An audit of Carter Plantation Community Development District in Springfield reveals the district is falling further into the red as lot sales lag and bonds remain unpaid.
But an attorney for the district said it may be able to work out a deal with the investor who holds most of the district’s debt and most of its property.
The district’s liabilities exceeded its assets by more than $7 million for the 2013 fiscal year, up from $5.5 million in 2012, according to the audit performed by Hienz & Macaluso LLC.
The difference was largely due to the district’s continued inability to pay down $18.5 million in outstanding bonds, the auditors said.
The district is a public entity organized under Livingston Parish government to create and finance the infrastructure for the subdivision.
The district issued a total of $23.6 million in tax-exempt bonds in 2004 and 2005 to build water and sewer systems and roads for the 726-acre golf course community near Springfield.
When the real estate market collapsed in 2008, development plans fell through and lot sales screeched to a halt.
The principal on the notes was set up to be paid with assessments collected on lot sales, and the developer was to pay interest twice a year.
Since no lots have sold in the past few years, those payments are not being made.
The last payment was made in 2009 when the district had to take funds from its debt service reserve to pay interest on the notes.
The district continues to bring in enough revenue through utility fees and maintenance assessments on existing landowners to meet operating expenses for the community’s utility services, according to the audit.
In 2010, when the development was “on death’s door,” the district entered into a pair of forbearance agreements on the bonds, said the district’s attorney, J. Patrick Beauchamp, of McGlinchey Stafford in New Orleans, on Friday.
Those agreements have been renewed annually, keeping the district out of default, but they cannot continue forever, he said.
The bonds will begin to mature in 2016, at which point the tax exemptions would no longer be viable and the district would be forced to levy assessments on the unsold property, Beauchamp said.
A similar fate has already befallen two other community development districts in Livingston Parish.
Whispering Springs in Walker and Juban Parc near Denham Springs both will move forward with imposing “full assessments on all unpaid property,” Beauchamp said.
Juban Parc developed and sold roughly half of its more than 300 lots before sales slumped. Whispering Springs saw no development at all, Beauchamp said.
“Those two really do show how profound the collapse was in the periphery of metropolitan Baton Rouge,” Beauchamp said.
Beauchamp doubts Carter Plantation will follow the same path.
He expressed confidence Friday that a deal might be worked out with real estate investor Claude Penn, who bought into the project in late 2012 or early 2013.
Ralph Hood, Penn’s representative on the project, could not be reached for comment Friday.
Penn and his affiliated companies now own all but about $700,000 of the district’s outstanding debt as well as most of the property in the subdivision, including the golf course and other common-use facilities and most of the remaining lots, Beauchamp said.
The district probably could reach a settlement with Penn — a forgiveness of the debt in return for an equivalent release of assessments — if they could figure out what to do with the $700,000 in “loose bonds,” Beauchamp said.
“What I have told the owner (Penn) is that forgiveness of the debt makes great sense because then he, or the builders he’s dealing with, can sell the property to interested purchasers free and clear of all that debt,” Beauchamp said.
Otherwise, the assessments could push the price of each lot beyond what buyers would be willing to pay, he said.
Beauchamp also expressed optimism in the market overall, noting that the economy around the Baton Rouge area is improving.
In Livingston Parish, projects such as Bass Pro in Denham Springs and Juban Crossing, a mixed-use development along Interstate 12 that will include a movie theater, Rouses supermarket and Belk department store, will spur reinvestment, he said.
“There are opportunities beginning to come online that didn’t exist a while ago that should bring builders interested in buying lots and putting up houses,” Beauchamp said.