.

[Brwne]

While there is a monthly amenity fee, the Villages CDDs are significantly different from an HOA.

The bond is simply a way for the Developer to keep the list price of a home lower while still collecting the cost of infrastructure. You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees. The home is "affordable," the infrastructure gets paid for, and the Developer makes a profit both on the home and on the Admin fees.

The same costs are there in other developments, they are just rolled into the price of the home (and likely affect the total profit).

In a state that allows Special Districts, Developers recoup their infrastructure costs through bonds.

At 3,000 to 4,000 new home sales per year, the bond has not been much of a hindrance to home sales.

In Colorado (and many other states), the developer advances the costs to the district, the district floats the bond and levy's a property tax on the house. Said property tax millage can be increased or decreased in the future.

Here in The Villages, the developer advances the infrastructure costs and floats bonds - individually on each property - for recouping those costs. The bond payment is fixed and doesn't change over the life of the Bond.

The Villages bond on the house can be paid off anytime. The Colorado property tax levy will stay in place until the district pays off the bond - sometime in the future and mostly out of the control of the homeowner.

[Bogie Shooter]

In Colorado (and many other states), the developer advances the costs to the district, the district floats the bond and levy's a property tax on the house. Said property tax millage can be increased or decreased in the future.

Here in The Villages, the developer advances the infrastructure costs and floats bonds - individually on each property - for recouping those costs. The bond payment is fixed and doesn't change over the life of the Bond.

The Villages bond on the house can be paid off anytime. The Colorado property tax levy will stay in place until the district pays off the bond - sometime in the future and mostly out of the control of the homeowner.
Not individually but by district, then distributed by acre to unit, then equally to homesites in the unit..

[villagetinker]

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

There are plenty of resales with "bond paid off", so you can look at those if you are looking to move here. Also, we found it advantageous to pay off the bond early, this is highly dependent on current interest rates, investments returns, taxes, etc. NOTE: the bond payments cannot be written off on your income taxes.

[smcmahon2002]

My assumption is no.

[Stu from NYC]

There are plenty of resales with "bond paid off", so you can look at those if you are looking to move here. Also, we found it advantageous to pay off the bond early, this is highly dependent on current interest rates, investments returns, taxes, etc. NOTE: the bond payments cannot be written off on your income taxes.

Thought long and hard when we moved here about paying off the bond immediately. Consulted two prominent real estate agents and their opinion that if we sell within a few years we would not recover the cost of the bond to the people we would sell too.

As a result for now we are not paying off the rest of the bond. In a year or two will reconsider.

[CoachKandSportsguy]

Thought long and hard when we moved here about paying off the bond immediately. Consulted two prominent real estate agents and their opinion that if we sell within a few years we would not recover the cost of the bond to the people we would sell too.

As a result for now we are not paying off the rest of the bond. In a year or two will reconsider.

Correct, if you are considering moving within the first 5-10 years, its best to not pay off the bond.

However, there is a behavioral economics question about how houses are priced to resell with or without a bond, based on total cost of ownership and the naiveness of the buyers.

[Bilyclub]

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.


I hear it can be pretty cheap to buy a house with no bond in rural Alabama.

[Nevinator]

You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees.

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

[Stu from NYC]

Correct, if you are considering moving within the first 5-10 years, its best to not pay off the bond.

However, there is a behavioral economics question about how houses are priced to resell with or without a bond, based on total cost of ownership and the naiveness of the buyers.

Unfortunately it would appear that many buyers do not understand total real cost of buying a house. As a result they do not factor in cost of bond in purchase

[BlueStarAirlines]

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

The bond is specific for a specific set section of houses, so is not one set price for a length of time (ie: Its not $40k for the month of September, etc.). The cost of the bond is correlated to the cost of the land prep, so houses across from each other could have a different bond. For example, my house is on a preserve next to a wall where the house across from me is an interior lot. My bond is higher than his. The second variable to the bond price is the interest rate. This is generally the same for a village.

For example, compare the bonds for my CDD: Amortization Schedules - Sumter (https://www.districtgov.org/departments/Finance/amortization_sumter.aspx#dist13)

[Bill14564]

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

The bond amount differs for every "unit" that is built (there are 177 homes in my unit but only 101 in the unit S12.20V discussed in the original post)
- The cost of the infrastructure changes from area to area ($21.4M for my unit, $30.3M for S12.20V)
- The amount of land belonging to a unit changes (38.8 acres for mine, 23 acres for S12.20V)
- The number of homes built within the unit changes (177 vs 101)

All together, this means that the 101 homes from the original post all pay the same amount ($57K over 30 years) but the homes in a different unit will pay a different amount ($44K over 30 years for mine)

The bond is specific for a specific set section of houses, so is not one set price for a length of time (ie: Its not $40k for the month of September, etc.). The cost of the bond is correlated to the cost of the land prep, so houses across from each other could have a different bond. For example, my house is on a preserve next to a wall where the house across from me is an interior lot. My bond is higher than his. The second variable to the bond price is the interest rate. This is generally the same for a village.

