I.R.S. Rules Against The Villages

[allus70]

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)

[skip0358]

I guess after all the heat the IRS is in they had to do something to save face. We'll have to wait and see what happens and who and how much has to be paid.

[Billyworld]

I wonder if this is part of this IRS scandal that seems to be getting bigger? What does this mean for us residents in The Villages? Do we get sucked in to paying for whatever mistake was made by whoever?:shocked:

[zcaveman]

There is a small article in the Daily Sun Business section on this.

Z

[carm310]

There is a small article in the Daily Sun Business section on this.

Z

Can you share more information for those of us outside the bubble at this time? : D

[rayschic]

I wonder if this is part of this IRS scandal that seems to be getting bigger? What does this mean for us residents in The Villages? Do we get sucked in to paying for whatever mistake was made by whoever?:shocked:

Too early to tell. Here's a link to another article about the issue.

BREAKING: IRS Rules Against The Villages (http://www.thevillagesfloridabook.com/irs-rules-against-the-villages/?awt_l=J78qB&awt_m=3aJr5ODt79RV9Ih)

[mickey100]

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

[TVMayor]

From the Orlando Sentinel
IRS rules that The Villages has no right to issue tax-exempt bonds

By Elo�sa Ruano Gonz�lez, Orlando Sentinel
June 6, 2013
The Internal Revenue Service has ruled that The Villages doesn't have the right to issue the tax-exempt recreational and utility bonds that have been crucial to the development of the sprawling retiree haven.
Last week's decision could prompt The Villages government to strike a deal to pay the taxes on the bonds. Such a prospect "has a potential negative impact on residents," said Elaine Dreidame, president of the Property Owners' Association of The Villages.
The Village Center Community Development District's major revenue comes from annual amenity fees, which help pay for upkeep of golf courses and other recreational services. About half the money goes toward paying off bonds.
Dreidame said Wednesday she is concerned that more of the amenity fees, which cannot be raised, will go toward paying off the taxes.
"I hope the developer steps up," she said, referring to H. Gary Morse, a major GOP donor and fundraiser. She added that Morse � the drving force behind the the fast-growing development of 100,000 northwest of Orlando � should "pay to get us out of this problem rather than pledge the amenity fees."
The agency's final decision, dated May 30, comes after a five-year probe into the way the CDD borrowed money. The investigation focused on $364 million in bonds the district issued between 1998 and 2003, which the federal agency could now end up taxing.
"I'm disappointed at their conclusion," said Perry Israel, a California attorney representing the district. He added the district "is currently considering what its options will be as it goes forward."
Ultimately, the burden falls on the holder of the bonds, who can challenge the decision in court, Israel said. In such cases, he said developer districts also have the option of settling with bondholders or reaching an agreement with the IRS to prevent the agency from going after bondholders.
The IRS argued in a memorandum that Morse and his family controlled the district's board and made money from the bonds. The agency also argued that a government should be accountable to the public, which then decides how the money from the bonds should be spent.
"We believe that an entity that is organized and operated in a manner intended to perpetuate private control, and to avoid indefinitely responsibility to a public electorate, cannot be a political subdivision of a State," according to the memorandum from the IRS Tax Exempt Bonds division.
A state law in 1980 gave private developers across Florida the right to establish their own governments to help pay the costs of major projects. A provision allowing for tax-exempt bonds was an important part of the legislation, which made borrowing cheaper.
Although control of the CDD board would be transferred to residents once they owned the majority of the property in the district, the memorandum states that "even after over 20 years, this has not happened � Indeed, the facts indicate that Issurer [district] was intentionally structured to ensure that this never could happen."
The memorandum was mailed to District Manager Janet Tutt, who was out sick and unavailable for comment, an employee said.
Israel said there are thousands of similar developer districts in the U.S. that could be affected by the IRS' decision. Not only does it put a "new standard" on what is considered a "political subdivision," but it also will likely make it more difficult for developers to find money to build utilities and other services, he said.

IRS officials: Villages not a "government" that can issue tax-exempt bonds - OrlandoSentinel.com (http://www.orlandosentinel.com/news/local/lake/os-villages-tax-exempt-bonds-20130606,0,2587067.story)

[gomoho]

Can anyone clarify this for me - are the bonds in question those for the amenities or do they also include the infrastructure bonds for roads, utilities, etc.

[asianthree]

i think a wait and see not going to worry about something i have no control of

[TVMayor]

Can anyone clarify this for me - are the bonds in question those for the amenities or do they also include the infrastructure bonds for roads, utilities, etc.
Leisureville USA: Big trouble in The Villages (http://andrewblechman.blogspot.com/2009/04/big-trouble-in-villages.html)

Leisureville USA: Big Trouble in The Villages (Part 2) (http://andrewblechman.blogspot.com/2009/04/big-trouble-in-villages-part-2.html)

[skip0358]

i think a wait and see not going to worry about something i have no control of

Agree, if Moorse and his legal team can't beat them, just wait & see. I'm not going anywhere !!

[mickey100]

I'm sure they'll try to draw out the process with endless appeals, but eventually the appeal process will end and someone will have to pay the proverbial piper.

[TVMayor]

I'm sure they'll try to draw out the process with endless appeals, but eventually the appeal process will end and someone will have to pay the proverbial piper.
Was not the draw out the last five years? Did the fat lady not just sing?

[jflynn1]

Can you share more information for those of us outside the bubble at this time? : D

To All the press outside of the Villages

Thank you for printing The Real Story.We do not get to read about the real story because it is never told in the Villages News publication The Daily Sun. T:bigbow::mademyday:wo months ago the headline was the problem was all solved. I wonder who is going to end up paying for this. and who has been paying for the legal fees associated with the defense of this IRS issue all along.

When you begin to peel away at the onion, The Villages Friendliest Hometown motto is really not so friendly and really is just a fantasy.

[justjim]

"it's not over until it's over". Yogi said that! I'm not an attorney (neither was Yogi) but there are so many unanswered questions....... Examples: What about all the other CDD'S in Florida? I don't think you can treat them any different. What about the bonds issued since 2003? Etc. etc. Nope, this is far from over IMHO.

[graciegirl]

To All the press outside of the Villages

Thank you for printing The Real Story.We do not get to read about the real story because it is never told in the Villages News publication The Daily Sun. T:bigbow::mademyday:wo months ago the headline was the problem was all solved. I wonder who is going to end up paying for this. and who has been paying for the legal fees associated with the defense of this IRS issue all along.

When you begin to peel away at the onion, The Villages Friendliest Hometown motto is really not so friendly and really is just a fantasy.

Unfriendly or friendly is not involved here. It is how monies are handled and collected and dispersed in a CDD form of government.. ...now the IRS seems to be deciding that the municipal bonds issued by CDD are not tax exempt. And that the Morses gained from this. Hello....

What was printed some time ago in the Sun was that the developer sold entities to the CDD that were underpriced. That was considered a good move and one that favored CDD's. We aren't the only CDD in Florida.

What the IRS ruled is that CDDs can't really continue as the Florida law that set them up allowed for many years.

We are now going to have to wait and see.

My guess as to what will happen is that there will be further negotiation and that the amount assessed will be lowered after a lot of lawyers will see that these conversations go on and on.

The Orlando Sentinel and Lauren Ritchie in my opinion has frequently offered stories on The Villages that have been very unfavorable and sensational. I don't know why, but it could be the editorial slant partially and the journalistic style which seems to me to be much more sensational than I consider responsible reporting.

Following will be posts by the same old people who bash the developer gloating and the same old people who think positively of the developer defending.

And eventually it will all come out in the wash.

It will put the kebash on the sales and growth and worth of our homes until it is resolved in my opinion.


NO ONE knows what the lawyers for the IRS and the lawyers for the villages will end up doing. The IRS is really on the hot seat these days about targeting certain groups. I am not suggesting that is what happened here but it won't help their reputation that Morse gives huge sums to that same party. I can't say the word or this post will be deleted.

[jflynn1]

Can you share more information for those of us outside the bubble at this time? : D

Visit This site.

BREAKING: IRS Rules Against The Villages (http://www.thevillagesfloridabook.com/irs-rules-against-the-villages/?awt_l=8GIzE&awt_m=3aJr5OErdtQlPIh)

[mickey100]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

[graciegirl]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

I have heard this opinion before and I respectfully do not agree. I have not heard of any law bring broken.

[manaboutown]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

This sums it up nicely without getting into the details.

IMHO it might be better to rent than buy to stay off the hook until this is finally settled which may be 10 years from now.

[Golfingnut]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

I wonder, could an Agency as Patriotic and honest as the IRS make a mistake in judgment i.e. the ruling they came to about this bond issue?

[njbchbum]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

yeah - just a guess.

and i could guess that if bonds had not been sold, home buyers would have had their share of infrastructure costs added straight into their purchase price...and that if this suit is ultimately lost by the developer that they just might be assessed that amount straight away!

but that's just a guess.

[Bogie Shooter]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

Guessing?

[justjim]

i think a wait and see not going to worry about something i have no control of

:boxing2: A very thoughtful approach. This issue is so complicated that most of us don't have enough correct information or knowledge to intelligently discuss it. I do know this much about the IRS. If you call three people at the IRS and ask the same question to each----you will very likely get three different answers. Say no more!!

[TVMayor]

Lauren Ritchie�s latest article is dated June 4, today is the sixth, the title is �Fruitland Park commissioners should remove police Chief Terry Isaacs as interim city manager�. People like to blame Lauren Ritchie for generating bad info on the IRS problem but LR had nothing to do with the multiple news releases today.

[coralway]

Everybody - and every group - wants to be tax exempt. Irregardless of who, or what they are or do.

It's always the other guy who should pay - but not me.

[Challenger]

I have seen nothing on this thread that indicates anyone posting here has an understanding of this process. The opinions being expressed appear mostly to be by people who have never been involved in issuing bonds of any kind nor in legislation or litigation relating to bond issues

Most often legal advise is worth about what you pay for it.

My guess is that the process has many years to run before it is settled. My previous experience is that the Bond Underwriters and the Attorneys on whose opinion the Underwriters and buyers relied have more immediate issues to deal with ( ditto their malpractice insurers)

[Advogado]

yeah - just a guess.

and i could guess that if bonds had not been sold, home buyers would have had their share of infrastructure costs added straight into their purchase price...and that if this suit is ultimately lost by the developer that they just might be assessed that amount straight away!

but that's just a guess.
I think you may not be clear on the fact that the bonds under IRS examination are not the infrastructure bonds attached to our houses. The bonds under examination were all issued by the Center Districts. The Center Districts used the proceeds of most of the bonds to pay the Developer (at what the IRS alleges were artificially inflated prices) for the amenity facilities.

Therefore, contrary to your post, Villagers cannot be directly assessed for the costs involved here. This is because the Center Districts can only tax within their boundaries, which do not include residents and cannot raise the amenity fees in excess of the CPI. Instead, the risk to Villagers is that IF the IRS investigation results in the Center Districts incurring huge costs, the Center Districts may not be financially able to continue to furnish the amenities to us. For a more detailed explanation, go to the POA website: http://poa4us.org/bulletins_files/bulletin200908.pdf

For accurate information, forget most of what you read in the Daily Sun and VHA Bulletin and look to either the POA Bulletin or to publications outside The Villages.

A final point regarding the concern expressed by some posters that the IRS actions here are politically motivated-- because of the Developer's large donations to the Republican party: The IRS investigation was begun under the Bush administration-- which, while it indicates nonpartisanship, is an indication of how long the investigation has dragged on.

While my above explanation is a simplified one, I hope it clarifies a little bit this complicated situation.

[Dr Winston O Boogie jr]

Was not the draw out the last five years? Did the fat lady not just sing?

I don't think so. The IRS ruled on an IRS regulation. Isn't the next step to go to the courts?

[ilovetv]

Advogado's first sentence above is a key factor of which many are not aware.

This is informative on page 9 of the VCCD IRS Update of May, 2012:

"The Issuer"

The Center District is a local unit of special-purpose government of the State of Florida, created in accordance with the Act pursuant to Ordinance 92-06 adopted by the Town of Lady Lake, effective August 17, 1992, attached as Exhibit D.....

....The Center District, which is comprised of commercial property, as originally established, encompassed approximately 169.56 acres of land, located entirely with the jurisdictional boundaries of the Town of Lady Lake, Florida in Lake County. There have been various boundary adjustments to reduce and increase boundaries, and the current boundaries encompass 166.82 acres still located entirely within the jurisdictional boundaries of the Town of Lady Lake in Lake County......The remaining acreage, approximately 162.82 acres, is developed.....

http://districtgov.org/images/IRSupdates/IRS%20Update%20-%205-17-12.pdf

And the two front-page articles of this other POA Bulletin of April, 2009 are highly informative also:

"Investigation of Bonds by the IRS Continues" and....

"AAC Comments on IRS - Bonds"...... See full articles at:

http://www.poa4us.org/bulletins_files/bulletin200904.pdf

[TVMayor]

I have seen nothing on this thread that indicates anyone posting here has an understanding of this process. The opinions being expressed appear mostly to be by people who have never been involved in issuing bonds of any kind nor in legislation or litigation relating to bond issues

Most often legal advise is worth about what you pay for it.

My guess is that the process has many years to run before it is settled. My previous experience is that the Bond Underwriters and the Attorneys on whose opinion the Underwriters and buyers relied have more immediate issues to deal with ( ditto their malpractice insurers)
While we are guessing my guess is the IRS has one target the CDD that shorted them tax money because they sold tax free bonds. My guess is the IRS does not give a rip about the Bond Underwriters or Attorneys or Uncle Bob�s Rock Shop for that mater.

I figure when the IRS says you Os me and you say I don�t have the money, the IRS says give me all your assets and we will sell them. Oh and after we get done with you if you want to have a word with your Bond Underwriters or Attorneys or Uncle Bob�s Rock Shop, enjoy. Now that I think of it, that�s what happened to Willie Nelson.

That�s just my personal opinion.

[andercat]

I think the issue is that tax free bonds have to be used for the public good and controlled by the public. If the developer controls them, they are for his benefit not the residents benefit. This debate does not concern the 10 CDDs that homes are in. The control of the 10 CDDs are turned over to the occupants and they elect people to run their particular district. The problem lies with the amenities CDDs. Residents do not elect and have no say in the decisions for these districts. If the public does not control the amenities, than the bonds can not be tax exempt.

What I don't understand is when the developer sells the amenities to the residents why does he continue to control them. Or who is he selling the amenities to?

[Irishmen]

Advogado's first sentence above is a key factor of which many are not aware.

This is informative on page 9 of the VCCD IRS Update of May, 2012:

"The Issuer"

The Center District is a local unit of special-purpose government of the State of Florida, created in accordance with the Act pursuant to Ordinance 92-06 adopted by the Town of Lady Lake, effective August 17, 1992, attached as Exhibit D.....

....The Center District, which is comprised of commercial property, as originally established, encompassed approximately 169.56 acres of land, located entirely with the jurisdictional boundaries of the Town of Lady Lake, Florida in Lake County. There have been various boundary adjustments to reduce and increase boundaries, and the current boundaries encompass 166.82 acres still located entirely within the jurisdictional boundaries of the Town of Lady Lake in Lake County......The remaining acreage, approximately 162.82 acres, is developed.....

http://districtgov.org/images/IRSupdates/IRS%20Update%20-%205-17-12.pdf

And the two front-page articles of this other POA Bulletin of April, 2009 are highly informative also:

"Investigation of Bonds by the IRS Continues" and....

"AAC Comments on IRS - Bonds"...... See full articles at:

http://www.poa4us.org/bulletins_files/bulletin200904.pdf

Yes the issue is related to commercial property and all that but if one thinks the developer is going to pay Back taxes out of their pocket your mislead. It's going to come from somewhere and homeowners somehow will foot the bill.
I relate this to big bad govt saying they're going to take away big oil tax breaks and by doing that consumers are in the clear. That kind of money aint walking away.

[njbchbum]

thanx. avogado! read it! now gotta ask a] is this related to the earllier decision that amenities were sold at less than their real value; and 2] this is a non-binding determination, is it not?

[Challenger]

While we are guessing my guess is the IRS has one target the CDD that shorted them tax money because they sold tax free bonds. My guess is the IRS does not give a rip about the Bond Underwriters or Attorneys or Uncle Bob�s Rock Shop for that mater.

I figure when the IRS says you Os me and you say I don�t have the money, the IRS says give me all your assets and we will sell them. Oh and after we get done with you if you want to have a word with your Bond Underwriters or Attorneys or Uncle Bob�s Rock Shop, enjoy. Now that I think of it, that�s what happened to Willie Nelson.

That�s just my personal opinion.

not much light there

[TexaninVA]

I think you may not be clear on the fact that the bonds under IRS examination are not the infrastructure bonds attached to our houses. The bonds under examination were all issued by the Center Districts. The Center Districts used the proceeds of most of the bonds to pay the Developer (at what the IRS alleges were artificially inflated prices) for the amenity facilities.

Therefore, contrary to your post, Villagers cannot be directly assessed for the costs involved here. This is because the Center Districts can only tax within their boundaries, which do not include residents and cannot raise the amenity fees in excess of the CPI. Instead, the risk to Villagers is that IF the IRS investigation results in the Center Districts incurring huge costs, the Center Districts may not be financially able to continue to furnish the amenities to us. For a more detailed explanation, go to the POA website: http://poa4us.org/bulletins_files/bulletin200908.pdf

For accurate information, forget most of what you read in the Daily Sun and VHA Bulletin and look to either the POA Bulletin or to publications outside The Villages.

A final point regarding the concern expressed by some posters that the IRS actions here are politically motivated-- because of the Developer's large donations to the Republican party: The IRS investigation was begun under the Bush administration-- which, while it indicates nonpartisanship, is an indication of how long the investigation has dragged on.

While my above explanation is a simplified one, I hope it clarifies a little bit this complicated situation.

I think Advogado's post is very helpful. Agree that the POA has the best info on this complicated topic. Some other points:

- I'm aware of when the lawsuit started but it's difficult for me to conclude the ruling is completely objective ... the IRS needs to go after the money hence that's what they'll usually do.

- Regarding lawsuits, I think the lawyers who issued the ruling will be the more likely initial lawsuit targets

- The ultimate risk to us, the residents, would be any negative impact to the amenities and thus the lifestyle, and therefore the value of our homes. OTOH, the Developer has a vested interest in keeping values and sales high so that's a good thing. Maybe this becomes a cost of doing business for him?

in the meantime, we wait and see how this whole thing evolves.

[Mack184]

All this amounts to is.."Let the games begin" as this now will wind it's way through court after court. I doubt Morse Industries, Inc. is going to just say "Oh Gee...I guess we'd better pay up quick". This is just the beginning. Stand by for appeal after appeal. Many of you won't even be alive by the time this gets all the way through the court system.

[rubicon]

This whole debacle didn't occur because of one political party being picked on, it happened because Morse and his people "stretched" and worked around the rules, and they got caught. Simple as that. I'm guessing most of the CDD's in other parts of the state do not work like the one here in The Villages, so this will act as a warning to other CDD's - abide by the intent of the law. The Villages clearly did not do this even after previous warnings.

mickey100: IMHO You are spot on. Most on this thread cite as references articles in various newspapers, bulletins, newsletters. None have referenced The Notice Of Proposed Issue dated january 20, 2009 issued by the IRS.

Essentially this three part notice alleged that the sell of property and future stream of income to the Districts from the Developer was controlled by the Developer and alleged to be over-stated.. I do not know if those allegations are true or untrue. However, if true they may well bode poorly for residents.

Further the IRS alleged that while there was a physical transfer of property rights the Developer in various ways continued control. Owns the commercial rights, the county commissioners, etc. all essentially amounting to ownerships rights or voting rights. Hence the tax exempt bonds based on the fact that of the status of a political subdivision as defined by the IRS was ignored by the Developer. Again I do not know if these allegations are true or untrue but if true then by its nature it distort the poltical sub-division definition

Prior to the January 2009 notice being made available to residents the POA was advised to notify its members, file an intervenor to protect the residents interests and demand the District notify their Professional Liability Carrier that a mistake in the March 31, 2003 bond issue was likely to be alleged. This may or may not have been the decision to be made but hopefully the POA consulted an attorney to determine present/future course of action

The leadership of both the Developer and District (VCCDD) made a number of mistakes. If a lifesuitis filed the likely defendants will be both the Developer and VCCDD because again based on the wording in the Notice of Proposed Issue the VCCDD essentially acqueisced to the Developers demands, used the Developers inspectors, accountants, etc and hence created more commom ground than not which in essentially does not bode well for residents. Again I am saying these allegation are true or untrue but if true then they complicate settlement possibilities for residents.

The POA is the only organization that is in a position to seek the advice of an attorney on behalf of the residents IMHO The POA should ask that an attorney file a lawsuit against both the Developer and the District demanding relief from both enities and that through a combination of private funds and insurance they satisify this IRS obligation. The leadership of both the Developer and District have Professional Liability Policies as well as indvidual liability policies that may provide coverage for the errors and omissions made during the 2003 Bond Issuance. As I am not an attorney this may not be the best avenue but the residents have no representation and the thought that our amenities are being used to defend and eventually settle an IRS ruling not of our making is just wrong

For those that say we should just wait well that what was said five years ago and here we are.

PS I lean on the POA because they are our only viable option.

I opine you decide

[ilovetv]

boyhowdy.

It's a free-for-all of filling in the blanks.

And the hatred for people who've earned their millions by selling all of us a normal American house that cost, in most cases, less than the one we had--without a gun to our heads--is appalling.

[Golfingnut]

Caution is a natural instinct that serves us well when tempered with common sense. Paranoia is a learned process that in some gets worse with age.

[TexaninVA]

mickey100: IMHO You are spot on. Most on this thread cite as references articles in various newspapers, bulletins, newsletters. None have referenced The Notice Of Proposed Issue dated january 20, 2009 issued by the IRS.

Essentially this three part notice alleged that the sell of property and future stream of income to the Districts from the Developer was controlled by the Developer and alleged to be over-stated.. I do not know if those allegations are true or untrue. However, if true they may well bode poorly for residents.

Further the IRS alleged that while there was a physical transfer of property rights the Developer in various ways continued control. Owns the commercial rights, the county commissioners, etc. all essentially amounting to ownerships rights or voting rights. Hence the tax exempt bonds based on the fact that of the status of a political subdivision as defined by the IRS was ignored by the Developer. Again I do not know if these allegations are true or untrue but if true then by its nature it distort the poltical sub-division definition

Prior to the January 2009 notice being made available to residents the POA was advised to notify its members, file an intervenor to protect the residents interests and demand the District notify their Professional Liability Carrier that a mistake in the March 31, 2003 bond issue was likely to be alleged. This may or may not have been the decision to be made but hopefully the POA consulted an attorney to determine present/future course of action

The leadership of both the Developer and District (VCCDD) made a number of mistakes. If a lifesuitis filed the likely defendants will be both the Developer and VCCDD because again based on the wording in the Notice of Proposed Issue the VCCDD essentially acqueisced to the Developers demands, used the Developers inspectors, accountants, etc and hence created more commom ground than not which in essentially does not bode well for residents. Again I am saying these allegation are true or untrue but if true then they complicate settlement possibilities for residents.

The POA is the only organization that is in a position to seek the advice of an attorney on behalf of the residents IMHO The POA should ask that an attorney file a lawsuit against both the Developer and the District demanding relief from both enities and that through a combination of private funds and insurance they satisify this IRS obligation. The leadership of both the Developer and District have Professional Liability Policies as well as indvidual liability policies that may provide coverage for the errors and omissions made during the 2003 Bond Issuance. As I am not an attorney this may not be the best avenue but the residents have no representation and the thought that our amenities are being used to defend and eventually settle an IRS ruling not of our making is just wrong

For those that say we should just wait well that what was said five years ago and here we are.

PS I lean on the POA because they are our only viable option.

I opine you decide


I respectfully disagree with the notion that our immediate and best course of action is to �sue the Developer.� Mistakes and various other Developer imperfections notwithstanding, our community would never have grown into what it has without the leadership and vision of Gary Morse. It seems to me the best way forward is, with respect to the IRS issue, for the residents� and Developer�s interests to be aligned where possible. At least give that a chance before suing him. The IRS ruling, while unwelcome news, is also not unexpected given the bureaucratic proclivities of our beloved tax collection agency.
In any event, the Developer still has a very large stake in the success of his commercial ventures. Likewise, we (the residents) have a large stake in preserving our lifestyle and home values. Why start fighting with each other? The common opponent here is the IRS.
Thus, I am trying to put myself in the Developer�s shoes, and ask what I would do? I don�t know much about Gary Morse except that he�s in his mid-70s, is a gifted businessman / leader, and worth a billion or more. Good for him � American Dream etc. I also have to think that he has a certain level of pride and attachment to his creation.. ie TV. He spent his whole adult life building this place. My instinct, were I he, would be to contest the issue, minimize the $$ damage, and find a way to keep the community going. OTOH, if I�m mid-70s, have all the money I�d ever need and the residents of what I created immediately ganged up to �sue me� and in general, be unpleasant about it, I think I could find myself saying �to heck with it� and set a course to Barbados aboard the yacht Cracker Bay.

