[DAH288]

I've been looking at houses for sale on the TV website. I notice that some listings include a line "bond not paid" or some other reference to a bond. What is that and how much does that add to the price of a house? Is it included in price listed for a house?

[DickY]

Here is a post by Villages Kahuna that helped me on "the bond". My bond on a new Patio Villa was between $10,000 and $11,000.

Think of the "Bond" as the amount of money needed to construct the roads, sewers, utility lines, irrigation systems, and so forth (the infrastructure) in The Villages. The amount spent on infrastructure construction is initially paid by the developer, but is then divided among the lots in a District based on the selling price of the homes built on each lot. A villa will have a smaller Bond than a Ranch or Premier home and becomes the responsibility of the homeowners. The Bond is a fixed amount and is listed as a closing cost for the original buyer of each new house or villa. The buyer of each house has the choice of paying the entire amount of the Bond up front as a closing cost or amortizing the payments of the Bond over a number of years--I believe the Bond is fifteen years. For that matter, a homeowner can opt to pay the remaining amount due on their Bond at any time during the tenure of the municipal bonds sold to repay the developer for his out-of-pocket expenses in paying for the infrastructure.

In the case of those amortizing their payments, the total of the cost of the infrastructure not paid by homeowners up front are combined and become the security for the issuance and sale of a municipal bond, the proceeds of which, along with all the front-end cash payments by home buyers, are paid back to the developer who "fronted" the cost of the infrastructure. So, those homeowners who opt for amortized bond payments pay the amount of their bond divided by 15 years plus their share of the interest and financing costs of the issuance of the municipal bond. Those that pay up front have no ongoing bond expenses, of course.

When an original owner who paid the Bond up front sells his house, theoretically he should be able to collect his payment back as the result of a higher market value than houses being sold by initial owners who did not pay the Bond payment up front. That's why you see "Bond Paid" in the listings of some houses for sale in TV, but not others.

There's no way of really proving whether those paying "up front" really get their money back with an elevated re-seal price, but a quick look at the prices of homes being sold in the secondary market suggests that they don't.

As far as maintenance or improvements to the elements of the infrastructure as they age or wear out, theoretically an amount is added to your monthly utility bills and cable bill sufficient to perform whatever future repairs or replacements needed. State laws govern how much the utilities must set aside and generally no additional outlays by homeowners are needed once the original Bond is repaid. That's the theory anyway. Until a few decades pass, there's no real way to prove or disprove the adequacy of the financing of the infrastructure but one seldom hears of an assessment to homeowners for items of that nature, in TV or anywhere else for that matter.

[Sidney Lanier]

The purpose of the bond is to cover the cost to the developer of infrastructure--roads, water and sewer lines, underground utilities, and so forth. So with new construction the bond is never paid and is instead there waiting for the new home buyer. The amount of the bond depends on the style (i.e., cost) of the house and the date of construction, that is, bonds on houses built some years ago started out as less than those on the same style houses being built today. Buyers of new houses have the option of taking on the bond, involving an annual payment which I believe comes with the annual tax bill, or paying it off upfront.

With resales, if the original buyer (or a subsequent buyer) chose to pay off the bond, then a current buyer benefits by no longer having a bond to pay off. (This was true in our case, which is why I'm not exactly sure how the annual bond payment is made.) However, many original owners chose not to pay off the bond for financial reasons, instead making the annual payments, so when a buyer buys a resale home in this situation, he/she 'inherits' the bond and must continue making payments on it. Depending on how old the house is, the bond will be larger or smaller based on the size of the original bond (as mentioned above) and for how many years the previous owner(s) made their annual bond payments.

Hope this helps....

[DAH288]

Thanks for the info. I've heard these described as "impact fees." We don't have them in suburban Indiana area in which I live. Of course, the infrastructure never keeps up with the growth. Impact fees seem to be a little to novel for Hoosiers and the developers really fight them.

Do you live in The Villages? I'm coming down to check out the area over my high school's spring break. If I like the place, after I retire in May, I will put my house up for sale and move.

Thanks again for the info. -- Don

[DickY]

I bought a Patio Villa in November, closed in December, did my home inspection in January. Then back to Pa to retire in March. I will be full time in April. ;D

[Sidney Lanier]

We visited friends in September, fell in love with the place, found our home (two houses away from our friends!) in October, closed in November, spent some time in December into January working on making it 'our home,' headed out to South America for the rest of January (plans in place long before TV came to be; my wife is a travel agent...), just got back and will be heading to our Villages home next week for a couple of months. We'll continue to be snowbirds from upstate New York. Also a retired educator (as well as a variety of other things...)!

[784caroline]

Dick Y
I am fairly certain the Bond payment period is for 30 years not 15. For my Designer I know it is spread over a 30 year period and a $18,000 original bond added $1357 in November to my property tax bill. The payments are amortizied and the interest portion can be deducted from your income taxes.

[DickY]

You are right, mine is over 30 years.

[drdodge]

according to H&R Block you cannot deduct any part of bond on your income taxes
drd

[pili]

Ok, I'm a little confused. From previous posting I read the interest on the bond is not tax deductible. Now I see a post that says it is. Is it or isn't? Thanks.

Pili

[Lucko]

The good part of a seperate bond is that you are not taxed on it and you don't pay house insurance on it. One way or another, you will pay for all that it represents.

[chuckinca]

I may be wrong but I think the bond is the impact fees charged by the local governments due to the construction inspections and facilities for the added population.

The infrastructure costs for roads, utilities etc in the new development is paid by the developer and passed on to the buyers - why would the local governments get into building development roads, sewers etc on private property (the developers property).


Normally, the developers are charged the impact fees up front by the local authorities in the building permit fees. In this case the developer of the Villages made a deal with the local governments that passed the building permit fees to the buyers. The villages developer doesn't have to put up the front money fees and the agencies can charge the buyers (maybe more than what a developer would have to pay)

Chuck
Construction Mgr