What Is a Bond in The Villages, Florida?

In The Villages, Florida, the term “bond” refers to Community Development District (CDD) bonds, a specific financing mechanism for infrastructure and amenities within master-planned communities. These are not corporate or government bonds traded on markets. For property owners, CDD bonds signify a direct financial obligation tied to their property.

Understanding Community Development District (CDD) Bonds

Community Development Districts (CDDs) are specialized local government entities established to finance, construct, operate, and maintain public infrastructure and services within planned communities. In Florida, these districts operate under Florida Statutes, which grants them the authority to issue bonds. CDDs allow developers to fund large-scale projects without relying solely on traditional municipal funding.

CDDs are typically formed early in a community’s development. Developers petition local government to establish the district, outlining proposed boundaries, services, and estimated infrastructure costs. Once approved, the CDD issues bonds to raise capital for constructing essential facilities. This ensures the financial burden of new infrastructure is primarily borne by property owners within the district.

CDD bonds are distinct from other types, such as general obligation municipal or corporate bonds. Unlike municipal bonds backed by a city or county, CDD bonds are secured by special assessments levied on properties within the district. Repayment comes directly from property owners who benefit from the funded infrastructure.

Funds generated through CDD bonds in communities like The Villages are allocated to a wide array of infrastructure and amenities. This includes roads, water and sewer systems, stormwater management facilities, and street lighting. Beyond these utilities, bond proceeds also finance recreational facilities such as golf courses, swimming pools, clubhouses, and multi-modal paths.

The use of CDD bonds allows for the upfront development of extensive amenities and infrastructure, ensuring residents have access to services and facilities from the outset. The bonds are repaid over a defined period, typically 20 to 30 years, with costs distributed among district properties.

Assessment and Payment of CDD Bonds

The financial obligation for CDD bonds is allocated to property owners through annual assessments. These are non-ad valorem assessments, meaning they are fixed charges or calculated based on factors like lot size or specific benefit received, unlike traditional property taxes based on assessed value.

CDD assessments are included on the annual property tax bill issued by the county tax collector. Property owners receive a single bill for both their property taxes and CDD obligations, simplifying the payment process. While combined, it is important to recognize the distinct nature of these charges.

The annual CDD assessment typically consists of two primary components. The capital assessment covers principal and interest payments for bonds issued to construct initial infrastructure. This portion remains consistent each year until the bond is fully retired or prepaid.

The second component is the operations and maintenance (O&M) assessment. This fee covers the ongoing upkeep, administration, and repair of CDD-funded infrastructure and common areas, including landscaping, recreational facilities, and street lighting. Unlike the capital assessment, the O&M assessment is an ongoing charge that continues as long as the CDD exists and provides services, even after the initial bond debt is paid off.

Property owners can identify these separate CDD components on their annual property tax statements. The statements itemize charges, distinguishing between property taxes and non-ad valorem assessments, with the CDD capital and O&M assessments listed explicitly.

Managing and Paying Off CDD Bond Obligations

Property owners can manage their CDD bond obligations, with prepayment being a notable choice. It is possible to pay off the capital assessment portion of a CDD bond early, which eliminates the debt service from future tax bills.

To obtain a bond payoff amount, contact the Community Development District responsible for your property. The district office can provide a payoff statement, which details the exact amount required to satisfy the remaining bond obligation. This amount includes the outstanding principal balance, accrued interest up to the payoff date, and administrative fees.

Paying off the bond early removes the capital assessment from the property’s annual tax bill, reducing the total annual payment. However, the operations and maintenance (O&M) assessment will continue. This ongoing fee covers the costs of maintaining the common infrastructure and amenities funded by the CDD.

If a property owner chooses not to prepay the bond, the capital assessment will continue to be collected annually over its full amortization schedule, typically 20 to 30 years. Once the bond reaches maturity, the capital assessment portion will automatically expire and no longer appear on tax bills.

The CDD bond obligation is tied to the property itself, rather than to the individual owner. If a property is sold before the bond is fully paid off, the remaining obligation transfers to the new owner.