[ilovetv]

I respectfully disagree with the notion that our immediate and best course of action is to �sue the Developer.� Mistakes and various other Developer imperfections notwithstanding, our community would never have grown into what it has without the leadership and vision of Gary Morse. It seems to me the best way forward is, with respect to the IRS issue, for the residents� and Developer�s interests to be aligned where possible. At least give that a chance before suing him. The IRS ruling, while unwelcome news, is also not unexpected given the bureaucratic proclivities of our beloved tax collection agency.
In any event, the Developer still has a very large stake in the success of his commercial ventures. Likewise, we (the residents) have a large stake in preserving our lifestyle and home values. Why start fighting with each other? The common opponent here is the IRS.
Thus, I am trying to put myself in the Developer�s shoes, and ask what I would do? I don�t know much about Gary Morse except that he�s in his mid-70s, is a gifted businessman / leader, and worth a billion or more. Good for him � American Dream etc. I also have to think that he has a certain level of pride and attachment to his creation.. ie TV. He spent his whole adult life building this place. My instinct, were I he, would be to contest the issue, minimize the $$ damage, and find a way to keep the community going. OTOH, if I�m mid-70s, have all the money I�d ever need and the residents of what I created immediately ganged up to �sue me� and in general, be unpleasant about it, I think I could find myself saying �to heck with it� and set a course to Barbados aboard the yacht Cracker Bay.

Now this is "wisdom".

Thank you so much for your insights and call for harmonious problem solving.

[janmcn]

Everybody talks about what a genius Gary Morse is for creating such a wonderful development. Did it not ever occur to him over the past decade or more that what he was doing was not legal in the eyes of the IRS? How did he reconcile this in his mind?

It seems that this is economics 101, that you can't use tax-free bonds in a profit making enterprise.

[Bucco]

Everybody talks about what a genius Gary Morse is for creating such a wonderful development. Did it not ever occur to him over the past decade or more that what he was doing was not legal in the eyes of the IRS? How did he reconcile this in his mind?

It seems that this is economics 101, that you can't use tax-free bonds in a profit making enterprise.

Appears that Walt Disney missed your economics 101 class.

This is not as simple an issue as most make it to be. I know nothing was done in secret....everything was on the table, and as one poster stated..this is complicated..those rushing to judgement to post what they just simply KNOW is right, are just WRONG.

This is neither support for or against the developer in anyway...above my pay grade. I do recall about 13/14 years there were free classes to explain it all, and to my knowledge nothing was hidden nor any question left unanswered.

[perrjojo]

Everyone here seems to have an "opinion" and it is just that, an opinion. In my "opinion", I know that I can not just go out and sell bonds. Someone has to approve the sale of these bonds and the bonds must comply with rules and regulations. Who approved and endorsed the sale of these bonds? If I buy that bond and the interest is tax free, that is a good deal for me. So...if the IRS decides these bonds are not tax free; do I, as owner of theses bonds now owe tax on these bonds. It would seem to me that if indeed the bonds are not "legal", who is responsible for the sale of the bonds to the public? I think the issue is FAR more complicated than whether Gary Morse was pulling a fast one. There are far more unanswered questions.

[rubicon]

I respectfully disagree with the notion that our immediate and best course of action is to �sue the Developer.� Mistakes and various other Developer imperfections notwithstanding, our community would never have grown into what it has without the leadership and vision of Gary Morse. It seems to me the best way forward is, with respect to the IRS issue, for the residents� and Developer�s interests to be aligned where possible. At least give that a chance before suing him. The IRS ruling, while unwelcome news, is also not unexpected given the bureaucratic proclivities of our beloved tax collection agency.
In any event, the Developer still has a very large stake in the success of his commercial ventures. Likewise, we (the residents) have a large stake in preserving our lifestyle and home values. Why start fighting with each other? The common opponent here is the IRS.
Thus, I am trying to put myself in the Developer�s shoes, and ask what I would do? I don�t know much about Gary Morse except that he�s in his mid-70s, is a gifted businessman / leader, and worth a billion or more. Good for him � American Dream etc. I also have to think that he has a certain level of pride and attachment to his creation.. ie TV. He spent his whole adult life building this place. My instinct, were I he, would be to contest the issue, minimize the $$ damage, and find a way to keep the community going. OTOH, if I�m mid-70s, have all the money I�d ever need and the residents of what I created immediately ganged up to �sue me� and in general, be unpleasant about it, I think I could find myself saying �to heck with it� and set a course to Barbados aboard the yacht Cracker Bay.

TexaninVA: I appreciate, respect and understand your rationale.

Let me first point out that what I said was (apparently not clearly) that an attorney should have or must be hired to follow this case and explore our options. Secondly, my personal view is that the Developer could care less about anyone or anything other than his financial interests and quite honestly I find no fault with that since this is all about business. Everything he has done and the manner in which he accomplished it tells me that is the case. Third the Developer is way ahead of all of us on the IRS thing and if he had any intentions of hiding assests, etc it is already done or in the making to do so.

If one recalls the Amenity Lawsuit filed by the POA was the only way to get the Developers's attention.

The reasons are unimportant but I abhor lawsuits and it is the last thing that I would want to do. However in my personal opinion our derrieres are up against the wall.

So far all that has been done hasn't exactly addressed the residents exposure and interests and since the residents were not a party to these agreements it seems we have been placed in a very bad situation. If the IRS decisions stands and if the Developer doesn't step up ( an unlikely happening) then one of two things will occur. We will either have to raise amenities to pay the tax bill or drastically reduce services.

While one viable option in the decision model is to do nothing I personally believe we need to begin gathering facts and potential scenarios to protect our interests.

[johndamelio]

Rubicon.......well put !

[bmarlo767]

Everybody talks about what a genius Gary Morse is for creating such a wonderful development. Did it not ever occur to him over the past decade or more that what he was doing was not legal in the eyes of the IRS? How did he reconcile this in his mind?

It seems that this is economics 101, that you can't use tax-free bonds in a profit making enterprise.

The reason to issue tax free bonds is so Someone can make money.

[mickey100]

I think you may not be clear on the fact that the bonds under IRS examination are not the infrastructure bonds attached to our houses. The bonds under examination were all issued by the Center Districts. The Center Districts used the proceeds of most of the bonds to pay the Developer (at what the IRS alleges were artificially inflated prices) for the amenity facilities.

Therefore, contrary to your post, Villagers cannot be directly assessed for the costs involved here. This is because the Center Districts can only tax within their boundaries, which do not include residents and cannot raise the amenity fees in excess of the CPI. Instead, the risk to Villagers is that IF the IRS investigation results in the Center Districts incurring huge costs, the Center Districts may not be financially able to continue to furnish the amenities to us. For a more detailed explanation, go to the POA website: http://poa4us.org/bulletins_files/bulletin200908.pdf


For accurate information, forget most of what you read in the Daily Sun and VHA Bulletin and look to either the POA Bulletin or to publications outside The Villages.

A final point regarding the concern expressed by some posters that the IRS actions here are politically motivated-- because of the Developer's large donations to the Republican party: The IRS investigation was begun under the Bush administration-- which, while it indicates nonpartisanship, is an indication of how long the investigation has dragged on.

While my above explanation is a simplified one, I hope it clarifies a little bit this complicated situation.


Thank you... nice summary.

[mickey100]

TexaninVA: I appreciate, respect and understand your rationale.

Let me first point out that what I said was (apparently not clearly) that an attorney should have or must be hired to follow this case and explore our options. Secondly, my personal view is that the Developer could care less about anyone or anything other than his financial interests and quite honestly I find no fault with that since this is all about business. Everything he has done and the manner in which he accomplished it tells me that is the case. Third the Developer is way ahead of all of us on the IRS thing and if he had any intentions of hiding assests, etc it is already done or in the making to do so.

If one recalls the Amenity Lawsuit filed by the POA was the only way to get the Developers's attention.

The reasons are unimportant but I abhor lawsuits and it is the last thing that I would want to do. However in my personal opinion our derrieres are up against the wall.

So far all that has been done hasn't exactly addressed the residents exposure and interests and since the residents were not a party to these agreements it seems we have been placed in a very bad situation. If the IRS decisions stands and if the Developer doesn't step up ( an unlikely happening) then one of two things will occur. We will either have to raise amenities to pay the tax bill or drastically reduce services.

While one viable option in the decision model is to do nothing I personally believe we need to begin gathering facts and potential scenarios to protect our interests.

I agree - we need to protect our interests, and be ready to step up legally if the need be.

[gomoho]

If the CDD issued bonds to pay the developer back for the amenities -who did they issue these bonds to??? and who is the recipient of all this tax free money???

[Challenger]

I respectfully disagree with the notion that our immediate and best course of action is to �sue the Developer.� Mistakes and various other Developer imperfections notwithstanding, our community would never have grown into what it has without the leadership and vision of Gary Morse. It seems to me the best way forward is, with respect to the IRS issue, for the residents� and Developer�s interests to be aligned where possible. At least give that a chance before suing him. The IRS ruling, while unwelcome news, is also not unexpected given the bureaucratic proclivities of our beloved tax collection agency.
In any event, the Developer still has a very large stake in the success of his commercial ventures. Likewise, we (the residents) have a large stake in preserving our lifestyle and home values. Why start fighting with each other? The common opponent here is the IRS.
Thus, I am trying to put myself in the Developer�s shoes, and ask what I would do? I don�t know much about Gary Morse except that he�s in his mid-70s, is a gifted businessman / leader, and worth a billion or more. Good for him � American Dream etc. I also have to think that he has a certain level of pride and attachment to his creation.. ie TV. He spent his whole adult life building this place. My instinct, were I he, would be to contest the issue, minimize the $$ damage, and find a way to keep the community going. OTOH, if I�m mid-70s, have all the money I�d ever need and the residents of what I created immediately ganged up to �sue me� and in general, be unpleasant about it, I think I could find myself saying �to heck with it� and set a course to Barbados aboard the yacht Cracker Bay.

A reasoned and well thought out comment. An exception to most on this subject:wave:

[jaringg]

Can you share more information for those of us outside the bubble at this time? : D
this is a link to the story
IRS officials: Villages not a "government" that can issue tax-exempt bonds - Orlando Sentinel (http://articles.orlandosentinel.com/2013-06-06/news/os-villages-tax-exempt-bonds-20130606_1_amenity-fees-tax-exempt-bonds-villages#.UbHjZV-pJxg.email)

[TVMayor]

this is a link to the story
IRS officials: Villages not a "government" that can issue tax-exempt bonds - Orlando Sentinel (http://articles.orlandosentinel.com/2013-06-06/news/os-villages-tax-exempt-bonds-20130606_1_amenity-fees-tax-exempt-bonds-villages#.UbHjZV-pJxg.email)

In part the article states...
Ultimately, the burden falls on the holder of the bonds, who can challenge the decision in court, Israel said. In such cases, he said developer districts also have the option of settling with bondholders or reaching an agreement with the IRS to prevent the agency from going after bondholders.

[DonH57]

I'm feeling the same way about the whole thing Asianthree. Quite frankly tired of hearing about it.

[djl8412]

i think a wait and see not going to worry about something i have no control of

:mad::mad:That is exactly the problem here and why the IRS ruled the way it did. We as residents have NO clout. The developer controls the media, movie theaters and hand picks the 2 major CDD members who hold all the cards. Put all the spin you want to it but this has been on going for 5+years and the warning shots from the IRS sounded well before that. No matter what, if any, settlement is reached it will involve lots of $ and be assured residents will pay for it some how.:$:

[Advogado]

For the benefit of those of you who are not members of the POA, here is the e-mail alert that the POA sent its members last night. Incidentally, if you have yet joined the POA, you might think about doing so now. If the IRS investigation does not end well, the POA is the only organization that we Villagers have to protect our interests.

IRS UPDATE � JUNE 6, 2013
On June 6, 2013, the Daily Sun, buried on page 6 of the Local Section, published the following article:
�District weighing options after IRS ruling by David Corder
THE VILLAGES - In a nonbinding opinion*, the Internal Revenue Service has ruled the Village Center Community Development District is not a political subdivision of the state. The ruling, contained in a memorandum released Wednesday to the district, means that about $364 million of the CDDs bonds could be declared taxable. �It�s a setback for the district, but it�s not the end of the process,� said Perry Israel, the attorney representing the VCCDD. We�re going to be continuing with the examination process. �Israel maintains the IRS is overstepping its bounds. �I�m concerned the IRS seems to still be trying to make law through the enforcement process rather than through the regulatory process,� he said. �They have the ability to write regulations. They didn�t do that. What they did is they came up with a rule that�s not easy to interpret.��
*The POA is unsure what this statement means, as this language was not found in the IRS Opinion.

In the April, 2013 POA Bulletin we advised that there were actually three questions, not just one, that had to be answered affirmatively in order to achieve tax exempt status, which are identified below. On February 23, 2009, the IRS Agent notified the VCCDD that after reviewing all of the documents, he had three questions regarding the tax exempt status of thebonds:

1. Is the VCCDD, the Issuer of the Bonds under investigation, a qualified issuer of tax exempt bonds? (This is the subject of today�s IRS finding that the VCCDD is not qualified to be an issuer of tax exempt bonds because it does not meet the criteria to be a political subdivision of the state.) It should be noted that by using the �income approach� (Revenue minus cost and expense) for determination of the acquisition price for the various amenity transfers, it made no difference to the District if the bonds issued were tax exempt or not. The issuing of tax exempt bonds by the District simply increased the Developer�s profit on the transaction, by lowering the interest cost.

2. Did the Series 2003 facilities acquisition price reflect the fair market value of the assets? i.e., were the Bond Issues properly sized to carry out the government purpose of the Bonds or were the amenity facilities overpriced and thus the bonds over-issued? (This is the subject of the April Bulletin article dealing with the valuation procedures in which the VCCDD claimed 'victory'. 3. Were the Bond proceeds used for an essential governmental function or do the nature of the facilities acquired with the Bonds result in private business use, and hence are the Bonds Private Activity Bonds? A negative response to any of the three questions could result in the bonds not being tax exempt.

The potential impact on the Villages amenities system of an IRS finding that the bonds are not entitled to be tax exempt has been discussed in earlier issues of the POA Bulletin. In a nutshell, the amenities system would be threatened if the outcome of the IRS investigation leaves the Center Districts with such large financial liabilities that the Districts can no longer continue to maintain and furnish the amenities. A complete analysis can be found in the August 2009 Bulletin, which is available on the POA website: poa4us.org. (Click on archived Bulletins) Copies of relevant documents can be found at districtgov.org, by clicking on the IRS Updates link.

The POA's Position. Because of the potential implications for Villagers of an adverse determination on valuation of the assets, the POA sincerely hopes the IRS (or a court, if litigation ensues) eventually agrees with Mr. Israel�s analysis. With respect to the entire IRS investigation, the POA has not taken a position on the relative merits of the positions of the IRS and the VCCDD / SLCCDD, although we sincerely hope that the VCCDD and SLCCDD are able to prevail in regard to all three questions. The POA's objectives in this matter are to keep residents informed of developments and to try to protect your rights by doing what we can to try to ensure that any resolution of the IRS investigation does not jeopardize your amenities or result in the costs of an IRS victory being passed on to you. We have previously written to the IRS to express our concerns, and we will continue to report to you at POA meetings, in the Bulletin, and in the E-Mail alerts to our members all publicly available news in this matter.

[Challenger]

:mad::mad:That is exactly the problem here and why the IRS ruled the way it did. We as residents have NO clout. The developer controls the media, movie theaters and hand picks the 2 major CDD members who hold all the cards. Put all the spin you want to it but this has been on going for 5+years and the warning shots from the IRS sounded well before that. No matter what, if any, settlement is reached it will involve lots of $ and be assured residents will pay for it some how.:$:

Speculation!

[mickey100]

For the benefit of those of you who are not members of the POA, here is the e-mail alert that the POA sent its members last night. Incidentally, if you have yet joined the POA, you might think about doing so now. If the IRS investigation does not end well, the POA is the only organization that we Villagers have to protect our interests.

IRS UPDATE � JUNE 6, 2013
On June 6, 2013, the Daily Sun, buried on page 6 of the Local Section, published the following article:
�District weighing options after IRS ruling by David Corder
THE VILLAGES - In a nonbinding opinion*, the Internal Revenue Service has ruled the Village Center Community Development District is not a political subdivision of the state. The ruling, contained in a memorandum released Wednesday to the district, means that about $364 million of the CDDs bonds could be declared taxable. �It�s a setback for the district, but it�s not the end of the process,� said Perry Israel, the attorney representing the VCCDD. We�re going to be continuing with the examination process. �Israel maintains the IRS is overstepping its bounds. �I�m concerned the IRS seems to still be trying to make law through the enforcement process rather than through the regulatory process,� he said. �They have the ability to write regulations. They didn�t do that. What they did is they came up with a rule that�s not easy to interpret.��
*The POA is unsure what this statement means, as this language was not found in the IRS Opinion.

In the April, 2013 POA Bulletin we advised that there were actually three questions, not just one, that had to be answered affirmatively in order to achieve tax exempt status, which are identified below. On February 23, 2009, the IRS Agent notified the VCCDD that after reviewing all of the documents, he had three questions regarding the tax exempt status of thebonds:

1. Is the VCCDD, the Issuer of the Bonds under investigation, a qualified issuer of tax exempt bonds? (This is the subject of today�s IRS finding that the VCCDD is not qualified to be an issuer of tax exempt bonds because it does not meet the criteria to be a political subdivision of the state.) It should be noted that by using the �income approach� (Revenue minus cost and expense) for determination of the acquisition price for the various amenity transfers, it made no difference to the District if the bonds issued were tax exempt or not. The issuing of tax exempt bonds by the District simply increased the Developer�s profit on the transaction, by lowering the interest cost.

2. Did the Series 2003 facilities acquisition price reflect the fair market value of the assets? i.e., were the Bond Issues properly sized to carry out the government purpose of the Bonds or were the amenity facilities overpriced and thus the bonds over-issued? (This is the subject of the April Bulletin article dealing with the valuation procedures in which the VCCDD claimed 'victory'. 3. Were the Bond proceeds used for an essential governmental function or do the nature of the facilities acquired with the Bonds result in private business use, and hence are the Bonds Private Activity Bonds? A negative response to any of the three questions could result in the bonds not being tax exempt.

The potential impact on the Villages amenities system of an IRS finding that the bonds are not entitled to be tax exempt has been discussed in earlier issues of the POA Bulletin. In a nutshell, the amenities system would be threatened if the outcome of the IRS investigation leaves the Center Districts with such large financial liabilities that the Districts can no longer continue to maintain and furnish the amenities. A complete analysis can be found in the August 2009 Bulletin, which is available on the POA website: poa4us.org. (Click on archived Bulletins) Copies of relevant documents can be found at districtgov.org, by clicking on the IRS Updates link.

The POA's Position. Because of the potential implications for Villagers of an adverse determination on valuation of the assets, the POA sincerely hopes the IRS (or a court, if litigation ensues) eventually agrees with Mr. Israel�s analysis. With respect to the entire IRS investigation, the POA has not taken a position on the relative merits of the positions of the IRS and the VCCDD / SLCCDD, although we sincerely hope that the VCCDD and SLCCDD are able to prevail in regard to all three questions. The POA's objectives in this matter are to keep residents informed of developments and to try to protect your rights by doing what we can to try to ensure that any resolution of the IRS investigation does not jeopardize your amenities or result in the costs of an IRS victory being passed on to you. We have previously written to the IRS to express our concerns, and we will continue to report to you at POA meetings, in the Bulletin, and in the E-Mail alerts to our members all publicly available news in this matter.

I agree Advogado. The POA has always looked out for the residents.

[allus70]

IRS ruling on the Villages tax-free bonds a long time coming - OrlandoSentinel.com (http://www.orlandosentinel.com/news/local/lake/os-lk-lauren-ritchie-villages-cdd-bonds-20130607,0,639160.column)

(kudos to ilovetv)

[djl8412]

Appears that Walt Disney missed your economics 101 class.

This is not as simple an issue as most make it to be. I know nothing was done in secret....everything was on the table, and as one poster stated..this is complicated..those rushing to judgement to post what they just simply KNOW is right, are just WRONG.

This is neither support for or against the developer in anyway...above my pay grade. I do recall about 13/14 years there were free classes to explain it all, and to my knowledge nothing was hidden nor any question left unanswered.

How would one really know?!

[swrinfla]

I'm really sorry, but I'm about to demand that the Aministrators shut down this thread, because it has become far too political, rife with unsubstantiated rumors or hear-say, or unsubstantiated "facts."

I have no personal axe to grind, here, and frankly believe that many posters do!

I have, since becoming a resident in January 2005, been strongly opposed to the always-negative approach of the POA. Yes, they may have, over the years, won some things for residents, but their on-going, relentless, negativity is, frankly, off-putting in the extreme!

My fear is that most of those who have posted an opinion in this thread have really very little knowledge of the true facts of the on-going tussle between the IRS and The Villages; indeed, their knowledge of the issue is, most likely, based upon sadly unsubstantiated "media reports."

I know that many of you will not only ignore my efforts at reasonableness, but will even work to counter them. That makes me exceedingly sad!

SWR
:beer3:

[gomoho]

Why would you read posts that offend you so much? Let people rant if the choose to do so and there will always be rumors and false information being shared when there are human beings involved. Sorry you are so offended by this thread, but I find interesting things talked about that encourage me to delve deeper.

[manaboutown]

These forums provide me with priceless information and BOTH sides of the story. That is why I follow them and post my own thoughts and perspectives now and then. The IRS issue is a HUGE financial black hole at present. I want to hear (or read) it all and make my own decisions.

[gomoho]

These forums provide me with priceless information and BOTH sides of the story. That is why I follow them and post my own thoughts and perspectives now and then. The IRS issue is a HUGE financial black hole at present. I want to hear (or read) it all and make my own decisions.

Well said.

[graciegirl]

I'm really sorry, but I'm about to demand that the Aministrators shut down this thread, because it has become far too political, rife with unsubstantiated rumors or hear-say, or unsubstantiated "facts."

I have no personal axe to grind, here, and frankly believe that many posters do!

I have, since becoming a resident in January 2005, been strongly opposed to the always-negative approach of the POA. Yes, they may have, over the years, won some things for residents, but their on-going, relentless, negativity is, frankly, off-putting in the extreme!

My fear is that most of those who have posted an opinion in this thread have really very little knowledge of the true facts of the on-going tussle between the IRS and The Villages; indeed, their knowledge of the issue is, most likely, based upon sadly unsubstantiated "media reports."

I know that many of you will not only ignore my efforts at reasonableness, but will even work to counter them. That makes me exceedingly sad!

SWR
:beer3:

I understand your point completely and also agree with you Steve, as I usually do.

[Bucco]

I'm really sorry, but I'm about to demand that the Aministrators shut down this thread, because it has become far too political, rife with unsubstantiated rumors or hear-say, or unsubstantiated "facts."

I have no personal axe to grind, here, and frankly believe that many posters do!

I have, since becoming a resident in January 2005, been strongly opposed to the always-negative approach of the POA. Yes, they may have, over the years, won some things for residents, but their on-going, relentless, negativity is, frankly, off-putting in the extreme!

My fear is that most of those who have posted an opinion in this thread have really very little knowledge of the true facts of the on-going tussle between the IRS and The Villages; indeed, their knowledge of the issue is, most likely, based upon sadly unsubstantiated "media reports."

I know that many of you will not only ignore my efforts at reasonableness, but will even work to counter them. That makes me exceedingly sad!

SWR
:beer3:

I support your post.

I share your concern in that even well meaning posters will confuse, scare, etc. other posters for no reason.

This is not a simple issue, and I have my doubts about the precise knowledge of those posting and advising others.

[Advogado]

I support your post.

I share your concern in that even well meaning posters will confuse, scare, etc. other posters for no reason.

This is not a simple issue, and I have my doubts about the precise knowledge of those posting and advising others.
You are right when you say that the subject is not simple, but some of us have spent enough time studying the publicly available details so that we have a pretty good understanding of it. We are willing to share, in Talk of the Villages, that understanding with those residents who don't have the background, time, or inclination to delve into all the details. We are also willing to exchange thoughts and ideas about what actions Villagers can take to protect their interests.

