I.R.S. Rules Against The Villages

[downeaster]

I have followed this thread fairly closely with great interest. One item does not seem to have been discussed. That is the bondholders. There was some mention of mutual funds but nothing definite.

Is it possible to obtain the name (s) of bondholders?

Are we to believe mutual funds would invest blindly in tax free bonds without making certain they were valid?

Is it conceivable the bonds were purchased by a smaller entity? Maybe a private sale?

A lot of tax free money has been made by someone. Now are the bondholders are going to be told it wasn't tax free? Will they be liable to pay the tax along with penalties?

There have been many intelligent and thought provoking posts on this thread. I would like to hear your thoughts on my questions.

[nitehawk]

So whats the big deal----issue more bond to pay the ruling against the villages - and start all over again - let the residents buy them. call them kool aid coupon bonds

[Advogado]

So whats the big deal----issue more bond to pay the ruling against the villages - and start all over again - let the residents buy them. call them kool aid coupon bonds
Why it's a big deal has already been explained numerous times in this thread, in the POA Bulletin, and in various newspaper (other than the Daily Sun) and magazine articles. It's nothing to joke about.

[EdV]

Per the second paragraph of my last post, I am in violent agreement with you. However, the validity of the purchase price is very relevant in other contexts, as evidenced by the class action suit against the Developer. Thus, if you will excuse the pun, equating it to a dead horse may be overkill.

I did not mean to imply that the manner in which the VCCDD spends the amenity funds is of no importance to the residents. Quite the contrary. If anything, that should be the subject of a separate thread topic.

I was simply trying to get us back on topic and focused on the direction that the IRS is headed with their investigation and what effect it might have on the residents of TV.

[Advogado]

I have followed this thread fairly closely with great interest. One item does not seem to have been discussed. That is the bondholders. There was some mention of mutual funds but nothing definite.

Is it possible to obtain the name (s) of bondholders?

Are we to believe mutual funds would invest blindly in tax free bonds without making certain they were valid?

Is it conceivable the bonds were purchased by a smaller entity? Maybe a private sale?

A lot of tax free money has been made by someone. Now are the bondholders are going to be told it wasn't tax free? Will they be liable to pay the tax along with penalties?

There have been many intelligent and thought provoking posts on this thread. I would like to hear your thoughts on my questions.
Here is a very interesting article that partially answers some of your questions:Billionaire Morse (http://1040taxplusservices.com/billionaire-morses-florida-dirt-bonds-not-tax-exempt/)

It sets forth some very interesting information, of which I was not previously aware, e.g.:
At least $955 million of Morse�s fortune comes directly
from money paid to him from the issuance of tax-free municipal
bonds � including the bonds ruled taxable by the IRS, according
to data compiled by Bloomberg from an analysis of 38 bond-offering statements since 1992.

Wow, our tax dollars (or, more precisely, tax subsidies or loopholes) at work. It makes you think that Congress ought to be taking a close look at who, if anybody, should be able to issue tax-free bonds. Maybe there is something to be said for eliminating them altogether, an idea that is currently being kicked around in Congress.

[villages07]

Advo.... that $955M might be the total of bonds issued ... utility, infrastructure, and amenity ... but, certainly, folks realize that not every dollar of bond issue went into the Developers bank account. The bonds were issued to construct the infrastructure, construct the wastewater treatment facilities, construct golf courses and rec centers, etc. Those costs are a substantial part of the $955M, the developers net profit the remainder.

As to the question of bondholders.... most of the original bond purchases were done by mutual funds, hedge funds, and other high dollar or institutional investors. Over time, these entities have sold off bonds that have been purchased by smaller individual investors, so there is a mix.

I have purchased the numbered district CDD bonds from the resale market. I declined an opportunity to buy 5% tax free recreation/amenity bonds because of the uncertainty with the IRS investigation.

I can understand the IRS's concern about a developer controlled board issuing tax-free bonds...it does seem to stretch the definition of local government. I don't understand why this wasn't addressed when the bonds were first issued. The valuation method used for the amenities can be argued from all sides... the good news is future purchases of amenities will undergo much closer scrutiny.

Time will tell how this gets resolved. No reason to panic, but, good reason to stay informed.

[graciegirl]

Advo.... that $955M might be the total of bonds issued ... utility, infrastructure, and amenity ... but, certainly, folks realize that not every dollar of bond issue went into the Developers bank account. The bonds were issued to construct the infrastructure, construct the wastewater treatment facilities, construct golf courses and rec centers, etc. Those costs are a substantial part of the $955M, the developers net profit the remainder.

As to the question of bondholders.... most of the original bond purchases were done by mutual funds, hedge funds, and other high dollar or institutional investors. Over time, these entities have sold off bonds that have been purchased by smaller individual investors, so there is a mix.

I have purchased the numbered district CDD bonds from the resale market. I declined an opportunity to buy 5% tax free recreation/amenity bonds because of the uncertainty with the IRS investigation.

I can understand the IRS's concern about a developer controlled board issuing tax-free bonds...it does seem to stretch the definition of local government. I don't understand why this wasn't addressed when the bonds were first issued. The valuation method used for the amenities can be argued from all sides... the good news is future purchases of amenities will undergo much closer scrutiny.

Time will tell how this gets resolved. No reason to panic, but, good reason to stay informed.

Always informed, reasonable and well thought out posts from this poster. Always.

[iaudit]

Advo.... that $955M might be the total of bonds issued ... utility, infrastructure, and amenity ... but, certainly, folks realize that not every dollar of bond issue went into the Developers bank account. The bonds were issued to construct the infrastructure, construct the wastewater treatment facilities, construct golf courses and rec centers, etc. Those costs are a substantial part of the $955M, the developers net profit the remainder.


According to a schedule prepared by the Center Districts and presented to the the IRS, here are some numbers for the amenity purchases:

Principal Amount: $426,600,000
Net Proceeds: 332,057,406
Book Value: 80,016,561

Principal Amount equals 5.33 times Book Value
Net Proceeds equals 4.15 times Book Value

As you can see, the costs (Book Value) is NOT a substantial amount of the funds received for the amenity purchases. The difference between the $955M mentioned in the article and the $427M amenity purchases probably represents the infrastructure bonds issued by the number CCD's and which were never questioned by IRS.

[NJblue]

Here is a very interesting article that partially answers some of your questions:Billionaire Morse (http://1040taxplusservices.com/billionaire-morses-florida-dirt-bonds-not-tax-exempt/)

It sets forth some very interesting information, of which I was not previously aware, e.g.:
At least $955 million of Morse’s fortune comes directly
from money paid to him from the issuance of tax-free municipal
bonds — including the bonds ruled taxable by the IRS, according
to data compiled by Bloomberg from an analysis of 38 bond-offering statements since 1992.

Wow, our tax dollars (or, more precisely, tax subsidies or loopholes) at work. It makes you think that Congress ought to be taking a close look at who, if anybody, should be able to issue tax-free bonds. Maybe there is something to be said for eliminating them altogether, an idea that is currently being kicked around in Congress.

The concept of tax free bonds goes way beyond this and probably amounts to many billions or trillions of dollars around the country. Sure, the net recipient of these dollars are the developers who build the public swimming pools, airports, parks, etc. However, the PRIMARY beneficiaries of the tax free nature of these bonds is the general public who pay them off - whether it be in the form of property taxes in most municipalities or, in our case, the amenity fees. So, if Congress wants to eliminate the tax advantage of these bonds, it will be the general public (who they are supposed to represent) that would be hurt the most. Yes, the developers will also be hurt to a limited extent because some worthwhile projects won't be done because the cost to pay for them will go up as a result of the higher cost of debt ... but it is the public that will have to do without that park or airport or bridge.

[janmcn]

The concept of tax free bonds goes way beyond this and probably amounts to many billions or trillions of dollars around the country. Sure, the net recipient of these dollars are the developers who build the public swimming pools, airports, parks, etc. However, the PRIMARY beneficiaries of the tax free nature of these bonds is the general public who pay them off - whether it be in the form of property taxes in most municipalities or, in our case, the amenity fees. So, if Congress wants to eliminate the tax advantage of these bonds, it will be the general public (who they are supposed to represent) that would be hurt the most. Yes, the developers will also be hurt to a limited extent because some worthwhile projects won't be done because the cost to pay for them will go up as a result of the higher cost of debt ... but it is the public that will have to do without that park or airport or bridge.




None of the things you mention are for-profit businesses, such as public swimming pools, airports, parks, bridges. Isn't that the difference between tax-free or taxable bonds, one is for non-profit and the other is for for-profit?

[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 (http://www.orrick.com/Events-and-Publications/Documents/742.pdf). 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.

[villagerjack]

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 (http://www.orrick.com/Events-and-Publications/Documents/742.pdf). 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.

Did the legal opinion attached to these bonds indicate that the IRS may have a different opinion of the taxable status of the bonds or were these purchasers totally in the dark about the possibility that the bonds may be declared untaxable? How about the liability of the sellers of these bonds, the brokers, who may have had some idea of what they were selling but did or did not disclose these facts to the purchasers? This has been in the news one way or the other for the last 10 years and these brokers should have disclosed these facts to purchasers. If they were disclosed, then the owners of these bonds could be held accountable to pay any taxes that may be due. The IRS may be focusing on the wrong people in going after Morse and the VCCDD if Morse was relying on professional legal advice. People differ with the IRS every day and in many cases they win.

[EdV]

.... This has been in the news one way or the other for the last 10 years....

Where did you get that idea?

[iaudit]

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 (http://www.orrick.com/Events-and-Publications/Documents/742.pdf). 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.

I think the problem with negotiating a settlement on the previous purchases is that it would impact all future purchases. As I mentioned in a previous post, most of the amenities south of both 466 and 466A have not been purchased by the central districts. If they have to purchase these facilities with taxable bonds that carry a higher interest rate, it could significantly impact the amount that the developer will receive for these facilities.

In reviewing your figures in the first table, the principal amount does not agree with the total bonds issued which is $426 million, not $50 million. I don't know why the budgets would have the principal and interest for these bonds, they were purchased by outside interests, not the central districts.

[EdV]

.....In reviewing your figures in the first table, the principal amount does not agree with the total bonds issued which is $426 million, not $50 million. I don't know why the budgets would have the principal and interest for these bonds, they were purchased by outside interests, not the central districts.

You�re misunderstanding what I�m showing here. The $50 million represents the total principal paid by the VCCDD to the bondholders between 2003 and 2012. The $113 million is the total interest paid by the VCCDD to the bondholders during that period. It�s that column that is being used to compute the approximate back taxes owed by the bondholders.

But since the IRS can only go back three years, I shortened the table to get a more realistic estimate of what is legally owed to the government if they were forced to collect it from each individual bondholder.

And as things stand right now (short of an absolute final judgment) the VCCDD is scheduled to make that approx. $116 million annual repayment on the bonds until around 2032.

[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 diligence 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.

[mickey100]

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.


Nice summary Rubicon.

[villagerjack]

Where did you get that idea?

Google it.

[Bogie Shooter]

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.

Wouldn't the meeting just be a rehash of all the Opinions posted on TOTV? Ideas are nothing more than just opinions.

[NJblue]

None of the things you mention are for-profit businesses, such as public swimming pools, airports, parks, bridges. Isn't that the difference between tax-free or taxable bonds, one is for non-profit and the other is for for-profit?

If you take a step back, you will see that parks, swimming pools, bridges, etc. in a city are no different than such things in a CDD like TV. The developer in both scenarios is very much a for-profit institution. Likewise those who benefit from the projects are the general public - residents of a city/county on one hand or residents of TV on the other. And, the owners of these "amenities", the city/municipality and the CDD are both not for profit entities.

Why should the residents of a municipality be able to 1) have low taxes because their "amenities" are paid for in tax-free bonds and 2) further benefit from this by being able to deduct the property taxes that are used to pay for these "amenities"? As you will note, city residents get a two-fold tax advantage for their amenities whereas people in a CDD like TV only benefit from the lower interest rates of tax-free bonds (we can't deduct our amenity fees). And now the IRS wants to take even that one single benefit away from us.

