THE VILLAGES
Taxation without representation” is a phrase used frequently by members of The Villages Property Owners’ Association. They use the phrase to describe the developer’s method of funding maintenance on the development’s many amenities, including golf courses, community buildings and landscaped areas. 

However, officials for The Villages say that this can’t be a case of taxation without representation because there is no taxation involved. The money that pays for this maintenance is not a tax but a contracted amenity fee each new resident agrees to pay when they purchase a home in the development. This fee can be as high as $105 monthly. 

Joe Gorman, president of the property owners association, says that the understanding most new residents have of the amenity fee is that it is going to pay for maintenance and administration of the amenities. 

And the fees do go partially for that. 

However, Gorman said, residents also end up paying for bond debt incurred through the purchase of these amenities from the developer by The Villages Center Community Development District. 

Gary Morse, developer of The Villages, discovered the CDD form of financing in the early 1990s. By creating special-purpose local governments that allow a developer to issue low-interest-rate bonds, he was able to build the community’s infrastructure. Without the CDD financing, Morse has said, The Villages could not have expanded as fast as it has. 

The VCCDD was created under Chapter 190 of the Florida statutes and can act in many ways like a city government, with a few key differences. 

The most controversial of these differences is the way the district board is elected. Rather than being elected by a popular vote, the power of the vote is dependent upon land ownership. The more property a land owner controls, the more votes that person or company gets. 

In the case of the VCCDD, the boundaries were drawn around the Main Street, Town Square area of The Villages, so the only property owners are the developer, and a small handfull of businesses such as Echard’s Drugs, Perkins Resturant, Citizens First Bank as well as others. 

But the developer still holds the bulk of the votes, and, under CDD law, this mean the developer can easily choose the board’s representatives. 

Even though the VCCDD continues to make business purchases that include property transfers, none of this new property becomes part of the VCCDD, it is only owned by the board. Because the VCCDD is designed to govern the community’s amenities, and many residents pay their montly fee to the VCCDD, Gorman says those residents should also have a say in what the board does. 

“If we could make one change in The Villages, we would have the VCCDD administration elected by a Villages-wide election process,” Gorman said. “The center district makes all the big money decisions, but the residents never get to vote for those making these decisions.” 

He says the problem is compounded by the fact that the developer, who stands to gain the most from the VCCDD’s business transactions, is also the one who appoints the board. 

This, Gorman says, is a major conflict of interest, because in essence, the developer can control both ends of the business deal. 

Wahl said that this issue is addressed in chapter 190.007 of the state statute where it says: “It shall not be a conflict of interest under chapter 112 for a board member or the district manager or another employee of the district to be a stockholder, officer, or employee of a landowner.” 

In fact the statutes say that anybody who is a resident of the state of Florida and a citizen of the United States is an eligible candidate to be on a CDD board, but it is up to the land owners to choose who they see fit. 

According to reports provided by the VCCDD, the district has incurred a bond debt of more than $352 million since its inception in since 1992. That figure includes more than $184 million in purchases from the developer and more than $167 million in interest. 

Gorman contends that, not only are the residents, through their amenity fees, now paying interest on debt they had no choice in incurring, but the properties were purchased at an inflated rate. 

Pete Wahl, the district administrator over the VCCDD, said none of this is the case. 

“We’re buying a business,” Wahl said, “not buildings.” He likened the VCCDDs practice to purchasing any other business with both physical property and a customer base. 

The VCCDD, Wahl said, is taking over operation of the properties, but what they are really purchasing from the developer is the contracts for the amenity fees. The physical property, he said, is actually a liability. 

“The buildings get transferred to us when we acquire the business component,” Wahl said. “When the developer owns the contracts, the developer gets the money. When it moves to the district, they get it.” 

The amenity fee contracts, Wahl says, are like gate fees at a theme park. When you buy a ticket to Walt Disney World, he said, you don’t suddenly get a say in how they use that money. 

Wahl says that, to view the amenity fee as a tax, as the property owners association does, is just not accurate. Gorman said that, while it may be true this is a contracted fee, not a tax, the spirit of the fee was for maintenance and administration of the properties, which only about 70 percent of the fee now goes toward. The remaining 30 percent pays for bond debt. 

Gorman said this extra 30 percent could be money in residents’ pockets rather than paying for facilities they already had access to. 

“We would be happier if the developer just said there are two charges,” Gorman said. “One for maintenance and administration and another the board could use to buy facilities.” 

However, that system would work only if the VCCDD board were elected by the residents, rather than the developer. “I suspect we would still buy those facilities from the developer,” Gorman said, “but for a fair value and an appropriate premium.” 

Wahl says that setting up the VCCDD was a benevolent act on the part of the developer, and that residents should be glad the VCCDD exists, because it guarantees the amenities they now enjoy will continue to operate perpetually. 

According to Wahl, The Villages does not so much sell homes as it sells a lifestyle. Therefore, the developer is obligated to make sure that lifestyle continues, even after the developer is gone. 

By setting up a CDD, and putting it, not the developer, in charge of the amenities and the fees, Wahl says, the residents have a legislative guarantee, much like those who reside in an incorporated city would, that their lifestyle will last indefinitely. 

“You can’t just leave it in private hands, or they can just close it down,” Wahl said. “They have no requirement to keep it going.” 

A CDD, on the other hand, would be required to maintain the lifestyle requirements of The Villages. 

“Those who live here have a government guarantee,” Wahl said, “that this lifestyle will continue.” 

The Villages Property Owners’ Association is the original home owners group, founded in 1975. Membership had fallen to around 700 members in 2001, but has since more than doubled. It has a monthly meeting and open forum at 7 p.m. on the third Wednesday of the month in the main auditorium of the Paradise Recreation Center.