The idea of shutting down this thread is totally absurd. This thread is about the most important issue facing The Villages today, and one that has been under-reported and misreported by both The Daily Sun and VHA Bulletin. It certainly deserves to be discussed here.

To understand the nationwide reporting of this the latest development, which is the subject of this thread, Google: irs "the villages" florida tax exempt bonds community development district

Limit the Google search to the last week.

You will see that it has been reported int the news media throughout the country. When this subject, affecting all of us, has received such nationwide attention, how can anyone seriously propose that it be censored out of Talk of the Villages??? To censor it out, it seems to me, would defeat the whole purpose of Talk of The Villages and turn TOV into a meaningless bit of fluff.

[Bucco]

The idea of shutting down this post is totally absurd. This thread is about the most important issue facing The Villages today, and one that has been under-reported and misreported by both The Daily Sun and VHA Bulletin. It certainly deserves to be discussed here.

CORRECT..discussion is great, and you are correct that it "May" be an important issue. It is MAY because this has a long life, and from my perspective when I read so much MISinformation, with talk of hiring lawyers, to statements of KNOWING the developer has off shore assets specifically to flee the issue, THAT is irresponsible discussion. And irresponsible on an important issue as you say.

Right now the issue is between the developer and the IRS with us residents as very interested spectators.

If you have solid information that we all need a lawyer or should sue the developer, as has been suggested, OR know for a fact he is fleeing with assets, act on it, but a discussion of rumors on this issue serves WHO ?

PS..And certainly the snide comments on political leanings are nothing but inflammatory posts and it appears the moderator is taking steps to quell them

[Advogado]

CORRECT..discussion is great, and you are correct that it "May" be an important issue. It is MAY because this has a long life, and from my perspective when I read so much MISinformation, with talk of hiring lawyers, to statements of KNOWING the developer has off shore assets specifically to flee the issue, THAT is irresponsible discussion. And irresponsible on an important issue as you say.

Right now the issue is between the developer and the IRS with us residents as very interested spectators.

If you have solid information that we all need a lawyer or should sue the developer, as has been suggested, OR know for a fact he is fleeing with assets, act on it, but a discussion of rumors on this issue serves WHO ?

PS..And certainly the snide comments on political leanings are nothing but inflammatory posts and it appears the moderator is taking steps to quell them
None of the quotes that you cite is attributable to me, and I am not sure why you imply that they are-- but they are part of free speech and, if you don't like them, you are free to ignore them. Members of TOV, I presume, are intelligent enough to discern what posts they want to believe and which ones they want to discount.

Furthermore, you may wish to correct your statement that this "the issue is between the developer and the IRS". That is, unfortunately, not the case. If it were, it wouldn't be of great concern to the residents.

Instead, the issue, right now, is between the IRS and the Center Districts (controlled by the Developer). Those Center Districts own a good chunk of our amenity facilities and need to be able to financially continue to furnish our amenity services to us. Please read the 2009 POA Bulletin article on the subject for a better understanding of the matter.

[Jim 9922]

CORRECT..
Right now the issue is between the developer and the IRS with us residents as very interested spectators.

If you have solid information that we all need a lawyer or should sue the developer, as has been suggested, OR know for a fact he is fleeing with assets, act on it, but a discussion of rumors on this issue serves WHO ?

PS..And certainly the snide comments on political leanings are nothing but inflammatory posts and it appears the moderator is taking steps to quell them
You are "spot on" for all three statements! Unfortunately the world is full of armchair legal and tax experts who seem to know a little something about everything.

In reality the IRS has issued a ruling in its investigation. There is an informal and formal appeal process and eventually a legal contention process which is available to the taxpayer before a tax case must finally be settled. Given the dollars involved, now and in the future, the possible ramifications to other CDD's, and financial strength and smarts of our Developer and his tax lawyers, I assume that this case and its outcome has a long way to go before it is settled in some negotiated way.

It took the IRS many years and a few different Agents to finally come up with a ruling. With all that, I am sure there are more than a few points of contention which will be used in the appeal process and settlement process if it comes to that.

Given the size and scope of this investigation I assume we, the public, are aware of less than one percent of all the important facts and issues. To predict an outcome at this stage is about as valid or useful as running around yelling " the sky is falling, the sky is falling".:22yikes:

[capecodbob]

Is anyone having trouble selling their property because of this issue? Who will want to buy the new planned construction with this bond liability affecting our amenities?

Has anyone heard if this matter will be appealed? Has the time for appeals ended? Is interest accruing all while this issue is being debated?

If the issue is a done deal and the taxes are now owed, who is in charge of paying the taxes and what are the plans to pay the bills?

I think it's time for the attorneys to publish a letter addressing these concerns so villagers will know where they stand and what the plan is going forward.

Frankly, I could not advise anyone to buy into The Villages until this matter is resolved and we know what the outcome will be.

[Advogado]

You are "spot on" for all three statements! Unfortunately the world is full of armchair legal and tax experts who seem to know a little something about everything.

In reality the IRS has issued a ruling in its investigation. There is an informal and formal appeal process and eventually a legal contention process which is available to the taxpayer before a tax case must finally be settled. Given the dollars involved, now and in the future, the possible ramifications to other CDD's, and financial strength and smarts of our Developer and his tax lawyers, I assume that this case and its outcome has a long way to go before it is settled in some negotiated way.

It took the IRS many years and a few different Agents to finally come up with a ruling. With all that, I am sure there are more than a few points of contention which will be used in the appeal process and settlement process if it comes to that.

Given the size and scope of this investigation I assume we, the public, are aware of less than one percent of all the important facts and issues. To predict an outcome at this stage is about as valid or useful as running around yelling " the sky is falling, the sky is falling".:22yikes:
I have never predicted an outcome (and I am not sure that anyone, including the involved parties, can with any degree of certainty), and I have never said that the sky is falling. Nevertheless, I and a number of other people are, thanks to Florida's Freedom of Information Law, aware of considerably more than the "one percent of all the important facts" that you mention. If you are interested in learning more, or are feeling particularly masochistic, go to districtgov.org and click on IRS updates and start reading.

[njbchbum]

I'm really sorry, but I'm about to demand that the Aministrators shut down this thread, because it has become far too political, rife with unsubstantiated rumors or hear-say, or unsubstantiated "facts."

I have no personal axe to grind, here, and frankly believe that many posters do!

I have, since becoming a resident in January 2005, been strongly opposed to the always-negative approach of the POA. Yes, they may have, over the years, won some things for residents, but their on-going, relentless, negativity is, frankly, off-putting in the extreme!

My fear is that most of those who have posted an opinion in this thread have really very little knowledge of the true facts of the on-going tussle between the IRS and The Villages; indeed, their knowledge of the issue is, most likely, based upon sadly unsubstantiated "media reports."

I know that many of you will not only ignore my efforts at reasonableness, but will even work to counter them. That makes me exceedingly sad!

SWR
:beer3:

swrinfla -

if you have no axe to grind, please stay out of the 'conversation' and leave it to continue! i, for one, learned a lot thanx to advogado's postings; and i hope to learn more - from all opinions!

your demand to have the thread shut down - when you have no axe to grind - seems like an oxymoron of sorts. i see no 'reasonableness' in your effort to stifle us.

so please leave the thread and allow the rest of us to continue to discuss, teach, advise, learn and consider.

thanx

[tucson]

Yes, pls keep the thread going, I find out more here than The Daily Sun..

[jimbo2012]

I think this issue has a long time to work its way thru the process of options for them.

But assuming for a moment the ruling stands what does it it mean in $$ to each homeowner here?

[Bucco]

None of the quotes that you cite is attributable to me, and I am not sure why you imply that they are-- but they are part of free speech and, if you don't like them, you are free to ignore them. Members of TOV, I presume, are intelligent enough to discern what posts they want to believe and which ones they want to discount.

Furthermore, you may wish to correct your statement that this "the issue is between the developer and the IRS". That is, unfortunately, not the case. If it were, it wouldn't be of great concern to the residents.

Instead, the issue, right now, is between the IRS and the Center Districts (controlled by the Developer). Those Center Districts own a good chunk of our amenity facilities and need to be able to financially continue to furnish our amenity services to us. Please read the 2009 POA Bulletin article on the subject for a better understanding of the matter.

I do not think I "quoted" anyone in my post and was simply showing where this thread was going. I certainly made no criticism of you or any organization.

I would not use information gained this way (message board) as any basis to make a decision on any legal matter, and this one is and will be complicated.

My thoughts were actually for non residents who may wish to settle here and there are many who read here for info, but my opinion is that this much to complicated to use this medium which is getting bogged down in other things, and bias to serve any value.

I am sorry you took my opinion as a criticism of you or any group....if you did that, imagine what folks looking in here might think.

[rubicon]

I believe the thread should continue. However those responding need to be cool headed. Secondly it does not help for posters to suggest subjective criteria sch as a cause suggesting residents have something against the Developer. Nor should time be wasted attacking the IRS. The fact remains that the pivotal issue is the definition of a political subdivision and does that accounting rule have application to the 2003 bond Issuance

The main focus here is not about the Developer, VCCDD, the POA, etc but about the residents and their stake/concerns in this dog fight.

Most following this thread know the subject matter. We need to stop rehashing it. The stated problem is the IRS ruled against and would do we do if all appeals, etc fail.

We cannot control what the lawyers do in defending the Developer and the Districts and we certainly at this stage of the game have no say in the matter.

The POA has followed this situation and issued information to its members. However as watchdogs for residents what have they done to protect our interests?

Here are my questions: If the IRS prevails what is the likely outcome? How will this affect our lives? Since the source of income is solely from our amenities does that mean an increase in amenity fees or a reduction in services should the District suffer the tax penalty?
How will the future financing of the build out proceed?

what can residents do to at least have some answers available should the worse occur?

But the biggest issue is that the reason we have all of these questions is no one has stepped up to say that if the worse occurs it will not monetarily affect resident. and before anyone suggest that no one knows then i would counter with then let us know what you already know as you have progressed in your fight against the IRS because surely you have laid out the possible scenarios both if you win and if you lose as to the financial implication and the sources of income to remedy a potential tax penalty and whom it will fall upon. Residents can face the realities and have them embrace them or ignore realityand have it work against them

[Advogado]

I believe the thread should continue. However those responding need to be cool headed. Secondly it does not help for posters to suggest subjective criteria sch as a cause suggesting residents have something against the Developer. Nor should time be wasted attacking the IRS. The fact remains that the pivotal issue is the definition of a political subdivision and does that accounting rule have application to the 2003 bond Issuance

The main focus here is not about the Developer, VCCDD, the POA, etc but about the residents and their stake/concerns in this dog fight.

Most following this thread know the subject matter. We need to stop rehashing it. The stated problem is the IRS ruled against and would do we do if all appeals, etc fail.

We cannot control what the lawyers do in defending the Developer and the Districts and we certainly at this stage of the game have no say in the matter.

The POA has followed this situation and issued information to its members. However as watchdogs for residents what have they done to protect our interests?

Here are my questions: If the IRS prevails what is the likely outcome? How will this affect our lives? Since the source of income is solely from our amenities does that mean an increase in amenity fees or a reduction in services should the District suffer the tax penalty?
How will the future financing of the build out proceed?

what can residents do to at least have some answers available should the worse occur?

But the biggest issue is that the reason we have all of these questions is no one has stepped up to say that if the worse occurs it will not monetarily affect resident. and before anyone suggest that no one knows then i would counter with then let us know what you already know as you have progressed in your fight against the IRS because surely you have laid out the possible scenarios both if you win and if you lose as to the financial implication and the sources of income to remedy a potential tax penalty and whom it will fall upon. Residents can face the realities and have them embrace them or ignore realityand have it work against them
In regard to your last point, it would be comforting if the Developer would issue a formal statement reassuring residents that everything will continue, no matter what the outcome. However, in the over 5 years that the investigation has continued, the Developer has not done so. The Developer has, instead, obscured or misrepresented the facts, via non-coverage or misleading articles in the Daily Sun. In a real newspaper, a story of this import would have been receiving front-page coverage and in-depth analysis, and we would not have to try to piece it together in an on-line-discussion site.

[Barefoot]

..... the biggest issue is that the reason we have all of these questions is no one has stepped up to say that if the worse occurs it will not monetarily affect resident. and before anyone suggest that no one knows then i would counter with then let us know what you already know as you have progressed in your fight against the IRS because surely you have laid out the possible scenarios both if you win and if you lose as to the financial implication and the sources of income to remedy a potential tax penalty and whom it will fall upon. Residents can face the realities and have them embrace them or ignore reality and have it work against them

Good post Rubicon. This would allow current residents to better understand "worst case/best case" scenarios, and the possible financial implications. Having said that, I can understand that the Developer doesn't want to publish any information that could possibly lessen the enthusiasm of prospective purchasers. Although I personally think the demand will always be there for this beautiful retirement community.

[senior citizen]

Too early to tell. Here's a link to another article about the issue.

BREAKING: IRS Rules Against The Villages (http://www.thevillagesfloridabook.com/irs-rules-against-the-villages/?awt_l=J78qB&awt_m=3aJr5ODt79RV9Ih)


Thank you for that link.........I just printed out the IRS letter to the attorney.

The Villages Florida Book also has:

Breaking: IRS Rules Against the Villages............

After a 5 year investigation into how the CDD borrowed money, in a memorandum dated May 30, the IRS says:

"WE believe that an entity that is organized and operated in a manner intended to perpetuate private control, and to avoid indefinitely responsibility to a public electorate, cannot be a political subdivision of a State."

Anyway, it's a lot to read...........plus many comments.......

[Mikeod]

I think this issue has a long time to work its way thru the process of options for them.

But assuming for a moment the ruling stands what does it it mean in $$ to each homeowner here?

No one, and I mean no one, really knows. There are so many players in this game besides the homeowners. Bond holders, lawyers, certifying agents, central districts, developer, IRS. Unfortunately, there is no direct voice for the homeowner involved.

IMHO, there is also no DIRECT liability for the homeowners. But central district funds are being expended in this fight and a loss for the central districts could threaten the amenities we enjoy. I'm glad we have the POA watching the progress of this dispute because I'm not confident the VHA or Sun will give us unfiltered news.

[EdV]

In regard to your last point, it would be comforting if the Developer would issue a formal statement reassuring residents that everything will continue, no matter what the outcome. However, in the over 5 years that the investigation has continued, the Developer has not done so. The Developer has, instead, obscured or misrepresented the facts, via non-coverage or misleading articles in the Daily Sun. In a real newspaper, a story of this import would have been receiving front-page coverage and in-depth analysis, and we would not have to try to piece it together in an on-line-discussion site.

If you want official information regarding the Districts position on various subjects you should be checking the Districts Our Place publication here: VCDD Our Place Archives (http://www.districtgov.org/OurPlaceArchives.aspx)

You can even have updates sent via email if you wish.

That said, as far back as this June 2009 issue, Janet Tutt, spokesperson for the Center District (and therefore the developer who controls it) stated:

�Although I can not address all the rumors, the one that is most disturbing floats the possibility that an adverse ruling would somehow result in increased amenity fees or assessments. That is absolutely false. Neither amenity fees, nor resident assessments could be increased for such a purpose.�

[andercat]

In regard to your last point, it would be comforting if the Developer would issue a formal statement reassuring residents that everything will continue, no matter what the outcome. However, in the over 5 years that the investigation has continued, the Developer has not done so. The Developer has, instead, obscured or misrepresented the facts, via non-coverage or misleading articles in the Daily Sun. In a real newspaper, a story of this import would have been receiving front-page coverage and in-depth analysis, and we would not have to try to piece it together in an on-line-discussion site.

I do not think that the developer will say anything unless sales of homes are threatened. I know that when my husband and I come for our lifestyle visit that we will be asking about the ramifications of this IRS decision. I want to know if the decision goes against the developer, what will the residents be liable for? Will any costs to settle this be imposed on the residents? Will there be sufficient money to maintain the amenities? I am moving here for the amenities. If they go to pot, I don't want to be here. I want an answer to these questions in writing.

We looked at TV about 7 or 8 years ago and ruled it out because the developer was never going to leave. No 55+ community we looked at had the developer controlling the community forever. We looked in TX, FL, AZ, NV and CA. We thought the the folks that moved here were giving up their rights and souls for free golf.

Now our son has moved to Orlando and we a considering TV again. If the developer would leave at build out, it would sure make our decision a lot easier. Making money for innovation, hard work, and risk taking is fine. It's the control the Morse family will not give up that is disturbing to me.

Sorry this got so long winded. I really would like to move here but I am really getting scared.

[gomoho]

Could someone PLEASE enlighten me as to who the beneficiary of this tax free money is/was???

[villagerjack]

I do not think that the developer will say anything unless sales of homes are threatened. I know that when my husband and I come for our lifestyle visit that we will be asking about the ramifications of this IRS decision. I want to know if the decision goes against the developer, what will the residents be liable for? Will any costs to settle this be imposed on the residents? Will there be sufficient money to maintain the amenities? I am moving here for the amenities. If they go to pot, I don't want to be here. I want an answer to these questions in writing.

We looked at TV about 7 or 8 years ago and ruled it out because the developer was never going to leave. No 55+ community we looked at had the developer controlling the community forever. We looked in TX, FL, AZ, NV and CA. We thought the the folks that moved here were giving up their rights and souls for free golf.



Now our son has moved to Orlando and we a considering TV again. If the developer would leave at build out, it would sure make our decision a lot easier. Making money for innovation, hard work, and risk taking is fine. It's the control the Morse family will not give up that is disturbing to me.

Sorry this got so long winded. I really would like to move here but I am really getting scared.

We love The Villages butI never thought that I was giving up my soul for free golf. The Villages us not for everybody. Please consider carefully:pray:

[Advogado]

If you want official information regarding the Districts position on various subjects you should be checking the Districts Our Place publication here: VCDD Our Place Archives (http://www.districtgov.org/OurPlaceArchives.aspx)

You can even have updates sent via email if you wish.

That said, as far back as this June 2009 issue, Janet Tutt, spokesperson for the Center District (and therefore the developer who controls it) stated:

�Although I can not address all the rumors, the one that is most disturbing floats the possibility that an adverse ruling would somehow result in increased amenity fees or assessments. That is absolutely false. Neither amenity fees, nor resident assessments could be increased for such a purpose.�


The quote by Ms. Tutt is generally true, because: (1) The Center Districts cannot tax outside their boundaries, no residents live therein, and, therefore no residents can be assessed taxes by those Districts, and (2) the amenity-fee increases cannot exceed CPI increases (however, maybe the amenity fees would not be increased to the maximum in the absence of bond-related costs). However, Ms. Tutt (perhaps unintentionally, but maybe not) is dodging the real question: If the Center Districts incur huge costs as a result of the IRS investigation, from whom will the money necessary to continue the amenity system come? Is the Developer going to voluntarily return the huge profits (illegitimately made at the expense of the US taxpayer, according to the IRS) made from the sale of the amenity facilities? The last time the Developer defaulted on his amenity obligations, it took a class-action lawsuit to get him to pay up.

[villagerjack]

Could someone PLEASE enlighten me as to who the beneficiary of this tax free money is/was???

The issuer of the bonds, The Center Districts, are paying a lower rate of interest to the bondholders who receive tax free income. Now that interest rates have come down substantially (creeped up last week) The "problem" is lessened and it may be an advantageous time to buy back those bonds with Developer assistance and issue taxable bonds. Maybe a hybrid, Fed Taxable, Fl Tax free would work.?

[rubicon]

If you want official information regarding the Districts position on various subjects you should be checking the Districts Our Place publication here: VCDD Our Place Archives (http://www.districtgov.org/OurPlaceArchives.aspx)

You can even have updates sent via email if you wish.

That said, as far back as this June 2009 issue, Janet Tutt, spokesperson for the Center District (and therefore the developer who controls it) stated:

�Although I can not address all the rumors, the one that is most disturbing floats the possibility that an adverse ruling would somehow result in increased amenity fees or assessments. That is absolutely false. Neither amenity fees, nor resident assessments could be increased for such a purpose.�


EdV: Re your comments "From your lips to God's ears". Please tell us who in an official capacity can guarantee that won't happen?. Who in an official capacity can speak to the effect this ruling will have/not respecting residents? Please tell us what officials are working to protect the individual/collective rights of residents? We know what the contracts say but contracts were written to be broken . It was in God's plan so that we would have an over-abundance of lawyers.
With all respect due, I am still amazed that as a non-resident you seem to have more information regarding this subject matter than the average resident bear.

I agree with barefoot this issue won't deter from the building of The Villages. Obviously there are competing voices here and thankful so because this subject needs to be studied carefully and followed to its conclusion. Methinks some are fearful of what affect this will have on their investment. Might i suggest that as any investment a continual watchful and probing eye is necessary even if someone else is managing their funds. Investors need to know how current events are affecting their savings so that if there is a need to pivot..they can pivot like a Magic Johnson without falling on their metphorical faces.

Again I say cooler heads, like Sgt Joe Friday prevail, so all I want are the facts

[Advogado]

The issuer of the bonds, The Center Districts, are paying a lower rate of interest to the bondholders who receive tax free income. Now that interest rates have come down substantially (creeped up last week) The "problem" is lessened and it may be an advantageous time to buy back those bonds with Developer assistance and issue taxable bonds. Maybe a hybrid, Fed Taxable, Fl Tax free would work.?

True, now may be a better time to issue replacement taxable bonds. However, the current bondholders would presumably claim that the lower current interest rates have increased the value of their existing bonds and thus the current bondholders' losses from the Center Districts' breach of the Districts' warranty that the current bonds are tax exempt. Furthermore, who knows what interest rates will be when, and if, it is necessary for the Center Deistricts to issue replacement bonds. In summary, it cannot be predicted how the issuance of replacement bonds, if that becomes necessary, would work out--but it wouldn't be pretty.

[tommy steam]

As the months move ahead ,we will see if new home sales are declining because of this news. IMHO ,I think it might have some impact on home sales here, but then again I could be wrong. We will see.

[EdV]

EdV: Re your comments "From your lips to God's ears". Please tell us who in an official capacity can guarantee that won't happen?. Who in an official capacity can speak to the effect this ruling will have/not respecting residents? ...

Rubicon,

I was merely responding to the other post that suggested that throughout this entire 5 year (or more) ordeal, that the developer has never said word one regarding the potential financial impact on TV residents, when in fact he has.

You will also note that throughout my many posts here on this subject over the years I�ve never professed to claim I know the outcome, only what cannot legally happen based on reading the applicable legal documents.

By the way, one option that I�ve not seen mentioned is that instead of requiring the Center District to recall all the tax free bonds in question and then sell a new set as taxable, is to simply agree to pay a penalty to the IRS each year for the remaining life of the bonds in question.

Pure speculation on my part but certainly appears to be the path of least resistance if the IRS assertions prevail through the legal system.

[gomoho]

The issuer of the bonds, The Center Districts, are paying a lower rate of interest to the bondholders who receive tax free income. Now that interest rates have come down substantially (creeped up last week) The "problem" is lessened and it may be an advantageous time to buy back those bonds with Developer assistance and issue taxable bonds. Maybe a hybrid, Fed Taxable, Fl Tax free would work.?

If what you say is correct- "the bondholders who receive tax free income" how in the world could residents in TV be held responsible for their tax debt?
Even if the were sold as "tax free bonds" wouldn't it be a "buyer beware" situation?

[villagerjack]

[QUOTE=Advogado;689065]True, now may be a better time to issue replacement taxable bonds. However, the current bondholders would presumably claim that the lower current interest rates have increased the value of their existing bonds and thus the current bondholders' losses from the Center Districts' breach of the Districts' warranty that the current bonds are tax exempt. Furthermore, who knows what interest rates will be when, and if, it is necessary for the Center Deistricts to issue replacement bonds. In summary, it cannot be predicted how the issuance of replacement bonds, if that becomes necessary, would work out--but it wouldn't be pretty.[

It depends on the deal. Since you have no numbers,even you cannot predict the outcome. Pretty is in the eye of the beholder.

[villagerjack]

If what you say is correct- "the bondholders who receive tax free income" how in the world could residents in TV be held responsible for their tax debt?
Even if the were sold as "tax free bonds" wouldn't it be a "buyer beware" situation?


It would seem so. Most tax free bonds are sold with a legal opinion. We would have ti see what it said in that document. I would have to assume that full risks were disclosed. I doubt the IRS would go after someone who purchased these bonds for back interest if they were called. IMHO.

