My name is Joe Gorman and I am the president of the POA (The Property Owners’ Association of The Villages, Inc.). I am responding to the many postings on local Forums that have voiced concern and questions about the recent Lauren Ritchie columns in the Orlando Sentinel about the IRS investigation of bonds issued by the Central District government here in The Villages.
Ms. Ritchie’s recent columns are informative, but they contain several errors that may be unnecessarily alarming to our residents. These are a few of the errors:
First, the calculation of $18,000 as being the average debt per person in The Villages is a meaningless number. This is equivalent to listing the total US debt of $10.9 trillion, dividing it by the US population, and then quoting the average per capita debt of $37,875. We will not be asked to immediately pay either the $37,875 in the US or the $18,000 in The Villages. Any debt incurred to purchase common property from the developer is being paid off in an orderly manner as a part of our monthly amenity fees.
Second, the monthly amenity fee cannot be increased to an unreasonably high number because the amenity fee increased is capped at the increase in the Consumer Price Index in the previous 12 months on an individual basis.
Third, the Central Districts cannot impose any taxes or assessment on residents, because the Chapter 190 law that regulates Community Development Districts (CDDs) prohibits a central district from assessing or taxing anyone outside its geographic boundaries.
For any resident concerned about this IRS investigation, we would direct you to the article on page 4 of our March issue of the POA Bulletin (available on the POA website
www.poa4us.org) which states the following:
"We have received numerous questions about the IRS investigation of the VCCDD and the tax-exempt bonds issued by it to finance the purchase of common property north of Hwy. 466 from the developer.
"This was written up in a two-part commentary by Lauren Ritchie in the Orlando Sentinel in September, 2008. These [older] Ritchie columns are still available on the Internet. [Two new columns have just been written by Ms. Ritchie and are what you have read most recently.]
"Basically, the IRS questioned whether the bonds were issued properly, whether the valuations were correct, and whether the interest being paid qualified to be tax-exempt.
"The IRS investigation has thus far resulted in a preliminary summary of findings which questions the details of the bond issue. The VCCDD has been asked to respond to the analysis. Thus, the whole matter is in the very early stages of review and it could be many months before we hear anything definitive.
"Some of the inquiries to us questioned what effect an adverse ruling would have on us, on the developer, and on the bonds with the related interest. Again, it is just too early to give a definitive answer, much less even speculate on the outcome.
"We feel that if there is any potential adverse effect for us, the developer will exercise the same good judgment and concern for the residents that he exhibited in the lawsuit settlement in early 2008 and do what he can to protect this community and its residents. We are hopeful that, if the worst case scenario occurs, the developer will do the right thing for the residents. And, we encourage residents to support the efforts of the developer and the VCCDD to resolve any issues.
"As we hear more, we will report developments in future issues of the Bulletin."
In closing, it should also be noted that the IRS did investigate the bonds once before in 2003 and found no problem. Also, the CDD financing technique in question is used regularly by many of the over 600 CDDs in the state.
The IRS investigation is in a preliminary stage and has so far just asked for comment from our Central District on the initial assessment by an IRS investigator. The comment of the Central District is expected in a few weeks (late March) and after that there will be a response from the IRS.
It is much too early to speculate on any outcome, and many of the speculative postings here, as well as Ms. Ritchie’s columns, are unnecessarily alarmist. It is possible that a more careful consideration by the IRS will result in no significant financial impact on our community.
We would ask Villagers to stay informed, understand the issues, don’t jump to conclusions, and wait until more definitive information is available.
And, as the POA Bulletin article pointed out, we expect that the developer of The Villages will act to protect the residents of The Villages however possible. The developer wants to build-out The Villages and sell houses. He doesn’t want a cloud of financial uncertainty hanging over the heads of residents which would impact the selling effort. So, we trust that the developer will do what is right for us.
Thanks for reading this. If you have comments for me on any of this, you can respond on this Forum or on the POA Forum at
www.poa4us.org. We will also be discussing any new developments during the Open Forum section of our monthly meetings on the third Tuesday of the month at Laurel Manor rec center.