Quote:
Originally Posted by katezbox
Hi JimJoe,
By "pure" profit I meant profit from just the construction and sale of a facility and it's appreciation. I maybe did not use the best of terms. (Too sad at having left TV yesterday and having to go back to work  ).
A facility like the Savannah Center will generate money that Villagers pay to attend events there. If the developer retained that property he would earn the profits from the revenues (less expenses) that it generates. By selling it, he knows it has a value beyond the brick and mortar in the profit stream it will bring. |
Kate, I don't understand. . You chose the Savannah Center to discuss future revenue earnings.. Do you really think it is that profitable? Even if true.. explain what the revenue earnings are for golf courses, pools, tennis courts, softball courts, etc that can only be used by residents and their guests, renters, and lifestyle previewers, at no cost beyond the amenities fee. Was a "profit" including future earnings made on those too? Isn't the main problem the IRS has that this "profit" is being for a non public purpose and therefore should not be tax free? Wasn't the increased value to the surrounding land the "profit"? Do you count the amenities fee as future revenue earnings? I don't think villagers think those fees were intended to be for profit nor do they think that they were marketed that way. If the district bought the land and paid for "future earnings profits", who is getting those profits now after it was purchased? And where is that money going? How can a seller claim the price of property upon which a village amenity was built reflects their hard work that would generate future earnings when at the time they were built the amenity apparently could never have any future earnings because only the villagers and the invited would use them forever at no cost beyond the cost of maintaining them with the amenities fee? I thought the golf courses, pools, tennis courts etc will be here for the villagers as long as the amenity fees are paid and they will not be sold and run for profit in the future? Doesn't the advertisement say "play golf free the rest of your life"? If I am right , there would be no future earnings. The amenities fee should only reflect the cost of acquisition and maintenance. If I am wrong, I am more confused than ever.
On your first post you talked about the cost to villagers if the IRS preliminary ruling stands. You did not address the question who pays the cost if bond holders are charged interest and penalties by the IRS for the years the bonds are denied tax exempt status. Those bonds go back several years. Who pays that and how much can interest and penalties be on those bonds if they are denied tax free status? If they did get IRS approval why are they reviewing it now?
I appreciate your expertise and hope you can clear those up for me. Thanks.