[villagerjack]

True, now may be a better time to issue replacement taxable bonds. However, the current bondholders would presumably claim that the lower current interest rates have increased the value of their existing bonds and thus the current bondholders' losses from the Center Districts' breach of the Districts' warranty that the current bonds are tax exempt. Furthermore, who knows what interest rates will be when, and if, it is necessary for the Center Deistricts to issue replacement bonds. In summary, it cannot be predicted how the issuance of replacement bonds, if that becomes necessary, would work out--but it wouldn't be pretty.

Does the legal opinion attached to the tax free bonds disclose all risks? If so, the holders of the bonds could not claim anything. Besides, I imagine after this ruling that the price of the bonds will drop, possibly below par reflecting the uncertainty. In that case the CD would have to pay out less particularly if these bonds are no longer tax free, but taxable.

[ilovetv]

I looked thru the thread and didn't see this article by Bond Buyer Online posted here, and I think it has some good information:

".......Sanford said the facts in the Village Center CDD are unusual. CDDs typically are initially created by developers, which issue bonds to finance the development of infrastructure in a community, and then sell lots to homeowners. While the developer or related parties may initially control the board of supervisors that governs the CDD, under Florida law once there are 250 residents members of the board must be elected by the �qualified electorate,� meaning residents who can vote.

The Village Center CDD was set up as a non-residential CDD with a board of supervisors controlled by the developer or affiliated parties for about 20 years, according to the IRS. The CDD�s bond documents stated that because of the non-residential nature of the development, there would never be �qualified electors� of board members, the IRS said.

The CDD�s board petitioned four times to shrink or otherwise move the district�s boundaries so that it would not include residences. Sanford said he had never seen a CDD take such actions.

The Village Center CDD contained recreational, water and sewer, and postal facilities as well as fire stations, that were constructed or acquired, owned and operated by the developer. Bonds were issued by the CDD to finance the purchase of these facilities from the developer. In its TAM, the IRS said that in some cases the �amount of [bond] proceeds paid to the developer and its affiliates significantly exceeded the developer�s costs of the assets acquired.�

Lots sold in other nearby CDDs were subject to deed restrictions requiring services to be provided by the developer, including an obligation by the developer to �perpetually provide the recreational facilities.� Property owners were required to pay the developer a monthly �amenities fee,� even if recreational facilities were located outside of their districts.

The IRS said in its TAM: �The issuer [CDD] was organized and operated to perpetuate private control and avoid indefinitely responsibility to a public electorate, either directly or through another elected state or local governmental body. That fact is not consistent with qualification as a political subdivision.�.......

Bond Buyer Online - IRS Ruling Against Fla. CDD May Have Limited Reach (http://www.bondbuyer.com/issues/122_109/irs-ruling-against-florida-cdd-may-have-limited-reach-1052445-1.html)

[rubicon]

Rubicon,

I was merely responding to the other post that suggested that throughout this entire 5 year (or more) ordeal, that the developer has never said word one regarding the potential financial impact on TV residents, when in fact he has.

You will also note that throughout my many posts here on this subject over the years I�ve never professed to claim I know the outcome, only what cannot legally happen based on reading the applicable legal documents.

By the way, one option that I�ve not seen mentioned is that instead of requiring the Center District to recall all the tax free bonds in question and then sell a new set as taxable, is to simply agree to pay a penalty to the IRS each year for the remaining life of the bonds in question.

Pure speculation on my part but certainly appears to be the path of least resistance if the IRS assertions prevail through the legal system.

Edv: Thank you this is the sort of thing we need to explore as options. You are other posters have made some excellent suggestions. While we are not in the loop we can at least offer these solutions to the powers to be via the POA. This is all I have ever suggested regarding this issue....that is we have some input since we have some risk.

The issue has a satisfactory solution. It may be that the parties IRS Developer et are so invested that they have become inflexible.. egos getting in the way. The reputation of the IRS the fact that the Developer is a huge Republican contributor are side issues and don't belong in this mix. A deal can be struck that satisifies both and as always leaves both parties feeling they gave something up....that's the nature of compromises

I appreciate your input and I am gald that you are well informed about this issue because we need all the friends that we can muster.

[NJblue]

Advogado wrote:
Is the Developer going to voluntarily return the huge profits (illegitimately made at the expense of the US taxpayer, according to the IRS) made from the sale of the amenity facilities?
What is your supporting documentation for this statement? The only thing that I recall coming from the IRS with respect to the amount of money that the developer made on this was that he was actually paid LESS than what the amenities were truly worth. Unfortunately for us, the real benefactor of the tax-free status of the bonds was the entity that we the residents pay for with our amenity fees - the central districts. If the bonds were sold as taxable bonds, the interest rates would have been higher and therefore our amenity fees would have been stretched tighter to pay off the bonds.

[manaboutown]

Advogado wrote:

What is your supporting documentation for this statement? The only thing that I recall coming from the IRS with respect to the amount of money that the developer made on this was that he was actually paid LESS than what the amenities were truly worth. Unfortunately for us, the real benefactor of the tax-free status of the bonds was the entity that we the residents pay for with our amenity fees - the central districts. If the bonds were sold as taxable bonds, the interest rates would have been higher and therefore our amenity fees would have been stretched tighter to pay off the bonds.

LESS??? Like paying $84,000,000 for $8,800,000 worth of property?

THE POA BULLETIN (http://www.poa4us.org/bulletins_files/POAMar03.html)

[villagerjack]

LESS??? Like paying $84,000,000 for $8,800,000 worth of property?

THE POA BULLETIN (http://www.poa4us.org/bulletins_files/POAMar03.html)

IRS recently ruled that the CDD paid LESS yes LESS tan the proprty was wrth.,

[Advogado]

IRS recently ruled that the CDD paid LESS yes LESS tan the proprty was wrth.,

I am afraid that you are mistaken about the IRS ruling, probably because of a misleading article that appeared in the Daily Sun. As confirmed by Janet Tutt at a POA meeting, the assertion that the CDD paid less than market value is NOT an IRS conclusion or ruling. It is merely an argument made by the CDD's attorney, which has not been agreed to by the IRS. I would you suggest that you read the article about the IRS in the following POA Bulletin: http://www.poa4us.org/bulletins_files/bulletin201304.pdf

[Advogado]

To expand on my previous post, not only has the IRS never ruled that the CDD's paid less than the assets were worth, in its recent TAM, the IRS is still complaining about the size of the Developer's profits.

Furthermore, if taxable bonds had been used, the amenity fees would not have been higher. Using the income-stream-valuation methodology employed in the transaction, if taxable bonds had been used, the amenity fees would have stayed the same, but the Developer's profits would have been less.

[jimbo2012]

Orlando sentinel

Bond profits go to developer

Morse, 76, is the developer of The Villages, one of the world's largest retirement communities, located on 33 square-miles south of Ocala. Through his fully owned Holding Company of The Villages, he has built and sold more than 44,400 homes since 1983.

Morse has a fortune of $2.6 billion, at least $955 million of which 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.

Under Florida's community-development district arrangement, Morse built amenities in The Villages -- primarily golf courses, pools and guard houses -- and then sold them to residents through district boards that decided how much to pay for the assets. The boards were appointed by Morse, as state law allows, and in every case the majority of the members worked for Morse; one board included Morse, according to Bloomberg's analysis.

AND (http://www.heraldtribune.com/article/20130607/ARTICLE/306079989/-1/news?Title=Villages-CDD-bonds-ruled-taxable&tc=ar)

Herald Tribune


In 2008, a sharp IRS agent conducting an audit figured out how the greedy Villages had perverted the law even further, adding a unique twist that kept the district's board of directors from ever being elected by the people who live there. That allowed the family of developer Gary Morse to pocket $925 million from the sale of tax-free bonds alone, according to Bloomberg News.

Morse, whose fortune Bloomberg estimated at $2.9 billion, used some of the proceeds of the bonds to pay for The Villages' expansion, but the biggest chunk of the cash went to purchase from him the right to collect amenity fees and the actual amenities themselves, such as golf courses and swimming pools.

As Agent Dominick Servadio Jr.'s audit got close to the heart of the matter, he began to write letters to the district questioning whether the proceeds from tax-free bonds were being used for a public purpose, whether the purchases were worth what was paid and whether the district was acting in the best interest of the public. Excellent questions, all.

Indeed, why would a board with the interest of the public at heart take out multimillion-dollar loans to buy the developer's responsibility and assets — unless, of course, the real goal was to make him rich? Consider that the developer is required by deeds to provide amenities to Villages homebuyers. Why not just stay out of enormous debt and let the developer collect amenity fees and take care of pools and such?

Suddenly, Servadio ran into trouble. The 25-year IRS bond expert found himself under investigation by agents of the Treasury Department's inspector general who accused him of illegally leaking his colorfully written documents to the press.

They tried — unsuccessfully — to charge him with a crime. The treasury agent who interviewed this columnist in 2011 stared in disbelief when told that the newspaper got all the IRS agent's documents through public-records requests. Obviously, the agent was uninformed about breadth of Florida's open-records law.

At the time, the agent denied that the investigation into Servadio's actions was a result of Morse's political influence. The developer, his family members and employees are among the largest contributors nationally to the Republican Party, its causes and committees. They kicked in at least $11.6 million in the last 13 years, including $2.4 million alone in the 2012 election cycle, according to OpenSecrets.org, an organization that tracks contributions.

Servadio retired to care for his ailing wife, and the case got bounced around to various agents of the IRS in different cities.

Meanwhile, in January 2012, dissatisfaction with community-development districts was brewing across the state, and Gov. Rick Scott ordered an investigation of Florida's 1,634 special districts. (The probe isn't expect to be done until January.)

Two months after Scott signed the executive order, Morse, his three children and The Villages itself donated a total of $180,000 to Let's Get to Work, a political-action committee whose millions in contributions are expected to help Scott get re-elected in 2014.

Then, in the last quarter of 2012, The Villages hired the two-time chairman of the Florida Republican Party to lobby for its CDDs in Washington. Apparently it didn't work.

Fast-forward six months to today and the IRS ruling.

Florida's director of bond finance says the ruling will have an icy effect on districts that want to issue tax-free bonds, which have been used to build much of the infrastructure inside Florida developments.

Good. CDD bonds are a rip-off — just a not-so-subtle way to shift the cost of doing business from developers to the people buying homes. Buyers in average developments with a CDD get to pay for some infrastructure twice: once in the price of the house and again as they pay off bonds.

In The Villages, however, it's more like paying triple: once in the price of the house, once (with interest) as the bonds are paid off and again (with more interest) in a bond attached to individual homes at the closings.

[gomoho]

Jimbo - so if this is correct how can we determine exactly what amount of $$$ the IRS is looking to recoup. Also if in fact Mr Morse was the recipient of this money through The Villages Holding Company than I could see how we as residents may end up paying for this through the amenity fees. He has the power to collect from us - an outside bond holder would not. I'm not saying that power is legal, moral, or the right thing to do - just that he can do it.

[jimbo2012]

Well the IRS will negotiate a settlement they always do.

If Morse bounced the responsibility back to us he would see a class action suit more than likely by the home owners.

Where do U see that he can?

.

[manaboutown]

I believe I read somewhere that about 60% of the amenity fee goes to bond interest. Does anyone know if this is accurate?

[rubicon]

Posts 105 thru 108 are the exact reason(s) that furrowed my brow when residents continued giving high praise to the Developer....and repeatedly explained that the residents leveraged this entire project meaning that the Developer really seldom took any business risks.

Five years ago I asked that this issue be studied in behalf of the residents to determine our options. Others wanted a wait and see. Well time is running out. We all know where the fault lies. What we don't know is will the Developer step up?

As to replacement bonds, etc another factor to consider is the effect the Fed's bond buying will have on the future of the bond market?

[mickey100]

Posts 105 thru 108 are the exact reason(s) that furrowed my brow when residents continued giving high praise to the Developer....and repeatedly explained that the residents leveraged this entire project meaning that the Developer really seldom took any business risks.

Five years ago I asked that this issue be studied in behalf of the residents to determine our options. Others wanted a wait and see. Well time is running out. We all know where the fault lies. What we don't know is will the Developer step up?

As to replacement bonds, etc another factor to consider is the effect the Fed's bond buying will have on the future of the bond market?

My brow furrows as well when residents basically stick up for the Developer and his actions in this case when he left us, the residents, holding the bag. Its just hard to believe.

[Advogado]

My brow furrows as well when residents basically stick up for the Developer and his actions in this case when he left us, the residents, holding the bag. Its just hard to believe.
It is, indeed, hard to believe.

While I enjoy life here and credit the Developer for showing absolute genius in many creating many aspects of The Villages, the fact is that Developer runs a very effective local propaganda machine with control of the local paper, TV station, and radio station-- as well as having great influence over the Villages Home Owner Association, local businesses, state and local governments. If any of those entities had been truly independent, there would, years ago, have been a much-more-critical look into how the Developer has financed The Villages through Developer-controlled Community Development Districts and the use of tax-payer subsidies (in the form of purportedly tax-exempt bonds). Instead, until recently, only the POA and to some extent, the Orlando Sentinel, have raised a red flag.

[gomoho]

Jimbo - my reference to he "can" is the based on the fact he pretty much holds all the cards - at least at this point.

[EdV]

To expand on my previous post, .... the IRS never ruled that the CDD's paid less than the assets were worth...

I too am a little uncertain as to the current status of the valuation audit(s) of the sold amenities. But I think it went like this:

The original agent pretty much valued the properties strictly on their physical asset value plus a modest amount of profit for a like facility. This caused an uproar in the press since the VCCDD paid tens of millions of dollars more to purchase it from the developer.

Last year the IRS attempted to settle the argument by hiring an independent auditor just to determine the true value of the amenity facilities (golf courses) that were sold. She ultimately concluded that it was worth something like 25-30 million when applying 15 years of amenity revenue to the formula. Or in other words about half of what the VCCDD actually paid.

Shortly thereafter the VCCDD attorney(s) issued letters and statements applauding the auditor for finally agreeing them that the amenity revenue should be included. But then they added their own little twist by saying that a “slight” error had been made and that the revenue stream should have been based on 30 years as is allegedly customary when a private utility company sells a water or sewage plant to a municipality, not 15. Then after running the numbers back through at 30 years they came to the conclusion that the VCCDD actually paid slightly less than what they claim is the true value of the property.

But I too have not seen a response to this latest argument from the IRS.

[EdV]

For those of you who insist on speculating who or what entity would be responsible for the back taxes and interest should the final ruling be that the bonds were in fact taxable, here is a link to the IRS Tax Exempt Bond (http://www.irs.gov/Tax-Exempt-Bonds/About-Tax-Exempt-Bonds)home page.

Under the Voluntary Compliance section it states:

��.the IRS seeks to encourage issuers, conduit borrowers and other parties to bond transactions to exercise due diligence and to attempt to correct any issuance and post-issuance infractions of the applicable sections of the Internal Revenue Code and regulations. This expansion reflects the IRS's continuing policy of taxing bondholders only as a last resort and its desire to resolve tax-advantaged bond infractions with other parties to the bond transactions.�

So not only is taxing the individual bondholders a last resort, can you imagine the outrage you would feel if you received a letter from the IRS claiming you owe them several thousand dollars in back taxes and interest for a taxable bond that was part of a tax free bond fund you purchased in 2006.

[villagerjack]

"But I too have not seen a response to this latest argument from the IRS."

Appraisal methods are 1) Cost to build 2) Market Value 3) Income Approach. Themost appropriate in tnis case wouldbe the income approach utilizing a discounted cash flow analysis (DCF). It ay appear that the original auditors valuation weighed heavily on tne cost approach? The actual valuation is probably much higher on the income approach, particularly since Interest rates have declined significantly. Under the DCF method, the Net Operating Income( Net Income before Depreciation and Interest NOI) divided by the Capitalization Ratio (Cap Ratio) which isbased on current interest rates. A lower Cap Ratio produces a higher valuation fr the property. My educated guess is that the initial auditorsvaluation was an unsophisticated approach (Cost Badis) and when the more sophisticated apprach (Income Basis or DCF) a more accurate valustion is determined hence the recent determination of value by the CDD which the IRS may have a diffucult time disproving.

[Advogado]

For those of you who insist on speculating who or what entity would be responsible for the back taxes and interest should the final ruling be that the bonds were in fact taxable, here is a link to the IRS Tax Exempt Bond (http://www.irs.gov/Tax-Exempt-Bonds/About-Tax-Exempt-Bonds)home page.

Under the Voluntary Compliance section it states:

��.the IRS seeks to encourage issuers, conduit borrowers and other parties to bond transactions to exercise due diligence and to attempt to correct any issuance and post-issuance infractions of the applicable sections of the Internal Revenue Code and regulations. This expansion reflects the IRS's continuing policy of taxing bondholders only as a last resort and its desire to resolve tax-advantaged bond infractions with other parties to the bond transactions.�


So not only is taxing the individual bondholders a last resort, can you imagine the outrage you would feel if you received a letter from the IRS claiming you owe them several thousand dollars in back taxes and interest for a taxable bond that was part of a tax free bond fund you purchased in 2006.
In addition, it is a lot simpler for the IRS to deal with one issuer instead of thousands of bond holders. The leverage that the IRS has in dealing with the issuer is that the issuer will be liable to reimburse the bondholders for their losses if the IRS does pursue the bondholders. The basis for that liability is breach of the warranty that the issuer gives the bondholders to the effect that the bond that the issuer is selling to them is exempt from federal taxes. Thus, one way or the other, the cost of the lost tax exemption is generally going to end up on the issuer, with maybe some liability on the part of other parties (attorneys, underwriters, etc.) involved. Again, hard to say, at this point, exactly how all this will play out here. Finally, we need to keep in mind that the fat lady has not yet sung on the basic issue of whether the bonds are, or are not, tax exempt.

[mickey100]

I believe I read somewhere that about 60% of the amenity fee goes to bond interest. Does anyone know if this is accurate?

This is a link to an old article in the Ocala paper that used that percentage. I have no way of knowing if that is correct or even up to date, but seems like I've heard 50-60% somewhere.
The Villages -- CDD fees, policies reveal developer's clout (http://www.ccfj.net/CDDVillclout.html)

[villagerjack]

In addition, it is a lot simpler for the IRS to deal with one issuer instead of thousands of bond holders. The leverage that the IRS has in dealing with the issuer is that the issuer will be liable to reimburse the bondholders for their losses if the IRS does pursue the bondholders. The basis for that liability is breach of the warranty that the issuer gives the bondholders to the effect that the bond that the issuer is selling to them is exempt from federal taxes. Thus, one way or the other, the cost of the lost tax exemption is generally going to end up on the issuer, with maybe some liability on the part of other parties (attorneys, underwriters, etc.) involved. Again, hard to say, at this point, exactly how all this will play out here. Finally, we need to keep in mind that the fat lady has not yet sung on the basic issue of whether the bonds are, or are not, tax exempt.

The Issuer issued the bonds in good faith, as did any other Florida CDD's, in compliance with existing laws and a legal opinion. I do not know how that legal opinion read but it should have stated the facts, including the fact that the IRS had not passsed final judgement on tax free status. If the bondholder chose to proceed anyway, it should be his loss and not anyone elses, provided all risks were adequately disclosed. I am not taking sides, only trying to understand the facts.

[villagerjack]

This is a link to an old article in the Ocala paper that used that percentage. I have no way of knowing if that is correct or even up to date, but seems like I've heard 50-60% somewhere.
The Villages -- CDD fees, policies reveal developer's clout (http://www.ccfj.net/CDDVillclout.html)

If that is the case we are a pretty darn good efficiently run operation. Al thise amenities fir anout $65-70/month after debt service? How do they do it?

[Advogado]

The Issuer issued the bonds in good faith, as did any other Florida CDD's, in compliance with existing laws and a legal opinion. I do not know how that legal opinion read but it should have stated the facts, including the fact that the IRS had not passsed final judgement on tax free status. If the bondholder chose to proceed anyway, it should be his loss and not anyone elses, provided all risks were adequately disclosed. I am not taking sides, only trying to understand the facts.

The warranty of tax exemption is standard and is intended to put the cost on the issuer in exactly this kind of situation. That is how the system works. Good faith (if any) on the part of the issuer has nothing to do with it. Otherwise, few people would be willing to purchase municipal bonds. The rationale is that it is incumbent on the issuer to make certain that the bonds qualify as tax exempt and take the hit if they are not.

Maybe the issuer, in turn, has some kind of recourse against its legal advisors or, in this case, against the Developer (who obviously structured the deal). However, in the absence of a municapal bankruptcy, it is hard to conceive of the Center Districts pursuing any kind of remedy against the Developer. Only time will tell about some of this stuff.

[villagerjack]

"The warranty of tax exemption is standard and is intended to put the cost on the issuer in exactly this kind of situation. That is how the system works."

Is this carved in stone? If so, Where? The bonds WERE tax exempt when issued. How could anyone guarantee tax exemption forever if it was still an IRS open item? If this is thecase then the M/V of these bonds wouldnot have dropped after this latest pronouncement. Do you know if it did ?

[kstew43]

so is it time to sell .....?:loco:

[justjim]

so is it time to sell .....?:loco:

Not at all. At least not because of this ruling by the IRS.

[rubicon]

NO It is not time to sell it is time to buy. This issue is going to get straightened out. As to the bonds there may well be a question of material misrepresentation which is going to take everyone back to a review and debate concerning the application.

Now a days it is not wise to give people the benefit of the doubt because unlike bygone days people's attitudes have changed and there are far too many characters whose reputations are in dispute.

However, let me advance an argument in favor of the Developer. While CDD are new The Villages appears to be the largest of its kind. And so it would seem that during the incubator period (until the build out) it is important for the Developer with sway over the project and counties stay involved to keep it all going forward. Perhaps if the Developer moved away too quickly the project would have faltered?

Folks keep debating the valuation formula utilized in the transaction between the Developer and District. TheNotice of Proposed Issue dated January 2009 addressed that issue in quite a bit of detail. Suffice is to say the newspaper accounts etc reported the IRS was not impressed.

Bottom ine for me is that it appears this controversey is moving forward and the sooner it is resolved the better for all of us.

[EdV]

The Issuer issued the bonds in good faith..... If the bondholder chose to proceed anyway, it should be his loss and not anyone elses, provided all risks were adequately disclosed. I am not taking sides, only trying to understand the facts.

Jack, with all due respect you�re missing the point.

Do you realize that as we speak right now, you yourself could be one of those bondholders that you claim should be �his loss�?

Seriously. Have you ever invested in a mutual fund, be it a stock fund or a bond fund. Did you ever scrutinize the purchases and sales that the fund made while you held stock in that fund or did you just keep an eye on the total return on your investment?

Anyone that invested in a Municipal Bond Fund (usually a tax free one but not always) over the past 10 years or so is a potential current or previous bondholder of VCCDD Tax Free Bonds.

Am I making sense or are you still unsure of what I�m trying to tell you?

[Advogado]

"The warranty of tax exemption is standard and is intended to put the cost on the issuer in exactly this kind of situation. That is how the system works."

Is this carved in stone? If so, Where? The bonds WERE tax exempt when issued. How could anyone guarantee tax exemption forever if it was still an IRS open item? If this is thecase then the M/V of these bonds wouldnot have dropped after this latest pronouncement. Do you know if it did ?
Think of the warranty on your car. It is intended to protect you, the buyer, if anything goes wrong with the car. If a wheel falls off during the warranty period, it doesn't matter if the manufacturer put the wheel on in good faith. When he gave you the warranty, he assumed responsibility if anything went wrong with the car. Same principle here.

Frankly, as a Villager, I would rather see the bond holders, as opposed to the Center Districts, take the ultimate hit, but, whatever you may think, it just simply is not going to happen-- although the bond holders may take a loss for reasons I am not going to get into.

By the way, although I have not followed the price of the relevant bonds, of course it dropped. The bond holders may have some difficulty in getting paid and also some tax problems as a result of the latest IRS ruling.

[villagerjack]

so is it time to sell .....?:loco:

I have owned since 2007 and had 6 great years enjoying the amenities at a reasonable cost, provided by the Developer who got rich on this very unique place. There are some who think he got too rich but in the end I am paying a very affordable price unlike anywhere else. If I had listened to all the attackers ( who are still here BTW) I would have missed out on six glorious years. I hope he makes another billion and buys more yachts and jets or spends it anyway he chooses. I will not make my life decisions based on nine year old newspaper articles by reporters who have very limited knowledge if what they are talking about. If you would not give these reporters your investment portfolio to handle, why trust them with anything else, especially where you are going to spend your retirement days?

[Advogado]

so is it time to sell .....?:loco:

I am not selling. I like it here.

