Quote:
Originally Posted by Lauren Ritchie
Stantheman,
there's no "conflict" between florida law and federal law because they address different things.
florida law creates a community development district and gives it power to issue bonds. i do not believe the law says does not say "tax exempt bonds."
the federal tax codes specify what makes a bond issue meet the test of "tax exempt." the IRS is applying the code to this issue and saying that it doesn't meet the test.
the district's defense is that it is a government under florida law and as such, it should be able to issue tax-exempt bonds.
the IRS says that argument is specious. its response: 'well, you might be a government under florida law, but state law doesn't matter to us when determining whether bonds are tax exempt. the two do NOT necessarily go together.'
that is what the agent meant when when he declared that the district's attorney archie lowry had made an "irrelevant" argument.
the IRS has a set of tests that it applies to any bond issue anywhere in the united states. pass, and it's tax-exempt. fail and it's not.
so, at the end of the day, these bonds could be declared formally as taxable and the district is still just as much a valid government under florida law as it was yesterday.
hope that helps.
--lauren
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Lauren,
Thanx for your response - very helpful. Again on a pure speculative point - facilities have not yet been sold for an area that we consider to be from RT 466, south to Route 466A an area larger than what the existing bond offerings had previously covered with alot more facilities (rec centers, golf courses, pools, etc.), and people.
Based upon what we know today would Mr. Morse be able to sell those facilities in the future to the VCDD on the same projected revenue basis as the previously contested facilities and prices?
My guess says Mr. Morse settles the issue, pays the penalty, reimburses the VCDD for the difference in interest rates between tax-free and taxable bonds for the 2003 facilities sales , and establishes a more defendable yet profitable evaluation process going forward for a considerable amount of future facilities sales.
Resulting Outcome:
- cost to settle is minimal compared to revenue that was generated from this 2003 offering and all previous facility sales
- residents are made whole as no increase in costs or increase in amenity fees resultng from change in tax status on new bond issue
-future facility sales are not put in jeopardy since the whole world will be watching closely for any unsubstantiated evaluation as well as requirement for arms length transaction
- future home sales not effected since whole issue has been resolved
your thoughts?
thanx