There seems to be a lot of foaming at the mouth about Morse doing something "shady" when it is we who are the primary beneficiaries. I think that the wrath should be directed at the IRS who wants to punish those of us who live in a CDD while those who have their amenities provided by a city/county get a double tax benefit.

[Advogado]

Wouldn't the meeting just be a rehash of all the Opinions posted on TOTV? Ideas are nothing more than just opinions.
Several of the POA leaders were plaintiffs in the successful class action lawsuit against the Developer and are exceptionally well informed about what's going on in regard to the IRS lawsuit. Their opinions are worth listening to.

[Bogie Shooter]

Several of the POA leaders were plaintiffs in the successful class action lawsuit against the Developer and are exceptionally well informed about what's going on in regard to the IRS lawsuit. Their opinions are worth listening to.

I assume if there is anything new (factually) the POA would share it in the monthly bulletin.

[villagerjack]

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 (http://www.orrick.com/Events-and-Publications/Documents/742.pdf). 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.

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.

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

[villagerjack]

----------

[manaboutown]

This seems to explain it pretty well. Although I just ran across it most of you have probably seen it since it is a couple of days old.

IRS rule ending some Villages tax-free bonds won't affect all CDDs - OrlandoSentinel.com (http://www.orlandosentinel.com/news/local/lake/os-lk-lauren-ritchie-villages-bonds-20130611,0,3944791.column)

an excerpt:

"Consider, for example, that the Village Center District in 1998 paid the family of developer H. Gary Morse $31 million for items that the Sumter County property appraiser valued at $1.1 million. They included retention ponds, a nine-hole golf course, an RV parking lot, a pool, a tennis court and a guardhouse.

What is the "wholly public purpose" in buying those items? Those are things the residents already paid for in the price of their house, and they're not necessary infrastructure, such as a road or wastewater plant. The ownership and maintenance of the things bought by the bonds should have been simply transferred to the CDD where they are situated, along with the right to collect the amenity fees to cover the expenses.

Instead, the residents paid ridiculously inflated prices for their golf courses and pools a second time, and then, because of the interest on the bonds, they paid thrice."

[villagerjack]

If you take a step back, you will see that parks, swimming pools, bridges, etc. in a city are no different than such things in a CDD like TV. The developer in both scenarios is very much a for-profit institution. Likewise those who benefit from the projects are the general public - residents of a city/county on one hand or residents of TV on the other. And, the owners of these "amenities", the city/municipality and the CDD are both not for profit entities.

Why should the residents of a municipality be able to 1) have low taxes because their "amenities" are paid for in tax-free bonds and 2) further benefit from this by being able to deduct the property taxes that are used to pay for these "amenities"? As you will note, city residents get a two-fold tax advantage for their amenities whereas people in a CDD like TV only benefit from the lower interest rates of tax-free bonds (we can't deduct our amenity fees). And now the IRS wants to take even that one single benefit away from us.

There seems to be a lot of foaming at the mouth about Morse doing something "shady" when it is we who are the primary beneficiaries. I think that the wrath should be directed at the IRS who wants to punish those of us who live in a CDD while those who have their amenities provided by a city/county get a double tax benefit.


Thank you. You could not be more right. All through the downturn the Villages was selling 150-200 homes a month. While values declined somewhat they did not decline as much as similar developments and that is attributed to the Morses and they way then run things. See my other reply about my home in a Sun City Development.

[NJblue]

I think the problem with negotiating a settlement on the previous purchases is that it would impact all future purchases. As I mentioned in a previous post, most of the amenities south of both 466 and 466A have not been purchased by the central districts. If they have to purchase these facilities with taxable bonds that carry a higher interest rate, it could significantly impact the amount that the developer will receive for these facilities.

In reviewing your figures in the first table, the principal amount does not agree with the total bonds issued which is $426 million, not $50 million. I don't know why the budgets would have the principal and interest for these bonds, they were purchased by outside interests, not the central districts.

What makes you think that the price that the developer will get for these amenities will be dictated by the tax status of the bonds used to pay for them? When you buy a car, does the car dealer ask you how much your financing will cost before he tells you how much he will sell the car to you for? While this may be part of the sale-price equation for Morse, it certainly doesn't have to be.

[NJblue]

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.
.

Why do you think it was the developer who benefitted from tax free nature of the bonds? I suggest that you look at the CDD budget line item associated with interest on debt repayment and then increase that amount by 30 percent or so to reflect taxable bond interest rates. Then look to see how the result gets covered by our amenity payments. Which other line item expense of the CDD would you have reduced to pay for the additional interest fees? Or, how much additional in amenity fees do you want to pay to cover the shortfall? It is WE who have benefitted handsomely because of the tax free nature of the bonds.

[EdV]

Google it.

Why should I Google it when you're the one making the claim about this situation being in the news 10 years ago. How about providing a reference link like I usually do to support your statements.

[rubicon]

Wouldn't the meeting just be a rehash of all the Opinions posted on TOTV? Ideas are nothing more than just opinions.

Bogie Shooter I envision meetings with a written agenda setting out the facts, definitions, parties involved and in what manner, applicable laws/rules regarding this issue, limitations, plans goals etc. so everyone is on the same page. The meeting will need a strong gatekeeper to ensure we are getting objective and factual dialogue and not just belly aching. People coming together will grow closer with one another because we all have a common goal ( we are all stakeholders) and once people meet in most instances frienships/understanding will be found but mostly the collective commitment to a just cause. Also the people attending will not on ly be TOTV people but other residents also

[villagerjack]

This seems to explain it pretty well. Although I just ran across it most of you have probably seen it since it is a couple of days old.

IRS rule ending some Villages tax-free bonds won't affect all CDDs - OrlandoSentinel.com (http://www.orlandosentinel.com/news/local/lake/os-lk-lauren-ritchie-villages-bonds-20130611,0,3944791.column)

an excerpt:

"Consider, for example, that the Village Center District in 1998 paid the family of developer H. Gary Morse $31 million for items that the Sumter County property appraiser valued at $1.1 million. They included retention ponds, a nine-hole golf course, an RV parking lot, a pool, a tennis court and a guardhouse.

What is the "wholly public purpose" in buying those items? Those are things the residents already paid for in the price of their house, and they're not necessary infrastructure, such as a road or wastewater plant. The ownership and maintenance of the things bought by the bonds should have been simply transferred to the CDD where they are situated, along with the right to collect the amenity fees to cover the expenses.

Instead, the residents paid ridiculously inflated prices for their golf courses and pools a second time, and then, because of the interest on the bonds, they paid thrice."
Wow a million sure buys a lot in this part of the country? Land to build a golf course, a golf course, tennis court, pools, a guardhouse and who knows what else, all for a million. I'll take two.

Using her logic if you buy land for a home, build a home on in and then take out a mortgage and pay interest on it your are paying thrice. hey if you add appliances you may be paying four times . She probably lives in a condo with that kind of an astute analysis. She really has no clue.

[iaudit]

What makes you think that the price that the developer will get for these amenities will be dictated by the tax status of the bonds used to pay for them? When you buy a car, does the car dealer ask you how much your financing will cost before he tells you how much he will sell the car to you for? While this may be part of the sale-price equation for Morse, it certainly doesn't have to be.

Simple example. Let's say there is $100 collected in amenity fees. Current principal and interest for tax free bonds is $50. $50 is left to maintain amenities. If higher interest taxable bonds are issued and the principal and interest is now $55, that leaves only $45 to maintain amenities.

In the second scenario, a prudent buyer of the amenities (Central District) would reduce the amount paid for amenity facilities so that the principal and interest payment would remain at $50, leaving the remaining $50 to maintain the amenities at their current level.

[villagerjack]

Simple example. Let's say there is $100 collected in amenity fees. Current principal and interest for tax free bonds is $50. $50 is left to maintain amenities. If higher interest taxable bonds are issued and the principal and interest is now $55, that leaves only $45 to maintain amenities.

In the second scenario, a prudent buyer of the amenities (Central District) would reduce the amount paid for amenity facilities so that the principal and interest payment would remain at $50, leaving the remaining $50 to maintain the amenities at their current level.

When you get free unlimited access to 32 golf courses, 100 pickle ball courts 90 tennis courts 65 swimming pools a multitude of rec centers in a safe community where home values were relatively stable during a downturn and are rising now with some of the nicest folks in the world for $145 a month I would say that is a fair deal. If you feel it us not a fair deal, someone will step up to buy your place. Your home is worth a lot more than other places because of these amenities so even if there was a settlement and amenity fees were raised, we are still way ahead of the game. I gave you previous examples of home values in other areas which no one wants to touch.

[rubicon]

Hi guys up to now you all have had informative and helpful post and now the testerone seems to be taking hold and is counter-productive. Save the aggression for the basketball court...we are all friends here with a commom goal

[Advogado]

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 (http://www.orrick.com/Events-and-Publications/Documents/742.pdf). 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.
While I appreciate your effort and will not attempt to come up with a better number, I am afraid that your number may turn out to be way too low. As you point out in your last paragraph, you are ignoring what may be the biggest cost in any settlement. Furthermore, you are only looking backward. What about the taxes that the bondholders will be liable for in all future years? The Center Districts covenanted to maintain the tax-free status of the bonds for the life of the bonds. Will the IRS say to the Center Districts that the only way for the Center Districts to do so is to pay all the future taxes? What kind of damages will bondholders claim for their loss of tax-free income? How do the Center Districts deal with bondholders who disagree with the Center Districts' terms in a buy back offer? It is complicated and uncertain and in the hands of the IRS and the Center Districts.

I could go on, but my point is that I think that neither you nor I can come up with a meaningful cost estimate at this point-- unless we make certain assumptions that may turn out to be wrong. I think that we just have to wait and see how things play out and what kind of a settlement, if any, the parties work out.

[NJblue]

Simple example. Let's say there is $100 collected in amenity fees. Current principal and interest for tax free bonds is $50. $50 is left to maintain amenities. If higher interest taxable bonds are issued and the principal and interest is now $55, that leaves only $45 to maintain amenities.

In the second scenario, a prudent buyer of the amenities (Central District) would reduce the amount paid for amenity facilities so that the principal and interest payment would remain at $50, leaving the remaining $50 to maintain the amenities at their current level.

Yes, it is a simple example, but I don't know how real-world it is.

[NJblue]

While I appreciate your effort and will not attempt to come up with a better number, I am afraid that your number may turn out to be way too low. As you point out in your last paragraph, you are ignoring what may be the biggest cost in any settlement. Furthermore, you are only looking backward. What about the taxes that the bondholders will be liable for in all future years? The Center Districts covenanted to maintain the tax-free status of the bonds for the life of the bonds. Will the IRS say to the Center Districts that the only way for the Center Districts to do so is to pay all the future taxes? What kind of damages will bondholders claim for their loss of tax-free income? How do the Center Districts deal with bondholders who disagree with the Center Districts' terms in a buy back offer? It is complicated and uncertain and in the hands of the IRS and the Center Districts.

I could go on, but my point is that I think that neither you nor I can come up with a meaningful cost estimate at this point-- unless we make certain assumptions that may turn out to be wrong. I think that we just have to wait and see how things play out and what kind of a settlement, if any, the parties work out.

I would think the re-issuance of the bonds as taxable would not be a big deal and in fact may actually save money since prevailing interest rates are much lower now than when the bonds were issued. Does anyone know if these bonds were callable? I would assume that they are. If so, the bond holders would have no recourse to loss of future tax savings if the CDD just called them and then re-issued them as taxable bonds.

[Advogado]

I would think the re-issuance of the bonds as taxable would not be a big deal and in fact may actually save money since prevailing interest rates are much lower now than when the bonds were issued. Does anyone know if these bonds were callable? I would assume that they are. If so, the bond holders would have no recourse to loss of future tax savings if the CDD just called them and then re-issued them as taxable bonds.

