LUTZ -- Greg Tamborello found exactly what he wanted for his retirement: a home on a golf course in Heritage Harbor. 

But lately he's thinking of leaving this subdivision off Lutz-Lake Fern Road. Despite all the greenery, Tamborello sees a lot of red. 

Heritage Harbor is awash in debt. Its developers borrowed millions to provide recreational facilities that created a country-club appeal. But such extras, while attracting buyers such as Tamborello, could send fees sky high for Heritage Harbor families. Already, the cost of mowing the grass and tending the flower beds has quadrupled. 

Experts say such extravagant spending runs counter to the purpose of community development districts, a state-sanctioned vehicle to help Florida meet the needs of its booming population. Increasingly popular, CDDs let developers borrow, tax-free, to build infrastructure in new communities. They receive little to no supervision from government regulators. And homeowners who have questions about their debt and business plans sometimes have trouble getting the facts. 

"To try to get a straight answer out of these people is impossible," Tamborello said. 

The trouble in Heritage Harbor, where 370 of the planned 670 homes have been sold, largely revolves around the golf course. While locals enjoy the 18-hole championship layout, there are many others to choose from in the Tampa Bay area. 

The $20.8-million that U.S. Home borrowed in 1997 to develop Heritage Harbor included $7.9-million for the golf course and other recreational facilities, including a luxury clubhouse and a theme park-caliber swimming pool. 

But it wasn't enough. The public golf course, where players pay between $25 and $46 in greens fees, was supposed to pull in enough revenue to cover the annual bond payments. That did not happen, either. 

Instead of making ample money off the golf course, U.S. Home, now owned by Lennar Corp. of Miami, has loaned itself millions to survive and complete the recreational facilities. Now, the Lennar-controlled CDD is using company money simply to pay off the note. 

Pummeled by the same flagging golf market, Lennar's other CDDs at Heritage Isles in New Tampa and Stoneybrook near Ft. Myers show signs of faltering, too. 

Alarmed at this shaky financial structure, Heritage Harbor homeowners banded together in protest. Tamborello recently joined the group, numbering about 100. They want Lennar, who inherited the problem with its 2000 purchase of U.S. Home, to assume responsibility for the debt. 

Tamborello is waiting one more year, so his daughter can graduate from college. "After that, if there's not a resolution to this I'm out of here," the former banker said. 

Created with little accountability

Experts say Heritage Harbor, Heritage Isles and Stoneybrook are exceptional in that most CDDs do not rely on golf course revenues to pay back debt. 

But the bigger issues of spending and oversight are not unusual. 

The 1980 legislation that created these districts leaves problem-solving to the developer -- with or without the homeowners' participation. Except for market pressures, CDDs have almost no accountability. 

Legislators originally intended for CDD bonds to pay for basic infrastructure, such as roads and schools, said Jim Nicholas, a professor of urban planning at the University of Florida who helped legislators write the law. While no one has formed a CDD yet to build a school, he said, Florida's education funding crisis opens up that possibility. 

He finds the U.S. Home practice disconcerting. "If we had talked in 1980 about funding golf courses in this manner the legislators would have said, 'No way,' in my opinion," he said. "They kept wanting assurances this would be used (for) public services the local government couldn't or would not provide." 

By law, the developer must start turning over CDD control from its employees to the residents six years after its inception. But some Heritage Harbor homeowners foresee a financial freefall. 

If the golf course continues to lose money, recreational fees, now $50 a month, could run into the hundreds, said Rick St. Pierre, the sole resident on the CDD board. Tamborello fears that the mounting debts could leave the CDD, even one controlled by homeowners, with little choice but to issue a special levy of thousands of dollars per resident. 

St. Pierre wants Lennar to fix the problem by guaranteeing payment of the bonds, and some of the other debts, before the transition to resident control is complete in 2006. 

