Is it time for Newland to step up by stepping into the Seawall fiasco?

There is a way to fund the balance of the cost of Modified Option 1 - at no cost to Mira Bay residents, and arguably resulting in a home run for the payor!

No one who purchased a home in MiraBay expected to be confronted with this problem! But, whether you're a homeowner or a builder, as you consider whom to blame - the CDD Board, your realtor, the previous homeowner, or the developer there is one common participant to every transaction: Newland Communities (the successor of Terrabrook).

The dog is responsible; the owner is accountable

Newland is accountable for the seawall fiasco. (Not saying responsible; there's a difference.) They (Terrabrook) approved the design; they approved the contractor. Yet, they weren't named as a defendant in the litigation!

Now, numerous property owners are threatening to sue; and they are including Newland as a possible co-defendant.


But, whether or not Newland is named and/or found to be liable,  they stand to be the major loser in this situation - both in dollars and in reputation.  It appears that builders are trying to "dump" their holdings and exit MiraBay. Will they be eager to continue building in Waterset or FishHawk?  How many property owners would flee MiraBay as soon as possible - if they knew that disclosing the truth about the seawall issue and the possibility of a major assessment wouldn't torpedo the selling price?  Why would a realtor lead a potential buyer into MiraBay, Waterset or Fishhawk - or any Newland Community - with so many of the players viewing Newland's reputation as less-than-favorable?  

Nationally, Newland has a very good reputation.  MiraBay may well be the first bad mark on their record.

And, just maybe they are willing to accept that negative press if it's limited to the Tampa Bay area.  But what about the DOLLAR LOSS to increased CDD fees and the devaluation of their unsold lots and unplatted land holdings?


I found 375 properties (lots) owned by Terrabrook (Newland) in Apollo Beach. (One MiraBay resident told me they own the equivalent of 600 - including unplatted land; I couldn't verify that.) Of the 375 listed, 81 are 100 foot lots (according to the square footage listed on the auditor's website.)  I will assume, but can't confirm that the remaining 294 lots are 60 foot wide.  (Some will be bigger; a few may be smaller.)  The 100 ft lots are assessed with $5620 CDD fees; the 60 ft lots are assessed at $3372 each.  So, best case scenario they are paying $1,446,588 yearly in CDD fees - not counting the fees paid for their commercial lots at an even higher rate.   And, assuming those lots have a current, average retail value of $100,000 each (much more for the 122 lots located on canals), the retail value would be, conservatively $37,500,000.    

If the CDD voted to proceed with Option 3, and that option involves a $25 million bond issue, the annual CDD fees increase by 43% - according to the bond underwriter. Based on the illustrative numbers above (which, again I believe are very conservative) Newland faces CDD fee increases of $622,033 each year they hold this number of lots.  And, if as previously suggested that 43% increase leads to a 20% drop in property values, Newland loses at least  $7,500,000 in the portfolio value of their land holdings! 

Their total loss in the first year, based on my non-confirmed assumptions is $8,122,033.


How much more will they lose on their Waterset and FishHawk holdings if the area builders and buyers feel Newland has done little to mitigate the problems at MiraBay?

Alternatively, it would likely cost Newland less than half that amount if they step up and agree to subsidize Modified Option 1 to the extent the cost exceeds the amount remaining from the litigation settlement!  And, how could the Board afford to ignore such an offer? How could any property owner believe their interests were not protected - assuming the Modified Option 1 is as acceptable as Langan has indicated - when they have no out-of-pocket costs for the fix?

And, it gets better: Let's say Newland's share is $4 million.  Assuming the payment is structured as a CDD assessment, it's all tax deductible in the tax year it is paid.  At a 38% (combined federal and state) tax rate,  the net cost drops to $2,480,000!   If future tax rates drop, the value of the deduction is reduced; thus there is an incentive to pay it sooner rather than later


Newland gets millions in value, not including the restoration of their heretofore unblemished reputation, for pennies on the dollar! 
 

If you agree with the content of this blog, consider sending it to Newland (Use FILE/PRINT command) with a cover note urging them to do what our Board Chairman should have done 2 years ago, post-litigation: 

TAKE ACTION NOW

Their contact info is

Newland Real Estate Group

777 S. Harbour Island Boulevard, Suite 320
Tampa, FL 33602

T. 813.620.3555
F. 813.627.0066

About the author: Thomas A. Peterson moved into MiraBay in May, 2009 and resides at 110 Aberdeen Pond Drive in the Anchor Cove Town Homes with his wife of 45 years, Kathleen.  Retired (disability) since 1999, he doesn't have much to do except Google everything from A to Z and write about what he finds!  The author makes no claims to copyright of any images appearing in this blog.  This blog may be reprinted and distributed at will by any reader; in fact, it is encouraged!