Community Development Districts (CDDs) Under Investigation By IRS

The IRS has accused a community development district in The Villages of misusing $64 million in tax-exempt bonds and overpaying for courses, guardhouses and other amenities. Conceived to help roads and utilities keep pace with population growth, community development districts let developers sell bonds — at a favorable rate because buyers do not pay tax on the interest — and spend the proceeds on new communities. As families move into the homes, they take control of the districts, as happened in Tampa Palms, Westchase and dozens of communities around Tampa Bay. Issues about community development district governance, gates and guardhouses aren't uncommon. In 2002, the Hillsborough County Commission cracked down on gates that blocked public and community development district-financed roads, including those at Heritage Harbor in Lutz. Guards were told they could question motorists, but not prevent them from entering. In New Tampa's Cory Lake Isles, lots sold so slowly that developer Gene Thomason, his family and associates dominated the district for more than a decade. Thomason had a community wide landscape contract. His wife and son ran a real estate office in the clubhouse, paying little or no rent. In November, residents assumed control over the board, signaling an end to both arrangements.

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