However, it is time for all of us to get involved in civic affairs, supporting the POA and attending district governmental meetings come to mind. In regard to this IRS issue, we should be staying informed and trying to watch developments so that no resolution of the matter is cooked up that prejudices the residents to the benefit of the Developer.

It's awful easy to lulled into thinking that we live it in fantasy world, removed from real world issues. I admit that that has happened to me, and I really have not been following a lot of local political issues as closely as I might have in my pre-Villages days. Maybe this IRS issue is a wake-up call.

[Geewiz]

The Morse family has made and continues to make a ton of cash out of TV. Granted, if they have to pay back taxes, it will hurt the bottom line. However, if they do anything to diminish their investment into the lifestyle here, they open themselves up to litigation hell as home buyers will be inundated with attorney offers...some possibly class action. This will add to their loss on the IRS ruling. Don't fret....they are smart and will challenge the IRS ruling in court and if they lose, they will accept the loss. Unless their greed defies logic and they want to take on 120,000 lawsuits.

[iaudit]

The Morse family has made and continues to make a ton of cash out of TV. Granted, if they have to pay back taxes, it will hurt the bottom line. However, if they do anything to diminish their investment into the lifestyle here, they open themselves up to litigation hell as home buyers will be inundated with attorney offers...some possibly class action. This will add to their loss on the IRS ruling. Don't fret....they are smart and will challenge the IRS ruling in court and if they lose, they will accept the loss. Unless their greed defies logic and they want to take on 120,000 lawsuits.

At this point in time, the developer has not spent any money to defend this issue with the IRS. The lawyer fees are being paid by the Central District CDD's which receive their funding from the homeowners' amenity fees. Therefore, it is the village homeowners who are paying for all costs involved in defending this issue.

[jimbo2012]

What is the support of that statement?

[JP]

It's all going to work our just fine. These are just the opening shots of what I think will be a protracted legal battle. Don't get your undies in a bundle.

[villagerjack]

"Do you realize that as we speak right now, you yourself could be one of those bondholders that you claim should be “his loss”?"

I really do not see that happening.

"Seriously. Have you ever invested in a mutual fund, be it a stock fund or a bond fund. Did you ever scrutinize the purchases and sales that the fund made while you held stock in that fund or did you just keep an eye on the total return on your investment?"

I invest plenty. Whats your point?

"Anyone that invested in a Municipal Bond Fund (usually a tax free one but not always) over the past 10 years or so is a potential current or previous bondholder of VCCDD Tax Free Bonds."

Your point?

"Am I making sense or are you still unsure of what I’m trying to tell you?

You mean.....When did i stop beating my wife.?

[villagerjack]

It's all going to work our just fine. These are just the opening shots of what I think will be a protracted legal battle. Don't get your undies in a bundle.

I agree. However, If they were going to settle, now would be a good time to do it since long term interest rates are very low however, they are not dealing with a weak person in Morse and the IRS is not exactly in favor these days.

[villagerjack]

Think of the warranty on your car. It is intended to protect you, the buyer, if anything goes wrong with the car. If a wheel falls off during the warranty period, it doesn't matter if the manufacturer put the wheel on in good faith. When he gave you the warranty, he assumed responsibility if anything went wrong with the car. Same principle here.

Frankly, as a Villager, I would rather see the bond holders, as opposed to the Center Districts, take the ultimate hit, but, whatever you may think, it just simply is not going to happen-- although the bond holders may take a loss for reasons I am not going to get into.

By the way, although I have not followed the price of the relevant bonds, of course it dropped. The bond holders may have some difficulty in getting paid and also some tax problems as a result of the latest IRS ruling.

Looks like the market, the ultimate arbiter, does not buy into your thesis and if you do, now is the time for you to buy these bonds and make a bundle.:$::$:

[KeepingItReal]

Bloomberg Articles

Billionaire Morse (http://www.bloomberg.com/news/2013-06-05/florida-billionaire-s-development-bonds-not-tax-exempt-irs-says.html)

IRS questions bonds from GOP donor development - Businessweek (http://www.businessweek.com/ap/2013-06-06/irs-questions-bonds-from-gop-donor-development)

After closing in November 2011 it was some time before I heard anything about the on going IRS problems.

I am wondering if this un-resolved IRS issue was not required to be disclosed to all prospective buyers before their closings, in fact I am pretty certain it was required?

Florida’s Required Real Estate Disclosures
Florida business and real estate attorneys Roddy Lanigan and Eric Lanigan have represented buyers, sellers, developers, appraisers and contractors in residential and commercial litigation.

There are an increasing number of mandatory disclosure obligations placed on those who sell Florida real estate and it’s hard to keep up with all the new requirements.

Here are a summary of disclosures required for Florida residential transactions units. Many of the following disclosures are required on commercial transactions. Local residential disclosures may exist so it is always prudent to inquire about such requirements before escrow closes.

The Top Real Estate Claim

The No. 1 claim on Errors & Omissions Insurance is “failure to disclose” an item that a buyer felt was material. There are some general guidelines to help protect against non-disclosure liability lawsuits. Part of this is ensuring that all real estate documents are reviewed by an attorney before signature. A key factor is to ensure that all disclosures are in writing and which have acknowledgment signatures.

Disclosures That Are Required

TDS (Transfer Disclosure Statement)
This law requires sellers to give prospective buyers a written disclosure statement of items including possible easements, neighborhood issues, appliances, structural defects, modifications, and other material defects that may affect the principal’s decision in a transaction.

[villagerjack]

Think of the warranty on your car. It is intended to protect you, the buyer, if anything goes wrong with the car. If a wheel falls off during the warranty period, it doesn't matter if the manufacturer put the wheel on in good faith. When he gave you the warranty, he assumed responsibility if anything went wrong with the car. Same principle here.

Frankly, as a Villager, I would rather see the bond holders, as opposed to the Center Districts, take the ultimate hit, but, whatever you may think, it just simply is not going to happen-- although the bond holders may take a loss for reasons I am not going to get into.

By the way, although I have not followed the price of the relevant bonds, of course it dropped. The bond holders may have some difficulty in getting paid and also some tax problems as a result of the latest IRS ruling.

I understand car and dishwasher warrantees but where is this warranty on the bonds?

[villagerjack]

"By the way, although I have not followed the price of the relevant bonds, of course it dropped. The bond holders may have some difficulty in getting paid and also some tax problems as a result of the latest IRS ruling."

Please enlighten me. I believe it s your position that the CDD bonds have a "WARRANTY". Although I never heard of a Warranty on Bonds, if these bonds have said Warranty then why should the price of the bonds drop? Can you give a link to the Warranty? Thanks

[Advogado]

"By the way, although I have not followed the price of the relevant bonds, of course it dropped. The bond holders may have some difficulty in getting paid and also some tax problems as a result of the latest IRS ruling."

Please enlighten me. I believe it s your position that the CDD bonds have a "WARRANTY". Although I never heard of a Warranty on Bonds, if these bonds have said Warranty then why should the price of the bonds drop? Can you give a link to the Warranty? Thanks

If you really want to get into it, here you go. Let me caution you, it would have been simpler to take my word for it:

Municipal Securities Rulemaking Board::EMMA (http://emma.msrb.org/Search/Search.aspx)

I'm not going to walk you through it, but you can find everything you could want to know here about the various relevant bond issues here. Have fun.

[villagerjack]

If you really want to get into it, here you go. Let me caution you, it would have been simpler to take my word for it:

Municipal Securities Rulemaking Board::EMMA (http://emma.msrb.org/Search/Search.aspx)

I'm not going to walk you through it, but you can find everything you could want to know here about the various relevant bond issues here. Have fun.

I thought so. A warranty, in all likelihood, does not exist. If it did, the price of the bonds would not have dropped when the ruling came out. Seems like when you guys are asked a specific question that challenges your view, it is never answered. Take your word? No thanks. Bondholders of CDD bonds are no different than other investors and should do their own due diligence. IMO they will shoulder any losses, as they should in the event this adverse ruling is held up in appeals. IMO it is too far reaching and will affect too many CDD,s and investors.

[Advogado]

I thought so. A warranty, in all likelihood, does not exist. If it did, the price of the bonds would not have dropped when the ruling came out. Seems like when you guys are asked a specific question that challenges your view, it is never answered. Take your word? No thanks. Bondholders of CDD bonds are no different than other investors and should do their own due diligence. IMO they will shoulder any losses, as they should in the event this adverse ruling is held up in appeals. IMO it is too far reaching and will affect too many CDD,s and investors.
Why the hostility? I didn't just say "take my word", I told you how you could verify my word. I merely cautioned that doing so would take a bit of work on your part. Did you click on the link I gave you and read the Official Statements? Although I said I wouldn't walk you through it, I will give you some help:

"The District has covenanted in the Indenture to comply with all provisions of the Code necessary, among other things, to maintain the exclusion from gross income of interest of the Series 1999 Bonds for purposes of federal income taxation." Direct quote form the Official Statement for the 5/1/96 Rec. Rev. 1996A bonds issued by the Villages Center District. Please check it.

Also, a common sense test regarding the question of liability: If the Center Districts were not going to end up holding the bag if the IRS prevails, why do you think that they are spending hundreds of thousands of dollars in attorneys' fees fighting the IRS?

[villagerjack]

Why the hostility? I didn't just say "take my word", I told you how you could verify my word. I merely cautioned that doing so would take a bit of work on your part. Did you click on the link I gave you and read the Official Statements? Although I said I wouldn't walk you through it, I will give you some help:

"The District has covenanted in the Indenture to comply with all provisions of the Code necessary, among other things, to maintain the exclusion from gross income of interest of the Series 1999 Bonds for purposes of federal income taxation." Direct quote form the Official Statement for the 5/1/96 Rec. Rev. 1996A bonds issued by the Villages Center District. Please check it.

Also, a common sense test regarding the question of liability: If the Center Districts were not going to end up holding the bag if the IRS prevails, why do you think that they are spending hundreds of thousands of dollars in attorneys' fees fighting the IRS?

Your link produced a blank slate.

The District can only comply with provisions existing at the time of issuance which it s suggested, they did comply. The IRS being what they are, changed the game.

There are nearly 580 CDDs operating in Florida alone that have been relying on the assumption that they are political subdivisions that can issue tax-exemot bonds. The decision also threatens the tax-exempt status of bonds issued by thousands of organizations with similar structures around the country.

�The IRS seems to be adding a new requirement for an issuer to be a political subdivision,� said Scott Lilienthal, president of the National Association of Bond Lawyers and a partner with Hogan Lovells US LLP. �That new requirement doesn�t seem to be based on any existing authority. If the IRS wants to revisit the definition of a political subdivision then it should so through the formal rulemaking process and issue guidance on a prospective basis only.�

Why wouldn't the District defend itself against a dishonest IRS that admittedly unfairly targets specific individuals and organizations for nefarious reasons?

[mickey100]

You can blame the IRS for being a bad guy, or you can blame the Developer for pushing the limits of the law beyond what other CDD's in the state have done."We believe that an entity that is organized and operated in a manner intended to perpetuate private control, and to avoid indefinitely responsibility to a public electorate, cannot be a political subdivision of a State," according to the memorandum from the IRS Tax Exempt Bonds division. The bottom line is, The Villages was warned previously yet continued on the path of issuing the bonds in a manner that obviously doesn't meet the definition of a political subdivision. At this point, no one can predict the affect the publicity will have on property values, or where the money will come from if the district is forced to pay. There is no question that it has a potential negative impact on the residents if our amenity fees have to be re-directed to pay the back taxes. The Orlando Sentinel is running another article Wednesday which is supposed to look at potential impacts.

[2 Oldcrabs]

For $10 a year you can join the POA. They are the only group looking out for the Homeowners. It is the best thing we can do at this time. "Strenght in Numbers".:bigbow:

[graciegirl]

You can blame the IRS for being a bad guy, or you can blame the Developer for pushing the limits of the law beyond what other CDD's in the state have done."We believe that an entity that is organized and operated in a manner intended to perpetuate private control, and to avoid indefinitely responsibility to a public electorate, cannot be a political subdivision of a State," according to the memorandum from the IRS Tax Exempt Bonds division. The bottom line is, The Villages was warned previously yet continued on the path of issuing the bonds in a manner that obviously doesn't meet the definition of a political subdivision. At this point, no one can predict the affect the publicity will have on property values, or where the money will come from if the district is forced to pay. There is no question that it has a potential negative impact on the residents if our amenity fees have to be re-directed to pay the back taxes. The Orlando Sentinel is running another article Wednesday which is supposed to look at potential impacts.

How many times has it been stated by people who know that our amentity fees will not be affected? The publicity ain't good for sure. AND some posters just seem to enjoy the heck outa anything that makes us look bad. What is that all about??????????????????????????

For some strange reason the Orlando Sentinel has always had a bad attitude toward anything The Villages has ever done. I haven't read any good press from any of its "editorial" writers. The IRS isn't looking too good these days sweetie and if we all had to pony up, someone figured it would be about six grand and change apiece. Back at the beginning of this INVESTIGATION, if I remember correctly, the fee was much smaller and the Morses didn't pay it but chose to bet that the CDD form of governance was a viable entity. I do believe that those who think they THE Morses are wise and those who think they are smarmy AND stupid will never agree.

I will wait and see. I don't know the Morses, does anyone? Ten years ago they weren't rolling in dough. Today they are. Doesn't bother me, but it sure bothers a lot of people. Class envy is rampant in these postings.

If this place became governed by a "public electorate" we would have Ocala. Not bad, certainly not bad, but The Villages it is not.

[graciegirl]

I shouldn't have called anyone sweetie, but Sweetie himself. I think that was snarky.

Folks shouldn't spread rumors that the Morses bought us our house or give us anything or that I shill for the developer. That is worse than mean.

[jblum315]

I agree. Rampant on this board are class envy and enjoying scaring people with rumors.

[Advogado]

Your link produced a blank slate.

The District can only comply with provisions existing at the time of issuance which it s suggested, they did comply. The IRS being what they are, changed the game.

There are nearly 580 CDDs operating in Florida alone that have been relying on the assumption that they are political subdivisions that can issue tax-exempt bonds. The decision also threatens the tax-exempt status of bonds issued by thousands of organizations with similar structures around the country.

�The IRS seems to be adding a new requirement for an issuer to be a political subdivision,� said Scott Lilienthal, president of the National Association of Bond Lawyers and a partner with Hogan Lovells US LLP. �That new requirement doesn�t seem to be based on any existing authority. If the IRS wants to revisit the definition of a political subdivision then it should so through the formal rulemaking process and issue guidance on a prospective basis only.�

Why wouldn't the District defend itself against a dishonest IRS that admittedly unfairly targets specific individuals and organizations for nefarious reasons?
First, my link did not produce a blank slate. It gave you a method of getting to the official statements for all the bonds in question. Here it is again: Municipal Securities Rulemaking Board::EMMA (http://emma.msrb.org/Search/Search.aspx)
Simply go there and plug in the CUSIP of whichever of the bonds you are interested in in the upper right hand corner of the screen (the search window) and start reading.

With respect to your quote from the President of the National Association of Bond Lawyers, what else would you expect him to say since his members rendered opinions that these bonds were tax exempt?

This being said, I reiterate that I am hoping that the Center Districts can find some way to avoid liability here-- which would be good for the Villagers. Again, the Villagers' dog in this fight is a desire that all of this not impact the continuation of the amenity system, which is owned and operated by the Center Districts. I am sure that this view is also that of the other posters who have been pointing out that we have an issue here that could impact all of us and I cannot fathom the reason for the hostility that some of you have expressed toward us.

Furthermore, while I hate to defend the IRS, there is not a shred of evidence to indicate that it is unfairly targeting the Developer here. The investigation was begun under the Bush administration.

[Advogado]

How many times has it been stated by people who know that our amentity fees will not be affected? The publicity ain't good for sure. AND some posters just seem to enjoy the heck outa anything that makes us look bad. What is that all about??????????????????????????

For some strange reason the Orlando Sentinel has always had a bad attitude toward anything The Villages has ever done. I haven't read any good press from any of its "editorial" writers. The IRS isn't looking too good these days sweetie and if we all had to pony up, someone figured it would be about six grand and change apiece. Back at the beginning of this INVESTIGATION, if I remember correctly, the fee was much smaller and the Morses didn't pay it but chose to bet that the CDD form of governance was a viable entity. I do believe that those who think they THE Morses are wise and those who think they are smarmy AND stupid will never agree.

I will wait and see. I don't know the Morses, does anyone? Ten years ago they weren't rolling in dough. Today they are. Doesn't bother me, but it sure bothers a lot of people. Class envy is rampant in these postings.

If this place became governed by a "public electorate" we would have Ocala. Not bad, certainly not bad, but The Villages it is not.
I would appreciate it if you could address facts and not attack the other posters. Your approach does not lead to an intelligent discussion of the issues.

To answer your factual points:
Of course our amenity fees will not be affected. That is part of the problem. The amenity fees are capped by the CPI and seem to get raised to the max every year anyway. The central question is, once again: If the Center Districts get hit with huge costs here, where will the money come from to continue the amenity system? It has to come from somewhere. Do you have a answer?

It doesn't matter here if the Morses are wise or swarmy. That is not the point at all.

The Orlando Sentinel has gotten some of its facts wrong in its reporting, but at least it is reporting-- which the Daily Sun has not been.

The fact that The Villages is, in general, efficiently run is true but irrelevant to the central question.

[iaudit]

The other thing that has not been mentioned is that there has not been a transfer of ownership of amenity facilities since 2004, almost ten years. Essentially, most of the amenity facilities south of Rt. 466 are still in the hands of the developers. Depending on the final disposition of this issue, the purchase price of these facilities by the Central Districts will be significantly impacted.

[villagerjack]

First, my link did not produce a blank slate. It gave you a method of getting to the official statements for all the bonds in question. Here it is again: Municipal Securities Rulemaking Board::EMMA (http://emma.msrb.org/Search/Search.aspx)
Simply go there and plug in the CUSIP of whichever of the bonds you are interested in in the upper right hand corner of the screen (the search window) and start reading.

With respect to your quote from the President of the National Association of Bond Lawyers, what else would you expect him to say since his members rendered opinions that these bonds were tax exempt?

This being said, I reiterate that I am hoping that the Center Districts can find some way to avoid liability here-- which would be good for the Villagers. Again, the Villagers' dog in this fight is a desire that all of this not impact the continuation of the amenity system, which is owned and operated by the Center Districts. I am sure that this view is also that of the other posters who have been pointing out that we have an issue here that could impact all of us and I cannot fathom the reason for the hostility that some of you have expressed toward us.

Furthermore, while I hate to defend the IRS, there is not a shred of evidence to indicate that it is unfairly targeting the Developer here. The investigation was begun under the Bush administration.

First, there is no hostility, only unanswered questions. Second, I don't have CUSIPS handy.

Second, This is the quote from the lawyers.

�The IRS seems to be adding a new requirement for an issuer to be a political subdivision,� said Scott Lilienthal, president of the National Association of Bond Lawyers and a partner with Hogan Lovells US LLP. �That new requirement doesn�t seem to be based on any existing authority. If the IRS wants to revisit the definition of a political subdivision then it should so through the formal rulemaking process and issue guidance on a prospective basis only.�

Where is it wrong? Do you have the Legal Opinion they issued? It is not enough to say "With respect to your quote from the President of the National Association of Bond Lawyers, what else would you expect him to say since his members rendered opinions that these bonds were tax exempt? "

[Geewiz]

I shouldn't have called anyone sweetie, but Sweetie himself. I think that was snarky.

Folks shouldn't spread rumors that the Morses bought us our house or give us anything or that I shill for the developer. That is worse than mean.

You can call me sweetie anytime, my graciegirl.

[manaboutown]

The other thing that has not been mentioned is that there has not been a transfer of ownership of amenity facilities since 2004, almost ten years. Essentially, most of the amenity facilities south of Rt. 466 are still in the hands of the developers. Depending on the final disposition of this issue, the purchase price of these facilities by the Central Districts will be significantly impacted.

The purchase prices which are to be paid to the developer in the future by the central districts for various infrastructure and amenities are my greatest concern. How will they be fairly determined? That is at the heart of the financial black hole Villagers face IMHO.

By the way, this is a highly informative thread. I want to sincerely thank those who are contributing facts and helpful links.

[andercat]

How many times has it been stated by people who know that our amentity fees will not be affected? The publicity ain't good for sure. AND some posters just seem to enjoy the heck outa anything that makes us look bad. What is that all about??????????????????????????

For some strange reason the Orlando Sentinel has always had a bad attitude toward anything The Villages has ever done. I haven't read any good press from any of its "editorial" writers. The IRS isn't looking too good these days sweetie and if we all had to pony up, someone figured it would be about six grand and change apiece. Back at the beginning of this INVESTIGATION, if I remember correctly, the fee was much smaller and the Morses didn't pay it but chose to bet that the CDD form of governance was a viable entity. I do believe that those who think they THE Morses are wise and those who think they are smarmy AND stupid will never agree.

I will wait and see. I don't know the Morses, does anyone? Ten years ago they weren't rolling in dough. Today they are. Doesn't bother me, but it sure bothers a lot of people. Class envy is rampant in these postings.

If this place became governed by a "public electorate" we would have Ocala. Not bad, certainly not bad, but The Villages it is not.

There is nothing wrong with making money. I'm all for it. Some people are jealous some are not. I think for many people it is the manner in which the money is made that is the issue. Bernie Madoff also made a ton of money. It was the manner in which he made the money that got him in trouble. When his business practices made his investors a lot of money, not a one had anything bad to say about him as well. I think the problem with the Morses is how the money is made that bothers some folks. The control that the developer keeps on the amenity facilities keeps these CDDs from being public entities. If, and I say if, the IRS appeal goes against the developer and if it impacts the pockets of the residence in TV I think many of the Morse's supporters will turn on them just like Madoff's investors did.

[mickey100]

I shouldn't have called anyone sweetie, but Sweetie himself. I think that was snarky.

Well we agree on one thing anyways.

[PennBF]

A couple of observations. It is not logical to allow the developer to have continued control over the residents but at the same time claim it is a Governmental controlled community. As they say you can't have it both ways. If you look at Fl Statue 718 which is used for Condo's it is clear that the developer must have a hands off/arm length when the units are buoght or turned over to the buyers. A question is why did the Fl Legisture pass such a law that allow CDD's and permit the Developer to continue to have extraordinary powers over residental properties that have been purchased. That in itself looks out of line? Having said all of this does anyone really doubt The Villages are being singled out because of it conservative views and public image? Come on..there is common sense. If you do I have a bridge for sale. It is unfortunate that we may have been tricked into the conditions we are in by (a) the Fl Politicians trying to make it comfortable for Developers to maximize returns for Developers and (b) an Federal Gov. looking to go after conservative groups. Guess who is in the middle. Yep. We are everybody's lunch..:icon_hungry:

[graciegirl]

A couple of observations. It is not logical to allow the developer to have continued control over the residents but at the same time claim it is a Governmental controlled community. As they say you can't have it both ways. If you look at Fl Statue 718 which is used for Condo's it is clear that the developer must have a hands off/arm length when the units are buoght or turned over to the buyers. A question is why did the Fl Legisture pass such a law that allow CDD's and permit the Developer to continue to have extraordinary powers over residental properties that have been purchased. That in itself looks out of line? Having said all of this does anyone really doubt The Villages are being singled out because of it conservative views and public image? Come on..there is common sense. If you do I have a bridge for sale. It is unfortunate that we may have been tricked into the conditions we are in by (a) the Fl Politicians trying to make it comfortable for Developers to maximize returns for Developers and (b) an Federal Gov. looking to go after conservative groups. Guess who is in the middle. Yep. We are everybody's lunch..:icon_hungry:

Morse and Bernie Madoff in the same sentence? Whoa.

A CDD is so different from anything that any of us has ever seen before that it almost cannot be described. I know one thing. If some of the people who post on here would take over running this place, I could not get out of here fast enough.

[manaboutown]

Morse and Bernie Madoff in the same sentence? Whoa.

A CDD is so different from anything that any of us has ever seen before that it almost cannot be described. I know one thing. If some of the people who post on here would take over running this place, I could not get out of here fast enough.

Actually, CDDs can be described and understood. What we are trying to rationally determine here is just how they are structured and operated within The Villages. Among other issues are the central districts which are controlled by the developer and contain no residents structured and operated within the letter and the spirit of the Florida and US law governing such entities?

Let's leave the hysteria and demeaning other posters out of it.