You are right about the callable aspect. As indicated in my post, I have not been inclined to get into trying to come up with a cost number until we see what the proposed settlement terms are or determine that there is no settlement. You are also right that interest rates are low right now, but we don't know how long it will be, if ever, that substitute taxable bonds will be issued. Also, we don't know what effect all this will have on the credit rating of taxable bonds (and interest rates) issued by the Center Districts at some unknown time in the future. The most recent Tutt memo sure makes it sound as though the Districts are going to contine to fight for a long time.

Also, since the Developer faces potential liability to homeowners if this thing causes the amenity system to collapse, one solution would be for him finance the settlement-- perhaps by buying back the amenity facilities. Wouldn't that be ironic?

[nitehawk]

So whats the big deal----issue more bonds to pay the ruling against the villages - and start all over again - let the residents buy them. call them kool aid coupon bonds

Why it's a big deal has already been explained numerous times in this thread, in the POA Bulletin, and in various newspaper (other than the Daily Sun) and magazine articles. It's nothing to joke about.

I would think the re-issuance of the bonds as taxable would not be a big deal and in fact may actually save money since prevailing interest rates are much lower now than when the bonds were issued. Does anyone know if these bonds were callable? I would assume that they are. If so, the bond holders would have no recourse to loss of future tax savings if the CDD just called them and then re-issued them as taxable bonds.

You are right about the callable aspect. As indicated in my post, I have not been inclined to get into trying to come up with a cost number until we see what the proposed settlement terms are or determine that there is no settlement. You are also right that interest rates are low right now, but we don't know how long it will be, if ever, that substitute taxable bonds will be issued. Also, we don't know what effect all this will have on the credit rating of taxable bonds (and interest rates) issued by the Center Districts at some unknown time in the future. The most recent Tutt memo sure makes it sound as though the Districts are going to contine to fight for a long time.

Also, since the Developer faces potential liability to homeowners if this thing causes the amenity system to collapse, one solution would be for him finance the settlement-- perhaps by buying back the amenity facilities. Wouldn't that be ironic?

I was not joking about issuing more bonds "Thank You" maybe the kool aid was a joke. advogado you seem to be very knowledgeable about this subject-- you first think is is a joke to re-issue bonds then think is may be a good idea ---- dont understand?

[NJblue]

No, we don't know what the future holds. However, the back-of-the-envelop analysis that EdV did as well as my own analysis tells me that this is not going to be a huge deal one way or the other. It's a shame that some people read threads like this and decide to hold off purchasing here thinking that this is going to financially ruin them. It's not. I'm quite confident that those who choose to wait it out will lose in the long run since the prices of houses will continue to climb.

[Bucco]

No, we don't know what the future holds. However, the back-of-the-envelop analysis that EdV did as well as my own analysis tells me that this is not going to be a huge deal one way or the other. It's a shame that some people read threads like this and decide to hold off purchasing here thinking that this is going to financially ruin them. It's not. I'm quite confident that those who choose to wait it out will lose in the long run since the prices of houses will continue to climb.

Good post. I concur with your comments, posted much the same early on in this thread, along with many others.

This has interest, needs to be paid attention to, but does not deserve all this hand wringing.

Many many more REAL issues to "worry" about.

Not pro or con developer...just think this is being made into something it is not nor ever will be.

Been here 13 years and lived through a number of "sky is falling" issues

[Advogado]

I was not joking about issuing more bonds "Thank You" maybe the kool aid was a joke. advogado you seem to be very knowledgeable about this subject-- you first think is is a joke to re-issue bonds then think is may be a good idea ---- dont understand?

You are, of course, right when you indicate that there is a good possibility that taxable bonds will need to be issued to repurchase the existing bonds. I guess the tone of my response to your earlier post was provoked by the intro to your post, which started out asking, "What's the big deal".

I've spent a lot of time thinking about this whole issue and believe that any plan to reissue bonds is not going to be simple. However, we don't know if and when that is going to happen. The last official word we have on all this is the recent Tutt memo, which indicates that the Center District is going to fight on--continuing to spend our amenity fees on its attorneys to defend a financing plan designed to inflate the Developer's profits. Not exactly what we thought we would be paying our monthly fees for. However, thus far, our amenities seem to be continuing at about the same level, so at this point, we can't complain too much.

Sorry if you and I got off on the wrong foot.

[Challenger]

If taxable bonds had been issues at the outset, at some higher rate of interest, say 1%,I would estimate that the District would have already paid more than $2,000,000 more in interest to bondholders. These additional costs would have to come from District funds, ie residents. Is it possible that the origional decision was made in an effort to provide the lowest possible cost structure for the interest payors(residents)?

[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.

[EdV]

....

[Parker]

The sky is falling? I hadn't noticed.

[mickey100]

i don't think anyone has a good idea of what will happen. Its all conjecture and wishful thinking. A few years ago a group of posters was "confident" that the IRS inquiry would come to nothing, and that they would never rule against Morse and The Villages. I think it is foolishness to act as though we have a crystal ball and can predict the future.

[graciegirl]

I do not understand the animosity against the developer. You hear ONLY from some posters when it is time to rant against the Morses. WHY?

I am VERY skeptical about anyone who doesn't keep an open mind about what appears to be an issue that will be debated for years before a final settlement comes and I cannot see why anyone would continue living in this place if they think the Morses are a bunch of rich, greedy, people without a conscience who jump at any opportunity to take from us.

The IRS feels that money is owed them. The other side feel it is not. It isn't like they didn't pay their income tax for pete's sake.

It is an issue of some rarity that has to do with whether the municipal bonds issued by a CDD have taxable interest.

Most of us go to an accountant to help us with our income taxes and make sure we get all the breaks coming to us. I see it as the same type of issue.

I have never met anyone before moving here that just decided to hate someone based on their financial success. That is like hating someone because they are poor. Classes were left behind in the countries that our forefathers left and we live here in the great country where we are supposed to be respecting people of all walks of life and economic conditions.

People can post a lot of things saying one thing and meaning another but when hatred rears it's ugly head you can read between the lines.

Maybe the Morses are a bunch of low lives and they are sitting there in their homes giggling about all of the money they have made off us, but what if they are decent people? WHO KNOWS?????

I see good in this family because of what they have created and how they maintain it and what is offered to us seniors over a pretty wide economic range.

I think it is foolishness that we have a crystal ball and can predict the future....too.

[EdV]

Class action lawsuit against the Developer seems likely should The Villages be required to pay.

.... I think it is foolishness to act as though we have a crystal ball and can predict the future.

...

[mickey100]

I think there are very few people that Hate the Morses because the are financially successful. I do think many people question their ethics however based on their previous history such as the need to file a class action lawsuit for the residents to obtain what was rightfully theirs.

[mickey100]

...

I see a big difference between the words "seems likely" rather than "I'm confident" or "I'm certain" or stating unequivocally that something will or will not happen. Subtleties of language. And I didn't try to predict what the IRS or any government agency would do or how they would rule, or certainty about whether housing prices would go up or down. Those are factors well beyond our control. I was talking about the reaction of residents if faced with a loss of their amenities. And since I am a resident and have discussed this issue with other residents, I guess I'm qualified to voice an opinion regarding possibility in that area.

[EdV]

�seems likely� is making a prediction!

And where in my post #294 did you see me use the words "I'm confident" or "I'm certain" or stating unequivocally that something will or will not happen. In fact I said it was speculation did I not?

Or were you referring to someone else�s post as being �foolish�? Just trying to understand what your point is.

[mickey100]

�seems likely� is making a prediction!

And where in my post #294 did you see me use the words "I'm confident" or "I'm certain" or stating unequivocally that something will or will not happen. In fact I said it was speculation did I not?

Or were you referring to someone else�s post as being �foolish�? Just trying to understand what your point is.

I never referred to any of your posts. I'm trying to see your point in re-posting my posts.

[Advogado]

A reminder: POA meeting Tuesday 7:00 p.m. at Laurel Manor. The IRS investigation will undoubtedly be one of the main topics of discussion. (Sorry I can't attend since I am up north for the summer.)

[Advogado]

I never referred to any of your posts. I'm trying to see your point in re-posting my posts.
Mickey100, from what I have seen, both you and EdV are truly interested in understanding the implications for residents of the IRS investigation. Suggest you shake hands and be friends.

[mickey100]

That would suit me fine.

[justjim]

A reminder: POA meeting Tuesday 7:00 p.m. at Laurel Manor. The IRS investigation will undoubtedly be one of the main topics of discussion. (Sorry I can't attend since I am up north for the summer.)

We too are up north. It would be terrific if somebody who attends the meeting would give us an update (if there is one) on the IRS investigation. :police:

[mickey100]

I hope there will be one in the next POA bulletin. You can find them online at:

Property Owners, Association of Florida (http://poa4us.org)

[Advogado]

This is from Fitch, a bond-rating agency: IRS Ruling Unlikely to Impact Village's Residential CDDs (http://www.fitchratings.com/gws/en/fitchwire/fitchwirearticle/IRS-Ruling-Unlikely?pr_id=794020&cm_sp=homepage-_-FitchWire-_-%20IRS%20Ruling%20Unlikely%20to%20Impact%20Village 's%20Residential%20CDDs)

I would feel better, however, if Fitch hadn't qualified its opinion by saying that is "unlikely" that the ruling will impact the bonds issued by the residential (numbered) districts. Those are the bonds that are "attached" to our houses.

[Mikeod]

I attended the POA meeting last night. The president discussed the IRS issue at the start of the general meeting. She pointedly differentiated between the bonds for the infrastructure which are attached to our homes and not issued by the central district, and the ones issued to purchase the amenities and income stream. She mentioned that the guarantee for the bonds is the amenity stream. She commented that the real risk to residents is the depletion of amenity funds to pay whatever costs arise from a negative result.

She expects the district to fight this to the end because if the district cannot use tax free bonds to purchase amenities south of 466, the net income to the developer will be significantly reduced. She related a formula that I had trouble following but appeared to be: total appraised value including revenue stream value less bond face amount less bond service (interest payable over the life of the bonds) equals the net to the developer. Therefore, the higher the interest (tax free vs. taxable), the less goes to the developer.

After all that, she indicated she expects the developer will not allow the residents to be negatively affected whatever the final ruling. She referred to the developer settling the lawsuit in 2008, rather than fighting it.

[villagerjack]

This is from Fitch, a bond-rating agency: IRS Ruling Unlikely to Impact Village's Residential CDDs (http://www.fitchratings.com/gws/en/fitchwire/fitchwirearticle/IRS-Ruling-Unlikely?pr_id=794020&cm_sp=homepage-_-FitchWire-_-%20IRS%20Ruling%20Unlikely%20to%20Impact%20Village 's%20Residential%20CDDs)

I would feel better, however, if Fitch hadn't qualified its opinion by saying that is "unlikely" that the ruling will impact the bonds issued by the residential (numbered) districts. Those are the bonds that are "attached" to our houses.

I don't think they did.

"Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) WILL NOT IMPACT Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook."

The HEADLINE you quote, was likely written by someone else, not FITCH.

[Advogado]

I don't think they did.

"Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) WILL NOT IMPACT Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook."

The HEADLINE you quote, was likely written by someone else, not FITCH.
The headline is on the Fitch website, so, unless their website was hacked, I guess Fitch must have written it. I don't know how Fitch reconciles the headline with the wording in the text of the article--maybe just poor proofreading. In any event, with or without the word "unlikely", the gist of the article is still good news for Villagers. I read the latest IRS Memorandum in the same way as Fitch does, but it is still reassuring to have a bond-rating agency make a public statement like Fitch's.

[EdV]

What�s next for the IRS vs. the VCCDD district?

