RUSKIN, Fla. - When prospective house buyers walked into a now-closed model home in south Hillsborough County four years ago, they remember being greeted with lots of promises.
"They had this big layout of all the land, what it was all going to look like," recalled Jimmy Peaster, who decided to move into the Belmont subdivision in Ruskin. "They were saying they were going to have an elementary school --- A-plus elementary school --- county parks, retail stores up front, big 10,000-square-foot swimming pool, with a clubhouse."
Today, all Belmont residents have is the shell of a clubhouse, with weeds overtaking the structure. No school. No parks. No stores. No pool.
Instead of hundreds of new houses, Peaster and other Belmont residents have almost as many neighbors with four legs as two.
"We've got cows moved in," said Peaster, standing in his garage near acres of open pasture where homes were supposed to have risen by now. "We can smell 'em."
Belmont is one of hundreds of Florida subdivisions created in the past decade with financing from taxing authorities called community development districts. The state allows developers to create CDDs to install roads, sewers, clubhouses, even golf courses in their subdivisions. Home buyers are later assessed on their property tax bills to pay off the tax-free municipal bonds that cover those costs.
But the housing bust and other factors have forced at least 168 Florida CDDs to default on more than $5 billion of bonds since 2008, according to Miami Lakes-based Income Securities Advisor Inc., publisher of a newsletter that follows the state's struggling CDDs for bond buyers.
"These districts are all over the country," said Daniel E. Carter, whose Naples-based financial services firm invests in distressed assets such as CCD bonds. "But Florida has had the biggest problem. And I think a lot of it is because the districts themselves are formed by the developers. All the people on the district boards initially are all typically employees of the developer. So you pretty much have the fox guarding the hen house."
The ABC Action News I-Team has discovered that no place in Florida has more CDDs than Hillsborough County. There are 67 in the county that have registered with the state. Unfortunately for Belmont residents, they live in one of the 21 Hillsborough CDDs that have run into financial difficulties.
In 2009, the Belmont Community Development District was declared in default on almost $30 million in bonds that were issued in 2006 to pay for the construction of roads, utilities and other infrastructure in the Ruskin subdivision. The Belmont CDD hasn't made a debt service payment in nearly four years, according to an annual audit of the district issued last month.
What happens in a subdivision when the CDD goes belly up?
"I'd say after about a year, I noticed the clubhouse area started to be overgrown," said Belmont homeowner Keith Jones. "Then, I noticed they were riding around, taking down the signs where the elementary school was going to be and everything. They started pulling out the signs. And then I was like, 'oh-oh, something's going on here.'"
Belmont was a joint venture between Atlanta-based residential builder Beazer Homes USA Inc. and a subsidiary of General Motors Acceptance Corp. GMAC, an automobile and home lender spun off from General Motors Corp. in 2006, received a $17.2 billion bailout from the federal government's Troubled Asset Relief Program three years later. GMAC's financial woes stemmed mostly from big losses on residential mortgages.
Kathi James, senior vice president and chief marketing officer for Beazer Homes, says the GMAC unit had to drop out of the Belmont project. Beazer Homes was not in a financial position to take over the whole development, James said.
That's why, according to James, fewer than 200 of the expected 2,000 Belmont houses have sprung up.
A spokeswoman for the GMAC affiliate told the I-Team that the lender was a passive investor in Belmont and the unit lost its entire investment. The unit is among a slew of GMAC affiliates that are going through bankruptcy reorganization in New York.
William J. Rizzetta, whose Tampa company manages the Belmont CDD, says a new developer has taken over the project. Unlike a subdivision without a CDD, however, any resumption of development in Belmont is complicated by the district's bondholders. But Rizzetta says the new developer is working with the bondholders and the district to restructure the bonds and cure the default.
Rizzetta is optimistic the Belmont clubhouse will finally be finished next year. Belmont residents are a bit skeptical. They say they've been told for the past two years that construction in their subdivision would start up again any day.
They're also concerned about the construction that has taken place already.
Belmont resident Mike Martin says he and other homeowners in the subdivision have experienced problems such as balky air conditioners and leaky windows since they