Fees for Nocatee (homeowners insurance, mortgage, house)

[Robyn55]

What does operating within budget in several categories matter if you're running an overall NOL (net operating loss) during the fiscal year? Which is apparently the case here reading the budgets (just look at the bottom line at the end of the fiscal year - which apparently is 9/30). The budget always starts out as balanced - but doesn't necessarily wind up that way.

Also - it's more than operating at a loss. This from the last audit in your link (in 2013):

FINANCIAL HIGHLIGHTS
 The Master Developer and an affiliate of the Master Developer (together referred to as the
“Developer Entities”) did not make all their required debt service assessment payments
during the fiscal years from 2011 - 2013.
 A portion of the Series 2007 bonds, including those associated with property owned by the
Master Developer, remain in default. The District and the Trustee have entered into a
Forbearance Agreement whereby the District forbear foreclosure actions on the property
owned by the Master Developer through September of 2014.
 A substantial portion of the funding for the District’s future capital projects is dependent
upon payment by the Master Developer. There is no assurance that the Master Developer
will make payments needed for future projects as the prior infrastructure completion
obligations of the developer were removed by the restructure agreement.
 At September 30, 2013 the liabilities of the District exceed its assets by approximately $195
million (deficit net position). This deficit is largely the result of asset conveyances and the
use of capitalized-interest bond funds to make interest payments.
 During the year ended September 30, 2013, the District established additional infrastructure
and purchased equipment totaling approximately $3.3 million and conveyed infrastructure
and capital assets of approximately $2 million to other governments.

I am not saying this excerpt represents the full current financial picture as of today (or - more importantly - the last audit - in 2014 or perhaps 2015). It just raises enough red flags to me that I would want to learn a lot more before buying here assuming I was interested in buying in the area (which I'm not - I'm not interested in buying anything now). A house is a big investment - and a lot of bad things can happen when CDDs get into default situations.

Also - one would have to look into specific HOAs (separate from the CDD) to see what's going on there. It is possible that some areas have both master and sub-HOAs.

Like I have stated repeatedly in the past - I don't like CDDs in general. But - if I were thinking of buying in one - I would only look at well established ones that have great looking financial statements.

In all honesty - I've lived in condos and HOAs in Florida for 40+ years. I am very familiar with how they work. I also did a lot of insurance coverage work as a lawyer and have a great tolerance for tedious things like reading insurance policies. But this stuff is just too much for me to absorb/analyze in less than perhaps a solid week worth of reading.

FWIW - if there was a group of people here who were interested in buying in Nocatee - perhaps they could hire an accountant (probably cheaper than a lawyer) to go through all this stuff and write a summary? Robyn

[Bob Rasmussen]

CDD fees are billed to individual home owners by the county tax assessor
Paying off these Community Development Dues "Bond" individually can
save as much as 40% over the life of the bond. Contact your association
manager for details.

[Robyn55]

Originally Posted by Bob Rasmussen

CDD fees are billed to individual home owners by the county tax assessor
Paying off these Community Development Dues "Bond" individually can
save as much as 40% over the life of the bond. Contact your association
manager for details.

I have asked from time to time over the years for someone/anyone to show me and people here anything in a legal recorded document that states making a payment like this would get a homeowner off the hook for the part of the CDD fee that is based on debt payments (you can't get off the hook for current/future non-debt maintenance type expenses). So far - I have gotten zilch in terms of responses. I would not take the word of an association manager or anyone similar. I would want a release from the bondholders (in some way/shape/form). The developers and the CDD too.

If there's anything worse than being on the hook for all this debt - it's making a large cash payment - thinking you're off the hook for the debt - when you actually aren't.

Also - how can such a payment release you from debt that is incurred in the future? Don't think it's possible. I don't think this CDD is at the end of its debt issuance/borrowing as of today.

Note that based on my cursory reading - the very primitive state of the law in Florida in this area indicates that the bond holders don't have recourse against individual homeowners if the CDD winds up in default. They just have recourse against the CDD (what recourse the CDD has against homeowners - I don't know). So why would any individual homeowner want to prepay? Especially because if the CDD goes into default - homeowners will have to scramble to come up with money to pay for the things that the defaulting CDD is no longer paying for/able to pay for.

I really don't have a "set in stone" opinion about all of this now. Just a lot of "on the one hand this" - "on the other hand that" thoughts.