[mickey100]

Actually, CDDs can be described and understood. What we are trying to rationally determine here is just how they are structured and operated within The Villages. Among other issues are the central districts which are controlled by the developer and contain no residents structured and operated within the letter and the spirit of the Florida and US law governing such entities?

Let's leave the hysteria and demeaning other posters out of it.

Good point. The IRS insists the Village Center and Sumter Landing community development districts are not "valid issuers" of tax-exempt bonds, which are most commonly used by cities and counties to finance public projects.
(IRS Agent Dominick) Servadio (Jr.) contended that the districts that issued the bonds don't meet the test of a genuine "political subdivision." Its governing board isn't chosen by residents, it has no authority to exercise police power and its power to take private property for public projects is very limited.

[jimbo2012]

Bloomberg

Dirt-Bond Sales Near �07 Peak Belie IRS Tax Ruling: Muni Credit

Demand for $6 billion of bonds sold to finance Florida housing developments shows no signs of waning even after the Internal Revenue Service said debt issued for a project of billionaire H. Gary Morse isn�t tax-exempt.

A Florida land-backed bond sale last week by Verona Walk Community Development District brought issuance of such debt this year to $323 million, close to the highest since 2007, data compiled by Bloomberg show. In May, the IRS alerted Morse that bonds sold to finance a district he created weren�t tax-free, a decision with potential implications for hundreds of similar entities.

Land-backed debt, dubbed dirt bonds, is the riskiest municipal segment, accounting for almost half of default filings where investors didn�t get paid, according to Concord, Massachusetts-based Municipal Market Advisors. Still, buyers are drawn by the extra yield. Wells Capital Management and Nuveen Asset Management plan to keep their bonds from Morse�s project while continuing to buy debt of certain districts.

�There�s a yield premium in the market for this type of debt that makes them competitive,� said John Miller at Nuveen, who oversees $95 billion of local debt in Chicago. �That tends to limit the amount by which the bonds would fall.�

[djl8412]

Morse and Bernie Madoff in the same sentence? Whoa.

A CDD is so different from anything that any of us has ever seen before that it almost cannot be described. I know one thing. If some of the people who post on here would take over running this place, I could not get out of here fast enough.

The names were used to illustrate a point that we should not relinquish objectivity and take everything for granted no matter where we live. If you feel comfortable with power and money being used carte blanche without any accountability from a voting populous then TV is your heaven. Many more of us would like to have the ability to question means and motives when necessary. This is one of those times! If you feel that by someone taking over running this place after being elected by residents instead of being hand-picked then many of us will be glad to help you pack.

[NJblue]

The purchase prices which are to be paid to the developer in the future by the central districts for various infrastructure and amenities are my greatest concern. How will they be fairly determined? That is at the heart of the financial black hole Villagers face IMHO.

By the way, this is a highly informative thread. I want to sincerely thank those who are contributing facts and helpful links.

The going forward implications of this is actually more interesting to me than the amount that the IRS claims that is owed to them from past interpretations of the law/tax code. Quite frankly the amount that is owed is unlikely to be enough on a per household basis (roughly $6,000) to make anyone really change their mind about living here. How, from whom or if that ever gets collected is an interesting discussion, but the forward-looking ramifications are more interesting to me.

First, I'm not sure I agree that the tax exempt versus taxable status of the bonds really has an impact on the selling price of the amenity. (Which is why I fail to see how the developer was the direct benefactor of the tax-free nature of the bonds.) If, for example, you want to buy a car, the seller of the car does not base his price on whether you have to pay 8% interest or 5%. Your negotiated price is based on the value of the car. However, if you are able to secure a 5% loan from a relative versus paying the going rate of 8%, it is you who will benefit - not the seller of the car.

Of course, our situation is a bit more complicated than this. In our case, the amenity fees were set based on the availability of low-rate tax-free bonds. If this changes in the future, it may be necessary to sell new houses with a higher amenity fee associated with them to pay the higher interest rate.

What happens to existing amenity fee contracts is a different issue. I haven't read the fine print of my agreement lately so I don't recall if there is a loophole which allows them to be raised higher than CPI (perhaps by a vote???) If not, I fear that the central CDDs will be forced to cut back on some of what they provide. Personally, I would rather pay an incremental increase in the amenity fee than to see services cut back.

[mickey100]

A couple of observations. It is not logical to allow the developer to have continued control over the residents but at the same time claim it is a Governmental controlled community. As they say you can't have it both ways. If you look at Fl Statue 718 which is used for Condo's it is clear that the developer must have a hands off/arm length when the units are buoght or turned over to the buyers. A question is why did the Fl Legisture pass such a law that allow CDD's and permit the Developer to continue to have extraordinary powers over residental properties that have been purchased. That in itself looks out of line? Having said all of this does anyone really doubt The Villages are being singled out because of it conservative views and public image? Come on..there is common sense. If you do I have a bridge for sale. It is unfortunate that we may have been tricked into the conditions we are in by (a) the Fl Politicians trying to make it comfortable for Developers to maximize returns for Developers and (b) an Federal Gov. looking to go after conservative groups. Guess who is in the middle. Yep. We are everybody's lunch..:icon_hungry:

I don't think we were "tricked" into the existing condition by the Federal Government. I think the Developer took advantage of the residents by stretching the limits of the laws, and left us holding the bag. As far as the federal government i.e. IRS going aftger conservative groups ( Morse ), the last time I looked the IRS investigation began under a conservative president. I believe the IRS had legitimate concerns, and frankly I agree with their conclusions. But realistically, we're past the blame stage. Our priorities now are to make sure we, the residents don't get stuck paying the bill, and to do what we can to make sure this doesn't happen again.

[villagerjack]

The names were used to illustrate a point that we should not relinquish objectivity and take everything for granted no matter where we live. If you feel comfortable with power and money being used carte blanche without any accountability from a voting populous then TV is your heaven. Many more of us would like to have the ability to question means and motives when necessary. This is one of those times! If you feel that by someone taking over running this place after being elected by residents instead of being hand-picked then many of us will be glad to help you pack.

Using Madoff in the same sentence as Morse is beyond the pale. You should know better. Most of the folks here are satisfied with the way the Morses have run the Villages Amenity Program at a very affordable price with amenities available to all. We left another over 55 facility in another state built by Del Webb because residents were allowed to take over the facilities and let their various clubs run the operation and instead of fairness we had facilities which were monopolized by a vocal few who worked their way into the structure. Tennis and Pickle Ball teams took over the tennis and pickleball courts. Swimming clubs and lane swimmers block off half the pools, ETC ETC. If you were a snowbird you were out of luck using the amenities since you were not a member of the clubs and could not join because you were not present to participate all year long. This does not happen here because of the control the Morses have. It is the primary reason we, as snowbirds, bought here and it is in my estimation one of the key reasons why the Villages with a large snowbird population is so successful. Snowbirds did not have to sell their primary home to purchase here. I still own that home in another state and the value is about $100,000 less than it was in 2007. In contrast the value of my home here is about 10% higher, than it was when I bought it in 2007. Residents running the place is not a panacea for anything. In fact, it could make it a lot worse as a few power hungry (sound familiar?) folks get control.

[NJblue]

I think the Developer took advantage of the residents by stretching the limits of the laws, and left us holding the bag.

In what way did we get taken advantage of? If the bonds were sold as taxable bonds, the interest rates would have been higher and the amenity fee to pay back those bonds would have had to have been higher. So, who was the benificiary of the deal? I would say that we the residents were by nature of lower amenity fees.

[rubicon]

Bloomberg Articles

Billionaire Morse (http://www.bloomberg.com/news/2013-06-05/florida-billionaire-s-development-bonds-not-tax-exempt-irs-says.html)

IRS questions bonds from GOP donor development - Businessweek (http://www.businessweek.com/ap/2013-06-06/irs-questions-bonds-from-gop-donor-development)

After closing in November 2011 it was some time before I heard anything about the on going IRS problems.

I am wondering if this un-resolved IRS issue was not required to be disclosed to all prospective buyers before their closings, in fact I am pretty certain it was required?

Florida�s Required Real Estate Disclosures
Florida business and real estate attorneys Roddy Lanigan and Eric Lanigan have represented buyers, sellers, developers, appraisers and contractors in residential and commercial litigation.

There are an increasing number of mandatory disclosure obligations placed on those who sell Florida real estate and it�s hard to keep up with all the new requirements.

Here are a summary of disclosures required for Florida residential transactions units. Many of the following disclosures are required on commercial transactions. Local residential disclosures may exist so it is always prudent to inquire about such requirements before escrow closes.

The Top Real Estate Claim

The No. 1 claim on Errors & Omissions Insurance is �failure to disclose� an item that a buyer felt was material. There are some general guidelines to help protect against non-disclosure liability lawsuits. Part of this is ensuring that all real estate documents are reviewed by an attorney before signature. A key factor is to ensure that all disclosures are in writing and which have acknowledgment signatures.

Disclosures That Are Required

TDS (Transfer Disclosure Statement)
This law requires sellers to give prospective buyers a written disclosure statement of items including possible easements, neighborhood issues, appliances, structural defects, modifications, and other material defects that may affect the principal�s decision in a transaction.

I have been saying since this situation was discussed in 2009 that that the Professional Liability insurance carriers for both the Developer and the district needed to be notified.

Too many posters are beating that same dead horse, defending the Developer, etc. But the bottom line is what are we as residents going to do to protect our interests? IMHO that's all that matters now

[rubicon]

The going forward implications of this is actually more interesting to me than the amount that the IRS claims that is owed to them from past interpretations of the law/tax code. Quite frankly the amount that is owed is unlikely to be enough on a per household basis (roughly $6,000) to make anyone really change their mind about living here. How, from whom or if that ever gets collected is an interesting discussion, but the forward-looking ramifications are more interesting to me.

First, I'm not sure I agree that the tax exempt versus taxable status of the bonds really has an impact on the selling price of the amenity. (Which is why I fail to see how the developer was the direct benefactor of the tax-free nature of the bonds.) If, for example, you want to buy a car, the seller of the car does not base his price on whether you have to pay 8% interest or 5%. Your negotiated price is based on the value of the car. However, if you are able to secure a 5% loan from a relative versus paying the going rate of 8%, it is you who will benefit - not the seller of the car.

Of course, our situation is a bit more complicated than this. In our case, the amenity fees were set based on the availability of low-rate tax-free bonds. If this changes in the future, it may be necessary to sell new houses with a higher amenity fee associated with them to pay the higher interest rate.

What happens to existing amenity fee contracts is a different issue. I haven't read the fine print of my agreement lately so I don't recall if there is a loophole which allows them to be raised higher than CPI (perhaps by a vote???) If not, I fear that the central CDDs will be forced to cut back on some of what they provide. Personally, I would rather pay an incremental increase in the amenity fee than to see services cut back.

Just a thought one of the issues the IRS raised in their initial filing had to do with the manner in which the flow amenity income was calculated which was also their question cocnerning the physical assets.

As to the amenitity fees posters keep reaching for agreements. However, depending on the outcome I personally feel that the status of that agreement is going to depend on the size of any IRS penalty, if they prevail, and to whom it will be attached.

Because the district is defending this with our amenities fees, which brings into play another question it seems likely at this point a likely target. I believe it was in the POA or perhaps the Village voice ahs to some $250,000 expended in defending this action and that was about a year ago.

[kbace6]

thanx. avogado! read it! now gotta ask a] is this related to the earllier decision that amenities were sold at less than their real value; and 2] this is a non-binding determination, is it not?


If this is in fact a non-binding descision, then why is everyone so upset? Did they not read the entire article or is there something about a non-binding descision that IS binding?

As far as I can tell this is mearly only a step in the direction to what everyone is so upset about in the many (not all) posts in this thread.

Am I missing something? :shrug:

[rubicon]

Whew! Gotta take a break, I am exhausted:D

[mickey100]

------------

[njbchbum]

based on personal experience, i share many of the same feelings re homeowner associations as villagerjack. if anyone does not now have a poor opinion of cliques, just wait until your neighbors replace the developer reps and start running the place. if that were ever to happen, i think i would have to start a movement on the historic side for secession!

btw - the 6/12 amenity auth comm agenda has been posted and irs updates is an item untder the reports and input section; audience comments is another item listed there!
http://www.districtgov.org/PDFView/PDFMeeting.aspx?id=20130612aa0201
wed 6/12 1:30pm Savannah Center - Ashley Wilkes Room

[graciegirl]

All of this debate will not change anything. I betcha that after it is all said and done, the fines will be reduced and the CDD will remain without the inmates running the asylum.

[gomoho]

Gracie - one can only hope!

[villagerjack]

All of this debate will not change anything. I betcha that after it is all said and done, the fines will be reduced and the CDD will remain without the inmates running the asylum.

I hope you are correct Gracie. The Dell Webb facility I referred to previously started in 1995 with a buildout of 8200 homes. They still have 1000 to sell. Last year tbey sold kess than 100 new homes. Some homes are selling at just above prices paid in 1995. Average selling price is $112 s/f. Amenity fees $500/3 months. Taxes are lower than here. After 18 years they still have amenities to build because their formula is based upon number of rooftops as compared to TV Morse who gives us a lot of these facility/amenities up front. They attract very few snowbirds so their golf courses, tennis, pickleball are used heavily at all times of the year. Lack of sales is also attributed (by me) to inability to attract snowbird buyers who do not have to sell their homes. We were there 10 years. Teams monopolize Tennis, Pickle Ball, Croquet, pools etc. When we came for the winter of 1997 we were told that there were 800 members on the pickle ball club and we would have to wait a year to play. That was after owning there 8 years. Niw they have a modified Chelsea. So for all you folks who think that it is wrong for Morse to have control, I caution you to be careful. You may get your wish. I will put my future in the hands of the Morses anyday rather than some of the folks on this board who are dying to get control, even if it means denegrating Mr. Morse by comparing him to Madoff. Disgraceful, really.

[rayschic]

Appears that Walt Disney missed your economics 101 class.

This is not as simple an issue as most make it to be. I know nothing was done in secret....everything was on the table, and as one poster stated..this is complicated..those rushing to judgement to post what they just simply KNOW is right, are just WRONG.

This is neither support for or against the developer in anyway...above my pay grade. I do recall about 13/14 years there were free classes to explain it all, and to my knowledge nothing was hidden nor any question left unanswered.

Nothing is being hidden at all. Anyone that desires can read all the IRS Updates that have been posted on the districtgov website since this began. You can read all the letters that went back and forth over the years.

Village Community Development Districts (http://www.districtgov.org/IRSupdate.aspx)

[rayschic]

These forums provide me with priceless information and BOTH sides of the story. That is why I follow them and post my own thoughts and perspectives now and then. The IRS issue is a HUGE financial black hole at present. I want to hear (or read) it all and make my own decisions.

If you want to read it all. Just click on this and start at the very beginning. Has all the info you need about the IRS issue.

Village Community Development Districts (http://www.districtgov.org/IRSupdate.aspx)

[rayschic]

[QUOTE=Advogado;689065]True, now may be a better time to issue replacement taxable bonds. However, the current bondholders would presumably claim that the lower current interest rates have increased the value of their existing bonds and thus the current bondholders' losses from the Center Districts' breach of the Districts' warranty that the current bonds are tax exempt. Furthermore, who knows what interest rates will be when, and if, it is necessary for the Center Deistricts to issue replacement bonds. In summary, it cannot be predicted how the issuance of replacement bonds, if that becomes necessary, would work out--but it wouldn't be pretty.[

It depends on the deal. Since you have no numbers,even you cannot predict the outcome. Pretty is in the eye of the beholder.

I believe the numbers you are looking for are on page 4 of this link.
http://www.districtgov.org/images/IRSupdates/IRS%20Update_TAM%206.5.13.pdf

[PennBF]

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said..:shrug:

[rayschic]

First, there is no hostility, only unanswered questions. Second, I don't have CUSIPS handy.

Second, This is the quote from the lawyers.

�The IRS seems to be adding a new requirement for an issuer to be a political subdivision,� said Scott Lilienthal, president of the National Association of Bond Lawyers and a partner with Hogan Lovells US LLP. �That new requirement doesn�t seem to be based on any existing authority. If the IRS wants to revisit the definition of a political subdivision then it should so through the formal rulemaking process and issue guidance on a prospective basis only.�

Where is it wrong? Do you have the Legal Opinion they issued? It is not enough to say "With respect to your quote from the President of the National Association of Bond Lawyers, what else would you expect him to say since his members rendered opinions that these bonds were tax exempt? "

Here's a link to the decision.

http://www.districtgov.org/images/IRSupdates/IRS%20Update_TAM%206.5.13.pdf

[graciegirl]

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said..:shrug:

We all moved here knowing just how this place worked. We "voted" with our wallets. No one forced us to come here, it was our own free choice and we can leave in exactly the same way. I do not see a CDD as anything but a very well designed deed restricted community and I liked it when I saw it.

[villagerjack]

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said..:shrug:

The "non-elected" person has done a fine job preserving the rights if ALL residents to utilize the amenities on an equal and unfettered basis. Once in the hands of 'elected" people, power groups tend to form which can violate the unfettered right to access facilities, particularly for snowbirds who spend only limited time in The Villages. I have experienced this first hand. Please read my prior post in answer to Gracie.

[mickey100]

The Morses could come in and steal the silverware and some of you would be defending them. If the residents have to pay for his dancing around the laws, or our amenities are reduced, you can bet that any defenders of the Morses will be in the minority in our community. I'm looking forward to the article in the Orlando Sentinel Wednesday which will cover possible consequences of the IRS ruling. Of course some people won't believe a word the paper has to say because the paper "picks on" the Morses so much. Sigh.

[perrjojo]

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said..:shrug:

Perhaps you are astonished because you have not lived in a neighborhood where the board was elected by the residents and the elected board did not have the qualifications or foresight to govern anything. It can become a big mess with pet projects and no foresight for the future. Then the good ole boy system really kicks in and things can go to pot quickly. I speak from previous experience. As another poster has said, "be careful what you wish for.

[nitehawk]

If anyone is interested in viewing some previous post about the IRS situation - just look back and see how many (most) to the then members crucified Lauren Ritchie...after she wrote an article about the IRS situation and how we could possible lose!!!!! She hates TV - she is not a reporter - she is a liar -etc
She who laughs last laughs best --- she was right --- will wait for here next article and see what she says --- I guess the championship courses will now never improve. Those Georgia mountains starting to look better and better. Should i sell now and avoid the rush - if i can sell now !!!!! We will see at least I only own one home --- no rentals

[Peachie]

[QUOTE=mickey100 I'm looking forward to the article in the Orlando Sentinel Wednesday which will cover possible consequences of the IRS ruling.

Of course, you are Mickey, I would be surprised if you weren't. (Bigger sigh here.)


djl8412, "If you feel that by someone taking over running this place after being elected by residents instead of being hand-picked then many of us will be glad to help you pack."


djl8412, wear comfortable shoes to help people pack because there will be a bigger exodus than you think if The Villages is run by "elected residents". Talk to people and see what they think of your idea of elected residents to change what we now have in The Villages.

PennBF:

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said.


PennBF, this is exactly what people have stood and fought for... the RIGHT to live in a community of this caliber with this type of representation that we desire. I understand that some people would not want this type of representation and there are so many communities from which they may choose, they would not be happy living here. Good luck to them.

Nitehawk, IMHO, Lauren Ritchie doesn't strike me as the kind of person who would laugh.

[rayschic]

I don't think so. The IRS ruled on an IRS regulation. Isn't the next step to go to the courts?

Next step: (copied from the link in the OP)

Sources said the CDD has several options going forward including, settling with the IRS to preserve the tax-exempt status of the bonds, appealing to the agency�s Office of Appeals, allowing the IRS to go after the bondholders who could in turn challenge the ruling in court, or seeking a legislative fix. The issuer does not have the ability to fight the IRS in a court, only taxpayers can do that, they added.

[NJblue]

The Morses could come in and steal the silverware and some of you would be defending them. If the residents have to pay for his dancing around the laws, or our amenities are reduced, you can bet that any defenders of the Morses will be in the minority in our community. I'm looking forward to the article in the Orlando Sentinel Wednesday which will cover possible consequences of the IRS ruling. Of course some people won't believe a word the paper has to say because the paper "picks on" the Morses so much. Sigh.

I for one am not defending Morse. It just seems to me that we the residents were the ones benefitting from what you call "dancing around the law". Afterall, the result of this "dance" was lower amenity fees for us. If he had not structured the deal as tax-free bonds, we would have to pay higher amenity fees to cover the extra bond interest payment. If you see it another way, please explain.

[villagerjack]

The Morses could come in and steal the silverware and some of you would be defending them. If the residents have to pay for his dancing around the laws, or our amenities are reduced, you can bet that any defenders of the Morses will be in the minority in our community. I'm looking forward to the article in the Orlando Sentinel Wednesday which will cover possible consequences of the IRS ruling. Of course some people won't believe a word the paper has to say because the paper "picks on" the Morses so much. Sigh.

I suggest you do an analysis of the market values of homes in similar over 55 communities and see how the values have held up over the years. My home in another Over 55 Community run by an elected board has dropped by $100,000 since 1997 while my home in the Villages has increased by $30,000. I wonder why Ritchie has not " investigated" these facts. My Villages home will sell for $200 s/f while my Del Webb is $120 s/f. There is a reason. It has to do with the Morse's running things in a proper way instead if elected unqualified self serving power hungry residents.

[ilovetv]

I suggest you do an analysis of the market values of homes in similar over 55 communities and see how the values have held up over the years. My home in another Over 55 Community run by an elected board has dropped by $100,000 since 1997 while my home in the Villages has increased by $30,000. I wonder why Ritchie has not " investigated" these facts. My Villages home will sell for $200 s/f while my Del Webb is $120 s/f. There is a reason. It has to do with the Morse's running things in a proper way instead if elected unqualified self serving power hungry residents.

Thank you.

[TVMayor]

based on personal experience, i share many of the same feelings re homeowner associations as villagerjack. if anyone does not now have a poor opinion of cliques, just wait until your neighbors replace the developer reps and start running the place. if that were ever to happen, i think i would have to start a movement on the historic side for secession!

btw - the 6/12 amenity auth comm agenda has been posted and irs updates is an item untder the reports and input section; audience comments is another item listed there!
http://www.districtgov.org/PDFView/PDFMeeting.aspx?id=20130612aa0201
wed 6/12 1:30pm Savannah Center - Ashley Wilkes Room
TOTAL $336,696.22 IRS Legal Expenses
http://i264.photobucket.com/albums/ii199/The_Villages/IRS_zps8f332262.jpg

[TVMayor]

We all moved here knowing just how this place worked. We "voted" with our wallets. No one forced us to come here, it was our own free choice and we can leave in exactly the same way. I do not see a CDD as anything but a very well designed deed restricted community and I liked it when I saw it.
The way I read

http://www.districtgov.org/images/IRSupdates/IRS%20Update_TAM%206.5.13.pdf

The CDD can continue on managing things as they have been doing with one exception they will not sell tax free bonds ever again.

[ilovetv]

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said..:shrug:


The constituents of these cities having "representation by persons elected by the people" could only wish their cities and economies were run as orderly, beautified, and as solvently as TV is. They can only wish their home market values were as healthy as they are in TV. People here from the Stockton, CA area can tell you how great a job their "elected by the people" politicians have been doing.

9 American Cities and Counties Going Broke

"....Other municipalities have excessive liabilities that they are unable to meet. Central Falls, RI, declared bankruptcy in August due largely to its bloated pension plan.

Strafford County, NH, spends two-fifths of its budget on a single nursing home. It funds residents' Medicaid, but is not receiving full reimbursement from the state, causing multi-million dollar deficits.

Other cities have simply made bad investments. Harrison, NJ, built a $200 million sports arena that has not brought in the amount of money the city was expecting.

Similarly, Salem, NJ, built a large office building downtown with the intention of leasing office space. But construction delays caused lease payment delays and money has been taken from the debt fund numerous times.

24/7 Wall St. has looked at the nine municipal bodies with the worst credit ratings assigned by Moody's, not including school systems, rated Ba2 and lower. To get a sense of how these areas are doing, we also included most recent median household income figures from the Census Bureau. This level of credit rating implies a substantial risk of default for investors who bought these bonds with the expectation of being repaid.

This is 24/7 Wall St.'s list of Nine American Cities and Counties Going Broke......"

9 American Cities and Counties Going Broke - Yahoo! Finance (http://finance.yahoo.com/news/pf_article_113588.html)

[graciegirl]

The names were used to illustrate a point that we should not relinquish objectivity and take everything for granted no matter where we live. If you feel comfortable with power and money being used carte blanche without any accountability from a voting populous then TV is your heaven. Many more of us would like to have the ability to question means and motives when necessary. This is one of those times! If you feel that by someone taking over running this place after being elected by residents instead of being hand-picked then many of us will be glad to help you pack.