Well, the IRS having finally ruled (after 3 years) in a Technical Advise Memorandum that concluded that �the Issuer is not a division of a State or local government�. So the next thing that we should expect from the IRS is a Proposed Adverse Determination letter to the two special CDDs.

As described in this IRS procedural document (http://www.irs.gov/pub/irs-drop/rp-06-40.pdf), the developer will have 30 days to respond and request a final appeal. That request can and probably will include a request for an extension. This appeal is sent to the IRS Tax Exempt Bond (TEB) division which has been handling the case from the outset.

The TEB will review the appeal and then eventually pass it on to the Appeal division for a final ruling. This is where the real negotiations will actually transpire between the developer and the IRS. It�s the highest level where such a case like this can go because opening a case in the US Tax Court is not an option.

There are only two outcomes from this stage. Either an agreed settlement is reached or the Proposed Adverse Determination becomes a Final Adverse Determination and the IRS goes after the taxes due from the bondholders.

The latter seems unlikely to me because the developer has his entire family and longtime business associates involved with the development and operation of TV. I just don�t see him subjecting them to the embarrassment and ridicule in the press that would surely result from that.

Now it�s true that he let dispute by certain POA member go all the way to civil court, but he did settle it out of court to the tune of $40 million which resulted in the widening of the paths north of 466 among other things.

[downeaster]

This is from Fitch, a bond-rating agency: IRS Ruling Unlikely to Impact Village's Residential CDDs (http://www.fitchratings.com/gws/en/fitchwire/fitchwirearticle/IRS-Ruling-Unlikely?pr_id=794020&cm_sp=homepage-_-FitchWire-_-%20IRS%20Ruling%20Unlikely%20to%20Impact%20Village 's%20Residential%20CDDs)

I would feel better, however, if Fitch hadn't qualified its opinion by saying that is "unlikely" that the ruling will impact the bonds issued by the residential (numbered) districts. Those are the bonds that are "attached" to our houses.

I don't think they did.

development for retirees located in central Florida. VCCDD, created by the developer to sell the development's recreational facilities to the residents, issued $426 million of tax-exempt bonds to finance the purchase of the facilities.

Following a five and a half year investigation, the IRS ruled on May 30 that VCCDD is not a political subdivision and consequently cannot issue tax-exempt bonds. Therefore, the existing bonds of VCCDD were decla"Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) WILL NOT IMPACT Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook."

The HEADLINE you quote, was likely written by someone else, not FITCH.

19 Jun 2013 3:28 PM
IRS Ruling Unlikely to Impact Village's Residential CDDs
Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) will not impact Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook.

We are not aware of any current or pending investigation into the taxability of bonds issued by CDDs No. 5 and 6 and believe their independent governance structure insulates them from the IRS decision. They are exclusively residential and governed by representative boards elected by residents within the districts. The developer has no control over the internal affairs of either district. In our view, this structure is positive as the interests of the developer, property owners and bondholders are not always aligned.

We do not rate bonds issued by VCCDD. The Villages is a popular red taxable. The IRS noted the developer's exclusive control of the VCCDD board over the past 20 years and actions taken by the developer during that period to perpetuate that control. The IRS stated that the VCCDD board, by not being "accountable, directly or indirectly, to a general electorate" did not meet the definition of a political subdivision under Section 103 of the Internal Revenue Code.


There seems to be some contradictions and/or confusion in the above report from Fitch. Or, are they mixing the two CDD's? Aren't 5 and 6 in SLCDD and not part of the IRS decision?

I would also like to hear Edv's opinion on this.

[EdV]

The CDDs north of Rt. 466

CDDs 1 through 4 � Residential CDDs not under IRS investigation

VCCDD Village Center Community Development District � Consists of all of the amenities scattered throughout the area north of Rt. 466. Developer owned/controlled and under investigation by the IRS

The CDDs south of Rt. 466

CDDs 5 through 10 � Residential CDDs not under IRS investigation

SLCDD Sumter Landing Community Development District - Consists of all of the amenities scattered throughout the area south of Rt. 466. Developer owned/controlled and under investigation by the IRS

[jflynn1]

Bond Buyer Online - IRS Rules Against Fla. CDD (http://www.bondbuyer.com/issues/122_108/irs-rules-florida-villages-cdd-not-a-political-subdivision-1052383-1.html)

This is not what Janet Tutt said and she repreents The Villages so what she said must be true.

Read the article you will be surprised what the real story is.

[Bogie Shooter]

This is not what Janet Tutt said and she repreents The Villages so what she said must be true.

Read the article you will be surprised what the real story is.

What are the points that you see that are different?

[KeepingItReal]

[QUOTE=jflynn1;698291]This is not what Janet Tutt said and she repreents The Villages so what she said must be true.

I have a personal experience with her in writing that proves this is not always the case..

[Advogado]

The latest news: Tax troubles for Walt Disney World's government? - Orlando Sentinel (http://articles.orlandosentinel.com/2013-07-13/business/os-disney-the-villages-tax-free-bonds-20130713_1_villages-walt-disney-world-disney-springs)

It appears that the Center District is now looking at settlement options. Let's hope that any settlement does not impact the District's ability to continue the amenity system. No news about this in the Daily Sun.

[graciegirl]

[QUOTE=jflynn1;698291]This is not what Janet Tutt said and she repreents The Villages so what she said must be true.

I have a personal experience with her in writing that proves this is not always the case..

What is it?

[Dreamer61]

How does this affect us? We just purchased a home in TV and have not closed yet? It's in Sumter Co. We have been told that we have a monthly bond fee. Although it is low they say. Will this be affected? This is disturbing news.

[Mikeod]

How does this affect us? We just purchased a home in TV and have not closed yet? It's in Sumter Co. We have been told that we have a monthly bond fee. Although it is low they say. Will this be affected? This is disturbing news.

No. The infrastructure bond for your home is not part of this IRS dispute. It involves bonds issued by the central districts to purchase amenities from the developer.

[Dreamer61]

Mike, thanks for clarifying that. So how, if at all, could this affect us homeowners????

[Harry Gilbert]

Any definitive answer is pure conjecture at this point

[Mikeod]

Mike, thanks for clarifying that. So how, if at all, could this affect us homeowners????

Worst case scenario I've seen proposed on this board is that the central districts wind up paying tax, interest and penalties which depletes the amenities funds to the point that amenities suffer. Others have wondered if the homeowners will have to cough up those funds, which doesn't appear possible since the dispute is with the central districts which are separate from the residential districts.

There is a history and timeline of the dispute on the district website. I would also direct you to the POA website and look at back issues. They have, to me, the most complete discussion of the dispute.

At a recent POA meeting, the president made several points. One, this isn't over by a long shot. Two, the developer, through the central districts, which he controls, will fight this aggressively because a negative result will severely reduce his take from the sale of amenities south of 466. Third, her belief that the developer will not allow the residents to suffer if the finding goes against TV.

But, as posted above, nobody really knows how this will end and the net effect, if any, on the residents.

Hope this helps.

[Dreamer61]

Thanks Mike, you put it in words I can understand!

[Flyinglady]

My friend and I are due to visit TV next week with a view to purchasing a home. I find all the comments interesting but also somewhat disturbing. I fail to understand why over $300,000 was paid in legal fees etc. by the home owners. My friend and I were first attracted to The Villages because it was a well run community and it provided a lifestyle that attracted us both, we are now having second thoughts. We have absolutly no problem with how much money the Morse family have made, they had a good idea and it has paid off for them. However some of the comments on this thread would seem to indicate that certain residents have severe doubts as to the honesty of the Morse family. I would like to ask these residents why they continue to live in your community? To end we had originally planned to purchse our home on this trip but unless we are given a witten guarentee that we will not be financially harmed in any way, if the final ruling on this matter goes against The Villages, either by reduced services or have to pay additional $'s, we most certainly will NOT be puchasing our new home in The Villages at this time.

[EdV]

.....unless we are given a witten guarentee that we will not be financially harmed in any way, if the final ruling on this matter goes against The Villages, either by reduced services or have to pay additional $'s, we most certainly will NOT be puchasing our new home in The Villages at this time.

Then I can assure you that you won't be purchasing your new home in TV at this time.

[Polar Bear]

I'm afraid EdV is right...you almost certainly will not get any written guarantees.

But on the other hand, I think you would be making a mistake to put too much emphasis on the what the doomsayers say regarding this issue. Do your own research and make your own decision of course. But I would strongly suggest you not make a decision based solely on what you've read on this site.

[janmcn]

My friend and I are due to visit TV next week with a view to purchasing a home. I find all the comments interesting but also somewhat disturbing. I fail to understand why over $300,000 was paid in legal fees etc. by the home owners. My friend and I were first attracted to The Villages because it was a well run community and it provided a lifestyle that attracted us both, we are now having second thoughts. We have absolutly no problem with how much money the Morse family have made, they had a good idea and it has paid off for them. However some of the comments on this thread would seem to indicate that certain residents have severe doubts as to the honesty of the Morse family. I would like to ask these residents why they continue to live in your community? To end we had originally planned to purchse our home on this trip but unless we are given a witten guarentee that we will not be financially harmed in any way, if the final ruling on this matter goes against The Villages, either by reduced services or have to pay additional $'s, we most certainly will NOT be puchasing our new home in The Villages at this time.


A lot of residents, myself included, are wondering why the home owners are paying $300,000 per month in legal fees for the developer.

As was stated previously, you will not be given any written guarantee that you will not be financially harmed in any way.

[bike42]

A lot of residents, myself included, are wondering why the home owners are paying $300,000 per month in legal fees for the developer.

Rumor Control please! The figure you're quoting is the TOTAL legal expense for the five years this has gone on. Less than the cost of a bad divorce. $3.00 per resident.

[graciegirl]

As was stated previously, you will not be given any written guarantee that you will not be financially harmed in any way.

And many of the critics continue to sing the same song with the same lyrics, year after year after year after year.

And they still have the same beautiful lifestyle, year after year etc.

[Missouri boy]

I�ve been watching the various information about the IRS ruling. Is it possible to know what is the worst that could happen. There are so many of you that understand this issue. This is way beyond my ability.

[EdV]

If you want some assurances in writing, here is what you will get if you do decide to purchase:

1. The Declarations and Restrictions document (contract) that you sign when you purchase a home in TV states that any increase in the amenity fee paid to the one of the two special district(s) cannot exceed the increase in the consumer price index in any given year. And no �special assessment� fees are provided for in that document.

2. Other than the amenity fee, the special district(s) have no taxing authority over you or your home in TV. They can exercise a lien on your home if necessary, but only for unpaid amenity fees.

3. The annual maintenance fee that you pay to your numbered district for maintenance of the common grounds within your numbered district is set by that district�s resident elected board of supervisors, and not by the developer or his two special districts.

[Advogado]

[QUOTE=janmcn;710449]A lot of residents, myself included, are wondering why the home owners are paying $300,000 per month in legal fees for the developer.

Rumor Control please! The figure you're quoting is the TOTAL legal expense for the five years this has gone on. Less than the cost of a bad divorce. $3.00 per resident.

As I recall, the last published figure for total attorney fees was $700,000. That was some time ago. The total must be about $1 million now. However, as long as we continue to get our amenities at the promised level, I guess we can't complain as Villagers. (Maybe we can as US taxpayers, since we have been subsidizing the Developer.)

There is one consideration in this regard that hasn't been mentioned in any of the posts on this matter: Every year, the amenity fee seems to be increased by the amount of the CPI. The CPI is supposed to be a cap on increases. If the Center District were not spending amenity-fee revenue defending the Developer's use of tax-exempt bonds, maybe our annual increases would be less. But who knows?

That consideration aside, in all fairness to the Developer, SO FAR it appears to be "no harm, no foul" and no basis for another class action by Villagers. We will see what the future holds.

[janmcn]

[quote=bike42;710462]

As I recall, the last published figure for total attorney fees was $700,000. That was some time ago. The total must be about $1 million now. However, as long as we continue to get our amenities at the promised level, I guess we can't complain as Villagers. (Maybe we can as US taxpayers, since we have been subsidizing the Developer.)

