Quote:
Originally Posted by EdV
I decided to do a little exercise to get an approximate value of the penalty that might be involved if the VCCDD decides to negotiate a settlement with the IRS.
The press loves to throw the 355 million dollar figure around because it turns head and sells newspapers. But the truth is that the IRS is only staking a claim on the taxes that should have been paid on the interest by the bondholders if the bonds had been issued as taxable municipal bonds.
Keep in mind that these are very rough estimates for discussion purposes (see the attached images). So I looked up the budgets that have been posted for the VCCDD in the current and recent years and with some extrapolation was able to construct a table of values representing the interest paid by the VCCDD starting back in 2003 and continuing through 2012.
Next I computed the tax based on a 29% tax rate. That is rate purported to be the rate that the IRS uses in settlement discussions as reported on page 12 of this document. And finally I added in the interest rate that the IRS used during those years. This yielded the sum total of 43 million dollars in uncollected taxes with interest.
However, if the VCCDD were to refuse to negotiate a settlement and the IRS were forced to go after the bondholders, the statute of limitations limits them to going back only 3 years prior to the year they notify the taxpayer of the deficiencies. So I recomputed the values based on that and come up with a new figure of around 13 million dollars owed to the IRS.
So if a negotiated settlement is reached, I’m guessing it will be in the 10-12 million dollar range.
Now this does not include the actual cost to the VCCDD for buying back the outstanding bonds at their present value and issuing new taxable Muni bonds. But keep in mind that the VCCDD has already paid off over fifty million of those bonds in principal payments to date. |
Quote:
Originally Posted by rubicon
The core issue here is the viability of the IRS claim regarding the poltical status of the district as qualifying for tax-exempt status and what each of the respective parties have a financial interest will do.
As to the actual transactions one should look to the Notice of Proposed Issue because it explains how and why the IRS came to their conclusions. what Iam leading up to is if in fact residents are left with this mess an obvious class action is going to take place. If that happens then it is going to be encumbent on the residents to argue that point because if the assets were over valued then the district purchased more in bonds needed to cover the sale.
My response to glowing praise of the Developer since 2006 have been consistent. I understand business but in doing my due deligence since moving here a common theme in the Developer's methods of operating left me uneasy. I do not want to be right here. I mention this only as a caveat because I am still seeing some well meaning people continuing these glowing praises. To my way of thinking residents need to shift their thinking to one of self preservation.
Most of us paid for a house, land that it rests on and a bond for the initial infrastructure. We pay monthly amenity fees, taxes and other fees. We may be asked to pay taxes and penalities for a bond issue that according to the IRS finding wasn't even in control by the District which is suppose to protect us and hansomely benefited the Developer.
On that add the fact that it now brings into question the remaining financing method of completing the build out.
No one knows the outcomes nor the amounts involved what we do know is that those people (person) in charge has left us all with a stomach ache
I believe the POA needs to establish a series of meetings so that residents can gaher and exchanged ideas...Perhaps someone close to POA officials can make that suggest.
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How about doing a "little exercise" on the value of homes in the Villages over the last Downturn and compare them with the value of homes during the downturn with other similar developments, say like Stonecrest or Del Webb for example.
I still own a home in a Del Webb project in South Carolina. The value of that home is about $100,000 less than it was in 2007. In fact it was listed originally with a realtor (his value) for $365,000 and now I am lucky if i can get $240,000 or less for this 2040 s/f home with a wooded view close to all amenities. The value of my home in The Villages would list for $335,000 for a Golf Course CYV with just 1600 s/f. I paid just over $300,000 for that home. THAT is attributed to the way the Morses run things here. The trouble with some of these so called analyses is that they analyze everything, concentration on what they perceive to be negative issues. Even if had to pay a penalty, I am still way ahead of the game