I was angry and what I said was over the top but helping me pack is not nice either. I am happy with how things are run here and I have heard horror stories of places where people who lived in nice communities pushed their own agendas and ruined those nice communities by spending on unnecessary and frivolous things. I personally lived in a community outside Cincinnati where the residents bought the golf course to keep it from becoming a public course and some the "girls" wanted to spend the money on fixing up the club house bathroom and hiring a masseuse and some of the "guys" wanted to completely replace all of the greens and get new golf carts. We didn't have the money for either of these projects but some thought we could easily borrow some.

We all come here with our own experiences. I think that this place is as close to perfect as it can be. I think that some of the reasonable posters on this forum would continue to keep it nicely, but even saying that, you never know. I am a red blooded patriot who believes in the American way but in this case I like the way the wizard of oz has done things. In a couple of years or so down the way we all can see how the folks who don't know exactly as well how to run things will do it. That will come very soon. I shudder to think about it.

[graciegirl]

The Morses could come in and steal the silverware and some of you would be defending them. If the residents have to pay for his dancing around the laws, or our amenities are reduced, you can bet that any defenders of the Morses will be in the minority in our community. I'm looking forward to the article in the Orlando Sentinel Wednesday which will cover possible consequences of the IRS ruling. Of course some people won't believe a word the paper has to say because the paper "picks on" the Morses so much. Sigh.

The Morses could be absolutely perfect and yet because of their politics and the fact that they are rich some would continue to find fault with them. There is no reason to say things like they are "dancing around the laws", that is simply not true and not even the IRS has come near saying anything like that. I don't know them, you don't know them, no one knows them. This place is superior to anyplace I have ever lived and the Morses dreamed it up and keep it nice. It sometimes feels like some people because of the above mentioned prejudices would be tickled pink with any wrongdoing proven on the part of the Morses.

I read all about THE lawsuit and I still can't figure out why they were sued. It sounds implausible that they were sued for not maintaining properties here and for improper use of amenity fees and the folks who brought suit tried to get that case heard in other venues until they ended up where they were. We know how it ended and who got what.

Then the case of the Morses and the charges levied at them for shooting wildlife on their ranch in the west somewhere and leaving it to rot on the ground. I never even knew there were laws like that. I guess that because of their great wealth they paid someone off and those charges were reduced or something?? I never could figure that out, I don't hunt and know nothing about hunting laws and when I heard they were charged with breaking of any law, even one I didn't know about or understand I was really upset. Laws are not to be broken. They either didn't do what they were alleged to do or had good lawyers I guess because they aren't in jail.

Then the Morses removed their previous invitation to the Relay for Life to continue to have it at the high school after they asked the American Cancer Society to "kick in" directly for the Moffitt center and they refused. Not popular at all. There were slings and arrows shot by both sides...I always wondered what was the real back story. Someday we will know when someone writes a tell all book about this place.

They may all be a bunch of greedy and corrupt people, but what if they are decent, hard working and nice people or does being rich and conservative disqualify them for that? The truth is that they are probably somewhere in between, just like the rest of us. Pre judging people on the basis of anything is ugly. I do it, everyone does it. But we shouldn't.

I am going to work on finding bad in them and worrying more.

[mickey100]

I for one am not defending Morse. It just seems to me that we the residents were the ones benefitting from what you call "dancing around the law". Afterall, the result of this "dance" was lower amenity fees for us. If he had not structured the deal as tax-free bonds, we would have to pay higher amenity fees to cover the extra bond interest payment. If you see it another way, please explain.

Good question, but here's the way I see it. Had the bonds issued been taxable bonds, they would have cost the borrowers less than nontaxable bonds, assuming they both had the same coupon rate. We'd have to go back in time and see the bond prices at the time of bond issuance to see exactly the spread between taxable and non-taxable bond prices. Anyways, the developer would have had to sell more bonds to obtain the same amount of money, so he would have paid a similar amount of interest. Not to mention there may have been additional tax writeoffs, depreciation etc., to be considered. I am no bond expert, and neither I expect are you, but we both know bond issuance and underwriting, etc., is complicated.

My chief complaint has been that the developer was warned back in 2003 about the legalities of the bond issuance, and he continued to do so. Here's what W. Mark Scott, director of the IRS' tax-exempt bond division, wrote to the district on Jan. 29, 2003, when the bonds got a thumbs up after an earlier audit.

"Our closing of these cases, however, should not be construed as an approval of your method of operations. We have concerns regarding: the amount of control the developer has over the issuer; the questions of value of the assets sold by the developer to the issuer as these are not arm's length [transactions]; the treatment of income and expenses (whether income is properly reported and expenses deducted only once); compliance with state law."

Please note above , the IRS said directly that they had concerns with the developer's compliance with state law. I'm sorry you don't like my term "dancing around the law" but when they were warned and continued to push the limits of the law, so be it.

Now, many years later, if the bonds have to be re-issued and we the residents have to pay the IRS penalties, we are concerned about the financial consequences to The Villages and our amenities.

[PennBF]

I could not have said it better. Although the Mores'e may be wonderful people and have done a great job in constructing a community the question remains as to whether they became weathy based on sound accounting practices or they bent the rules to maximize profit to them and now the residents are being hung out to dry. Judging from the input from the IRS it would appear the "residents are being hung out to dry". I continue to be amazed at some favoring a dictorship rules rather than a demoncratic vote by the people for representation. I thought the men and women who fought and died to protect our form of government meant something. Because the Morses have done a great job of building a community does not mean I would give up my form of government. Remember: Absolute Power Corrupts. Through a unique series of laws there is a family who controls the purse strings for over 100K residents by contolling appointments, etc. That is not a democratic form of government that some have given their lives for and I for one continue to believe in our democratic form of government. :bowdown:

[njbchbum]

I could not have said it better. Although the Mores'e may be wonderful people and have done a great job in constructing a community the question remains as to whether they became weathy based on sound accounting practices or they bent the rules to maximize profit to them and now the residents are being hung out to dry. Judging from the input from the IRS it would appear the "residents are being hung out to dry". I continue to be amazed at some favoring a dictorship rules rather than a demoncratic vote by the people for representation. I thought the men and women who fought and died to protect our form of government meant something. Because the Morses have done a great job of building a community does not mean I would give up my form of government. Remember: Absolute Power Corrupts. Through a unique series of laws there is a family who controls the purse strings for over 100K residents by contolling appointments, etc. That is not a democratic form of government that some have given their lives for and I for one continue to believe in our democratic form of government. :bowdown:

there is nothing in life more important that the men and women who fought and died to protect our form of government...and our opportunity to always have the freedom of choice...some of us just prefer to choose the current form of govt in the villages to one that is more akin to our right to vote for the individuals most likely to screw things up.

[mickey100]

I could not have said it better. Although the Mores'e may be wonderful people and have done a great job in constructing a community the question remains as to whether they became weathy based on sound accounting practices or they bent the rules to maximize profit to them and now the residents are being hung out to dry. Judging from the input from the IRS it would appear the "residents are being hung out to dry". I continue to be amazed at some favoring a dictorship rules rather than a demoncratic vote by the people for representation. I thought the men and women who fought and died to protect our form of government meant something. Because the Morses have done a great job of building a community does not mean I would give up my form of government. Remember: Absolute Power Corrupts. Through a unique series of laws there is a family who controls the purse strings for over 100K residents by contolling appointments, etc. That is not a democratic form of government that some have given their lives for and I for one continue to believe in our democratic form of government. :bowdown:

:bowdown:

[Mikeod]

Good question, but here's the way I see it. Had the bonds issued been taxable bonds, they would have cost the borrowers less than nontaxable bonds, assuming they both had the same coupon rate. We'd have to go back in time and see the bond prices at the time of bond issuance to see exactly the spread between taxable and non-taxable bond prices. Anyways, the developer would have had to sell more bonds to obtain the same amount of money, so he would have paid a similar amount of interest. Not to mention there may have been additional tax writeoffs, depreciation etc., to be considered. I am no bond expert, and neither I expect are you, but we both know bond issuance and underwriting, etc., is complicated.

My chief complaint has been that the developer was warned back in 2003 about the legalities of the bond issuance, and he continued to do so. Here's what W. Mark Scott, director of the IRS' tax-exempt bond division, wrote to the district on Jan. 29, 2003, when the bonds got a thumbs up after an earlier audit.

"Our closing of these cases, however, should not be construed as an approval of your method of operations. We have concerns regarding: the amount of control the developer has over the issuer; the questions of value of the assets sold by the developer to the issuer as these are not arm's length [transactions]; the treatment of income and expenses (whether income is properly reported and expenses deducted only once); compliance with state law."

Please note above , the IRS said directly that they had concerns with the developer's compliance with state law. I'm sorry you don't like my term "dancing around the law" but when they were warned and continued to push the limits of the law, so be it.

Now, many years later, if the bonds have to be re-issued and we the residents have to pay the IRS penalties, we are concerned about the financial consequences to The Villages and our amenities.
Couple of things.

The developer most assuredly has a staff of legal and tax people at his disposal. I would expect their advice to him was that the bnd issue was legal and proper. The IRS expresses some concern but closes the case. Don't forget the IRS is a department that tells taxpayers to come to them for advice on their tax returns, but, if the advice they give is faulty, the taxpayer owes the tax plus interest and penalties. I don't have such confidence in the IRS that I would automatically assume everything they say is 100% accurate. I suspect Morse went back to his advisors and had them review the issue and was told it was proper. Regarding state law, I remember the IRS has in their recent (last few years) review made statements that indicated they did not understand the CDD form of governance as established in Florida.

I would not say I'm completely comfortable with the CDD situation either. It seems that efforts have been made to further dilute the ability of the residential CDDs to have any say in finances especially with regards to the Project Wide funding. However, might this also somewhat shield the residents in this IRS dispute? The dispute is nominally between the central districts and the IRS. The amenities fee is capped by CPI. So the risk to us is the central district having to deplete its funds to pay the government or the bondholders or ??? and the effect that may have on maintaining the amenities to the level we are accustomed. I don't see any way the residents are on the hook for the total that may be due.

The Morse family has created a wonderful community here through some risk and hard work. They do not appear to me to be the type that would sit back and let the community go down the drain by allowing the amenities to deteriorate. They still have significant investments in this community, and they live here as well. Yes, you can sell the commercial property, the real estate office, and the championship golf courses. But the negative publicity of the residents being cheated out of the lifestyle they bought into while the family bolts for greener pastures would assuredly cut into the selling price. Truth is, they can likely make much more money by keeping this place up to the usual standard.

But I agree we need to be alert and aware.

[villagerjack]

"Good question, but here's the way I see it. Had the bonds issued been taxable bonds, they would have cost the borrowers less than nontaxable bonds, assuming they both had the same coupon rate."

WHERE DID YOU GET THAT FROM? TAX FREE BONDS ALWAYS HAVE LOWER COUPON RATES OF INTEREST FOR SIMILAR RISKS.

"We'd have to go back in time and see the bond prices at the time of bond issuance to see exactly the spread between taxable and non-taxable bond prices. Anyways, the developer would have had to sell more bonds to obtain the same amount of money, so he would have paid a similar amount of interest."

NOT SURE HOW YOU ARRIVED AT THAT CONCLUSION. THE SAME DOLLAR AMOUNT OF BONDS WOULD HAVE BEEN SOLD WHETHER THEY WERE TAXABLE OR TAX FREE. IN ADDITION, THE DEVELOPER DID NOT ISSUE THE BONDS, HE RECEIVED THE PROCEEDS FROM THE BONDS.


"Not to mention there may have been additional tax writeoffs, depreciation etc., to be considered."

NOT SO FOR REASONS CITED ABOVE

[djl8412]

[QUOTE=mickey100 I'm looking forward to the article in the Orlando Sentinel Wednesday which will cover possible consequences of the IRS ruling.

Of course, you are Mickey, I would be surprised if you weren't. (Bigger sigh here.)


djl8412, "If you feel that by someone taking over running this place after being elected by residents instead of being hand-picked then many of us will be glad to help you pack."


djl8412, wear comfortable shoes to help people pack because there will be a bigger exodus than you think if The Villages is run by "elected residents". Talk to people and see what they think of your idea of elected residents to change what we now have in The Villages.

PennBF:

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said.


PennBF, this is exactly what people have stood and fought for... the RIGHT to live in a community of this caliber with this type of representation that we desire. I understand that some people would not want this type of representation and there are so many communities from which they may choose, they would not be happy living here. Good luck to them.

Nitehawk, IMHO, Lauren Ritchie doesn't strike me as the kind of person who would laugh.

WOW!!! So much to digest but all missing the most important point: Let the residents determine their fate instead of a hand-picked few behind closed doors. Yes, there would be outcomes that many would not like which we always endure through life. I don't recall EVER standing and fighting for the right to live in a community of this caliber but we did move here of our own free will and our own free will also includes the right to choose how we are governed instead of NO CHOICE. I have plenty of comfortable shoes and most important of all............I can choose which pair I wear. not someone else.

[djl8412]

Perhaps you are astonished because you have not lived in a neighborhood where the board was elected by the residents and the elected board did not have the qualifications or foresight to govern anything. It can become a big mess with pet projects and no foresight for the future. Then the good ole boy system really kicks in and things can go to pot quickly. I speak from previous experience. As another poster has said, "be careful what you wish for.

Were these private, gated communities such as homeowner associations?

[djl8412]

The "non-elected" person has done a fine job preserving the rights if ALL residents to utilize the amenities on an equal and unfettered basis. Once in the hands of 'elected" people, power groups tend to form which can violate the unfettered right to access facilities, particularly for snowbirds who spend only limited time in The Villages. I have experienced this first hand. Please read my prior post in answer to Gracie.

ALL residents????

[Mikeod]

ALL residents????

OK, elaborate. What residents or group of residents is not given the right to access the amenities?

[villagerjack]

OK, elaborate. What residents or group of residents is not given the right to access the amenities?

Just one instance which applied to tennis. Similar things were done with Pickleball, Croquet, Swimming etc. In a former over 55 gated community built by Dell Webb, Tennis Teams were formed by full time residents. They joined USTA and other groups playing tennis all year long, each group with a different season. If you were not a permanent resident you could not break into the various teams. Players joined 3-4 teams, played in Tournaments frequently and CLOSED THE COURTS TO RESIDENTS during the frequent tournaments. Also closed them for practice sessions for Tournaments, etc etc. There was OPEN TENNIS for all residents in the morning ( come and play)which they also tried to take over. When they met some resistance they changed the hours to 7AM. We played in the cold with LIGHTS in the winter. I could go on but you see what can happen under resident control. The Morses do not let this happen here.

[mickey100]

Couple of things.

The developer most assuredly has a staff of legal and tax people at his disposal. I would expect their advice to him was that the bnd issue was legal and proper. The IRS expresses some concern but closes the case. Don't forget the IRS is a department that tells taxpayers to come to them for advice on their tax returns, but, if the advice they give is faulty, the taxpayer owes the tax plus interest and penalties. I don't have such confidence in the IRS that I would automatically assume everything they say is 100% accurate. I suspect Morse went back to his advisors and had them review the issue and was told it was proper. Regarding state law, I remember the IRS has in their recent (last few years) review made statements that indicated they did not understand the CDD form of governance as established in Florida.

I would not say I'm completely comfortable with the CDD situation either. It seems that efforts have been made to further dilute the ability of the residential CDDs to have any say in finances especially with regards to the Project Wide funding. However, might this also somewhat shield the residents in this IRS dispute? The dispute is nominally between the central districts and the IRS. The amenities fee is capped by CPI. So the risk to us is the central district having to deplete its funds to pay the government or the bondholders or ??? and the effect that may have on maintaining the amenities to the level we are accustomed. I don't see any way the residents are on the hook for the total that may be due.

The Morse family has created a wonderful community here through some risk and hard work. They do not appear to me to be the type that would sit back and let the community go down the drain by allowing the amenities to deteriorate. They still have significant investments in this community, and they live here as well. Yes, you can sell the commercial property, the real estate office, and the championship golf courses. But the negative publicity of the residents being cheated out of the lifestyle they bought into while the family bolts for greener pastures would assuredly cut into the selling price. Truth is, they can likely make much more money by keeping this place up to the usual standard.

But I agree we need to be alert and aware.

Clarification - When I said the "we the residents" would pay the financial penalties, I meant that the CDD which we pay into and which controls our amenities, would be paying, and our amenities would possibly suffer. I do agree that the Morses have built a wonderful community, and we all enjoy the lifestyle. I do have concerns though, based on their past history (remember the lawsuit filed against them some years ago), of whether or not they will step up to the plate and make things right if the need arises. With so much money at stake, its not in my nature to sit back with my head in the sand and "trust" a Developer to take care of things. I agree with your statement - we need to be alert and aware.

[villagerjack]

I should point out that wnen Del Webb was in control, this did not happen. When residents were elected, the special interest groups took over, effectively shutting out smowbirds. We then bought in TV. I still own that home. It would sell for about $120/s/f. My home here $200/s/f. After 18 years they still have not sold out and Amenities not completed. Morse builds them first. Effectively Locking out Snowbirds by hogging amenities was not a good move. For the last few years, they sold less than 10 homes a month. This was the result of "electing" people to the board. I did not fight in the military to have my rights usurped by elected officials but it happened.

[Mikeod]

Just one instance which applied to tennis. Similar things were done with Pickleball, Croquet, Swimming etc. In a former over 55 gated community built by Dell Webb, Tennis Teams were formed by full time residents. They joined USTA and other groups playing tennis all year long, each group with a different season. If you were not a permanent resident you could not break into the various teams. Players joined 3-4 teams, played in Tournaments frequently and CLOSED THE COURTS TO RESIDENTS during the frequent tournaments. Also closed them for practice sessions for Tournaments, etc etc. There was OPEN TENNIS for all residents in the morning ( come and play)which they also tried to take over. When they met some resistance they changed the hours to 7AM. We played in the cold with LIGHTS in the winter. I could go on but you see what can happen under resident control. The Morses do not let this happen here.

I thought the post referred to TV residents. Sorry if I misinterpreted it. I don't disagree with the point that resident control may not be an improvement.

[mickey100]

[quote=;690167]

WOW!!! So much to digest but all missing the most important point: Let the residents determine their fate instead of a hand-picked few behind closed doors. Yes, there would be outcomes that many would not like which we always endure through life. I don't recall EVER standing and fighting for the right to live in a community of this caliber but we did move here of our own free will and our own free will also includes the right to choose how we are governed instead of NO CHOICE. I have plenty of comfortable shoes and most important of all............I can choose which pair I wear. not someone else.

djl8412, I like your spunk!

[rubicon]

Some folks seem to forget that TheVillages hold better than 100,000 residents many of whom have very impressive credentials meaning that we will have an internal market to select from when the time comes due.

In my mind the first order of business is ultimately who will be found to have the legal/financial obligation should the IRS prevail with the sub-political status action.

Secondly would be the financial amount of that financial obligation and penalities and fees and the question of who is ultimately holding the bag on the monies to defend this action.

Next is the the manner of the payout.

following this is the affect this case has on the continual buildout.

By the way there apparently is an argument that the Developer at least held this project together given the previous concerns about places like Del Web.

Again I am confident that this is all going to work out

[PennBF]

One of the advantages of a democracy is that it protects the minority Some are professing that an appointed person(s) is better who may not care about the minority. That is the opposite of a democracy and a formula for a number of countries that few would want to live in. As I mentioned before: Power corrupts, absolute power corrupts absolutely. Although a few continue to be surprised that it is astonishing that some prefer a dictator form of government as opposed to a democracy I am sure that when they understand the scope of possible abuse they will come to their senses. How many today understand abuses that may be going on? Just as a simple test: Who is paying the most for the improvements to property that mainly provides advantages to the business's? What program was taken from the Amenity funding controls and was placed in a program with no ceiling to protect the residents? To get the answers it would take research !! :shrug:

[janmcn]

In the early 2000's, residents were asked to vote on becoming a city and they voted it down because of the expense involved. This was when the population was less than 30,000. Today that expense would be much higher.

Think of all the things that a city provides that would have to be put in place: policemen and firemen, garbage pick-up, water and sewer, a city hall, all the various inspection offices, all the elected officials, etc etc etc.

The developer would probably be happy to sell the new "city" his facilities, but at what price?

This is really off the subject of the IRS investigation. Majority rules works well in probably 99% of the country, but not on Indian reservations, military bases, college campus, prisons, or The Villages. It's never going to happen here.

[villagerjack]

One of the advantages of a democracy is that it protects the minority Some are professing that an appointed person(s) is better who may not care about the minority. That is the opposite of a democracy and a formula for a number of countries that few would want to live in. As I mentioned before: Power corrupts, absolute power corrupts absolutely. Although a few continue to be surprised that it is astonishing that some prefer a dictator form of government as opposed to a democracy I am sure that when they understand the scope of possible abuse they will come to their senses. How many today understand abuses that may be going on? Just as a simple test: Who is paying the most for the improvements to property that mainly provides advantages to the business's? What program was taken from the Amenity funding controls and was placed in a program with no ceiling to protect the residents? To get the answers it would take research !! :shrug:

When you get 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 with some of
the nicest folks in the world for $145 a month what is it you need to be protected from?

[gomoho]

In the early 2000's, residents were asked to vote on becoming a city and they voted it down because of the expense involved. This was when the population was less than 30,000. Today that expense would be much higher.

Think of all the things that a city provides that would have to be put in place: policemen and firemen, garbage pick-up, water and sewer, a city hall, all the various inspection offices, all the elected officials, etc etc etc.

The developer would probably be happy to sell the new "city" his facilities, but at what price?

This is really off the subject of the IRS investigation. Majority rules works well in probably 99% of the country, but not on Indian reservations, military bases, college campus, prisons, or The Villages. It's never going to happen here.

Can't think of many cities being run by government workers that is successful. Too much waste and whining and not enough hard work. TV is the most efficient "city" I have ever had the opportunity to live in. Things just happen on schedule and seem to work without a hitch. If private enterprise was involved in running more parts of a city I believe we would start to see things turn around. They have to make a profit - they can't just raise taxes.

[Advogado]

To get back to the topic at hand:

The POA has a General Membership Meeting on Tuesday June 18th, 7:00 p.m. at the Laurel Manor Recreation Center.

This will be a chance to get the POA's take on the latest IRS development. It should be interesting to compare that with what the Orlando Sentinel says in its next article on the subject, which I understand is slated to appear tomorrow.

Hopefully, the latest setback in the IRS investigation is going to wake some people up as to the necessity of supporting the POA. If things end up badly for residents in the IRS investigation (and they may or may not), the POA will be the only organization that we have to protect our interests. Certainly, the VHA will do nothing to help.

[mickey100]

To get back to the topic at hand:

The POA has a General Membership Meeting on Tuesday June 18th, 7:00 p.m. at the Laurel Manor Recreation Center.

This will be a chance to get the POA's take on the latest IRS development. It should be interesting to compare that with what the Orlando Sentinel says in its next article on the subject, which I understand is slated to appear tomorrow.

Hopefully, the latest setback in the IRS investigation is going to wake some people up as to the necessity of supporting the POA. If things end up badly for residents in the IRS investigation (and they may or may not), the POA will be the only organization that we have to protect our interests. Certainly, the VHA will do nothing to help.

Thanks for the heads up. I agree, certainly a good time to be a member of the POA.

[Challenger]

[QUOTE TV is the most efficient "city" I have ever had the opportunity to live in. Things just happen on schedule and seem to work without a hitch. If private enterprise was involved in running more parts of a city I believe we would start to see things turn around. They have to make a profit - they can't just raise taxes.[/QUOTE]

"Profound" I think!:ho:

[janmcn]

Potential impact of IRS decision on The Villages' tax-exempt bonds causing worries - OrlandoSentinel.com (http://www.orlandosentinel.com/os-villages-tax-exempt-irs-impact-20130606,0,4773899.story)



Here's the article from today's Orlando Sentinel.

[JohnFromMaine]

I haven't read all 22 pages in this thread so forgive me if this question is a repeat; In light of the recent IRS scandal, do you think that both the developer and the general population of The Villages leaning on the conservative side could have influenced the IRS's decision?

[njbchbum]

I haven't read all 22 pages in this thread so forgive me if this question is a repeat; In light of the recent IRS scandal, do you think that both the developer and the general population of The Villages leaning on the conservative side could have influenced the IRS's decision?

john - goes back further than that. you can read about it here: Village Community Development Districts (http://www.districtgov.org/IRSupdate.aspx) updates go back to 2009!