There is one consideration in this regard that hasn't been mentioned in any of the posts on this matter: Every year, the amenity fee seems to be increased by the amount of the CPI. The CPI is supposed to be a cap on increases. If the Center District were not spending amenity-fee revenue defending the Developer's use of tax-exempt bonds, maybe our annual increases would be less. But who knows?

That consideration aside, in all fairness to the Developer, SO FAR it appears to be "no harm, no foul" and no basis for another class action by Villagers. We will see what the future holds.



That still doesn't answer the question of why are the residents paying to defend the developer's bottom line?

[EdV]

.... If the Center District were not spending amenity-fee revenue defending the Developer's use of tax-exempt bonds, maybe our annual increases would be less. But who knows?.....

Actually Advocodo that�s not the way it works. You see, if you read your contract carefully in the amenities section you�ll find this carefully worded declaration:

�the Contractual Amenities Fee is a fee for services and is in no way adjusted according to the cost of providing those services.�

What this actually means is that they can raise the fee if the CPI goes up but are not required to lower it if it were to go down. Furthermore, it means that they can (and do) subtract the actual cost of running the amenities from the amenity fee income and then hand over the balance to the developer as management fees. (see the published VCCDD budget)

That�s something most TV residents just don�t understand.

[Advogado]

For those who are interested in staying informed, here is today's news that was posted on the Distict Gov website: http://districtgov.org/IRSupdate.aspxl

Still no resolution of the dispute. It will be interesting to see the Daily Sun / VHA spin on this.

[Advogado]

[quote=bike42;710462]

As I recall, the last published figure for total attorney fees was $700,000. That was some time ago. The total must be about $1 million now. However, as long as we continue to get our amenities at the promised level, I guess we can't complain as Villagers. (Maybe we can as US taxpayers, since we have been subsidizing the Developer.)

There is one consideration in this regard that hasn't been mentioned in any of the posts on this matter: Every year, the amenity fee seems to be increased by the amount of the CPI. The CPI is supposed to be a cap on increases. If the Center District were not spending amenity-fee revenue defending the Developer's use of tax-exempt bonds, maybe our annual increases would be less. But who knows?

That consideration aside, in all fairness to the Developer, SO FAR it appears to be "no harm, no foul" and no basis for another class action by Villagers. We will see what the future holds.

[quote=Advogado;710493]



That still doesn't answer the question of why are the residents paying to defend the developer's bottom line?

Hey, I am not happy about the whole situation.

But to answer your question, technically the Center District, as the issuer of the purportedly tax-exempt bonds, is paying its attorneys to defend its actions. My point in my earlier post is that what the residents are entitled to, in exchange for our amenity fees, are the amenities at the same level as when our house was originally sold by the Developer. As long as we get that, we are not hurt by the District's paying attorneys to defend what is really the Developer's financing scheme.

IF the attorney fees and, more importantly, the other costs resulting from loss of the tax-exempt status of the bonds render the Center District financially unable to continue to provide the amenities, THEN we have a basis for a claim against the Center District and the Developer. But for right now, life goes on.

[Advogado]

Actually Advocodo that�s not the way it works. You see, if you read your contract carefully in the amenities section you�ll find this carefully worded declaration:

�the Contractual Amenities Fee is a fee for services and is in no way adjusted according to the cost of providing those services.�

What this actually means is that they can raise the fee if the CPI goes up but are not required to lower it if it were to go down. Furthermore, it means that they can (and do) subtract the actual cost of running the amenities from the amenity fee income and then hand over the balance to the developer as management fees. (see the published VCCDD budget)

That�s something most TV residents just don�t understand.
I don't think that you and I are in disagreement.

[Advogado]

For those who are interested in staying informed, here is today's news that was posted on the Distict Gov website: http://districtgov.org/IRSupdate.aspxl

Still no resolution of the dispute. It will be interesting to see the Daily Sun / VHA spin on this.
The Daily Sun has reported on this in today's edition, on page C5, in an article entitled "Attorney refutes IRS memo regarding tax-exempt bonds". The reporting is straight forward, but it once again fails to give the reader the background information necessary to understand what is going on.

[TVMayor]

The Daily Sun has reported on this in today's edition, on page C5, in an article entitled "Attorney refutes IRS memo regarding tax-exempt bonds". The reporting is straight forward, but it once again fails to give the reader the background information necessary to understand what is going on.
"Attorney refutes IRS memo regarding tax-exempt bonds" Am I correct in interpreting this to mean The Villages is telling the IRS they do not know what they are talking about?

[Warren Kiefer]

The Daily Sun has reported on this in today's edition, on page C5, in an article entitled "Attorney refutes IRS memo regarding tax-exempt bonds". The reporting is straight forward, but it once again fails to give the reader the background information necessary to understand what is going on.


What would you expect the Attorney for the developer would say ?? The min problem is the VCCDD set up. Those who don't know, the VCCDD controls most fiancial decisions north of 466. The committee that makes the actual decisions are "elected" by the property owner in that district. The only property owner in the VCCDD happens to be the developer. This district is bounded by the Spanish springs business area and there are no residents living within those boundaries. I have little faith in the Attorney Perry Israel and know from experience that attorneys love to drag out cases. Simply put, the longer a case lasts, the more money a attorney makes.

[Dreamer61]

Wow!!! You go dudes! After much painstaking thinking. And reading about this matter, I've decided to have some faith. The developer is obviously a pretty wise individual and has a truck load of attorneys working for him. This is really his issue. The residents are not involved in the matter. The people the developer has set in place to run TV and keep it running smoothly have done an outstanding job. My opinion: Relax and enjoy your beautiful community, my father always said.. Don't worry about something until you have something to worry about! Just saying...

[Warren Kiefer]

Wow!!! You go dudes! After much painstaking thinking. And reading about this matter, I've decided to have some faith. The developer is obviously a pretty wise individual and has a truck load of attorneys working for him. This is really his issue. The residents are not involved in the matter. The people the developer has set in place to run TV and keep it running smoothly have done an outstanding job. My opinion: Relax and enjoy your beautiful community, my father always said.. Don't worry about something until you have something to worry about! Just saying...

Dreamer I love your optimism but there is a but. Your statement is not quite correct, "If" the IRS rules against the bonds being tax free there is no doubt we might have to pay up. As I said in an earlier posting the Developer has total control over the VCCDD and the election of the committee members. It is my understanding that the VCCDD sold the bonds in question to purchase properties. Now here is where things get sticky. It is important to realize the VCCDD represents the Villages Residents eventhough it is controlled by the Developer. YThe VCCDD sells the bonds on our behalf to buy properties from the Developer. The Developer pockets a nice profit, and we (the Villagers) must pay back the borrowed money (the bonds). So, who's responsibility is it to pay if the IRS says no to the ineligible tax free bonds.

[Mikeod]

Dreamer I love your optimism but there is a but. Your statement is not quite correct, "If" the IRS rules against the bonds being tax free there is no doubt we might have to pay up. As I said in an earlier posting the Developer has total control over the VCCDD and the election of the committee members. It is my understanding that the VCCDD sold the bonds in question to purchase properties. Now here is where things get sticky. It is important to realize the VCCDD represents the Villages Residents eventhough it is controlled by the Developer. YThe VCCDD sells the bonds on our behalf to buy properties from the Developer. The Developer pockets a nice profit, and we (the Villagers) must pay back the borrowed money (the bonds). So, who's responsibility is it to pay if the IRS says no to the ineligible tax free bonds.
I do not believe the residents are responsible for the bond total no matter what the result of the dispute. The financial transaction is between the VCCDD and the bond purchasers. We are not in the loop. Worst case, IMO, is that the VCCDD has insufficient funds to maintain the amenities due to the costs of IRS tax/penalties, and recalling and reissuing the bonds as taxable. However, we have redress if that occurs.

[Mikeod]

Dreamer I love your optimism but there is a but. Your statement is not quite correct, "If" the IRS rules against the bonds being tax free there is no doubt we might have to pay up. As I said in an earlier posting the Developer has total control over the VCCDD and the election of the committee members. It is my understanding that the VCCDD sold the bonds in question to purchase properties. Now here is where things get sticky. It is important to realize the VCCDD represents the Villages Residents eventhough it is controlled by the Developer. YThe VCCDD sells the bonds on our behalf to buy properties from the Developer. The Developer pockets a nice profit, and we (the Villagers) must pay back the borrowed money (the bonds). So, who's responsibility is it to pay if the IRS says no to the ineligible tax free bonds.
I do not believe the residents are responsible for the bond total no matter what the result of the dispute. The financial transaction is between the VCCDD and the bond purchasers. We are not in the loop. Worst case, IMO, is that the VCCDD has insufficient funds to maintain the amenities due to the costs of IRS tax/penalties, and recalling and reissuing the bonds as taxable. However, we still have funds controlled by the AAC that perhaps could be brought to that problem..

[janmcn]

I do not believe the residents are responsible for the bond total no matter what the result of the dispute. The financial transaction is between the VCCDD and the bond purchasers. We are not in the loop. Worst case, IMO, is that the VCCDD has insufficient funds to maintain the amenities due to the costs of IRS tax/penalties, and recalling and reissuing the bonds as taxable. However, we still have funds controlled by the AAC that perhaps could be brought to that problem..


If what you say is true and residents are "not in the loop", why are the residents paying the legal fees to protect the developer's bottom line? This figure has been estimated to be already approaching one million dollars. If this is true and this amount has been paid from the amenity fees, what was that money originally earmarked for?

[Villageshooter]

Wow!!! You go dudes! After much painstaking thinking. And reading about this matter, I've decided to have some faith. The developer is obviously a pretty wise individual and has a truck load of attorneys working for him. This is really his issue. The residents are not involved in the matter. The people the developer has set in place to run TV and keep it running smoothly have done an outstanding job. My opinion: Relax and enjoy your beautiful community, my father always said.. Don't worry about something until you have something to worry about! Just saying...
the IRS NEVER EVER LOSES!

[jimbo2012]

Sure they do

[Mikeod]

If what you say is true and residents are "not in the loop", why are the residents paying the legal fees to protect the developer's bottom line? This figure has been estimated to be already approaching one million dollars. If this is true and this amount has been paid from the amenity fees, what was that money originally earmarked for?
The legal fees are being paid out of VCCDD funds, part of which is our amenities fees. The VCCDD has other income sources beyond our amenities fees. Don't forget the VCCDD only gets amenities fees from north of 466.

[Dreamer61]

Just curious. Are you saying residents south of 466 don't pay amenity fees?

[Mikeod]

Just curious. Are you saying residents south of 466 don't pay amenity fees?

No. There are two central districts that collect amenity fees. VCCDD for those north of 466, and SLCDD for those south.

[Dreamer61]

Oh, thanks!

[Advogado]

No. There are two central districts that collect amenity fees. VCCDD for those north of 466, and SLCDD for those south.
Apparently, in order to avoid potentially digging himself into a deeper mess with the IRS, the Developer has stopped selling amenity facilities to the SLCDD until the current IRS investigation is concluded. Thus, the amenity fees for the unsold facilities south of 466 still go to the Developer, who is still incurring the costs of providing those amenities.

It would be nice if the Daily Sun (or maybe the VHA or POA) would provide residents with an unbiased, basic explanation of the details of the amenity system and its current status since that system is the reason that we all bought here and its prior breakdown engendered the successful class-action suit against the Developer.

[Mikeod]

Apparently, in order to avoid potentially digging himself into a deeper mess with the IRS, the Developer has stopped selling amenity facilities to the SLCDD until the current IRS investigation is concluded. Thus, the amenity fees for the unsold facilities south of 466 still go to the Developer, who is still incurring the costs of providing those amenities.

