Villages Tax Free Bond Issue Q & A

[cabo35]

I hesitated whether to put this post under one of the two existing threads concerning the Ritchie articles or start fresh without benefit of Ms. Ritchie's perspective. I opted for an independent, stand alone thread unless the administrators bump me back into one of the old threads. In this regard, I hope a distinction of motive separates this thread from the others.

My case simply stated is... not to get back into the useful but opinion driven semantics already posted, but instead generate a sincere effort to become enlightened on the bonding process of which I am blissfully ignorant. I have seen evidence of articulate and knowledgeable posters in the other threads and hope that those infinitely more conversant on the bonding process, as it relates to the Villages, will step forward with information based on some questions I have.

Before any tax-free bond is issued, is there a regulatory agency that must review it for compliance with statutes that govern the bond issue process?
If so and if defective, how did the bond in question pass muster?

Is rating of the bonds before issue a prerequisite to issue? If so, who rates them and do the bonds have to pass some type of litmus test for compliance with regulations? Is there a rating on Villages tax free bonds? If so, would the rater have an obligation to determine the legality of the bond issue and tax free status before applying a rating?

What is the Municipal Securities Rulemaking Board (MSRB)? Is it a government agency that oversees bond issues? Does it have enforcement power? Has it weighed in on the Villages bond issue?

I read that, "the issuer is also obligated to provide continuing disclosure to the marketplace, including annual financial information and notices of the occurrence of certain material events (including notices of defaults, rating downgrades, events of taxability, etc.). Continuing disclosures also are available for free from the EMMA continuing disclosure service." (Wikipedia) Does the Villages issue conform to this obligation?

Are the Villages bonds considered revenue bonds based on a the promise of repayment predicated on a continuing income stream? Does that stream come from assessment (monthly fees) provided by residents of the community?Would the CDD revenue stream be in essence the same as a municipal tax called by a different name?

One of my questions remains. If the issue of bonds in this case were questionable, why wouldn't the defect have surfaced before the issue of the bonds?

This is a sincere request for input and enlightenment. I hope others air questions and answers in the hope of generating constructive, enlightened facts and answers that put the controversy into perspective and strip it of its annoying itch to those Villagers with varying degrees of concern. Knowledge is a powerful intellectual aphrodisiac.

[jannd228]

I hesitated whether to put this post under one of the two existing threads concerning the Ritchie articles or start fresh without benefit of Ms. Ritchie's perspective. I opted for an independent, stand alone thread unless the administrators bump me back into one of the old threads. In this regard, I hope a distinction of motive separates this thread from the others.

My case simply stated is... not to get back into the useful but opinion driven semantics already posted, but instead generate a sincere effort to become enlightened on the bonding process of which I am blissfully ignorant. I have seen evidence of articulate and knowledgeable posters in the other threads and hope that those infinitely more conversant on the bonding process, as it relates to the Villages, will step forward with information based on some questions I have.

Before any tax-free bond is issued, is there a regulatory agency that must review it for compliance with statutes that govern the bond issue process?
If so and if defective, how did the bond in question pass muster?

Is rating of the bonds before issue a prerequisite to issue? If so, who rates them and do the bonds have to pass some type of litmus test for compliance with regulations? Is there a rating on Villages tax free bonds? If so, would the rater have an obligation to determine the legality of the bond issue and tax free status before applying a rating?

What is the Municipal Securities Rulemaking Board (MSRB)? Is it a government agency that oversees bond issues? Does it have enforcement power? Has it weighed in on the Villages bond issue?

I read that, "the issuer is also obligated to provide continuing disclosure to the marketplace, including annual financial information and notices of the occurrence of certain material events (including notices of defaults, rating downgrades, events of taxability, etc.). Continuing disclosures also are available for free from the EMMA continuing disclosure service." (Wikipedia) Does the Villages issue conform to this obligation?

Are the Villages bonds considered revenue bonds based on a the promise of repayment predicated on a continuing income stream? Does that stream come from assessment (monthly fees) provided by residents of the community?Would the CDD revenue stream be in essence the same as a municipal tax called by a different name?

One of my questions remains. If the issue of bonds in this case were questionable, why wouldn't the defect have surfaced before the issue of the bonds?

This is a sincere request for input and enlightenment. I hope others air questions and answers in the hope of generating constructive, enlightened facts and answers that put the controversy into perspective and strip it of its annoying itch to those Villagers with varying degrees of concern. Knowledge is powerful intellectual aphrodisiac.

English teacher here, look forward to answers from others who have knowledge

:BigApplause:

[JimJoe]

My question has always been why didn't the issuer of the bonds get a private opinion letter from the IRS that the bonds qualified to be tax free BEFORE they were issued?

[Bob45]

My question is: Why wouldn't all the agencies that approved the bonds be held accountable?

