Connerton developer Adam Krug had expected to see new model homes popping up by this time after working out a debt restructuring deal last spring for the sprawling central Pasco community.
Instead, he was reading about the "unfinished town" in USA Today.
Bad publicity is nothing new for Connerton, one of Pasco County's many former cattle ranches that were transformed into upscale communities during the height of the Florida building boom. Like so many others, the Connerton project went into default, and construction stalled after just 256 homes.
But in May, Krug and his Texas-based investment firm, Hayman Woods, had reason to be optimistic. They had won approval from Connerton's community development district to reissue bonds with a delayed payment schedule, but before the deal could close, a new bondholder ground the entire project to a halt.
"In order for the restructuring to be approved, it required unanimous consent from the bondholders," Krug said.
Stew Gibbons, chairman of the district's board of directors, said the "obstructionist bondholder" bought its shares after the board voted on the restructuring deal. "There were six bondholders, and a couple of them sold their interest after the agreement for the restructuring was put in place," he said.
Gibbons, a Connerton resident who also works as a consultant for Hayman Woods, said the developer has three home builders under contract to start construction as soon as the bond deal closed. Hayman Woods was scheduled to pay the district $500,000 it owes for operations and maintenance of the community, but that, too, is on hold.
Homeowner Pete Rundel said he bought his home because he believed in the original developer's vision of Connerton as a "new town," like Disney's Celebration.
"The community in general is frustrated as hell," he said. "We've got all these finished lots sitting here, and nothing's happened for three years."
Rundel attended a recent CDD meeting demanding answers. "What is an obstructionist bondholder?" he asked. "Is that just someone who doesn't want to get screwed again like the one who got screwed before?"
Most of the bonds are held by large investment banks, such as Wells Fargo, Oppenheimer and Goldman-Sachs, in funds that specialize in tax-free municipal bonds. Krug said the firm that bought the Connerton bonds in May was a private equity firm.
"What they want to do is purchase the bonds with the goal of trying to take ownership of the property," he said. "These bonds are not traded very often, so when you have a buyer who doesn't typically buy municipal bonds, they're not buying them for the return on the bonds. They have other goals."
In this instance, the bondholder likely wants to get control of the finished lots and sell them at auction rather than wait for the bonds to mature, Krug said. Hayman Woods is working with the other bondholders and the trustee to complete the restructuring.
"It's been very a frustrating process and evolution," Krug said. "We were on the 2 yard line. It's very unfortunate for the community, the residents and for us, as the owner. We have a very significant investment in Connerton and we're not going anywhere. We're determined to see the project through."