The BIG Purchase

Based on documents from the HOA, the HOA Board authorized the purchase of the golf course and Club House from Lennar for $8 million. $8 million.

Please remember that the HOA Board of Directors has been 100% controlled by Lennar since the inception of this community–whether they hold 100% of the seats on the HOA Board or 60% of the seats (as they presently do), they still hold a majority of the vote, so homeowners do not have a voice in these transactions.

So, Lennar voted to offload these facilities (amenities) to the Colonial Heritage HOA–which they used to their advantage to sell homes to people like us.

According to Note 8 in the December 31, 2023 audited financial statements, the Association is obligated to reimburse the Developer $8,000,000 for the costs of constructing the golf course and facilities.

Current Financial Picture

As for the remaining balance as of the latest financial data available:

The December 31, 2023 audited financial statements show the Note payable – short-term at $456,295 and Note payable – long-term at $4,963,279, for a total of $5,419,574 still owed on the loan as of that date.

This loan continues until the principal balance is paid in full, with a final due date of December 1, 2035 if not paid earlier.

The payment schedule for the next five years (from December 31, 2023) is shown as:

2024: $456,295
2025: $456,295
2026: $456,295
2027: $456,295
2028: $456,295
Thereafter: $3,138,099 Total: $5,419,574

Note that the monthly payments may be adjusted annually based on a “percentage of completion” formula related to the cumulative number of homes built versus the budgeted amount of 66 homes per year.

Original Purchase Terms

The property was conveyed by the Developer to the Association in prior years
Conveyed property included golf course facilities, restaurant equipment, maintenance building, clubhouse, fitness center, pool, tennis courts, gate house, gazebos, and furnishings
The property was recorded at estimated fair value based on Developer costs and insurance assessments
The Association agreed to reimburse the Developer $8,000,000 for the costs of constructing the golf course and facilities

Loan Structure & Payment Terms

The loan repayment is scheduled to be fully paid by December 1, 2035
Monthly payments are determined by a “percentage of completion” formula
This formula is based on cumulative actual new homes built versus the budgeted new homes amount of 66 per year
If the actual number of homes built in any year doesn’t equal the budgeted amount, the monthly payments remain the same as the previous year
Beginning January 1, 2018, monthly payment amounts could be adjusted annually if the cumulative number of total units within the Association reaches certain thresholds (specific thresholds aren’t detailed in the documents)

Funding Sources

One-third of the Working Capital Contributions collected at home settlements are designated for debt repayment
Working Capital Contributions are collected upon acquisition of title to a unit (both new sales and resales)
Each member must contribute a one-time, non-refundable working capital contribution equivalent to eighteen months of assessments
In 2015, the Board approved an additional six months of working capital contributions from resales and new sales to be contributed specifically to the repayment of this debt

Current Status (as of Dec 31, 2023)

Original amount: $8,000,000
Remaining balance: $5,419,574
Short-term portion (due in 2024): $456,295
Long-term portion: $4,963,279

The documents show the Association making regular payments on this loan, with $435,711 paid in 2023 and payments of similar amounts in previous years. The Association appears to be on track with the repayment schedule.