Property owners at The Cliffs Communities have an extra incentive to provide their developer with $100,000 or more in financing -– a waiver of dues. That little pot sweetener turns an effective rate of 7% interest into something more like 14% for those who intended to pay dues over the seven year term of the loan. The money is intended to help the developers finish a Tiger Woods designed golf course and other promised amenities.
According to a Cliffs property owner who attended meetings with developer and Cliffs founder Jim Anthony and his staff over the weekend, “the members seem strongly supportive” of the request for a total minimum $60 million in loans. The property owner wrote me that, “I’ve heard some folks are putting in really big money. In today’s market,” he added, “a seven-year ‘note’ paying roughly 14% per year sounds pretty good.” Our contact calculated the 14% overall rate based on expected 4% annual increases in dues.
The bond offering is on a first-come, first-served basis, and our contact predicts the offering will be fully subscribed and that “members who send in their money too late” may be out of luck. Owners have until the end of the month to subscribe to the offering.
Other high-end golf community developers will be keeping a close eye on The Cliffs to see if this turns out to be a trend-setting approach to financing planned developments.