OTOH - in all honesty - I like to keep my financial life pretty simple. Which rules out dealing with CDDs. Especially ones with hundreds of millions of dollars in debt. Robyn

[oneslip]

I refuse to pay CDD fees. Why should I pay for someone else's mistake?

[expatCA]

Watch out for low HOA fees while the developer is still there. The developer covers many of the costs until he sells out, then ............................. the fees can go WAY up to cover the expenses he did not have to pay. I know one commercial association that went from under $100.00 a month to almost $500.00 when the last unit was sold.

[oneslip]

I guess due to lack of current home inventory or location is the reason why people subjugate themselves to these excessive fee's.


Thank you Robyn for posting such an informative and thought provoking questions with regards to paying off one's portion/liability of the CDD Bond.


I am new to FL so CDD fees are a new expense to consider along with HOA fees for me. I've looked at a few houses that were nice houses but when you consider the liability of the CDD & strong potential for rising HOA fees it puts the house in an over valuation situation. I just fail to see how anyone can justify the extra expense unless the house is sold at a far undervalued amount on it's own without CDD consideration.

[expatCA]

Originally Posted by oneslip

I guess due to lack of current home inventory or location is the reason why people subjugate themselves to these excessive fee's.


Thank you Robyn for posting such an informative and thought provoking questions with regards to paying off one's portion/liability of the CDD Bond.


I am new to FL so CDD fees are a new expense to consider along with HOA fees for me. I've looked at a few houses that were nice houses but when you consider the liability of the CDD & strong potential for rising HOA fees it puts the house in an over valuation situation. I just fail to see how anyone can justify the extra expense unless the house is sold at a far undervalued amount on it's own without CDD consideration.

My wife and I are considering moving to FL, but will not buy any home with a CDD and will considering buying a home with a reasonable HOA fee. Likely we will buy an older home with neither, and the savings will go toward upgrades.

[Robyn55]

Originally Posted by expatCA

Watch out for low HOA fees while the developer is still there. The developer covers many of the costs until he sells out, then ............................. the fees can go WAY up to cover the expenses he did not have to pay. I know one commercial association that went from under $100.00 a month to almost $500.00 when the last unit was sold.

That sounds a bit extreme. I've gone through 3 developer to condo/HOA turnovers - and on average the increase was about 30%. I would bake that 30% or so into the cake. Robyn

[Robyn55]

Originally Posted by oneslip

I guess due to lack of current home inventory or location is the reason why people subjugate themselves to these excessive fee's.

Thank you Robyn for posting such an informative and thought provoking questions with regards to paying off one's portion/liability of the CDD Bond.

I am new to FL so CDD fees are a new expense to consider along with HOA fees for me. I've looked at a few houses that were nice houses but when you consider the liability of the CDD & strong potential for rising HOA fees it puts the house in an over valuation situation. I just fail to see how anyone can justify the extra expense unless the house is sold at a far undervalued amount on it's own without CDD consideration.

In all honesty - I have lived in Florida for 40+ years - 20 years here - but never heard of this CDD stuff until Nocatee came to St. Johns County in maybe the early 2000's. I read about it first here and in the local papers - and then started to read about it on my own in various places.

Perhaps there are some older CDDs that are well established with great financials (don't know) - but I honestly wouldn't be inclined to touch the vast majority of them with a 10 foot pole.

Another thing to consider when it comes to housing in most parts of the county is there is so much land left to be developed out west. If you buy a house in a place like Nocatee - you will be in competition with developers building new houses for years to come if you want to/have to sell.

Why are you moving here? Work (if so where)? Retirement? Other? What are you looking for in terms of the metro area? Kids/no kids in school? Housing budget? I don't think it's necessary to move into a CDD here. But the alternatives may be more/less depending on what you're looking for and where. Robyn

[oneslip]

From my understanding the CDD fee's are a result of the recent recession of '08/09 in which many developers went bankrupt so obviously they failed to pay the bond off for the infrastructure. So the liability is passed unto to home buyers. I do agree with new home sites that low HOA fees will increase once guard gates/ camera's etc. are put in.


I greatly appreciate your comments regarding what happens to residents that pay their portion of the bond off & what type of assurance/ proof do they receive to never be liable again for any defaults etc. that may occur with the bond.


As someone that is currently looking for a home this is a very timely thread for me. The next hurdle is investigating the high home insurance premiums. I have already experienced a substantial jump in my auto policy premiums. Moving to Florida is not without it's own unique challenges but I do love it here.