Quote:
Originally Posted by villagerjack
Perhaps, but if the legal opinion attached to the bonds highlighted the risk, and I do not know what it said, then it should be at the risk of the purchaser. In addition, those bondholders who bought years ago and held would probably have little or no loss since interest rates declined substantially. But you are likely correct. This will not be over for quite a while.
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As I pointed out before, the District covenanted take whatever steps are necessary to maintain the tax exempt status of the bonds. I loosely referred to to the effect of that covenant as a "tax-exempt warranty", in a previous post, because that is what it amounts to. If the District breaches that covenant by failing to maintain such tax exempt status and the bondholders have to pay taxes, the District would seem to be clearly liable to the bondholders. This is also pointed out, but not expained, in the Orlando Sentinel article of today.
What gives you the idea that the bondholders have "assumed the risk"? Have you now read the official statements for the bonds that I previously referred you to? If not, you may wish to do so, before reasserting your assumption-of-risk or any other theory.
By the way, I would be happy, as a Villager, if you are right and the District could find some way to avoid such liability. If, after you read the bond documents, you come up with a way (e.g., some actual basis for your assumption-of-risk theory), you might want to pass your idea on to the District. If you have such a way already, it is to bad you didn't tell the District a long time ago. You could have saved it hundreds of thousands of dollars in attorney fees.