[EdV]

Yesterday I threw some numbers up in an attempt to get a rough handle on the true cost of the IRS case against the VCCDD. But I wasn’t including an estimated true cost of calling all of the outstanding tax-free bonds and re-issuing them as taxable bonds. That amount could be anybody’s guess.

But there’s another option available. The developer and his two special CDDs could agree that in addition to paying the back taxes from 2009 with interest, they could agree to pay the IRS the taxes that would be due on the interest paid to the bondholders each year. This solution has the additional benefit of spreading the payments out over the next twenty years and avoids the complicated and messy task of recalling and reissuing all those bonds.

I of course cannot predict whether this will be a viable solution to all parties, but I can run the numbers to come up with a rough figure for the total cost.

So in the attached spreadsheet I’ve made the following assumptions:

I’ve included bond payment data from both districts.
A tax rate for the prior years (2009-2012) of 20% negotiated down from the 29% the IRS traditionally proposes.
A tax rate of 18% for the remaining years of the outstanding bonds.

What I come up with is an initial settlement of around $11 million paid to the IRS on acceptance of the agreement and then an additional $29 million paid to the IRS over the next twenty years or so.

Pure speculation no doubt, but at least something to think about.