BRADENTON, Fla. – A 93-year-old Florida resident is joining his neighbors contesting a bond financing plan proposed by the community development districts overseeing their retirement community.
Martin Kessler, a resident of the Solivita development, said he is representing himself without an attorney to intervene in court proceedings by the Poinciana CDD, which has requested that a judge validate up to $102 million of tax-exempt bonds.
“I’m going to be asked to come to the court and explain in my simple way why the bonds should not be validated,” Kessler said. “I’m going to say my piece and see if I can make some headway.”
Polk County Circuit Court Judge Glenn Shelby begins several days of hearings on the validation request Wednesday. Those who object to the bond issue must appear the first day in order to preserve the right to appeal the case, if necessary.
The CDD plans to issue 30-year bonds, and use the proceeds to make $11.2 million in capital improvements and purchase existing amenities for $73.7 million from Solivita’s developer, Avatar Properties, an affiliate of AV Homes.
Kessler said he disagrees with the way the CDD supervisors determined the value of 17 existing community facilities such as pools, parks, and restaurants that the CDD proposes to purchase. He said Florida law requires such purchases be made at fair value.
“They did not hire an appraiser; they made no analysis of the projects they are going to buy,” he said, referring to the CDD's supervisors. “All they did was compute the possible amount of bonds you can issue if you have a certain amount of payment you can make every year.”
Kessler said that he consulted with the Polk County Property Appraiser, whose records showed the amenities are valued at $15 million.
Kessler is not involved with a separate complaint by two other Solivita residents challenging the validation, but he noted that they hired a licensed Florida appraiser who determined the value of the amenities to be $19.25 million.
“Someone might say, 'Well, if I were the CDD I might say the price is the value – we don’t care what it’s worth,'” Kessler said. “Well, I care what it’s worth and so do the residents. We’re going to pay 30 years.”
Solivita is a retirement community in Polk County, about 25 miles south of Orlando. AV Homes sold 4,258 home sites as of Dec. 31, according to its annual report filed with the Securities and Exchange Commission.
Poinciana CDD and Poinciana West CDD oversee different portions of the 4,189-acre development. They’ve agreed in joint meetings that Poinciana CDD will issue the bonds.
For the past 20 months, the two CDD boards of supervisors have been working on a structure to purchase the developer’s assets and make capital improvements that will benefit Solivita residents, said the district’s attorney, Michael Eckert, with Hopping Green & Sams PA.
The structure will lower the amounts residents are currently required to pay for the amenities through fees; will eliminate the “perpetual nature” of the club membership fees residents currently pay; and will eliminate annual increases in club membership fees, Eckert said in an email to The Bond Buyer Monday.
Eckert also said the structure will provide for the construction of a new wellness center and a performing arts center, as well as reconstruct some amenities “for no additional cost above what residents currently pay for the amenities.”
The deal, he added, is also being structured so that residents “gain control of the funding and management of the amenities, and consequently protect the residents’ lifestyle which is so cherished in Solivita.”
The two CDDs have a combined total of about $31 million of outstanding bonds, according to documents on the Municipal Securities Rulemaking Board’s EMMA filing system.
The outstanding debt is secured by assessments on property owner’s tax bills. The same structure will back the new debt.
According to court documents, the CDDs hired Environmental Financial Group Inc., of California, to conduct an asset valuation study, “upon which to base an indicated maximum acquisition value” for the existing amenities.
EFG said it was instructed by the CDD boards “to utilize income-based valuation methods to capitalize net available 2016 club fee revenue into an acquisition value,” the firm said.
Residents objecting to the validation, including Kessler, have questioned the income approach to valuing the existing amenities, most of which are between 10 and 15 years old.
Kessler said he will appear in court Wednesday to ask that the bonds not be validated because the CDD has failed to meet the requirements of Florida law, and failed to provide an explanation of the lawful use of the bond proceeds.
“It is ridiculous what they have done,” he said, referring to the CDD’s asset valuation method. “They determined what price they would pay but did not determine the value of the assets they are supposed to be buying.
“Maybe I’m Don Quixote fighting the CDD, fighting the court, and fighting everybody,” Kessler said.