It would be nice if the Daily Sun (or maybe the VHA or POA) would provide residents with an unbiased, basic explanation of the details of the amenity system and its current status since that system is the reason that we all bought here and its prior breakdown engendered the successful class-action suit against the Developer.

Thanks, you're right. I should have known that below 466 our fees still go to the developer since he still owns the amenities.

[Warren Kiefer]

I do not believe the residents are responsible for the bond total no matter what the result of the dispute. The financial transaction is between the VCCDD and the bond purchasers. We are not in the loop. Worst case, IMO, is that the VCCDD has insufficient funds to maintain the amenities due to the costs of IRS tax/penalties, and recalling and reissuing the bonds as taxable. However, we have redress if that occurs.

Just who do you think the VCCDD are???? Who do you think provides the funding for the VCCDD ???? ALAS !, it is we the residents !!!!

[Mikeod]

Just who do you think the VCCDD are???? Who do you think provides the funding for the VCCDD ???? ALAS !, it is we the residents !!!!

I believe the VCCDD is a board comprised of representatives of the owner of the town squares, I.e., the developer, not the residents. That appears to be the central problem the IRS has with the tax-free bonds. Essentially, there is no path for resident input or control within the VCCDD, thus the ruling that the VCCDD is not a political entity with the ability to issue tax-free bonds.

Essentially the bonds were issued to purchase amenities from the developer by a developer controlled board with the profits going to the developer. To me it appears to be a mechanism for the developer to change ownership while still exercising control and profit at the same time.

Understand, I live here and like it here. Should the IRS dispute have never happened, I would not have given the transfer a second thought because the successful result of the lawsuit set a precedent for transfer of amenities that seems to ensure their continuation.

From the district website:
Governance of the Village Center Community Development District is accomplished by a five member Board of Supervisors, elected biannually, as described in Chapter 190.006, Florida Statutes. Inasmuch as there are no residential properties contained within the boundaries of the Village Center Community Development District, members of the Board of Supervisors will continue to be elected by the landowners of property within the boundaries of the District.

[Advogado]

On August 15, the VCDD posted the latest IRS communication (an August 13 Notice of Proposed Issue) on the VCDD's website: http://www.districtgov.org/images/IRSupdates/20130815-IRSupdate.pdf

The upshot of this is that the IRS does not agree with the VCCDD's attorney's arguments and is sticking with its position, explained earlier in this thread, that the VCCDD could not legitimately issue tax exempt bonds.

[JeffAVEWS]

I believe the VCCDD is a board comprised of representatives of the owner of the town squares, I.e., the developer, not the residents. That appears to be the central problem the IRS has with the tax-free bonds. Essentially, there is no path for resident input or control within the VCCDD, thus the ruling that the VCCDD is not a political entity with the ability to issue tax-free bonds.

Essentially the bonds were issued to purchase amenities from the developer by a developer controlled board with the profits going to the developer. To me it appears to be a mechanism for the developer to change ownership while still exercising control and profit at the same time.

Understand, I live here and like it here. Should the IRS dispute have never happened, I would not have given the transfer a second thought because the successful result of the lawsuit set a precedent for transfer of amenities that seems to ensure their continuation.

From the district website:
Governance of the Village Center Community Development District is accomplished by a five member Board of Supervisors, elected biannually, as described in Chapter 190.006, Florida Statutes. Inasmuch as there are no residential properties contained within the boundaries of the Village Center Community Development District, members of the Board of Supervisors will continue to be elected by the landowners of property within the boundaries of the District.

That's some Catch, that Catch 22!

[Advogado]

Two new communications from the VCCDD's attorney to the IRS are now available at: Village Community Development Districts (http://districtgov.org/IRSupdate.aspx)

In a nutshell: One letter asks the IRS to reverse its determination that the VCCDD is not qualified to issue tax exempt bonds. The other letter asks that, if the IRS will not reverse that determination, then the IRS only apply such determination prospectively.

Either outcome would be good for Villagers.

[Warren Kiefer]

I believe the VCCDD is a board comprised of representatives of the owner of the town squares, I.e., the developer, not the residents. That appears to be the central problem the IRS has with the tax-free bonds. Essentially, there is no path for resident input or control within the VCCDD, thus the ruling that the VCCDD is not a political entity with the ability to issue tax-free bonds.

Essentially the bonds were issued to purchase amenities from the developer by a developer controlled board with the profits going to the developer. To me it appears to be a mechanism for the developer to change ownership while still exercising control and profit at the same time.

Understand, I live here and like it here. Should the IRS dispute have never happened, I would not have given the transfer a second thought because the successful result of the lawsuit set a precedent for transfer of amenities that seems to ensure their continuation.

From the district website:
Governance of the Village Center Community Development District is accomplished by a five member Board of Supervisors, elected biannually, as described in Chapter 190.006, Florida Statutes. Inasmuch as there are no residential properties contained within the boundaries of the Village Center Community Development District, members of the Board of Supervisors will continue to be elected by the landowners of property within the boundaries of the District.

I have followed the VCCDD thing for years. At the outset the relationship where a governing board (the VCCDD) is elected by a developer (the only landowner in the VCCDD area) which board issues bonds and purchases amenities from the developer. Simply put the Developer appoints the board, the board issues bonds, the board buys property from the developer, the developer gets the profits. If that doesn't sound like a sweetheart deal nothing does !!!! No resident ever will play a role in these transactions.

[graciegirl]

I have followed the VCCDD thing for years. At the outset the relationship where a governing board (the VCCDD) is elected by a developer (the only landowner in the VCCDD area) which board issues bonds and purchases amenities from the developer. Simply put the Developer appoints the board, the board issues bonds, the board buys property from the developer, the developer gets the profits. If that doesn't sound like a sweetheart deal nothing does !!!! No resident ever will play a role in these transactions.


Ah yes my friend, but every resident here benefits from them, including you and me....

I don't see anything broke around here.

I do see a lot of people not happy with successful big business.

[Advogado]

Ah yes my friend, but every resident here benefits from them, including you and me....

I don't see anything broke around here.

I do see a lot of people not happy with successful big business.

I think that you are missing the point.

I don't think anybody (at least not me) is saying that the present lifestyle in The Villages is broken. There is concern that it may break if the VCCDD is unsuccessful in defending the actions of itself and the Developer in utilizing tax-exempt bonds to develop the Villages.

In the meantime, it is ironic when one thinks of the millions of dollars that the Developer gives to conservative causes and candidates while taking tens, if not hundreds, of millions of dollars in corporate welfare via the utilization of taxpayer-subsidized tax-exempt bonds.

[rp001]

I think that you are missing the point.

I don't think anybody (at least not me) is saying that the present lifestyle in The Villages is broken. There is concern that it may break if the VCCDD is unsuccessful in defending the actions of itself and the Developer in utilizing tax-exempt bonds to develop the Villages.

In the meantime, it is ironic when one thinks of the millions of dollars that the Developer gives to conservative causes and candidates while taking tens, if not hundreds, of millions of dollars in corporate welfare via the utilization of taxpayer-subsidized tax-exempt bonds.

I totally agree....Subsidized wealth accumulation

[ilovetv]

I think that you are missing the point.

I don't think anybody (at least not me) is saying that the present lifestyle in The Villages is broken. There is concern that it may break if the VCCDD is unsuccessful in defending the actions of itself and the Developer in utilizing tax-exempt bonds to develop the Villages.

In the meantime, it is ironic when one thinks of the millions of dollars that the Developer gives to conservative causes and candidates while taking tens, if not hundreds, of millions of dollars in corporate welfare via the utilization of taxpayer-subsidized tax-exempt bonds.

Add to the accusation developers buying favors on both sides of the aisle. Google:

Del Webb federal land exchange deal Nevada senator

[graciegirl]

I think that you are missing the point.

I don't think anybody (at least not me) is saying that the present lifestyle in The Villages is broken. There is concern that it may break if the VCCDD is unsuccessful in defending the actions of itself and the Developer in utilizing tax-exempt bonds to develop the Villages.

In the meantime, it is ironic when one thinks of the millions of dollars that the Developer gives to conservative causes and candidates while taking tens, if not hundreds, of millions of dollars in corporate welfare via the utilization of taxpayer-subsidized tax-exempt bonds.

Freudian...?

[rubicon]

I believe the VCCDD is a board comprised of representatives of the owner of the town squares, I.e., the developer, not the residents. That appears to be the central problem the IRS has with the tax-free bonds. Essentially, there is no path for resident input or control within the VCCDD, thus the ruling that the VCCDD is not a political entity with the ability to issue tax-free bonds.

Essentially the bonds were issued to purchase amenities from the developer by a developer controlled board with the profits going to the developer. To me it appears to be a mechanism for the developer to change ownership while still exercising control and profit at the same time.

Understand, I live here and like it here. Should the IRS dispute have never happened, I would not have given the transfer a second thought because the successful result of the lawsuit set a precedent for transfer of amenities that seems to ensure their continuation.

From the district website:
Governance of the Village Center Community Development District is accomplished by a five member Board of Supervisors, elected biannually, as described in Chapter 190.006, Florida Statutes. Inasmuch as there are no residential properties contained within the boundaries of the Village Center Community Development District, members of the Board of Supervisors will continue to be elected by the landowners of property within the boundaries of the District.

mikeod: You are spot on and it goes deeper than what you address here.

[Mikeod]

mikeod: You are spot on and it goes deeper than what you address here.

Are you referring to the belief that the developer's family also bought up most of the bonds in question so that they profit from the interest paid on them tax free as well?

[Advogado]

Are you referring to the belief that the developer's family also bought up most of the bonds in question so that they profit from the interest paid on them tax free as well?

That rumor is apparently not true. Refer to: http://districtgov.org/images/IRSupdates/IRS%20Update%208-27-13_Letter%20to%20Chief%20Counsel.pdf

Refer to the penultimate paragraph.

[Mikeod]

That rumor is apparently not true. Refer to: http://districtgov.org/images/IRSupdates/IRS%20Update%208-27-13_Letter%20to%20Chief%20Counsel.pdf

Refer to the penultimate paragraph.

Exactly!

[marlinguy]

As someone who at the moment is bent on moving to the inside of the Dome in the near future I have followed the IRS issue with some interest. I am curious as to how all of this came about. Didn't the Bond Issuer have a rating agency, Moody's for example, rate them for tax exempt status? Wasn't the IRS asked for an opinion BEFORE issuing? Then, when I get so dizzy contemplating a million bits of info I try to look at what's the basic issue. Tell me if I'm wrong (in a nice way please) but as I understand it, the IRS is saying that because the CCD's did not meet the requirements of IRS 103 that they weren't in fact not a qualified political subdivision and therefore not authorized to issue bonds exempt from federal tax. Is that it? Personally, based on what I have seen and read, I would have to agree but then that really doesn't make a bit of difference, does it? For me, the much bigger question is,,"What if the IRS prevails???" Does anyone know? I have read a number of IRS published case studies concerning similar outcomes and none of them sound very good. I have read a couple of "well, the Developer will just write a check", maybe, I kinda doubt it though. Replies?

[graciegirl]

As someone who at the moment is bent on moving to the inside of the Dome in the near future I have followed the IRS issue with some interest. I am curious as to how all of this came about. Didn't the Bond Issuer have a rating agency, Moody's for example, rate them for tax exempt status? Wasn't the IRS asked for an opinion BEFORE issuing? Then, when I get so dizzy contemplating a million bits of info I try to look at what's the basic issue. Tell me if I'm wrong (in a nice way please) but as I understand it, the IRS is saying that because the CCD's did not meet the requirements of IRS 103 that they weren't in fact not a qualified political subdivision and therefore not authorized to issue bonds exempt from federal tax. Is that it? Personally, based on what I have seen and read, I would have to agree but then that really doesn't make a bit of difference, does it? For me, the much bigger question is,,"What if the IRS prevails???" Does anyone know? I have read a number of IRS published case studies concerning similar outcomes and none of them sound very good. I have read a couple of "well, the Developer will just write a check", maybe, I kinda doubt it though. Replies?

