All You Wanted to Know About Your CDD, but Were Afraid to Ask!

Well maybe you weren’t afraid to ask, Maybe you just didn’t know who to ask. I found the guy and his name is Pat Infante. Pat lives in Hampton Lakes and is currently on the CDD Board, but he is up for re-election this November. You will find him on the ballot when you vote in this November’s general election. And don’t forget to vote for another Hampton Lakes resident, Steve Fox.

OK, so I attended the last CDD Board Meeting when the new $10 million addition to the CDD was voted down. This doesn’t mean the developer is going to stop developing, but it does put a hiccup in his plans. So I didn’t know anything about the CDD and had a bunch of questions that Pat was happy to answer in several emails. My questions are in bold and Pat’s answers are italicized. Here we go…

This is from the first email:

1. Is the CDD’s bond money used exclusively for retention pond creation and the storm sewers that feed into them? I keep hearing that the CDD is just responsible for the ponds and nothing else. So is that right?
   When developing new land/lots, the lakes are transferred to the CDD for maintenance.  In a completed community, or section there of, the CDD maintains the lakes and the preserves. As for the issuance of bonds for a new assessment area (i.e. new section of undeveloped land), the money from the bonds is used to fund the infrastructure build out.  That typically includes, the roads, potable water, sewer, electric, irrigation, storm water management (storm sewers) etc.  All the things needed in advance of a builder who buys the lots from the developer and builds the homes. In short, the developer sells lots ready for builders, that is their business model.  So specifically, the 10 Million in bond proceeds would be used to build infrastructure once the land is platted and lot demarcations defined, not just for lakes and storm sewers.
2. If this bond was approved would the developer buy the bonds? And then he would do the work constructing the ponds and then the CDD would, in effect, pay him back for the work with his own money? So the work gets done at no expense to the developer? And then the developer (if he’s the bond holder) gets interest payments for 30 years from the resultant homeowners? Is that the way it works? If that’s the way it works, that sure is a sweet deal!
   No, the bonds are sold mostly to institutional buyers, banks, etc.  The bond holders are paid interest like any other fixed income investment vehicle (think of it like a municipal bond – a predetermined stream of interest and return of principal at maturity). So if the bonds were (or get) approved, the CDD collects principle from the bond purchasers.  The developer completes an agreed upon amount of the total project, and then the CDD releases those funds to the developer.  This continues until the entire project is completed.  In this last bond proposal, like in the ones prior, the total project cost is anticipated not to be covered by bond proceeds, and the developer states and recognizes that the additional cost would be covered by them.  That is why Paul Asfour has a problem with the bond proposal since it did not include a performance bond and therefore the CDD, and potentially the residents, could be left covering the amount that exceeded the bond proceeds should the developer decide to walk away.
   
3. So if he doesn’t get the bond approved, he has to pay for the work himself and to get his money back, he has to raise the cost of the lots to the builders? Is that right?
   If they do not get the bonds approved, they would either have to fund the project themselves (which they have never done), or find some alternate means of financing the project. I suppose this could imply charging more for the lots, but keep in mind, even with other peoples money, they always make a profit on the lot sales (again, their business model). Keep in mind that the developer at one point in time, had to buy the land, do engineering studies, environmental studies, etc.  So they do have other expenses to reclaim.
   
4. So the development wasn’t stopped. Its just that the developer has to pay more up front and therefore the cost of a home is going to be higher in order for the developer to get what he wants to get as profit? Right?
   Mostly true.  As you said, the development was not necessarily stopped, but the NO vote does not automatically mean homes will cost more. It means the developer may need a different, and potentially more expensive, source of financing, which could affect either the developer’s profit, the lot prices, the home prices, or some combination of the three. In the end, the market will dictate the price. Builders look at lot sales, just like we look at home sales (i.e. what the current state of market will allow).
   