[cabo35]

English teacher here, look forward to answers from others who have knowledge

:BigApplause:

Yikes.....I'm being evaluated by a professional English teacher! I will have to double the spell check effort. Is there a grammar check? Sometimes the thought processes get ahead of the keys strokes and the result can get confusing. Occasionally the context of my posts take license with the rules of the King's English. With those preemptive disclaimers, I hope my grade will not arbitrarily be lowered.

I agree jannd. I really hope the thread receives some solid, informed answers as well as more relevant questions like those offered by Bob45 and JimJoe.

TOTVers, feel free to add to the questions or post your best effort at answering any or all of the questions being submitted by your friends and neighbors.

[Bogie Shooter]

Cabo, great post. I wish you would have asked these questions a year a go. I do not know the answers to your questions, however, I look forward to reading the answers.....more so than the non-fact based opinions, guesses that we have been reading.

[swrinfla]

Generally, I try to avoid subjects like this, because I'm never quite sure what the facts are, and certainly have no clue about who's going to take a "political" stand! :wave:

On this "hot button" issue about the IRS and The Developer, my gut tells me that the whole matter will go away - at least until it comes up again in some five years or so!

I remain convinced that individual Villagers will NOT, repeat NOT, be personally affected, whatever the outcome. It's remotely possible that The Developer (that is, of course, the Morse family) will be "damaged" by an adverse ruling, but I'm strongly inclined to doubt that anything will happen!

SWR
:beer3:

[Bogie Shooter]

More opinion, no answer to questions.

[villa2]

More opinion, no answer to questions.

Do more research.

[spk7951]

I hesitated whether to put this post under one of the two existing threads concerning the Ritchie articles or start fresh without benefit of Ms. Ritchie's perspective. I opted for an independent, stand alone thread unless the administrators bump me back into one of the old threads. In this regard, I hope a distinction of motive separates this thread from the others.

My case simply stated is... not to get back into the useful but opinion driven semantics already posted, but instead generate a sincere effort to become enlightened on the bonding process of which I am blissfully ignorant. I have seen evidence of articulate and knowledgeable posters in the other threads and hope that those infinitely more conversant on the bonding process, as it relates to the Villages, will step forward with information based on some questions I have.

Before any tax-free bond is issued, is there a regulatory agency that must review it for compliance with statutes that govern the bond issue process?
If so and if defective, how did the bond in question pass muster?

Is rating of the bonds before issue a prerequisite to issue? If so, who rates them and do the bonds have to pass some type of litmus test for compliance with regulations? Is there a rating on Villages tax free bonds? If so, would the rater have an obligation to determine the legality of the bond issue and tax free status before applying a rating?

What is the Municipal Securities Rulemaking Board (MSRB)? Is it a government agency that oversees bond issues? Does it have enforcement power? Has it weighed in on the Villages bond issue?

I read that, "the issuer is also obligated to provide continuing disclosure to the marketplace, including annual financial information and notices of the occurrence of certain material events (including notices of defaults, rating downgrades, events of taxability, etc.). Continuing disclosures also are available for free from the EMMA continuing disclosure service." (Wikipedia) Does the Villages issue conform to this obligation?

Are the Villages bonds considered revenue bonds based on a the promise of repayment predicated on a continuing income stream? Does that stream come from assessment (monthly fees) provided by residents of the community?Would the CDD revenue stream be in essence the same as a municipal tax called by a different name?

One of my questions remains. If the issue of bonds in this case were questionable, why wouldn't the defect have surfaced before the issue of the bonds?

This is a sincere request for input and enlightenment. I hope others air questions and answers in the hope of generating constructive, enlightened facts and answers that put the controversy into perspective and strip it of its annoying itch to those Villagers with varying degrees of concern. Knowledge is a powerful intellectual aphrodisiac.


To start with I would say that you have some very good questions of which I would certainly like to know the answers to. With that said my question would be have you addressed these questions to Janet Tutt? For me that would seem to be the place to start.

[graciegirl]

P is right. This thread should be kept for questions.

[Pturner]

Yikes.....occasionally the context of my posts take license with the rules of the King's English.

TOTVers, feel free to add to the questions or post your best effort at answering any or all of the questions being submitted by your friends and neighbors.

What's Gary's English got to do with it? Sorry, sometimes my weird sense of humor gets the better of me.

Cabo, I think your questions are excellent. I applaud your rational and fact-based approach. Since there are other very good threats for posting opinions on this topic, I hope posters will honor your request for this thread to remain devoted just to fact-based questions and answers. Otherwise, factual answers will get lost among pages and pages of opinions, wise as many of them will be.

Additional questions:


If "continuing disclosure to the marketplace" is required, is this sent only to bond holders, or must it be published and made available in public locations?
What financial agency/agencies handled the bond sale(s) and what, if anything, is that agency's or agencies' responsibility to the bond buyers to assure the legitimacy of the bonds?
If the bonds are rated, what is the rating and has it changed over the life of the bonds?
Is there a published list of the bondholders?

BTW, I don't worry about the IRS issue. I'm a journalist. I love facts.

[Pturner]

Over what periods of time were the bonds in question issued?
Is there a statute of limitations on the IRS challenges?
Will similar bonds be issued to purchase amenities in the third town center?