No one really knows what the developer will do. In my opinion, many FREQUENT posters (including myself) have opinions on the developer and his doings based partially on his political leanings. Over time this is what I have ascertained based on reading posts over a six year span.

Back to the issue. No one really knows. This issue has been going on for five years and some say it will be in litigation for many more. I am glad we took the chance and moved here then or we would have not had these wonderful years.

We are NOT risk takers and very planned and very conservative in our financial dealings.

It is danged impossible to know what the outcome might be. The developer had the opportunity to pay a much smaller fine in the beginning but apparently (guessing) on the advice of lawyers decided to fight it.

Now the lawyers are supposedly paid by the central district fund and there are those that say that comes from our amenities and those who say it does not.

I am a firm believer that up until now the developer and his family and his consultants have made very good decisions.

As Rubicon says. I opine...you have nothing to do but decide for yourself and your guess will be as good or bad as any of ours.

[Advogado]

As someone who at the moment is bent on moving to the inside of the Dome in the near future I have followed the IRS issue with some interest. I am curious as to how all of this came about. Didn't the Bond Issuer have a rating agency, Moody's for example, rate them for tax exempt status? Wasn't the IRS asked for an opinion BEFORE issuing? Then, when I get so dizzy contemplating a million bits of info I try to look at what's the basic issue. Tell me if I'm wrong (in a nice way please) but as I understand it, the IRS is saying that because the CCD's did not meet the requirements of IRS 103 that they weren't in fact not a qualified political subdivision and therefore not authorized to issue bonds exempt from federal tax. Is that it? Personally, based on what I have seen and read, I would have to agree but then that really doesn't make a bit of difference, does it? For me, the much bigger question is,,"What if the IRS prevails???" Does anyone know? I have read a number of IRS published case studies concerning similar outcomes and none of them sound very good. I have read a couple of "well, the Developer will just write a check", maybe, I kinda doubt it though. Replies?
Gracie is right when she indicates that nobody can tell you, with any certainty, what the outcome will be. You are also right-- some of the potential outcomes would not be "very good".

It is possible (although it seems unlikely) that the IRS will (a) change its position and say that developer-controlled CDDs can issue tax exempt bonds, or (b) only apply the proscription against such issuance prospectively (a real possibility). In either case, there would appear to be no impact on Villagers.

However, if the IRS successfully maintains its current position, there would presumably be huge costs incurred by the VCCDD, which owns a big chunk of the amenity facilities. If that happens, the concern to Villagers is how the amenity system would have the financial resources to continue to operate. But you should understand that, even if the VCCDD loses, the IRS cannot come after the Villagers for any taxes, penalties, etc.

Exactly how all this plays out, time will tell. For a more complete analysis, go to the POA website. You should also discount just about everything that the VHA and Daily Sun have said about the matter.

[mickey100]

As someone who at the moment is bent on moving to the inside of the Dome in the near future I have followed the IRS issue with some interest. I am curious as to how all of this came about. Didn't the Bond Issuer have a rating agency, Moody's for example, rate them for tax exempt status? Wasn't the IRS asked for an opinion BEFORE issuing? Then, when I get so dizzy contemplating a million bits of info I try to look at what's the basic issue. Tell me if I'm wrong (in a nice way please) but as I understand it, the IRS is saying that because the CCD's did not meet the requirements of IRS 103 that they weren't in fact not a qualified political subdivision and therefore not authorized to issue bonds exempt from federal tax. Is that it? Personally, based on what I have seen and read, I would have to agree but then that really doesn't make a bit of difference, does it? For me, the much bigger question is,,"What if the IRS prevails???" Does anyone know? I have read a number of IRS published case studies concerning similar outcomes and none of them sound very good. I have read a couple of "well, the Developer will just write a check", maybe, I kinda doubt it though. Replies?

I would expect that IF there was a negative effect to the Villagers, for example, if the VCCDD had to pay penalties which affected its ability to provide our amenities, there would be a class action lawsuit against the developer. And of course, we don't know what the outcome of that would be.

[Advogado]

I would expect that IF there was a negative effect to the Villagers, for example, if the VCCDD had to pay penalties which affected its ability to provide our amenities, there would be a class action lawsuit against the developer. And of course, we don't know what the outcome of that would be.
You got that right, although I would be pretty sure the residents would ultimately prevail. But what happens in the meantime to the amenity system?:sad:

[graciegirl]

Gracie is right when she indicates that nobody can tell you, with any certainty, what the outcome will be. You are also right-- some of the potential outcomes would not be "very good".

It is possible (although it seems unlikely) that the IRS will (a) change its position and say that developer-controlled CDDs can issue tax exempt bonds, or (b) only apply the proscription against such issuance prospectively (a real possibility). In either case, there would appear to be no impact on Villagers.

However, if the IRS successfully maintains its current position, there would presumably be huge costs incurred by the VCCDD, which owns a big chunk of the amenity facilities. If that happens, the concern to Villagers is how the amenity system would have the financial resources to continue to operate. But you should understand that, even if the VCCDD loses, the IRS cannot come after the Villagers for any taxes, penalties, etc.

Exactly how all this plays out, time will tell. For a more complete analysis, go to the POA website. You should also discount just about everything that the VHA and Daily Sun have said about the matter.

I strongly disagree.

[rubicon]

As residents follow this issue they need with support from the POA to discuss what options are available to them depending on the outcome.

It must begin with what the decision means for The Villages future

it must include who has liability/responsibility why the IRS ruled against The Villages, if they do

it must include research on related legal cases

[Advogado]

[/B][/COLOR]
I strongly disagree.

Then you have not been following this matter very closely.

[Easyrider]

I would expect that IF there was a negative effect to the Villagers, for example, if the VCCDD had to pay penalties which affected its ability to provide our amenities, there would be a class action lawsuit against the developer. And of course, we don't know what the outcome of that would be.

I do know none of this IRS Bond Issue problem was disclosed to us as potential purchasers before we closed as required by Florida Real Estate Disclosure Laws and that in itself is a class action lawsuit if the outcome has a negative effect on the home buyers.

[Bogie Shooter]

Hundreds and hundreds of opinions. Nobody really knows.

https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/irs-investigation-79482/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/developer-irs-issues-74539/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/irs-bond-issue-72635/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/can-i-get-straight-answer-irs-70454/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/irs-investigation-tax-free-bonds-36324/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/daily-sun-article-district-updates-position-irs-63371/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/latest-development-irs-tax-exempt-bond-investigation-40713/
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/irs-resets-bond-challenge-53568/

[dillywho]

Has it occurred to anyone here that IF the IRS prevails that it may just all fall on the developer alone? Then what will the nay-sayers have to say about the developer?

Who took the risk to develop this place? Certainly none of us. How could the developers possibly have known for sure that if they built all this that it would be a sure-shot? As I see it, we really don't have anything to lose.

I remember when they had their troubles in Montana how people here were so worried about what ramifications we would all suffer if they lost in court. They lost and that was the end of that; no impact here other than criticisms of how they got into trouble in the first place and what scoundrels they are.

I don't know them, but I do appreciate their ability to do business. They have done many things here that they didn't have to do. The land for the VA Clinic comes to mind, for one. I'm sure it generates business for them in various ways but not having to constantly travel to Leesburg or Gainesville is a big plus for lots of folks here.

Let's worry about the issues facing each of us everyday and not so much about something over which we have no control. It still beats the heck out of any place else we've lived since retirement or considered. Comparison shopping is always an option.

[mickey100]

...
Let's worry about the issues facing each of us everyday and not so much about something over which we have no control. It still beats the heck out of any place else we've lived since retirement or considered. Comparison shopping is always an option.

At present it beats the heck out of any other retirement option we considered. However, if something happens to negatively affect the amenity fund flow, we'll all be singing a different tune. As Advogado said, hopefully the residents would prevail in a class action lawsuit, but that could take years, and in the meantime our property values would most likely take a hit. I'm certainly hoping things go our way, but realistically, I don't see any guarantees.

[Mikeod]

Has it occurred to anyone here that IF the IRS prevails that it may just all fall on the developer alone? Then what will the nay-sayers have to say about the developer?
.
The dispute is between the central districts and the IRS. The developer is involved only because he is the principal landowner in the central districts and thus controls the makeup of the boards. But our amenity fees go to the central districts and the quality of our amenities may be at risk if the IRS prevails.

Now, there are those who believe the developer will not let our amenities suffer and will step in to cover penalties and interest if they are imposed. But he has no legal obligation to do that. With the profits earned from the sale of the amenities, which was maximized because of the tax-free bonds, there may be a moral obligation to keep us whole since we did not benefit in any significant way from the bond issue.

But, as stated many times before, nobody knows what the outcome will be.

[Bogie Shooter]

At present it beats the heck out of any other retirement option we considered. However, if something happens to negatively affect the amenity fund flow, we'll all be singing a different tune. As Advogado said, hopefully the residents would prevail in a class action lawsuit, but that could take years, and in the meantime our property values would most likely take a hit. I'm certainly hoping things go our way, but realistically, I don't see any guarantees.

So much certainty...........................

[Easyrider]

Join Date: Sep 2008
Location: Summerhill
Posts: 899
Default My Thoughts
Has it occurred to anyone here that IF the IRS prevails that it may just all fall on the developer alone? Then what will the nay-sayers have to say about the developer?

Who took the risk to develop this place? Certainly none of us. How could the developers possibly have known for sure that if they built all this that it would be a sure-shot? As I see it, we really don't have anything to lose.





Of course you realize it started very small and was added to as the original venture paid off and then more was added as more and more money was made . It's not like the whole thing was built at once hoping for a winner and millions were put at risk on less than a sure thing up front.

[graciegirl]

Has it occurred to anyone here that IF the IRS prevails that it may just all fall on the developer alone? Then what will the nay-sayers have to say about the developer?

Who took the risk to develop this place? Certainly none of us. How could the developers possibly have known for sure that if they built all this that it would be a sure-shot? As I see it, we really don't have anything to lose.

I remember when they had their troubles in Montana how people here were so worried about what ramifications we would all suffer if they lost in court. They lost and that was the end of that; no impact here other than criticisms of how they got into trouble in the first place and what scoundrels they are.

I don't know them, but I do appreciate their ability to do business. They have done many things here that they didn't have to do. The land for the VA Clinic comes to mind, for one. I'm sure it generates business for them in various ways but not having to constantly travel to Leesburg or Gainesville is a big plus for lots of folks here.

Let's worry about the issues facing each of us everyday and not so much about something over which we have no control. It still beats the heck out of any place else we've lived since retirement or considered. Comparison shopping is always an option.

Well said. And although it wasn't the size it is now, the money put to risk was most everything they had.

Thank you Morse family for all of us who appreciate it and for those who don't.

[JP]

Well said. And although it wasn't the size it is now, the money put to risk was most everything they had.

Thank you Morse family for all of us who appreciate it and for those who don't.

I agree and it just goes to show you what can be done when there is money available that isn't taxed like crazy.

There could be more places like TV all across America if the government would just get out of our pockets and more people would accept individual responsibility.

[graciegirl]

I agree and it just goes to show you what can be done when there is money available that isn't taxed like crazy.

There could be more places like TV all across America if the government would just get out of our pockets and more people would accept individual responsibility.


I want to hug you.

[marlinguy]

Thanks for the direction to the POA website. Never even knew there was one. Now I understand why "no one knows"?? Geez, thinking about a hefty bond on a golf course home, enjoying life and all "the stuff" and potentially have a major "glitch",,,and never having been able to enjoy "the stuff". Boy, something to think about

[Mikeod]

Thanks for the direction to the POA website. Never even knew there was one. Now I understand why "no one knows"?? Geez, thinking about a hefty bond on a golf course home, enjoying life and all "the stuff" and potentially have a major "glitch",,,and never having been able to enjoy "the stuff". Boy, something to think about

I hope you understand that the bond on your home is not the bond(s) involved in the IRS dispute.

