Unpaid bonds create golf course hazard

After five years of silence, the issue concerning Waterlefe’s bond dilemma is resurfacing.

Concerned residents attended a public meeting with Community Development District supervisors and the golf course committee Nov. 13.

The main issue is whether the district will attempt to repay the golf course bond debt that was inherited after developer WCI Communities filed for bankruptcy in 2009. Since 2010, the golf course hasn’t earned enough revenue to make payments on the bonds.

The bonds to pay for the golf course were separate from community bonds and were revenue based, meaning there was no “lien,” or no collateral on the bond. Revenue profits from the golf course were meant to be distributed in a “waterfall” pattern in which progress flows steadily downward. First, operation costs would be met. Then, what’s left would be available to pay principal and debt service needs.

However, nothing has been available to pay down the debt, which totals $8 million.

The developer overestimated how much revenue would be generated from golf course use and how many homeowners would buy a membership. WCI estimated about 350, but there have never been more than 180 members.

Chairman Ken Bumgarner said it would be in the best interest of everyone if the board began researching its options.

The board is assembling a study group to research, vet and propose potential options for paying off the bond debt. The committee has been given at least four months for the scope of work requested. Any changes made would be widely publicized to residents, Bumgarner said.

Research has become a priority now because an investment company in Texas, Provident Realty, has an interest in purchasing a majority of the bonds.

Greg Cox, district manager, said the board or the district staff has never seen a solidified proposal from the company, but its interest has the bond holders wanting to reconsider salvaging their bonds.

“We have investors who think there is a play to be made,” he said.

While the CDD board has no intention of making any changes to the status quo right now, it wanted to update the residents on the situation.

If the bonds aren’t paid off, the future of the golf course would be in doubt and a shutdown could negatively affect property values. To pay for the bond, the CDD has the right to create an assessment collected from all residents to pay principal and debt services.

That would annoy some residents.

“WCI made a promise if you didn’t play golf, you didn’t have to pay for the course,” Bumgarner said. “That was fine and dandy when WCI was here. After they went bankrupt, that promise doesn’t hold a lot of water.”

An obvious solution would be to improve business at the golf course.

“Lots of golf courses around the country are closing. Memberships are dying,” Bumgarner said. “We’re doing everything we can.”

The board has reached out to Medallion Home, which is building a development on 288 acres next to Waterlefe, to use Waterlefe memberships as an incentive to potential homebuyers. When the Fort Hamer bridge is complete, communities to the north without courses will also have quicker access to Waterlefe, and Bumgarner said the board has been advertising in that area. However, he doesn’t believe the community can spike the membership from its current 125 to enough members to start creating profit to pay bonds.