5. Are the ponds just fed only by rain water, or does Lee County pump water into them to keep them from getting too low?
   The way our civil engineer explained it to the board is that there are wells connected to some of the lakes.  Under normal circumstances, the wells can replenish the water used by irrigation, but not caused by evaporation.  Also, the current level of the lakes represents the current levels of the ground water. Taking too much water from the aquifers could cause surrounding wells to go dry. Many homes in the surrounding rural areas depend on well water as their only source of potable water.
   
6. Are the ponds interconnected?
   Yes. And since they are interconnected, they function as a larger integrated water system, effectively increasing the total water surface area and storage available compared with any individual lake considered by itself.
   
7. Is just one pond used for irrigation water?
   The pump adjacent to the lake would be the immediate source, however, due to the interconnectivity referenced above, all lakes would participate.
   
8. Did the CDD money build ponds for the golf course?
   Since this predates my tenure, I cannot be sure of the arrangement so many years ago.  But considering how CDD’s operate in general, the CDD does not use or have money to build things, only to maintain things.  Typically, once the lakes are created, they are turned over to the CDD for maintenance.  Maintenance money comes from the CDD General Fund, which is the smaller amount you pay above and beyond the Bond payoff and interest.
   
9. Is there an exemption for golf courses so that they can water all they want with no restrictions?
   While this is not a CDD issue, I do know that under the current Lee County dry-season restrictions, golf courses are treated differently than residential lawns and common-area irrigation.  A Lee County 2024 ordinance specifically created provisions for golf courses.  Their irrigation is typically governed by permit conditions and conservation requirements rather than the same address-based watering schedule that applies to homeowners.  The course could also be operating under an approved variance which for which I do not have information. However, keeping your questions focused on the CDD, the only irrigation controlled/managed by the CDD is that which is on River Hall Parkway.
   

This is from my second email:

•  In question 8 above you say the cdd does not have money to build things. But initially the money from the bonds is used to build the infrastructure. The money from the bonds is specifically for the purpose it is issued for.  It is investor money, not CDD money. The CDD is just holding the money before it is released to the developer.  In the case of these new bonds, it would be for assessment area 6 (i.e. that undeveloped land in the back that borders CC. The money from the bonds would be released to the developer as they meet certain milestones.
• So i was just trying to see if any of the initial bond money could have been used to help build out the golf course which is a private business. It is my understanding that the golf course was already built when GreenPointe purchased the master planned community  (HL, CC, THAC) which was in bankruptcy from the prior developer.
• Also, do you know who owns the amenity center? Owner: RH VENTURE THC LLC EDWARD E BURR
• Some people think its already owned by the hoa, but i believe the developer owns it and we, the residents, are going to have to come up with some money to purchase it. Do you know? Yet to be determined. A lot of work has been done to date by someone in the CC claiming that it is ‘Common Property’ and the deed will simply transfer at turnover.

This is from the third email:

I couldn’t sleep because I kept thinking about all this, so I have a few more questions and maybe I’ll be able to sleep! Here we go:

1. So when we were looking to buy in Hampton Lakes we were told by the salesman that the area along Riverhall Parkway was zoned commercial and that the plan was to have small retail shops and restaurants along there. But then that was changed to have 250 condos or townhomes. Was CDD money used to put in the infrastructure? Clear the land, ponds, sewers and roads? Did the CDD need to be adjusted somehow because there was now 250 additional units instead of a smaller number of commercial businesses?
   200 townhomes in two phases (100 each). Bonds were issued for that project and the developer is currently paying the assessment.  I believe the bonds were issued after the re-zoning.
   
2. Why did that project get abandoned? Do you think that was done just to get money from the CDD for putting in infrastructure with no intent of finishing the project? Does the developer own that land, or somebody else?
   We were told that Lennar dropped out and the developer is currently ’speaking’ with other builders. They own the land.
   
3. Was the CDD created before or after the development went bankrupt in 2008? If it was created before, funds could have been used to create the golf course.
   The CDD was created at the start back in 2005.  According to the 2005 Engineer’s Report, it does not appear as if the golf course was built with CDD funds.
   
