Originally Posted by JourneyOfLife (Post 974387)

You have to admit... there is an unpleasant odor wafting about! Can't blame that on the messenger!

So...... who is going to get stuck with the tax bill... plus any related legal expenses?

Originally Posted by T-325 (Post 974393)

This seems like a happy ending to this long drawn out bond issue. No one is hurt... and the issue is in the rear view mirror.

Or am I missing something?

Originally Posted by Bogie Shooter (Post 974460)

Isn't it time for the IRS to assign a new agent to this case?

Originally Posted by janmcn (Post 974464)

The IRS has never equivocated in its opinion of this case. It would seem that the investigative portion is over, and the only remaining action is to total up the damages (interest and penalties). There would be no need for a new agent assigned to this case.

Originally Posted by eweissenbach (Post 974317)

but here is her article on the latest development in the IRS bond issue.
Lauren Ritchie: Villages refunds tax-free bonds with taxable ones - Orlando Sentinel

Originally Posted by Advogado (Post 974472)

In my view, Lauren Ritchie performs a valuable service for Villagers since she reports on stories, like the IRS investigation, that the Daily Sun either buries or distorts. The problem is that, while her articles tend to get the basic facts right, the articles sometimes misinterpret those facts.

For example, in this article:

Ritchie criticism: The price of the Villages homes does not include the use of amenities and the cost of infrastructure. Therefore, Villagers are paying twice for those when they pay their amenity fees and the bond amortization/interest charges.

Legitimate criticism: True, the price of the new houses does not include the infrastructure costs or use of amenities. However, mathematically, we clearly are not paying twice for those, and Ms. