By Josh Salman and Derek Gilliam
Suncoast Searchlight
A Naples developer had big plans in 2022 to bring more than 850 homes to a rural area of DeSoto County, betting the region’s unprecedented housing demand would continue stretching further east into Arcadia.
With no connections to municipal sewers, the homebuilder wanted the authority to tax future residents for the cost of a new utility plant needed to bring basic plumbing to their homes. So the company petitioned local officials to establish a new special government that it would control.
Three years later, there are still no sewers, and the 412 acres of vacant land is back on the market for $28.6 million — a billboard on the property advertising houses that never came. But unlike other nearby farmland, this site now comes with the power of its own local government, a growing model where private interests hold public authority.
Dozens of new local governments, led not by mayors or town managers but instead by businesses profiting from those who live there, have sprouted up across the Suncoast along with the sprawling new housing communities they bring.
The real estate developers behind these independent special districts use their government status to float multimillion-dollar, tax-free bonds to finance construction and dictate how homeowners pay it back — all with no reins on the spending, a Suncoast Searchlight investigation has found.
From a little-known developer whose business is registered to a waterfront estate near Tampa to the nation’s largest homebuilders in Lennar and DR Horton, dozens of companies have turned to special districts, including the more commonly known “community development districts,” to fund their neighborhoods’ infrastructure.
These districts now span the entire region — from Parrish’s 40-acre Rye Crossing district in northern Manatee County to the more than 12,000 acres at the West Villages district in southern Sarasota County.
Unlike traditional bank loans, municipal bonds are tax-exempt and carry lower costs. Developers use them to finance site improvements like interior roads, street lights, sidewalks, sewers and amenities, which are needed before homebuilding can begin. The money also funds ongoing community maintenance and operations.
With a majority stake on the governing boards, builders then pass those bond repayments on to home buyers through tax assessments at rates the residents can’t control.
Florida law says these bonds also can be used for “public recreation.” Developers tap them to build high-end golf courses, plant multimillion-dollar tropical landscaping and maintain posh clubhouses – oftentimes behind guard-gates accessible only to those who live there.
One homebuilder turned to public bonds to finance a swimming lagoon designed to rival postcard beaches. Another used district funds to help build a new spring training stadium for the Atlanta Braves.
Suncoast Searchlight combed through thousands of pages of municipal bond cases, civil lawsuits, public real estate records, state filings, and board agendas and minutes to build a dataset of the region’s special independent districts that were established at the behest of developers. Reporters then used that data to track how much developers bonded, the scope of their projects and board turnover.
Among the findings:
- Special districts across the Suncoast faltered during the Great Recession under the weight of substantial bond debt. But since then, more developers are turning to these districts for municipal bonds than ever before, leaving tens of thousands of homeowners on the hook if the market sinks.
- During the past five years alone, local districts bonded out $2.9 billion in public bond money. That gave the real estate developers behind these entities nine times more cumulative spending power than the city of Sarasota over that same period. One district went on to take a string of 10 bonds to fuel future growth.
- With the authority of a municipality, these development districts levy assessments enforce rules and process liens on those who don’t pay. But, unlike a city, people in the district go years with no say over who represents them. Even through a project’s final stages, builders sometimes take extreme measures to keep control out of the hands of residents.
- The steady flow of capital allows developers in special districts to advance massive projects much faster than traditional subdivisions, bringing droves of new homes and booming the region’s population — a strain on public infrastructure outside these districts.
Community development districts “are a legislatively-sanctioned license to steal,” said Paul Asfour, a tax attorney who serves as a homeowner board member at the River Hall district in Lee County, where the builder has three majority votes. “There are basically no limitations on what a developer-controlled board can do.”
To be sure, homebuyers chose these communities knowing they could face escalating fees, strict rules and future expansions. Districts can set higher standards for maintenance and property care — often making their neighborhoods more attractive than the greater area. Many see the extra assessments as a small cost for that picturesque Florida lifestyle.
When using traditional bank loans for infrastructure, builders pay interest calculated on spread and prime rates, equaling about 10% based on Bank of America’s current terms, said Pat Neal, founder and chairman of Neal Communities, an area homebuilder who has been involved in several special districts.
Rates for independent districts, on the other hand, are based on the municipal bond market, which now carry interest in the high 5% or low 6% range, Neal said. He argues those savings are passed onto buyers, lowering the cost of his homes.
“Publicly-financed completed infrastructure — and often amenities — provide security and benefit to the prospective homebuyer,” Neal said.
Suncoast Searchlight spoke with area builders, real estate agents and district managers who defended these independent special governments and their bonds as a method to bring more desirable neighborhoods to the region.
“They can be a pretty effective tool,” said Bill Eshenbaugh, a commercial broker in Tampa who has the listing on the Arcadia district now for sale and has represented developers on a dozen of these district boards over the years. “But anytime the money is flowing like that, it will bring bad characters.”
Others argue it’s just another legal tool that makes homebuilding easier and more profitable for developers, among the region’s most politically-connected industries.
Attorney Henry Kenza van Assenderp represented the first developer to form a community development district, or CDD, in Florida and says he helped write the initial state laws in the early 1980s.
He said he believes these districts can work to help with growth management but that more builders are exploiting the law by using the districts just for the stream of bond money. The majority now operating in Florida, he said, have not lived up to the law’s original intent.
Since the law’s passage, these developer-led governments have tapped nearly $10 billion in municipal bonds between Sarasota, Manatee and DeSoto counties – nearly a third of them authorized since 2020, Suncoast Searchlight found.
“The problem is the abuse of the law from developers who view these districts simply as financing mechanisms,” van Assenderp said. “These CDDs are not banks … It’s gross abuse.”
From Disney to Lakewood Ranch: the rise of special districts
Gov. Ron DeSantis made national headlines in 2022 for his legal attack on the special purpose district that governs Disney World after the company opposed Florida’s so-called “Don’t Say Gay” legislation.
During the two-year showdown, DeSantis politicized the benefits that the independent government provided to Disney to build 40 square miles of resort communities surrounding its theme park mecca near Orlando, pledging to strip away the mouse’s powers.
Special districts, including Disney’s Reedy Creek, operate like homeowners associations on steroids, some with the budget of a small city. Each must be established through a local ordinance or specific state law setting their powers, the ability to levy special assessments and enforce community rules.
“The path forward is Disney will not control its own government in the state of Florida,” DeSantis said in a 2022 CNN story.
After counter lawsuits, the Disney spat cooled with a settlement last year.
But few of Florida’s more than 2,000 other special development districts are under any similar scrutiny.
“Nobody in the state of Florida is holding special districts accountable,” said John Meisel, a homeowner and board member of the West Villages Improvement District in North Port. “Unless it’s Reedy Creek.”
Special districts first appeared in the Suncoast in 1982 when the Palms of Terra Ceia Bay Community Development District was established in Palmetto through a city ordinance. The district was created to build a gated waterfront community with a golf course.
More from our investigative journalists: Sign up for the Suncoast Searchlight newsletter
The region did not see another one until Schroeder-Manatee Ranch plotted out the early days of Lakewood Ranch, using ordinances to form a series of governing districts through the 1990s and 2000s to fund various stages of the 35,000-acre community. Schroeder-Manatee Ranch CEO Rex Jensen declined to comment for this story.
As growth in the region accelerated over the years, more builders repeated the model to advance projects in once-rural areas like Parrish, North Port and east Sarasota County.
These local development districts now cover 95 square miles across the Suncoast — an area larger than the entire city of Boston. That’s enough space to fit 13,500 professional baseball fields.
There are now 88 developer-organized special districts operating between Sarasota, Manatee and DeSoto counties, according to a Suncoast Searchlight review of registration filings with the state.
More than one-third were formed within the last five years, including 13 new districts in 2022 alone — the most active year for the area on record.
Some area real estate agents who sell homes in these districts argue they provide homeowners with more long-term consistency in the look and maintenance of their community.
“For the most part, it’s a net positive from a real-estate value and everyday living standpoint as far as the character of the neighborhood,” said Robert Goldman, a Realtor in Venice with Michael Saunders & Co.
Like any local government, some operate with more fairness and transparency than others, and resident hostility remains rare, he said.
“People want the niceness of it,” Goldman said, “but they often don’t want to pay for it.”
But Jon Thaxton, a former Sarasota County commissioner who serves as director of policy and advocacy for the Gulf Coast Community Foundation and who has decades of local land-use experience, said some homebuyers aren’t even aware of what they’re getting into.
“It’s just too obscure of a financing vehicle for the general public to figure out,” Thaxton said. “They just write the check and wonder why their taxes keep going up and wonder why the roads keep getting more crowded.”
A boom, a bust, and the bonds left behind
Commercial developer Tim Morris and his business partners had grandiose plans in 2005 to bring more than 1,000 new homes and condos to more than 200 acres in Palmetto their companies purchased for $15 million.
Demand for Florida housing was flirting with record highs, as droves of under-qualified buyers rushed to take out loosely-regulated mortgages on homes commanding well-above asking prices in mere days.
To accelerate construction, the developers asked the city of Palmetto for a local ordinance that created a new special government called the Sanctuary Cove Community Development District.
Establishing the CDD allowed them to seek public bonds and assess fees on future homeowners who would pay it back. The CDD’s governing board — controlled by Morris and his associates — were authorized for $43 million of municipal bonds in February 2008, court records show.
The district used the money to build the neighborhood’s roads, sewers and street lights. But Wall Street crashed before a single model home in Sanctuary Cove broke ground.
Thousands of homebuyers who drove the frenzy just years earlier were underwater on mortgages they could no longer afford. Construction projects across the Suncoast were left unfinished. With a plethora of foreclosures available at rock-bottom prices, there were just no buyers for new home communities like Sanctuary Cove.
By 2009, Morris and his partners stopped making payments on the bond, facing the largest foreclosure in Manatee County history at the time. It wasn’t until almost a decade later — after another builder stepped in to buy the distressed property — that construction resumed.
“We were able to work out a suitable agreement between our lenders and the buyer in which we avoided the foreclosure action and the lenders received an acceptable sales price to satisfy our financial obligations as the project developers,” Morris said in a statement at the time. He did not respond to phone calls seeking comment for this story. “Given all the turmoil in the real estate marketplace these past few years, I believe it is a collective win-win.”
During the recession, delinquent CDDs across the Suncoast faced a similar fate on hundreds of millions of dollars in bonded projects, prompting a tsunami of developer defaults. Homeowners living on roads to nowhere in districts left half empty were forced to continue paying thousands of dollars each year in assessments — getting no maintenance — or they would lose their homes.
At the time, about 40% of the state’s 575 CDDs were under some degree of financial distress, according to research from the LeRoy Collins Institute at Florida State University.
Yet within years, builders were right back at it.
Area CDDs started sprouting up again in 2010 with Blackburn Creek in Sarasota County, then Summer Woods the following year in Manatee, and the Toscana Isles district in 2013 in Venice. All went on to tap bonds.
A Suncoast Searchlight review of bonds, district budgets and itemized spending ledgers found most area CDDs are now on steadier financial footing than when dozens in Florida defaulted. That’s because there are still enough buyers to step in for now.
But given global economic uncertainty tied to the controversial new tariffs, forecasters question the sheer amount of bond risk.
“When the economy crashed, there were just too many (development districts) going on at the same time — too much capacity,” said Richard Lehmann, a Boca Raton-based securities adviser who spent years tracking CDD delinquencies in Florida. “If there’s another (economic) setback, you’ll see another wave of these bond defaults.”
Market trouble: Suncoast home values face one of the steepest drops nationwide
The area’s long-sizzling housing market has already shown signs of softening. A lull in demand means more homes are saturating the market and becoming harder to sell. Rising inflation, stock weakness and tariffs are now expected to push up interest rates. The result has more economists predicting a recession tied to President Donald Trump’s policies.
“It’s an uncertain economy right now,” Florida real estate analyst Jack McCabe said. “People are getting hit with these huge special assessments, and incomes have not kept up to match … You’re going to see a lot of announced projects get put on the backburner.”
They took out bonds to build roads and sewers. Then they took out more.
The primary benefit of these districts is the ability to exercise municipal bonds — the same bonds counties and cities often tap to help fund major public improvements.For developers, it means better rates and the ability to get the project underway without as much capital or business credit for necessary infrastructure.
Tax-free municipal bonds must be approved by circuit court judges, who can greenlight the developers steering these districts to fetch bond after bond to fund improvements for future homesites or refinance bad debt, Suncoast Searchlight found.
The West Villages near North Port tapped 10 bonds — far more than any other special district in the area — totaling $805.8 million. Others, like Waterlefe in Parrish, also turned to municipal bonds again and again.
Built by national developer WCI Communities, the 458-acre Waterlefe district was authorized in 2001 for $25 million to jump-start the community and another $10 million for its 18-hole golf course.
But as demand for luxury tee times dried up amid the recession, the course began bleeding revenue. WCI Communities and 130 of its national subsidiaries fell into Chapter 11 bankruptcy over $1.8 billion in companywide debt.
In court filings, WCI blamed the financial woes on subcontractors and losses from homes built at the time with bad Chinese drywall.
When the market reheated, the district set its eyes on more municipal bond money.
Judges authorized Waterlefe for another $5 million in bonds in 2016 in an effort by the district to refinance its sour debt, which had racked up $4.6 million in unpaid interest alone and had languished in default since 2009.
The new bonds passed on an additional $364 annual assessment levied against all district residents for 30 years. In exchange, residents got control of the golf course from WCI.
The credit card kept swiping. By 2023, the CDD was authorized for $6 million more for golf course and clubhouse renovations, further compounding the tax bill on residents.
Single-family homeowners in Waterlefe paid $3,849 last year in district assessments. Those fees were more than double what most homeowners paid in taxes to Manatee County’s general operating budget, which funds services like libraries, emergency medical services and law enforcement.
“Unfortunately, Waterlefe got caught up in all this mess in 2009 when the housing market collapsed, and people were stopping just short of jumping out of buildings,” said Matthew Huber, regional district manager for Rizzetta and Co., which manages several Florida CDDs, including Waterlefe. “Had they not gone through that, the assessments would probably not be what they are.”
Other builders point to that very reason for why they avoid municipal bonds. Hugh Culverhouse Jr. is among the region’s most well-known developers with projects like the Palmer Ranch master-planned community in Sarasota County. He vowed to never use special districts for his new developments, calling them “poison.”
Culverhouse said that’s because the model relies too much on the gamble that all the new homes will sell quickly to risk-tolerant buyers. He doesn’t want that kind of debt saddled on his land and said investors should be wary because, if the CDD goes down, the bond is “worthless.”
“The bottom line on CDDs, if you look at them, they’re a powderkeg for the homeowner, who is paying for the infrastructure,” Culverhouse said. “The developer wants to over-leverage his property and put none of his own money into it … The joke of it is, the person who is buying is paying what I should have paid (as the developer).
“The CDD starts growing and growing and growing and also it never stops because each year you pay maintenance, maintenance, maintenance, interest, interest, interest.”
Homeowners fight for more say on district boards
For years on end, the real-estate developers who head these special districts can maintain control of every decision from the onset of construction through a project’s final phases.
They appoint their associates to the inaugural governing board — tasked with decisions like bond requests, new land acquisitions, infrastructure needs and rate assessments — then drag out the timeline to turn those duties over to homeowners.
Attorneys, board members and other experts said that gives the developers who run these districts — and profit from them — no reigns on spending and lax regulation over the books.
Under Florida law, developers are supposed to hand over control of the CDD’s governing board to the residents through seats elected within the neighborhood boundaries, much like an HOA.
Most special districts operate under control of the primary landowner until the community is at least six years old and meets certain population thresholds, which can vary from district to district, that measure the number of voters living there.
The board is then supposed to transition to a general election process. In a community development district’s first election, two board seats are open to residents while the other three remain with the developer. In subsequent elections, more seats gradually turn over to voters. Other forms of special purpose government have different turnover requirements.
But developers can manipulate those thresholds by diluting the calculations, often by expanding their projects to include more land, more homes and more bonds.
Suncoast Searchlight identified three special districts operating in the region that were established more than two decades ago yet remain controlled by developers.
