[BrianL99]

Someone here must have some real understanding of the Bonds? As best as I can figure out, per the 2025 Financial Audits ...

In CDD 11, the Infrastructure construction exceed the Bond availability by $2,381,824.

In CDD 14, the Infrastructure construction exceed the Bond availability by $4,921,079

CDD 15, the Infrastructure construction exceed the Bond availability by $6,996,139

For a total of $14,299,042 owed to the Developer for those 3 CDD's.

Where does the CDD get the money to pay these amounts? In theory, this amount should be added to the Resident Bond Payments (by additional bonding, which would also have to include interest) I suppose?

[Maker]

Homeowner agrees to bond at the time of purchase.
There is no way to just add more costs without homeowner agreeing, in writing. That won't happen.

[BrianL99]

Originally Posted by Maker

Homeowner agrees to bond at the time of purchase.
There is no way to just add more costs without homeowner agreeing, in writing. That won't happen.

So yes, you're right ... the homeowner's agreed to a specific price for the infrastructure bonds, but an extra $14,000,000 was spent.

So where do the Districts come up with the money to pay the $14M?

The District doesn't get money from anyone but residents, so residents are going to pay, one way or the other. I'm trying to figure out what the "other" is.

[Bill14564]

Originally Posted by BrianL99

So yes, you're right ... the homeowner's agreed to a specific price for the infrastructure bonds, but an extra $14,000,000 was spent.

So where do the Districts come up with the money to pay the $14M?

The District doesn't get money from anyone but residents, so residents are going to pay, one way or the other. I'm trying to figure out what the "other" is.

Where in the financial report does it mention a shortfall? I've tried to find it in the CDD11 annual audit but I must be looking at the wrong report.

[Brwne]

Originally Posted by Bill14564

Where in the financial report does it mention a shortfall? I've tried to find it in the CDD11 annual audit but I must be looking at the wrong report.

The reference to $2,381,824 is on page 33 of the 2025 Audit.

Repayment to the Developer: "The liability will be paid from any excess funds that become available in the Reserve account in the Debt Service Reserve Fund."

[BrianL99]

Originally Posted by Brwne

The reference to $2,381,824 is on page 33 of the 2025 Audit.

Repayment to the Developer: "The liability will be paid from any excess funds that become available in the Reserve account in the Debt Service Reserve Fund."

I read the note. If there are "excess funds" available, why hasn't the Developer been paid?

& why does the Developer get to spend more money than he was authorized to spend, per the Bond Offering?

& not to to get too technical, but do the CDD's have the flexibility to simple re-allocate $14,000,000 ?

[Bill14564]

Originally Posted by Brwne

The reference to $2,381,824 is on page 33 of the 2025 Audit.

Repayment to the Developer: "The liability will be paid from any excess funds that become available in the Reserve account in the Debt Service Reserve Fund."

Thanks. Not sure what I was looking at before; it was similar but apparently not the right document.

[Brwne]

Originally Posted by BrianL99

I read the note. If there are "excess funds" available, why hasn't the Developer been paid?

& why does the Developer get to spend more money than he was authorized to spend, per the Bond Offering?

& not to to get too technical, but do the CDD's have the flexibility to simple re-allocate $14,000,000 ?

Applies to CDD 11, the other districts have different provisions.

Excess funds - there aren't excess funds in the Reserve Fund, or they would have been paid to the Developer.

The Bond isn't the "authorizing authority", it's a financial instrument.

Quasi-governmental entities (CDD's) do not have flexibility to "sweep" money at will. Dollars are authorized into different Funds and must be used for those specific authorized purposes. As an example, revenue raised by the School Levy can't be used by the County to buy fire trucks.

[OrangeBlossomBaby]

I don't know the answer, and our area never had bonds so I can't even look up the history of my own house's bond debt obligation - it simply doesn't exist.

However I just figured it worked similarly to some other types of loans -

Contract: The developer gets various loans to create a new area.
The debt gets passed to the new property owner when the house is built and sold.
The debt repayment requires "$x" per year for "Y" years, or ALL paid in full at any time - no overpayments allowed unless it's to pay the debt off in full.
The money goes into a fund, and the fund is used to repay the debt.
All homeowners who pay yearly - are also paying interest. So the fund will always be larger than the actual yearly principal debt.
The fund account ALSO accrues interest. So at the end of the year, there will be "excess."

I don't know if that's how this works, but that was my guess based on our condo association debt repayment when I was on the board of our COA.

[BrianL99]

Originally Posted by Brwne

Applies to CDD 11, the other districts have different provisions.

Excess funds - there aren't excess funds in the Reserve Fund, or they would have been paid to the Developer.

The Bond isn't the "authorizing authority", it's a financial instrument.

Quasi-governmental entities (CDD's) do not have flexibility to "sweep" money at will. Dollars are authorized into different Funds and must be used for those specific authorized purposes. As an example, revenue raised by the School Levy can't be used by the County to buy fire trucks.