[mickey100]

The dispute is between the central districts and the IRS. The developer is involved only because he is the principal landowner in the central districts and thus controls the makeup of the boards. But our amenity fees go to the central districts and the quality of our amenities may be at risk if the IRS prevails.

Now, there are those who believe the developer will not let our amenities suffer and will step in to cover penalties and interest if they are imposed. But he has no legal obligation to do that. With the profits earned from the sale of the amenities, which was maximized because of the tax-free bonds, there may be a moral obligation to keep us whole since we did not benefit in any significant way from the bond issue.

But, as stated many times before, nobody knows what the outcome will be.

I agree - in my opinion there is a moral obligation on the part of the developer to keep us whole, but unfortunately no legal obligation.

[marlinguy]

If you don't mind, when you have a chance and not too time consuming, I would love to know the details, which is for what.

Thanks

[Advogado]

I agree - in my opinion there is a moral obligation on the part of the developer to keep us whole, but unfortunately no legal obligation.

There is a contractual obligation on the part of the Developer to continue to provide the amenities in exchange for payment of the amenity fees.
Take a look at your deed restrictions. Understanding that is basic to understanding how the whole amenities system works.

In this regard, remember that, although everybody refers to the Developer as "he", the Developer is really an "it"-- a corporation owned by the Morse family.

[graciegirl]

If you don't mind, when you have a chance and not too time consuming, I would love to know the details, which is for what.

Thanks


Go to search above and type in bond.
There are hundreds of thousands of words written about it. There are two bonds. The one a buyer pays when he buys a new home here that is for the cost of the roads and the lights and the underground plumbing and the whole infrastructure. This bond is NOT included in the price of a home like it is in other parts of the country. On most new homes it is about 24 thousand dollars extra.

The bond that there is so much discussion about is the other one that is an investigation by the IRS. The issue is whether it is o.k. to have municipal bonds that are tax free in a CDD, which this is. A very unusual municipal situation that is working far better than the other kinds if you ask me.

The developer is not being investigated for not paying his proper income tax or anything shady.

There are those who like the developer and are on the side of big business and there are those who don't like the developer and don't like big business. There are those who don't know the developer, that would be every single person who lives here I would guess. It boils down sadly to be too often a political opinion whether you think Gary Morse is a good guy or a spawn of the devil.

And that is just my opinion.

[redwitch]

There are those who like the developer and are on the side of big business and there are those who don't like the developer and don't like big business. There are those who don't know the developer, that would be every single person who lives here I would guess. It boils down sadly to be too often a political opinion whether you think Gary Morse is a good guy or a spawn of the devil.

And that is just my opinion.

And then are those who appreciate what has been accomplished here and the work entailed in creating TV but think the Morses have feet of clay. They can be greedy. They can be high-handed. They have shown themselves to participate in some questionable practices at times. They also have freely contributed their own money to various things and charities in TV. They aren't devils. They aren't saints.

Personally, I don't want to meet Mark or Gary Morse. I doubt they are the type of people with whom I really want to associate. Like most TVers, I think Harold Schwartz walked on water.

[rubicon]

Has it occurred to anyone here that IF the IRS prevails that it may just all fall on the developer alone? Then what will the nay-sayers have to say about the developer?

Who took the risk to develop this place? Certainly none of us. How could the developers possibly have known for sure that if they built all this that it would be a sure-shot? As I see it, we really don't have anything to lose.

I remember when they had their troubles in Montana how people here were so worried about what ramifications we would all suffer if they lost in court. They lost and that was the end of that; no impact here other than criticisms of how they got into trouble in the first place and what scoundrels they are.

I don't know them, but I do appreciate their ability to do business. They have done many things here that they didn't have to do. The land for the VA Clinic comes to mind, for one. I'm sure it generates business for them in various ways but not having to constantly travel to Leesburg or Gainesville is a big plus for lots of folks here.

Let's worry about the issues facing each of us everyday and not so much about something over which we have no control. It still beats the heck out of any place else we've lived since retirement or considered. Comparison shopping is always an option.

Hi dillywho: I appreciate your thoughts and comments and your desire not to pre-judge. However if you read all of what the IRS questioned in its Notice of Proposed Issue you might not be so quick to speak. I am not saying what follows is true or untrue but what the IRS alleges

In an abridge version the IRS essentially is saying that the Developer because he and his control board voted on the sell of facilities using his appraisals accountants ,etc to determine market value and income streams and used the VCCDD which he controls as a conduit to finance the sell via tax exempt bonds. so the IRS ask if the issuer of the bonds, the VCCDD is qualified for tax exempt bonds.

since the Issuer of the bonds was not the Developer but the VCCDD it does not appear the Developer is exposed.

The attorney for the VCCDD is utilizing our amenities fees to defend a case which is the subject of questionable transaction created by..... the Developer. However the question remains is the Developer (Villages of Lake Sumter, Inc formerly Orange Blossom, Inc) a legal party to the issuance of the bonds or just a recipient?

If you study the Developers methods of finance etc he did not take any risks he shifted all of the financing to the residents and secured all the profits. he certainly should be hailed for his business acumen in this respect

[mickey100]

And then are those who appreciate what has been accomplished here and the work entailed in creating TV but think the Morses have feet of clay. They can be greedy. They can be high-handed. They have shown themselves to participate in some questionable practices at times. They also have freely contributed their own money to various things and charities in TV. They aren't devils. They aren't saints.

Personally, I don't want to meet Mark or Gary Morse. I doubt they are the type of people with whom I really want to associate. Like most TVers, I think Harold Schwartz walked on water.

Well said. Not everyone who is not a fan of the Morses is "jealous" of their money, disparaging of big business, or in disagreement with their politics. The issue is much more complex.

[Mikeod]

If you don't mind, when you have a chance and not too time consuming, I would love to know the details, which is for what.

Thanks

Simply, there are bonds issued for the infrastructure to build the homes. Power, sewer, water, etc. These are the bonds that we pay annually with our property taxes, or pay them off entirely.

The bonds in dispute were issued by the central districts, VCCDD and SLCDD, to finance the purchase of amenities (exec golf courses, rec centers, etc.) from the developer. These bonds are paid, in part, by our amenity fees. It is that revenue stream that is at risk if the IRS prevails. Since our amenity fee increases are capped by CPI essentially, if more money has to be diverted to cover interest and penalties, there is less to maintain the amenities.

This is the Cliff notes version. The POA website has a more complete picture of the situation and a timeline of events.

[marlinguy]

OK, I think I got it now. As far as my vote goes, "He", The Developer, "Morse", whoever, was the inspiration and driving force that created one of the most unique and successful communities ever. What's more, the level of pure satisfaction from his customers is nothing short of astounding! He get's my vote for "DUDE" of the last 20 years. However, from what I gather, the question really isn't whether people like what he has done, clearly they do. It's whether his entities that created this (looking at new golf course homes as we type) did this within the scope of IRS law. Guess the IRS has already made up it's mind. Kinda like Barry Bonds, awesome baseball player, just he did it with the help of steroids. So, all this brings this to what is currently on my mind. Should I wait to plop down my $500K or so or jump in, the waters fine! ??? I would sure hate to jump in and the water just dried up. I wonder if the 270 or so new homes sitting in inventory is typical or are their others doing a little stutter step, wondering the same thing. Whaddaya think? I truly want to thank all of you for being so responsive for my education. I cant wait to get there,,,as soon as I get over my fear of no water in the pool.

[Bogie Shooter]

OK, I think I got it now. As far as my vote goes, "He", The Developer, "Morse", whoever, was the inspiration and driving force that created one of the most unique and successful communities ever. What's more, the level of pure satisfaction from his customers is nothing short of astounding! He get's my vote for "DUDE" of the last 20 years. However, from what I gather, the question really isn't whether people like what he has done, clearly they do. It's whether his entities that created this (looking at new golf course homes as we type) did this within the scope of IRS law. Guess the IRS has already made up it's mind. Kinda like Barry Bonds, awesome baseball player, just he did it with the help of steroids. So, all this brings this to what is currently on my mind. Should I wait to plop down my $500K or so or jump in, the waters fine! ??? I would sure hate to jump in and the water just dried up. I wonder if the 270 or so new homes sitting in inventory is typical or are their others doing a little stutter step, wondering the same thing. Whaddaya think? I truly want to thank all of you for being so responsive for my education. I cant wait to get there,,,as soon as I get over my fear of no water in the pool.

Less than one months sales!
Come join us, maybe it will be settled before or after we go out in the box.
Why wait??

[marlinguy]

Working hard so I can carry a 7. Heard all you guys are Sr. Tour material. A seven,,,lol,,I cant even dream of a 7. Buy thanks, hope to see all of you soon.

[mickey100]

OK, I think I got it now. As far as my vote goes, "He", The Developer, "Morse", whoever, was the inspiration and driving force that created one of the most unique and successful communities ever. What's more, the level of pure satisfaction from his customers is nothing short of astounding! He get's my vote for "DUDE" of the last 20 years. However, from what I gather, the question really isn't whether people like what he has done, clearly they do. It's whether his entities that created this (looking at new golf course homes as we type) did this within the scope of IRS law. Guess the IRS has already made up it's mind. Kinda like Barry Bonds, awesome baseball player, just he did it with the help of steroids. So, all this brings this to what is currently on my mind. Should I wait to plop down my $500K or so or jump in, the waters fine! ??? I would sure hate to jump in and the water just dried up. I wonder if the 270 or so new homes sitting in inventory is typical or are their others doing a little stutter step, wondering the same thing. Whaddaya think? I truly want to thank all of you for being so responsive for my education. I cant wait to get there,,,as soon as I get over my fear of no water in the pool.

I guess it depends on how much of a gambler you are. We live here and love it, but are dismayed by this whole IRS deal, and as you've read, there is much uncertainty about how it will affect the residents should the final decision be against The Villages.

[RVRoadie]

OK, I think I got it now. As far as my vote goes, "He", The Developer, "Morse", whoever, was the inspiration and driving force that created one of the most unique and successful communities ever. What's more, the level of pure satisfaction from his customers is nothing short of astounding! He get's my vote for "DUDE" of the last 20 years. However, from what I gather, the question really isn't whether people like what he has done, clearly they do. It's whether his entities that created this (looking at new golf course homes as we type) did this within the scope of IRS law. Guess the IRS has already made up it's mind. Kinda like Barry Bonds, awesome baseball player, just he did it with the help of steroids. So, all this brings this to what is currently on my mind. Should I wait to plop down my $500K or so or jump in, the waters fine! ??? I would sure hate to jump in and the water just dried up. I wonder if the 270 or so new homes sitting in inventory is typical or are their others doing a little stutter step, wondering the same thing. Whaddaya think? I truly want to thank all of you for being so responsive for my education. I cant wait to get there,,,as soon as I get over my fear of no water in the pool.

270 houses sitting in inventory is less than one month of sales at the current rate.

[rubicon]

It was reported in the New York newspapers that the IRS ruled against the District.

[graciegirl]

It was reported in the New York newspapers that the IRS ruled against the District.

???

[janmcn]

It was reported in the New York newspapers that the IRS ruled against the District.


Do you have a link or can you tell us which NY newspapers?

[Bogie Shooter]

Do you have a link or can you tell us which NY newspapers?

And when it happened?
Once again no facts.......................

[Mr.Kris]

It was reported in the New York newspapers that the IRS ruled against the District.

If it is current and accurate reporting it most likely refers to the August 7, 2013 IRS letter requiring a response from the VCCDD within 30 days to avoid an "adverse opinion."

It's doubtful that the IRS considers the August 23, 2013 request for relief nor the August 26, 2013 letter to Chief Counsel adequate responses.

Thirty days ended September 7, 2013, but it takes a few days for an opinion to become public.

If it is not current and accurate reporting it is just rehashing old news.

But something should be coming out very soon.