Lennar executives, who have been negotiating continually with the Heritage Harbor group, say they were trying to resolve the conflict. Residents planned to consider Lennar's latest offer, which they could not describe, over the weekend. 

At the same time, Lennar is trying to shore up the golfing business through aggressive advertising and friendlier service. 

"When all the performance numbers were run on the course in Tampa, the market was significantly better than it was today," Lennar Vice President Craig Johnson said. "The golf course market is overbuilt. That's no secret to anybody. 

"We are working with the homeowners, and we will resolve that issue," he said. "We have a significant investment in that community, as well. We will continue to work to protect that investment as well as address those concerns that homeowners raised with us." 

Sun does not always shine

For Lennar to satisfy the homeowners' concerns, it will have overcome considerable mistrust. 

Part of that mistrust is intrinsic to CDDs, quasigovernments that hand developers vast powers in those initial six years. 

St. Pierre has often complained about difficulties obtaining important financial documents and getting board members to respond to questions. 

Company employees who control the CDDs often meet on weekdays, when working homeowners are elsewhere. They are vulnerable to challenges under Florida's strict open-meetings, or Sunshine Law. In Tampa Palms, activist homeowner Bob Doran was successful in suing his CDD board for Sunshine Law infractions between 1996 and 1999. 

Access is another problem, as critics see it. 

Homeowners cannot simply walk into a town hall to look at documents or arrange an easy appointment with a CDD officials. For example, important Heritage Harbor files are spread all over: the state, the county and the CDD's district office in Coral Springs. 

Residents, preoccupied with adapting to new homes and surroundings, often don't research or understand their CDDs, said Marie York, associate director of the Catanese Center for Urban and Environmental Solutions at Florida Atlantic University in Boca Raton. 

"If the residents want to find out, they can find out," she said. "It's just an extra amount of work. Most residents aren't thinking it's a unit of local government." 

The state approves the larger CDDs. Those governing smaller subdivisions, such as Heritage Harbor and Heritage Isles, go for review before local county commissions. 

In Hillsborough County, the departments of Debt Management and Planning and Growth Management review the developer's site plans and financial statements. Then they issue recommendations to the commissioners. 

Debt Management director Mike Merrill said he had never seen a proposed CDD fail to get a recommendation. Once they are approved, the county essentially considers its job done, he said. 

"We're not overseeing that at all," said Paula Harvey, zoning division director for Planning and Growth Management. "Once the board approves it, they have no responsibility for the success or failure of the CDD. It's not like a DRI (Development of Regional Impact) where they (the developers) have an annual report they have to file." 

Other important financial documents go to the state auditor general, the state comptroller and the Department of Community Affairs. The documents include bond issues, annual budgets and audits. 

But that's where the spotlight dims. No one state or local authority can order a CDD to take corrective action, except in the case of financial emergency. At that point the governor's office may become involved. But Ted Sauerbeck, supervisor of local government audits for the state Auditor General's Office, could not cite a situation in which a CDD was shut down because of a financial emergency. 

The Department of Community Affairs, which oversees planning across the state, is a mere clearinghouse for CDDs. "Our only role is to register them and get them on the list of special districts," said Jack Gaskins, who runs the agency's special district program. "Nobody's ever asked us to undertake any studies or reports." 

Hillsborough County Commissioner Jan Platt said she had been concerned about CDDs for years but added that officials felt hamstrung. 

"The law needs to be changed to cure the lack of oversight and accountability," she said. 

Debt to pay more debt

In an unusual move, Lennar allowed a resident homeowner to fill one of the seats on its five-person board. St. Pierre took the position in September 2001. 

Although frequently frustrated, St. Pierre said he was able to learn about the multimillion promissory notes U.S. Home issued to the same CDD board it controlled. The fact that a $3-million promissory note -- rubberstamped by the CDD earlier this year -- did not appear on any agenda supported his suspicions, he said. 

