I have owned these bonds since 2008 and they fit for me a good part of my tax free portfolio. The bonds that were being questioned by the IRS were the Recreation Bonds issued by the Villages but that objection has been dropped a few years back.
The Community Development Bonds are NOT the Recreation Bonds. These are the bonds that are attached to each and every new house in The Villages that pay for the infrastructure supporting that particular VCCD District. They are not insured BUT you and I live here and you certainly dont see many foreclosures on homes never mind people not paying their bonds. In fact many people pay these bonds back early. You are guaranteed the first 5 years of interest payments which are made twice a year. After the first 5 years depending upon how many of the bonds have been prepaid by the homeowners in that District, the VCCD can randomly call via a lottery system which particular bond (in $5K increments) to call in early at par. SO if you paid 100 for the bond you would get 100 back...if you paid 95 for the bond you would get 100 back. It is very likely the vast majority of these bonds will be called in 10 years from issue date...ie never reach maturity ..you in essence are getting long term rates with a good chance it will be a short term play ie less than 10 years.
I have tried to buy these bonds either as new issue or on the after market from 3 different brokers...they could not get them. Note these bonds will fluctuate in price but you will not lose any money (unless you sell below par) but you will still get your semi annual dividend payment Federal TAX FREE. If you bought the bonds at par(100) or less you will at least get your money back when or if the bonds are ever called early or even at the 10 year mark.
These Bonds can be bought through FMS BONDS in Boca Raton Contact Edie Nasello at 1-800-741-1103. They get a good majority of these after market bonds via estate settlements.
BTW...with bond funds (Vanguard/Fidelity etc) you can lose money if interest rates rise because you have no specific maturity date upon which the individual bonds can be redeemed.
Any questions on these bonds send me a PM.
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