4. If it takes 20 years to build out a development and a home is purchased in year 20 and that homeowner has to pay the CDD $1500 for 30 years, isn’t the bond holder getting kind of anxious? Don’t bond payments have to be made at set intervals, or are the payments contingent on the sale of the homesites? So the bond holder has to be patient. How does the bond finally getting paid off?
   Before the lots are sold, the developer pays the assessment, then once owned by a builder, the builder pays the assessment, finally when the house is sold, the homeowner pays the assessment.  The 30 year maturity is locked in for the bond holders.
   
5. And then if the developer changes the number of homes in the development, how does the CDD get changed? Homes were added to the development, homes were taken away from the country club and added to Hampton Lakes. How does all that get sorted out?
   All of that is done before the bonds are issued.  The developer can move boundaries on land that they own before asking for bonds to be issued. Homes weren’t moved around, land boundaries were moved. The bond docs then specify the detailed plans (e.g. #platted lots, assessment methodology, assessment by lot size, etc).
   
6. Does CDD money get used to put the final asphalt coating on the streets? Does the final coat get put right on top of all those pothole patches, or does the initial coat get replaced like they did on that stretch of East Hampton Circle between Mistflower and Palmetto Prairie? That sure looks nice even after almost 2 years!
   No, not the CDD.  The developer is responsible for paving the roads, pot holes, final lift, etc. They have a bond with the County to ensure it gets done.  As far as method, I’d assume that would be up to County Engineering requirements and practices.
   

Well, that’s all that I can think of now. Time to go back to bed! Its going to be a heck of a long article for the Hampton Lakes Herald! 

This is from the 4th email and this is really important:

Hi again Pat,

Thank you. Thank you. Thank you for taking the time to answer my questions. But I have one more! Sorry! In your latest reply on question number 4, so when I bought my house in 2021 payments for the bond were made by the developer from 2005 to 2021 and then the builder when he started building my house in 2021 and then when I moved in I started paying, right so far? I’ve been here for 5 years, so does that mean I only have 10 years left to pay the cdd fees? Not 30 years of payments from the day I moved in? Then I just pay the maintenance amount?

That’s the last question. (I hope)

Thanks again,

From Pat:

Not quite that easy!

  First of all, it depends on when the bonds were issued.  There are/were difference bond series (i.e. different dates of issuance). There were at least 5 bond series issued since 2005, so it would depend on when the bonds for your parcels of land were issued, plus any Capitalized Interest Period “baked” into the bond issuance (complicated).

However, I can provide a way for you to find out the remaining principal balance on your CDD bond payment if you wish.  Then, you can do the math based on what your yearly tax bill says under RIVER HALL CDD and get an approximation of how many years are left.  Keep in mind that that number includes the General Fund operating amount (~$300) and interest, so it won’t be exact.

Here’s the way:

Here is the info to find out how much principal is left on a property’s CDD bond.  If published, you must advise folks that the number on their tax bill includes interest and the maintenance fee, so they cannot do simple math to determine the number of years remaining:

Send an email to estoppels@whhassociates.com

Ask for the remaining principal balance on the CDD bond for the particular address:

Include the full property address [house number, street], Alva, FL  33920

It may take a week or longer to get a response.

In conclusion:

I hope this answers a lot of question you might have about the CDD. Is you have any more questions, please leave a comment. So for me, my lot was part of the original plan. That was plotted out in 2005 or there abouts which is some years ago. That means the developer and builder have paid the previous CDD payments prior to me moving in in 2021. I’ve paid 5 years of CDD payments, so that means I have about 10 years left on my CDD bill and then I just have to pay for maintenance. That might be a good selling point for realtors and people selling their homes. It would be a whole lot better to sell a home that only has 10 years left on their CDD as opposed to something brand new and then have to pay for 30 years.

Thanks Pat Infante! Everybody vote for Pat Infante and Steve Fox in the November election!