Five Florida homeowners who ran for office to take charge of future financings by their community development districts swept all open positions on the CDD boards by healthy margins in Tuesday’s election.
The winners, who each won by more than 63% of the vote, are residents of the Solivita retirement community near Orlando who have fought attempts by their districts to finance the purchase of pools, parks and other existing amenities at a price they say is too high.
Michael Luddy, Tony Reed and Elizabeth Lambrides will become supervisors on the Poinciana CDD board, while Peggy Gregory and Roy LaRue will take seats on the Poinciana West CDD board.
All five were backed by a grassroots committee that campaigned on the Price is Too High platform.
“Until I came to Florida I’d never heard of a CDD but I’ve been learning the last couple of years,” said Luddy, who added that some district board members thought they were spending government money. “I disagree, it’s my money.”
The prior CDD boards agreed to issue $73 million of bonds to purchase the community’s 15- to 17-year-old amenities from the developer, AV Homes, without obtaining an appraisal to determine the price.
More than 1,500 Solivita residents signed a petition demanding that the boards obtain an appraisal. When that didn’t happen, they hired an attorney and paid a Florida-certified real estate appraiser who valued the existing amenities at $19.25 million.
The CDDs pursued two bond validation cases. The first was unsuccessful due to an improper assessment scheme to pay back the debt. The second case is pending in Polk County Circuit Court.
In court, the homeowners argued that the CDDs and the developer improperly used an income-based approach, instead of getting a certified appraisal, to capitalize 30 years of future club membership fees currently charged by the developer to value the amenities in excess of their worth.
Residents, who pay to use the amenities, have also filed a class-action lawsuit challenging the legality of the club fee.
Under terms of the proposed bond issue, the club fee would have terminated when the debt was sold even though residents would still pay an assessment on their tax bills for 30 years to repay the debt.
In a transcript of an Oct. 23 hearing in the current bond validation case, Circuit Court Judge Steven Selph questioned how the districts arrived at the amount of the bond issue and calculated the assessments.
“The issue is whether this evaluation and the assessment are proper,” he said. “I’m having trouble wrapping my mind around how you assess the value – determine the value of a property - for a district to agree to buy it at that price when it’s based on a number that’s not going to even exist in the future if there’s not going to be membership fees.”
In ruling from the bench, Selph said he would allow the Solivita residents’ attorney, J. Carter Andersen, to take depositions from certain executives with AV Homes who helped structure the bond deal.
On Oct. 25, Taylor Morrison Home Corp., the new owner of Solivita, told residents
Four days later, attorneys formally notified the CDDs that the developer no longer supported validating the bonds and wouldn’t provide any more funds for the effort.
Andersen hailed Taylor Morrison’s decision to terminate the sale.
“The CDDs sued the residents in two separate bond validation cases and the developer, AV Homes, paid close to $2 million to lawyers and experts to fund the lawsuits and the proposed transaction where AV Homes would sell amenities for $73 million even though they only appraised for $19.25 million,” Andersen said. “But the class-action case has not been resolved.”
Andersen said AV Homes and Taylor Morrison continue to argue in the class-action suit that the club membership fee to use the amenities, which ranges from $65 to $85 per month per home, is legal.
“The residents who we represent – both in the bond validation cases and the class-action case – argue that the club membership fee is illegal,” he said.
The developer declined to comment on how much was spent pursing the validation cases, or whether the CDDs would be responsible for any costs.
The CDDs had planned to issue about $102 million of bonds, using most of the proceeds to buy existing amenities and $11.2 million to build a new wellness center and a small performing arts theater.
Martin Kessler, a 94-year-old Solivita resident who represented himself in the two bond validation cases, said the CDDs should now try to salvage “the better part of the deal that this district has labored over for almost two years” in court.
“Taylor Morrison decided to announce unwinding the sale of the [existing] amenities to the CDD in the interest of creating a strong sense of community as the proposed sale has been a source of confusion and frustration to the residents,” he said. “That was a very wise business decision as it also removes the executive leadership in AV Homes from potential deposition.”
Kessler said the CDD supervisors can now turn their attention to providing the new amenities that residents have wanted for a long time.
“The residents will have a village street party celebrating that the supervisors delivered what they promised,” he said. “As for the old amenities, Taylor Morrison/AV Homes will just continue operating as they have for the past 19 years.”
Kessler said two local lawmakers who represent the area plan to file legislation next year that would specifically require CDDs in Florida to get appraisals of any real property proposed for purchase.
The new CDD supervisors will be seated Nov. 28, and are expected to withdraw the bond validation case.
Luddy said he hopes to work with Taylor Morrison to find a “reasonable and rational” basis on which to build the new amenities and take ownership of the existing facilities.
“My concern is for the residents of Solivita,” Luddy said, adding that he will request a bond referendum to finance any purchase. “I think we’ll have overwhelming support and it’ll be a happy outcome to this sad situation that’s been going on here the last two years.”
"I'm hoping in the near future we can get some legislation to fix this kind of abuse in the senior community," he added.