For example, compare the bonds for my CDD: Amortization Schedules - Sumter (https://www.districtgov.org/departments/Finance/amortization_sumter.aspx#dist13)

Houses across the street from one another should only have a different bond amount if they were in a different "unit." This map (https://www.districtgov.org/yourdistrict/districtmap/images/all-districts.png) shows unit numbering, at least for my district.

[rsimpson]

I just built a financial model for retirement decision making, ie: When to take SS, take out IRA/ keep working, for a cash flow analysis, including federal taxes, std deduction changes, expenses, pensions, IRA balances and bond payoff along with auto replacement, insurances, roof replacements, etc. .

for the next 20 years for anyone to use. . testing it out tonight with a neighbor who just lost his job here in TV, and is 62, so needs some help making a decision. .

What i found in reproducing the Bond payoff amount by year, is that the numbers published on the district web site are pretty funky. . . doesn't fit the typical amortization schedule as presented. . its weird as the District interest and principal total is $1,790 versus the $1,824 as calculated by the excel formula, and tested out and its correct. .

Below is the comparison between excel amortization calculated schedule for the first 4 years, against the district schedule. . . I can't figure out what they are doing, and i suspect there are some cell adjustments which is why the schedule is a pdf, and the interest and principal totals are different. .

Here is the snapshot, any financial types help me out here?

Here is the link to the original schedule
https://www.districtgov.org/departments/Finance/amortization/Sumter/District%2012/S12%20-%20Unit%2020V.pdf

Timing of the payment(s) could also be affecting schedule. Is Payment at START or END od period.

[Stu from NYC]

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

It is higher. In area 84 have heard it is up to $ 71k.

[Papa_lecki]

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

Another “The Villages is done” post. Their business model has worked, we will soon hear about a village selling out in 2 hours soon.
Um, you’re from NJ, based on your user name. So you are okay paying the highest property taxes in the country, but not paying LOW property taxes and a bond, that can be paid off at any time?

The bond and HOA are like comparing apples to pork chops - they are not related at all. Bond is for infrastructure, HOA fees are for maintenance of common areas of the Association and the homes/condo building.
Monthly Amenity fees are to the operating costs of the amenities (which do include maintenance).

The deed covenants are in place to be sure your neighbor doesn’t paint their house yellow with flamingos on the walls.

[petsetc]

Having read and occasionally comment on bond threads through the years, the way I look at it is, the bond funded the initial infrastructure, most developers just add this cost to the house, but The Villages makes it a assumable "second mortgage" that can be retired any year. It allows The Villages to charge more for a house without appearing too out of line since the infrastructure cost is "hidden" in the bond, not the house price.

As for the cost and the county admin fee, if you pay your taxes in November, you get a 4% discount on the whole amount. But wait, the bond holder isn't giving you a discount, therefore the 4% off your bond payment must be made up. I suspect that comes from the (also discounted) admin fee.

Finally, based on historic investment returns, I see no reason to pay off the bond (or to not have a mortgage) but many people would rather be totally "debt-free" - I truly personal choice.

FWIW

[Topspinmo]

not sure how two years interest free plays into it, as the payoff periods are still 30, count them, and there is no interest accrual on the schedule, which would be misleading.

The question would be when did they float the actual bond, and what is the schedule for interest payments to the bond holders. . . i guess that would play into this somehow. . .

things that make one go hmmmm, but not keep one up at night.


In financings nothing free. You either pay in front or out the end. Another key note I’ve learned the money in interest, how it figured, and compounded. they don’t want you to pay it off. Then there the very fine print, lots and lots of fine print. :a040:

[Topspinmo]

Having read and occasionally comment on bond threads through the years, the way I look at it is, the bond funded the initial infrastructure, most developers just add this cost to the house, but The Villages makes it a assumable "second mortgage" that can be retired any year. It allows The Villages to charge more for a house without appearing too out of line since the infrastructure cost is "hidden" in the bond, not the house price.

As for the cost and the county admin fee, if you pay your taxes in November, you get a 4% discount on the whole amount. But wait, the bond holder isn't giving you a discount, therefore the 4% off your bond payment must be made up. I suspect that comes from the (also discounted) admin fee.

Finally, based on historic investment returns, I see no reason to pay off the bond (or to not have a mortgage) but many people would rather be totally "debt-free" - I truly personal choice.

FWIW

IMO it’s way double dip. :oops: