Waterlefe seeks debt holders to settle bonds

The search for minority holders of bonds used to develop the Waterlefe golf course is slowing the Waterlefe Community Development District’s attempts to resolve its bond debt.

Used to build the golf course by developer WCI Communities, the revenue bonds went into default after the developer declared bankruptcy in 2009 and the revenues from the golf course were not high enough to make payments on the debt.

Now the CDD has received an inquiry from a Texas-based company, Provident Realty, which is interested in purchasing a majority of the bonds, which total $8 million. Since receiving that inquiry late last year, the three majority bondholders have been contacting the CDD to find out what will happen to the bonds they purchased years ago.

Before making any major decisions, Andrew Cohen, the CDD’s legal counsel, is trying to hunt down more bondholders.

The three individuals who own a majority of the bonds have been kept in the loop with the CDD. The rest of the bondholders, who own a combined $1.5 million of the $8 million total, are scattered across the country. They have been difficult to track down.

“Individuals who own smaller amounts tuck them away,” said Ken Bumgarner, the CDD chairman. “They’re more difficult to find.”

Cohen is developing a notice to be posted on the Electronic Municipal Market Access (EMMA) website, which is a site dedicated to presenting information on bonds across the U.S. The notice will be public and is Waterlefe’s best chance of tracking down the other bondholders.

“We may not find everybody and that might be OK,” Cohen said.

Bumgarner said they would try their best to get all the bondholders to participate in the resolution of the bond debt, but said the CDD would at some point move forward.

In addition to the golf course debt, the CDD is hoping to settle a debt with WCI.

After the golf course was built, and before the developer went bankrupt, the CDD borrowed money from WCI for course operations. After the developer filed bankruptcy, it was legally uncertain if the CDD was obligated to pay the debt, Cohen said.

However, WCI is alive again, developing a second community south of Waterlefe, and the two entities have begun negotiating about the remaining operations debt.