OK, I think I found the "pots of money" and how it works. It sounds like you have a way better understanding of the Bonds than I, so you can tell me if I'm close.

The total owed the Developer by ALL the CDD's, is a bit under $32,000,000. The vast majority, is from CDD's 11-15.

When the Bonds are issued, they include "cash reserves for interest", which the CDD holds. They then invest those funds, earning interest. Additionally, as the Bonds mature, the required "interest reserve", decreases.

This gives us "2 pots of money". Interest earned on the reserve deposits + reduction of the required reserve. Am I close so far?

I guess my next question is my original, who authorizes the Developer to go over-budget on construction? & those "pots of money" were not allocated/anticipated originally and the CDD can spend it however they want?

This makes the 2 pots an escalating balance, increasing every year. The CDD's use this cash, to pay the Developer what he's owed (presumably because the infrastructure went over-budget)?

[Brwne]

Originally Posted by BrianL99

OK, I think I found the "pots of money" and how it works. It sounds like you have a way better understanding of the Bonds than I, so you can tell me if I'm close.

The total owed the Developer by ALL the CDD's, is a bit under $32,000,000. The vast majority, is from CDD's 11-15.

When the Bonds are issued, they include "cash reserves for interest", which the CDD holds. They then invest those funds, earning interest. Additionally, as the Bonds mature, the required "interest reserve", decreases.

This gives us "2 pots of money". Interest earned on the reserve deposits + reduction of the required reserve. Am I close so far?

I guess my next question is my original, who authorizes the Developer to go over-budget on construction? & those "pots of money" were not allocated/anticipated originally and the CDD can spend it however they want?

This makes the 2 pots an escalating balance, increasing every year. The CDD's use this cash, to pay the Developer what he's owed (presumably because the infrastructure went over-budget)?

Each CDD is independent of the others. Each Bond has its own provisions. To get an accurate answer, one would need to read and understand each Bond and the "Fund" requirements, as defined therein.

The Reserve Fund is managed by an independent Trustee and no cash can leave the managed accounts until the total amount of the Bond is paid off (2045).

[BrianL99]

Originally Posted by Brwne

Each CDD is independent of the others. Each Bond has its own provisions. To get an accurate answer, one would need to read and understand each Bond and the "Fund" requirements, as defined therein.

I should have figured that, which is why Bond Counsel is so damn expensive ... normal humans can't decipher Bond language.

Thank you

[kingofbeer]

Originally Posted by BrianL99

So yes, you're right ... the homeowner's agreed to a specific price for the infrastructure bonds, but an extra $14,000,000 was spent.

So where do the Districts come up with the money to pay the $14M?

The District doesn't get money from anyone but residents, so residents are going to pay, one way or the other. I'm trying to figure out what the "other" is.

That does not make any sense at all. Please explain. If homeowners have been issued a bond to cover the cost of of the infrastructure. How can there be a deficit? Who pays for this deficit?

[BrianL99]

Originally Posted by kingofbeer

That does not make any sense at all. Please explain. If homeowners have been issued a bond to cover the cost of of the infrastructure. How can there be a deficit? Who pays for this deficit?

There you go!

That's what precipitated my question.

Apparently, the Bonds that were supposed to pay for the infrastructure, didn't pay for all the infrastructure and the Developer is still owed money by the CDD's ... $34,000,000.

If you read the prior posts, we seem to have figured it out how they're going to pay.

The CDD's will pay from other sources with the Resident's money (that's the only money a CDD has). I'm questioning if they can do that, but we're into a question that's over my head.

The bigger question in my opinion, is why infrastructure costs more than it was supposed to? Why the Developer had ZERO risk? & why was every single project, in ever CDD, over-budget?

Logic would tell you, that if you do it 15 times and every single time, you're over budget ... there's something wrong.

By dumb luck, at least one construction project should have come in UNDER budget, don't you think?

[CoachKandSportsguy]

yes, bonds are written in legalese. . . primarily why i only buy treasuries or bond etfs

however, in non legalese terms, borrowing for a large project and expecting to come in under budget in today's world, is probably not realistic. The fuel cost increases this year would impact the budgeted costs as a major overrun.

So lets spitball:
Lets say the developer is on the hook for the overrun. that would make some sense. .
Lets say that the developer also makes money on the houses built, that maybe could be used to payoff the overrun. .
The developer just has to pay off the overrun, which it might be able to do with income from other parts of the business.

Yes, each CDD is separate, and on the books of the developer, each CDD development is a separate project. But at the end of the day, the overruns by the developer can be paid by the developer in any way he chooses. There are very profitable years, and there are marginally profitable years. Hopefully the profits from the very profitable years cover the increased costs for the marginally profitable years.

So a CDD project with a 15% projected return might come in at 10% now, still profitable, just not as profitable. .

but remember, I am just spitballing a different viewpoint.