Discovery of the note alarmed him, and he pressed the company for details. He has reason. Little more than a year before partial control is transferred to homeowners, the CDD owes $7.3-million on the recreational bond and $4.7-million from two promissory notes, he said. 

The debt will go up this year because the golf course keeps losing money, he added. The projected deficit is nearly $600,000. 

What's more, St. Pierre is not convinced that the promissory notes are legal. Governments can issue debt, but promissory notes, which are loans with no maturity date, are not specifically mentioned in the statute, he said. It is one issue homeowners are trying to resolve in negotiations with Lennar. 

"Those promissory notes are blank checks," St. Pierre said. "So any money they lose, they just charge it to us." 

Auditors hired by the developer are raising red flags, as well. 

Grau & Company P.A. in Boca Raton questioned the Heritage Harbor CDD's health after the 2001 fiscal year, the most recent period analyzed. "The District is economically dependent on the developer," the report said, "and . . . ultimate repayment . . . is uncertain at this time." 

Audits for Heritage Isles and Stoneybrook also cited debts at their golf courses. Like Heritage Harbor, the Heritage Isles CDD also borrowed money -- $1.2 million -- from the developer, Grau noted. The CDD is in a "deteriorating financial condition," it said. 

Both Heritage Isles and Stoneybrook make golf course revenues a central part of paying off their debts, despite the stagnant golfing market, the audits said. 

There is nothing any state or local authority can do to force Lennar to address the findings. As long as Lennar controls the CDD, the ball is in the company's court. 

All three CDDs are technically in financial crisis. But Sauerbeck, of the state Auditor General's office, said that didn't mean they would go out of business. 

Still, Sauerbeck would like to see the state have more power in requiring CDDs to fix their balance sheets. A report by the Auditor General's Office this year, surveying the high frequency of unaddressed issues on annual audits, recommended a stronger statute. 

It would have required local governments such as CDDs to set a timetable for addressing financial problems and explain why corrections did not occur. But the proposal did not make it into a government accountability bill. And that effort died before reaching the full Senate. 

The agency "does a review of every audit report we receive," Sauerbeck said. But as for followup, "that's not our responsibility. We have no enforcement. In other words, we can't make a local government comply with the auditors' recommendations." 

Nicholas wonders if lawmakers should have subjected CDDs to more controls. 

"I think in hindsight we should have put more responsibility on the state agencies," he said. "Rather than recording and filing reports, actually getting into oversight. At the time there was talk of . . . bureaucracies sticking their noses where they don't belong." 

In hopes of raising revenue, the Lennar-controlled CDD at Heritage Harbor hired a new manager for its golf course operations. 

Its choice of companies raised a few eyebrows: The CDD hired Lennar. The company will receive $35,000 a year for the work, St. Pierre said. 

Lennar, meanwhile, says its experience with Heritage Harbor, Heritage Isles and Stoneybrook has been a sobering one. Although the company plans to continue building golf course communities, Johnson said that in the future, it will not issue bonds through CDDs to finance the golf courses. 

Beyond the question of Heritage Harbor golf course revenues is the looming debt issue, including the future of the promissory notes, those open-ended loans U.S. Homes extended to the CDD. The district is obligated to pay off its recreational bonds first. But while that happens, one loan is collecting interest at a rate of 2 percent, and another is collecting 8 percent interest. 

Theoretically, surplus golf revenue can whittle away at the debt. Assuming that doesn't happen, options include bankruptcy and selling the subdivision, St. Pierre said. 

Another option is to raise the flat recreational fee all homeowners pay, St. Pierre said. 

However, some homeowners may not be able to pay higher fees, he said. Although the CDD cannot file liens on homes whose owners have not paid the fees, the homeowners association can. 

Homeowners also wonder how, after being shut out of key decisions for so long, they can govern when the day of reckoning comes -- especially if their community is in financial crisis. 

"How do you expect people to take over if they're not up to speed?" Tamborello said. "The brightest guy in the world can't just walk in and take over a situation."