[villagerjack]

Appears to be a fair representation of events presented without sensationalism and hysteria. It does make one wonder why Our Villages was singled out by the IRS. I know what they say but I firmly believe that the present structure of the Center Districts permits delivery of services on an equal and unfettered basis to all residents and is why Our Villages sells as many homes as they do and why market values of homes have not declined as much as other similar developments. The number of snowbirds, who did not have to sell their homes to buy in The Villages, is amazing and likely the primary reason for the smaller decline in home prices during the downturn, which now has returned to more normal levels. I believe the reason for the large number of snowbird sales is attributed to the fact that under this unelected structure Snowbirds could be 100% confident that when they came for the winter, they would have access to all facilities on the same basis as full time residents. This is nit the case in other venues. Attracting Snowbirds has an added benefit........wear and tear on the amenity structures helps keep expenses and Amenity Fees at reasonable (bargain, really) levels as Snowbirds are here for only one third of the year. This was a brilliant move by the Morse Family....a win win for all, except perhaps the IRS.

[villagerjack]

If it is the IRS thesis for attemting to tax the bonds is that the Residents in The Villages did not benefit from a more stabilized structure of the CDD's, albeit controlled by Morse, I would suggest they compare similar venues where there is an elective board and see what has happrned over the last seven years in terms of cost and delivery of services ability to access amenities, ability to sell your home as well as market values of homes during this recent downturn and they will find that this structure has indeed benefited Village Residents.

[gomoho]

Potential impact of IRS decision on The Villages' tax-exempt bonds causing worries - OrlandoSentinel.com (http://www.orlandosentinel.com/os-villages-tax-exempt-irs-impact-20130606,0,4773899.story)



Here's the article from today's Orlando Sentinel.

FINALLY I got my answer to who issued and who is holding these bonds. Thank you Orlando Sentinel. As I understand this now, these bondholders may come back to the district for selling tax-free bonds that were not actually tax-free. Well that will be another lengthy court battle so I'm thinking we won't really know much for a long, long time.

[villagerjack]

FINALLY I got my answer to who issued and who is holding these bonds. Thank you Orlando Sentinel. As I understand this now, these bondholders may come back to the district for selling tax-free bonds that were not actually tax-free. Well that will be another lengthy court battle so I'm thinking we won't really know much for a long, long time.

Perhaps, but if the legal opinion attached to the bonds highlighted the risk, and I do not know what it said, then it should be at the risk of the purchaser. In addition, those bondholders who bought years ago and held would probably have little or no loss since interest rates declined substantially. But you are likely correct. This will not be over for quite a while.

[EdV]

"Do you realize that as we speak right now, you yourself could be one of those bondholders that you claim should be �his loss�?"

I really do not see that happening.

"Seriously. Have you ever invested in a mutual fund, be it a stock fund or a bond fund. Did you ever scrutinize the purchases and sales that the fund made while you held stock in that fund or did you just keep an eye on the total return on your investment?"

I invest plenty. Whats your point?

"Anyone that invested in a Municipal Bond Fund (usually a tax free one but not always) over the past 10 years or so is a potential current or previous bondholder of VCCDD Tax Free Bonds."

Your point?

"Am I making sense or are you still unsure of what I�m trying to tell you?

You mean.....When did i stop beating my wife.?

Why the acerbic response?

You posted the following: �If the bondholder chose to proceed anyway, it should be his loss and not anyone else�s provided all risks were adequately disclosed�

I was simply pointing out that if you or any other member of TOTV had at any time over the past ten years invested in a tax free muni bond fund, that you could be one of those bondholders that invested in the VCCDD bonds being challenged by the IRS. In a bond fund, you don�t choose the bonds, the fund�s analysts do and the average fund investor never bothers to scrutinize those trades.

[manaboutown]

This is out of the Sentinal's article.

"Israel said the district is weighing its options on how to proceed with the case, but it's "too soon" to tell. District officials said they have spent more than $700,000 defending their position. Israel said he hasn't calculated how much in back taxes is owed."

...and the clock is still running on the legal fees as well as perhaps any additional interest which it appears are being paid and/or are to be paid by the central district(s) out of what, the amenities fees paid by Villagers?

[Advogado]

Perhaps, but if the legal opinion attached to the bonds highlighted the risk, and I do not know what it said, then it should be at the risk of the purchaser. In addition, those bondholders who bought years ago and held would probably have little or no loss since interest rates declined substantially. But you are likely correct. This will not be over for quite a while.

As I pointed out before, the District covenanted take whatever steps are necessary to maintain the tax exempt status of the bonds. I loosely referred to to the effect of that covenant as a "tax-exempt warranty", in a previous post, because that is what it amounts to. If the District breaches that covenant by failing to maintain such tax exempt status and the bondholders have to pay taxes, the District would seem to be clearly liable to the bondholders. This is also pointed out, but not expained, in the Orlando Sentinel article of today.

What gives you the idea that the bondholders have "assumed the risk"? Have you now read the official statements for the bonds that I previously referred you to? If not, you may wish to do so, before reasserting your assumption-of-risk or any other theory.

By the way, I would be happy, as a Villager, if you are right and the District could find some way to avoid such liability. If, after you read the bond documents, you come up with a way (e.g., some actual basis for your assumption-of-risk theory), you might want to pass your idea on to the District. If you have such a way already, it is to bad you didn't tell the District a long time ago. You could have saved it hundreds of thousands of dollars in attorney fees.

[gomoho]

This is out of the Sentinal's article.

"Israel said the district is weighing its options on how to proceed with the case, but it's "too soon" to tell. District officials said they have spent more than $700,000 defending their position. Israel said he hasn't calculated how much in back taxes is owed."

...and the clock is still running on the legal fees as well as perhaps the interest which it appears are being paid and/or are to be paid by the central district(s) out of what, the amenities fees paid by Villagers?

Thank you for highlighting this - if the district didn't think they would be looked to for the back taxes I don't imagine they would have spend $700k plus to fight this.

[mickey100]

Thank you for highlighting this - if the district didn't think they would be looked to for the back taxes I don't imagine they would have spend $700k plus to fight this.

How true. :BigApplause:

[Advogado]

Potential impact of IRS decision on The Villages' tax-exempt bonds causing worries - OrlandoSentinel.com (http://www.orlandosentinel.com/os-villages-tax-exempt-irs-impact-20130606,0,4773899.story)



Here's the article from today's Orlando Sentinel.

The article is a reiteration of what I have been saying, and have been attacked for saying, on this site for a long, long time.

[manaboutown]

Another part of the artle in the Sentinel:


"The district sold $426 million in tax-free bonds from November 1993 through June 2004, including $364 million worth of bonds that were under scrutiny in the five-year IRS probe. The district used the borrowed money to purchase boccie-ball courts, golf courses, swimming pools and other recreational facilities from Morse, whose fortune is estimated by Bloomberg News at $2.9 billion."

So, if I understand this correctly, the central districts, controlled by Morse, paid Morse $364,000,000 for these facilities. Who determined the prices to be paid, a disinterested third party appraiser or one controlled by Morse? How were the prices determined? They most assuredly were not based solely on cost to build or current structural value. If an income appraisal approach was used the income would be from amenity fees paid by Villagers. So Villagers pay the amenity fees which are then used to vastly increase the "value" of physical structures based on their "income" from the assessed fees. Then, based upon the fees paid by Villagers the physical lands and structures thereon are sold at very high prices, possibly at multiples of actual cost to build, from Morse to the central districts controlled by Morse which contain no residents, only commercial properties owned by Morse. Wow!

[EdV]

Stop the presses, the end game on this matter may be sooner than we thought.

In the past, I and other posters on this subject have speculated that the Developer/VCCDD might challenge this all the way through the Tax Court(s), or even higher.

But it turns out that the Tax Court path is an option available only to a challenging tax payer. But in this case the VCCDD is not a taxpayer but a Tax-free Muni Bond issuer and it’s next and apparently last recourse at this point is an appeal to the IRS Office of Appeals with a final challenge to the ruling issued in the May 30 letter from the IRS.

A settlement agreement between the VCCDD and the IRS could well be reached in a year or less.

I’ll have more to say on that shortly but wanted to get this info posted.

[TVMayor]

From Bloomburg June 10, 2013 Dirt-Bond Sales Near �07 Peak Belie IRS Tax Ruling: Muni Credit

Demand for $6 billion of bonds sold to finance Florida housing developments shows no signs of waning even after the Internal Revenue Service said debt issued for a project of billionaire H. Gary Morse isn�t tax-exempt.
A Florida land-backed bond sale last week by Verona Walk Community Development District brought issuance of such debt this year to $323 million, close to the highest since 2007, data compiled by Bloomberg show. In May, the IRS alerted Morse that bonds sold to finance a district he created weren�t tax-free, a decision with potential implications for hundreds of similar entities.
Land-backed debt, dubbed dirt bonds, is the riskiest municipal segment, accounting for almost half of default filings where investors didn�t get paid, according to Concord, Massachusetts-based Municipal Market Advisors. Still, buyers are drawn by the extra yield. Wells Capital Management and Nuveen Asset Management plan to keep their bonds from Morse�s project while continuing to buy debt of certain districts.
�There�s a yield premium in the market for this type of debt that makes them competitive,� said John Miller at Nuveen, who oversees $95 billion of local debt in Chicago. �That tends to limit the amount by which the bonds would fall.�
Pace Prevails
Investors are seeking lower-rated local debt for the higher relative yields as the Federal Reserve holds its benchmark overnight rate near zero to spur the economy. Munis one to three levels above junk, encompassing the debt from Morse�s project, have earned 1.5 percent in 2013, compared with a loss of 0.4 percent on top-rated munis, Barclays Plc data show.
The IRS ruling related to $426 million of bonds sold by Village Center Community Development District, a Morse residential project in central Florida.
Perry Israel, the Sacramento-based attorney for the district, said June 7 that its board hasn�t decided whether to appeal the IRS decision.
Morse is the developer of The Villages, one of the world�s largest retirement communities, located on 33 square miles (85 square kilometers) in central Florida. Through his fully owned Holding Company of The Villages, Morse has built and sold more than 44,400 homes since 1983.
Different Beast
Village Center bonds rated three steps above junk and maturing in November 2032 traded last week with an average yield spread of about 2.2 percentage points, the lowest in five weeks, data compiled by Bloomberg show.
The project �is a different type of entity than a number of the other ones that we�ve seen or currently hold,� said Dennis Derby, who helps manage about $34 billion of munis, including $5 million of Village Center bonds, at Wells Capital in Menomonee Falls, Wisconsin.
Verona Walk issued $7 million of revenue bonds to refinance debt sold to build part of a 760-acre development near Naples on the Gulf Coast, bond documents show. Standard & Poor�s rated the deal A, the sixth-highest level. Bonds maturing in May 2035 yielded 4.48 percent, or about 1.4 percentage points above top-rated munis, Bloomberg data show.
The bonds are repaid from assessments on 935 residential units, of which only about 75 are undeveloped, Michael Rosen, Verona Walk�s district manager, said in an interview.
Audit Scenario
�It�s a fairly well-occupied development, and therefore there�s not a lot of risk for the bondholders,� he said.
Borrowing documents warned of a potential review of its tax-exempt debt and Florida dirt bonds in general given the latest IRS ruling.
If the IRS were to audit the Verona Walk bonds and determine that they aren�t tax-exempt, such a decision �may adversely impact any secondary market� for the securities and their price, the documents say.
The IRS determined that the Village Center bonds aren�t tax-exempt because the entity isn�t a political arm of the state, according to an IRS memo dated May 30. Since its creation in 1992, the district has been issuing debt with approval from a board of supervisors controlled by the developer, according to the IRS memo.
The agency said state law intends for the development districts to be turned over to residents who vote in board members at a general election. Yet the developer has owned sufficient land to appoint the board even though the district has existed for over 20 years, according to the memo.
Verona Walk�s documents indicate that four of its five board members are qualified electors, or residents of the district, who were voted in or appointed.
Research Requirement
Derby and Miller said buying Florida dirt bonds will require additional research into whether board members were elected by residents or handpicked by the developer.
�The results of this case, both what�s happened in the past and how it unfolds in the future, is going to add to our research criteria and our research process,� said Miller, whose firm holds $10 million of Village Center bonds.
An improving Florida housing market helps make the development bonds attractive, Miller said.
The April median sale price for a single-family Florida home was $165,000, the highest since at least January 2009, according to Florida Realtors, a profession trade association.
�Characteristics are improving generally in this market,� Miller said. �The reliability of repayment is going up.�
In the municipal market this week, New York City Transitional Finance Authority leads issuers offering debt with yields close to the highest since March 2012.
At 2.19 percent, yields on benchmark 10-year munis have exceeded the interest rate on similar-maturity Treasuries for seven straight trading days, the longest stretch in more than a month.
The ratio of the yields, a gauge of relative value, is about 101 percent. The higher the percentage, the cheaper munis are compared with Treasuries.
To contact the reporters on this story: Michelle Kaske in New York at mkaske@bloomberg.net; Michael C. Bender in Tallahassee at mbender10@bloomberg.net
To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

[rubicon]

Stop the presses, the end game on this matter may be sooner than we thought.

In the past, I and other posters on this subject have speculated that the Developer/VCCDD might challenge this all the way through the Tax Court(s), or even higher.

But it turns out that the Tax Court path is an option available only to a challenging tax payer. But in this case the VCCDD is not a taxpayer but a Tax-free Muni Bond issuer and it�s next and apparently last recourse at this point is an appeal to the IRS Office of Appeals with a final challenge to the ruling issued in the May 30 letter from the IRS.

A settlement agreement between the VCCDD and the IRS could well be reached in a year or less.

I�ll have more to say on that shortly but wanted to get this info posted.

EdV thank you for the information and reminding us to stay focused on the issues that matter now. As long as we are following this action plans can be made as facts evolve

[villagerjack]

Another part of the artle in the Sentinel:


"The district sold $426 million in tax-free bonds from November 1993 through June 2004, including $364 million worth of bonds that were under scrutiny in the five-year IRS probe. The district used the borrowed money to purchase boccie-ball courts, golf courses, swimming pools and other recreational facilities from Morse, whose fortune is estimated by Bloomberg News at $2.9 billion."

So, if I understand this correctly, the central districts, controlled by Morse, paid Morse $364,000,000 for these facilities. Who determined the prices to be paid, a disinterested third party appraiser or one controlled by Morse? How were the prices determined? They most assuredly were not based solely on cost to build or current structural value. If an income appraisal approach was used the income would be from amenity fees paid by Villagers. So Villagers pay the amenity fees which are then used to vastly increase the "value" of physical structures based on their "income" from the assessed fees. Then, based upon the fees paid by Villagers the physical lands and structures thereon are sold at very high prices, possibly at multiples of actual cost to build, from Morse to the central districts controlled by Morse which contain no residents, only commercial properties owned by Morse. Wow!

Unless we see the actual appraisal it would just be a guess. Usually there is not that much difference between the income approach and the other two appraisal methods so to say he "vastly increased the value" is speculation. The value from the income approach is not determined from the assessed fees but the net operating income before interest and depreciation but after all the expenses of the VCCDD. An appropriate Cap Rate is then applied based on current interest rates. In fact. the latest reading on this valuation a few weeks ago was that he received less not more but it is not clear what method was used in that calculation either.

[mickey100]

The article is a reiteration of what I have been saying, and have been attacked for saying, on this site for a long, long time.


There is a minority that attacks anyone or anything that verbalizes a problem with the Villages or with the developer. I suspect most people are grateful for the posts you've made and information you've provided. I know I am.

[gomoho]

If I am not mistaken the question about the value of the assests by the IRS has been resolved in favor of the developer - that he actually was paid less than they were worth at the time. I'm sure you'll correct me if I am wrong.

[manaboutown]

Unless we see the actual appraisal it would just be a guess. Usually there is not that much difference between the income approach and the other two appraisal methods so to say he "vastly increased the value" is speculation. The value from the income approach is not determined from the assessed fees but the net operating income before interest and depreciation but after all the expenses of the VCCDD. An appropriate Cap Rate is then applied based on current interest rates. In fact. the latest reading on this valuation a few weeks ago was that he received less not more but it is not clear what method was used in that calculation either.

From the Orlando Sentinel, April 29, 2009:

The district grossly overpaid Morse by $53 million, according to the IRS. The tangible assets, such as pools, golf courses, mail facilities, golf-ball washers and guardhouses, were worth about $6.9 million. Appraisers the Village district chose weren't qualified under IRS rules, partly because they weren't independent, and they failed to calculate correctly the value of the items purchased, Servadio contended.

The district acknowledged that one of the appraisers "acted as a consultant to both parties in the transaction," but Israel argued that a regulation requiring independent appraisers doesn't apply to a tax-free bond transaction. Even if it did, he wrote, the appraiser was acting as an independent contractor and was "not subject to the District's controls in the same fashion that an employee might be."

"In other words, it's all good to hire your buddies help you spend $64 million in public funds. This is Florida, where the rules are different. Go back to your office in the beltway, Revenooer Man.

Documents 'recreated'

And then there's the allegation of overpayment. The district went on a $53 million shopping spree in The Villages for recreational goodies but apparently misplaced its sales slip.

Neither of its supposedly very qualified appraisers could provide a schedule of what each of the tangible properties was worth as opposed to the value of the other portion of the purchase, buying the rights to collect amenity fees.

So, the district stated in a footnote in teeny-tiny type that it asked the two appraisers to "recreate their calculations."

How very entertaining! Where would Richard Nixon be if Rose Mary Woods had "recreated" the 18-minute gap in the tapes of the Watergate scandal?

Of course, the resurrected calculations show that the district paid just the right amount and that it used all the proper methods of figuring it out the value of the amenity-fee rights. "

Adding $53,000,000 onto $6,900,000 of property seems a vast increase to me, and probably to most folks.

[EdV]

The amount that the developer was paid for the amenities he sold to the VCCDD is irrelevant at this point regarding this IRS matter. The Sentinel and other rags love to bring this up to stir the pot.

It was only used by the original IRS agent as one of many examples he used to show that the VCCDD did not qualify to be issuing tax-free Muni bonds. It will have no relevance on what the final assessment of what is owed the government for back taxes.

[Geewiz]

Remember - this is Gary's structure. I assume when everything is done and if money is owed - he will pay. But, if not, everyone bury him in law suits. You can Litigate anyone for anything and win or lose the cost to Tv in reputation and the literal cost to handle each suit will be substantial. I assume he will figure all of this in and pay anything he owes. He's a smart gUy.

[Advogado]

If I am not mistaken the question about the value of the assests by the IRS has been resolved in favor of the developer - that he actually was paid less than they were worth at the time. I'm sure you'll correct me if I am wrong.

Since you asked, I will correct you. I am afraid you are mistaken, mislead by an article in the Daily Sun.

As confirmed by Janet Tutt, herself, when questioned at a POA meeting (and as later reported in the POA Bulletin): The valuation question has NOT been resolved. The under-payment calculation you cite was merely an argument made by the Center District's attorney in a letter to the IRS. The Daily Sun then reported his argument as fact, even though it has not been agreed to by the IRS. You can read the attorney's letter at districtgov.org.

Now, maybe the attorney's calculation will turn out to be right; I won't even try to get into the proper way to calculate an arm's-length price of a future income stream (which can be manipulated by using different discount rates). In any event, whatever I (or any of us) think about it really doesn't matter at this juncture) since the IRS is taking the position that the bonds would be taxable no matter what the valuation of the underlying assets sold to the Center Districts by the Developer.

The point is that, despite what the Daily Sun claimed, there is no publicly available information that the valuation question has been resolved in favor of the Developer/Center District. But to me the central thing that we should be watching is how this darn thing gets resolved, and trying to make sure that the resolution doesn't prejudice the residents. It is not easy to do this when our local paper either doesn't report, or distorts, the facts.

Morals regarding the above: (1) Be very skeptical l about what you read in the Daily Sun about the IRS investigation and about the Developer in general. (2) The POA Bulletin will be the most reliable source of information, but also look at the documents at districtgov.org. (3) Thank Lauren Ritchie of the Orlando Sentinel for keeping a spotlight on this (even though she gets some of her facts wrong).

[EdV]

Again for the record, it Does Not Matter what he was paid, with regard to the IRS matter at this point in time. You folks are really beating the death out of that poor horse!

[LndLocked]

Again for the record, it Does Not Matter what he was paid, with regard to the IRS matter at this point in time. You folks are really beating the death out of that poor horse!

You are correct Ed ... for the purpose of determining if or not the district qualified / qualifies to sell "tax free" bonds per the determination by the IRS (and perhaps ultimately the court(s) ) as a "public" district is the heart of the matter.

Nor does it matter if or not TV residents like the current system of VCDD control. Because that is not pertinent to the issue for the same reason.


However, it should be of great interest to all TV landowners that "The Developer" was paid a fair and not inflated price for the amenity's purchased with these bonds. IF they were inflated, then a far greater % of amenity fee revenue is going to retiring the bonds than it should be. Resulting in less funding for upkeep and improvement.

[mickey100]

Remember - this is Gary's structure. I assume when everything is done and if money is owed - he will pay. But, if not, everyone bury him in law suits. You can Litigate anyone for anything and win or lose the cost to Tv in reputation and the literal cost to handle each suit will be substantial. I assume he will figure all of this in and pay anything he owes. He's a smart gUy.

Wouldn't that be wonderful if he did pay. I have a feeling, though, he won't. Would love to be proven wrong. We'll see.

[manaboutown]

Wouldn't that be wonderful if he did pay. I have a feeling, though, he won't. Would love to be proven wrong. We'll see.

Aren't the central districts which are funded by Villagers amenities fees paying?

[LndLocked]

Since you asked, I will correct you. I am afraid you are mistaken, mislead by an article in the Daily Sun.

As confirmed by Janet Tutt, herself, when questioned at a POA meeting (and as later reported in the POA Bulletin): The valuation question has NOT been resolved. The under-payment calculation you cite was merely an argument made by the Center District's attorney in a letter to the IRS. The Daily Sun then reported his argument as fact, even though it has not been agreed to by the IRS. You can read the attorney's letter at districtgov.org.

Now, maybe the attorney's calculation will turn out to be right; I won't even try to get into the proper way to calculate an arm's-length price of a future income stream (which can be manipulated by using different discount rates). In any event, whatever I (or any of us) think about it really doesn't matter at this juncture) since the IRS is taking the position that the bonds would be taxable no matter what the valuation of the underlying assets sold to the Center Districts by the Developer.

The point is that, despite what the Daily Sun claimed, there is no publicly available information that the valuation question has been resolved in favor of the Developer/Center District. But to me the central thing that we should be watching is how this darn thing gets resolved, and trying to make sure that the resolution doesn't prejudice the residents. It is not easy to do this when our local paper either doesn't report, or distorts, the facts.

Morals regarding the above: (1) Be very skeptical l about what you read in the Daily Sun about the IRS investigation and about the Developer in general. (2) The POA Bulletin will be the most reliable source of information, but also look at the documents at districtgov.org. (3) Thank Lauren Ritchie of the Orlando Sentinel for keeping a spotlight on this (even though she gets some of her facts wrong).

Per a memo dated 6/12 Janet Tutt said the the IRS reviewed and changed it's earlier valuation and that TV landowners received a bargain.

http://www.districtgov.org/images/IRSupdates/IRS%20Update%206.12.13.pdf

[Advogado]

Again for the record, it Does Not Matter what he was paid, with regard to the IRS matter at this point in time. You folks are really beating the death out of that poor horse!

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.

[gomoho]

Per a memo dated 6/12 Janet Tutt said the the IRS reviewed and changed it's earlier valuation and that TV landowners received a bargain.

http://www.districtgov.org/images/IRSupdates/IRS%20Update%206.12.13.pdf

So.... propaganda or truth??? I don't know who to believe anymore.

[Geewiz]

I would like to thank the mod for deleting my post and the one I was responded to. I don't like me when I get nasty and it is my weakness that I will respond when baited. Again, all cheers to the mod.

[Advogado]

Per a memo dated 6/12 Janet Tutt said the the IRS reviewed and changed it's earlier valuation and that TV landowners received a bargain.

http://www.districtgov.org/images/IRSupdates/IRS%20Update%206.12.13.pdf

If you read that memo carefully, Ms. Tutt does not say that the IRS has agreed to the adjustments. I suspect that the matter is still not resolved, although I would be happy if it has been. Again, the only public document, of which I am aware, substantiating the "bargain" claim is the letter from the District's tax attorney to the IRS. I have seen no IRS reply to that letter. If one existed,it presumably would be on the districtgov.org website. Maybe somebody can ask Ms. Tutt about it at the POA meeting next week.