What I find interesting is the apparent IRS contention that the CDD paid more for the properties for which the bonds were issued than the FMV. If that is upheld through the tax court process, then it seems to me that the CDD (representing the residents) may have a claim against the developer for the excessive price, since there is surely a duty to assure that tax free bonds are legally issued. If the the bonds were not legally issued (by being in excess of the FMV), I suspect the developer would have some liability. I'm sure this avenue will be explored before the residents get stuck with any additional liability, if the tax free status is revoked should the IRS prevail. I don't think the developer could illegally profit at the expense of the CDD (residents), if the developer cannot sustain the FMV of the properties for which the bonds were issued. Sounds like a lot of legal fees in someone's future.