[Endless Summer]

If someone purchases a property on which the bond is paid does the new owner become the bondholder and become subject to the decision of the court?

[Pturner]

If someone purchases a property on which the bond is paid does the new owner become the bondholder and become subject to the decision of the court?

Hi Sue & Gene,
I know the answer to that one. The bonds being questioned by the IRS are NOT the one-time bonds on the new houses. The bonds in question were sold to commercial bond investors, not homeowners.

BTW, Welcome to TOTV!

[Endless Summer]

Pturner, thanks for the info and good news! We're coming in Oct. for the lifestyle preview. But, I know this is where we want to live....See you all soon!:wave: -Sue

[iaudit]

Hi Sue & Gene,
I know the answer to that one. The bonds being questioned by the IRS are NOT the one-time bonds on the new houses. The bonds in question were sold to commercial bond investors, not homeowners.

BTW, Welcome to TOTV!

Just to clarify, all of the bonds sold by Central CDD's and the numbered CDD's were sold as tax free to bond investors, not the homeowners. The central CDD's are paying off their bonds by using the amenity fees that we pay every month. The numbered CDD's are paying their bonds from the payments that the homeowners make once a year, unless, the homeowner has chosen to pay off their bond liability early. The IRS is not questioning the bonds issued by the numbered CDD's, only the central CDD's.

[cabo35]

Thanks for submitting some good questions. I had hoped for some informed answers from the vast body of talented Villagers with expertise in the bonding or financial arenas. Perhaps restating the questions asked will motivate the posting of some answers. Here goes.......

Before any tax-free bond is issued, is there a regulatory agency that must review it for compliance with statutes that govern the bond issue process?
If so and if defective, how did the bond in question pass muster?

Is rating of the bonds before issue a prerequisite to issue? If so, who rates them and do the bonds have to pass some type of litmus test for compliance with regulations? Is there a rating on Villages tax free bonds? If so, would the rater have an obligation to determine the legality of the bond issue and tax free status before applying a rating?

What is the Municipal Securities Rulemaking Board (MSRB)? Is it a government agency that oversees bond issues? Does it have enforcement power? Has it weighed in on the Villages bond issue?

I read that, "the issuer is also obligated to provide continuing disclosure to the marketplace, including annual financial information and notices of the occurrence of certain material events (including notices of defaults, rating downgrades, events of taxability, etc.). Continuing disclosures also are available for free from the EMMA continuing disclosure service." (Wikipedia) Does the Villages issue conform to this obligation?

Are the Villages bonds considered revenue bonds based on a the promise of repayment predicated on a continuing income stream? Does that stream come from assessment (monthly fees) provided by residents of the community?Would the CDD revenue stream be in essence the same as a municipal tax called by a different name?

If the issue of bonds in this case were questionable, why wouldn't the defect have surfaced before the issue of the bonds?

Why didn't the issuer of the bonds get a private opinion letter from the IRS that the bonds qualified to be tax free BEFORE they were issued?

Why wouldn't all the agencies that approved the bonds be held accountable?

Have you addressed these questions to Janet Tutt? For me that would seem to be the place to start.

If "continuing disclosure to the marketplace" is required, is this sent only to bond holders, or must it be published and made available in public locations?

What financial agency/agencies handled the bond sale(s) and what, if anything, is that agency's or agencies' responsibility to the bond buyers to assure the legitimacy of the bonds?

If the bonds are rated, what is the rating and has it changed over the life of the bonds?

Is there a published list of the bondholders?

Over what periods of time were the bonds in question issued?

Is there a statute of limitations on the IRS challenges?

Will similar bonds be issued to purchase amenities in the third town center? [/quote]

I have seen some great input in other forums and other threads from TOTVers who are articulate and knowledgeable about many financial matters includiing bonds. Please feel free to jump in, share and post some educated and informative responses to questions in this thread. I am certain your effort will be appreciated.

In response to one question......Janet Tutt.....are you out there? Perhaps you can shed some light on some of the questions. We would certainly appreciate your input.

[beartrack]

Cabo, this is without question the best thread on this topic so far. I applaud your effort ( and your grammer ) on this topic. You are correct in asking Janet Tutt, who in my experience with her seems to be a very reasonable and intelligent professianal but, rather then rely on her reading of posts on TOTV, may I suggest that you email your well written query's directly to her office. Her answer's posted here, would be of great benefit to us all. Cudo's to you for your effort here to enlighten us all.

[Bogie Shooter]

Cabo, this is without question the best thread on this topic so far. I applaud your effort ( and your grammer ) on this topic. You are correct in asking Janet Tutt, who in my experience with her seems to be a very reasonable and intelligent professianal but, rather then rely on her reading of posts on TOTV, may I suggest that you email your well written query's directly to her office. Her answer's posted here, would be of great benefit to us all. Cudo's to you for your effort here to enlighten us all.

FYI janet.tutt@districtgov.org.