[villages07]

Ms Richie is talking about the Recreation Bonds that are used to purchase amenity facilities (Rec Centers, golf courses, etc) from the Developer. We pay our amenity fees to the Central commercial Districts (Sumter or Villages Central districts). These central districts are run by a board essentially appointed by the developer. These districts establish budgets for the amenity fees. Approx 60% of our amenity fees go to payoff the recreation bonds. The other 40% goes to ongoing maintenance and operations of the amenities. I believe it is these recreation bonds that are in question by the IRS as to whether they are floated for a municipal govt and hence should be tax free. Whether they are tax free or not affects how marketable they are up front and what interest rate they will be floated for. Not tax free then higher interest rate and more expense for us to pay back.

There is a whole separate issue on whether the cost that the central CDDs agree to pay for amenity purchases is fair value or not. I have some concerns about these terms as well since those agreeing to the purchase price with the developer are appointed by the developer. But, this issue is different than the IRS investigation.

The bond each of us pays on our homes is a differnent bond...it paid for the upfront infrastructure in our neighborhoods. These are considered tax free municipal bonds and I don't believe they are in question.