CDDs at a crossroads
Real Estate Partner Richard Perez was quoted in an Orlando Business Journal article titled, "CDDs at a crossroads."
Central Florida developers have found it difficult to get financing for projects lately – but they may be in for an even bigger shock as the economy improves. This article reports that when large-scale residential development returns to the region – which experts predict is at least two to three years away – the low-cost financing model developers enjoyed for the past 30 years may not. That's because the dozens of defaults on bonds issued by community development districts (CDDs) in Florida have scared away investors. In the coming years, developers could be faced with the choice of paying a higher interest rate to mitigate an investors' perceived risk on a bond issue, spending some of their own money to start work on the project or demonstrating the viability of a project through having some orders for homes. Mr. Perez, who helped CDDs issue bonds, explained that investors' appetite for bonds issued by CDDs will depend on what they recoup from the latest round of issues involving failed communities. "The cost of development will go up," he said.
READ: CDDs at a crossroads