Advogado
01-06-2011, 02:22 PM
Has anybody figured out the implications for Villagers of this Official Statement regarding the issuance of tax free bonds by the North Sumter Utility Dependent District?
http://emma.msrb.org/EA446587-EA346613-EA742508.pdf
Frankly, I have not figured it out, but it looks as though the Developer's Utility Company is going to sell its water system to a special governmental district that is also controlled by the Developer and then have the district issue tax-exempt bonds to pay for the purchase. This is the same type of transaction now under investigation by the IRS, with the IRS alleging that the assets were grossly overpriced in the transactions under investigation. The alleged overpricing with respect to the Developer's sale of recreational assets to the Center Districts is also the same issue that led to the class-action lawsuit against the developer (which the Developer finally settled for $43 million).
Hopefully, the water-system assets here are going to be priced on an arm's-length basis. Otherwise (apart from a whole new potential IRS issue), our water bills will sky rocket. The numbers in the Official Statement are disturbing, indicating debt-service costs to each home of about $600/year. I.e., $12,000,000 principal + interest / 20,000 homes. This comes out to $50 a month per home, and that $50 will not cover the actual cost of the water and of operating expenses.
Does anybody have a full understanding of what is going on?
http://emma.msrb.org/EA446587-EA346613-EA742508.pdf
Frankly, I have not figured it out, but it looks as though the Developer's Utility Company is going to sell its water system to a special governmental district that is also controlled by the Developer and then have the district issue tax-exempt bonds to pay for the purchase. This is the same type of transaction now under investigation by the IRS, with the IRS alleging that the assets were grossly overpriced in the transactions under investigation. The alleged overpricing with respect to the Developer's sale of recreational assets to the Center Districts is also the same issue that led to the class-action lawsuit against the developer (which the Developer finally settled for $43 million).
Hopefully, the water-system assets here are going to be priced on an arm's-length basis. Otherwise (apart from a whole new potential IRS issue), our water bills will sky rocket. The numbers in the Official Statement are disturbing, indicating debt-service costs to each home of about $600/year. I.e., $12,000,000 principal + interest / 20,000 homes. This comes out to $50 a month per home, and that $50 will not cover the actual cost of the water and of operating expenses.
Does anybody have a full understanding of what is going on?