Across Sarasota, Manatee and DeSoto counties, more than 90% of CDDs established within the past decade remain under the control of business interests rather than the people who live there, according to the analysis.
At Stoneybrook, an upscale subdivision initially built by Lennar in the Heritage Harbour CDD of east Manatee, homeowners organized a task force in 2013 to vet options for taking over community decisions they said should have been theirs years earlier.
Instead of turning over control at the buildout threshold, Lennar added more acreage to Stoneybrook to make way for another 735 new homes, allowing the company to maintain its majority. When the market began to slide, Lennar refinanced — using the new land as collateral — which was later tangled up in a $9.3 million foreclosure, court records show.
Representatives from Lennar did not respond to calls and emails seeking comment.
Some 50 miles south, near the marshes of North Port, the developer-led board of the West Villages Improvement District even turned to Tallahassee, spending more than $100,000 on a lobbyist, which homeowners had to pay for, to push new legislation that would alter when residents can take control of the board.
A $2.8 billion Water Fight: How a century-long irrigation deal pit homeowners against their special improvement district
The aggressive push came after one of the communities in the district began questioning irrigation fees and how the community was governed.
“The non-elected members do not listen to the residents at meetings at all,” Ali Johnston, a resident of the West Villages and licensed real-estate broker, said in an email to Suncoast Searchlight. “Public comments are not put into record, and they often stop the one elected member from speaking … There seems to be nowhere to turn for help.”The West Villages Improvement District, whose community is now known as Wellen Park, has defended the board’s decisions over water fees and other matters, including the legislative push to change the equation for board transition.”As an independent special district, the WVID’s purpose is to manage, own, operate, construct and finance basic capital infrastructure, facilities and services,” the district wrote in a statement previously emailed to Suncoast Searchlight by District Manager William Crosley.”To fulfill its purpose, WVID issues tax-exempt bonds to finance public infrastructure projects throughout the community,” the statement said. “While these bonds pay for a portion of the cost of developing the improvements, the master developer of Wellen Park provides funding to make up the difference … to ensure critical infrastructure projects are completed in a timely fashion.”
New rooftops, more traffic: Rapid growth frustrates residents outside these districts
When finished, the West Villages development alone will bring more than 65,000 people to South Sarasota County. Newer CDDs like Parrish North, Paddocks and Firethorn together will mean thousands more homesites.
With bond money in hand and control of initial decision making, developers can accelerate project timelines — allowing them to move from concept through construction faster than other subdivisions, said van Assenderp, the developer attorney who helped craft the CDD law.
“Developers have high efficiency but hardly any accountability,” he said.
Community leaders who spoke to Suncoast Searchlight point to CDDs as among the many drivers behind the region’s population boom. The number of people living between Sarasota and Manatee counties has swelled 10% since 2020 to reach nearly 1 million residents, according to the U.S. Census.
Countywide roads cannot keep up, they said, with all of those extra people driving to school, work or the grocery store.
Infrastructure Failures: The historic hurricane season flexed its muscles. A Suncoast sewage crisis followed.
Across the Suncoast, traffic has spiked on major public thoroughfares serving the massive developments governed by these special districts.
The stretch of U.S. 41 near River Road that feeds much of the West Villages district saw annual average daily traffic loads spike 30% since 2020, according to data from the Florida Department of Transportation.
Traffic on Moccasin Wallow Road east of Interstate 75 to U.S. 301, which connects to several special districts in Parrish like North River Ranch, similarly rose 30% during that same time, the data shows.
On University Parkway east of I-75 into Lakewood Ranch, where sprawling new subdivisions were built through a series of these districts, traffic is up 42% over those same years.
Becky Ayech, a Myakka City resident who served on Sarasota County’s traffic advisory council, has seen the once-rural roads near new homes become more congested as massive new special districts come closer. She also points to the long-term strain on regional sewer and stormwater systems.
“This is a real slick way,” Ayech said, “for developers to go around without waiting for water and sewer lines and roads to go into place.”
This story was produced by Suncoast Searchlight, a nonprofit newsroom of the Community News Collaborative serving Sarasota, Manatee, and DeSoto counties. Learn more at suncoastsearchlight.org.
Copyright 2025 WWSB. All rights reserved.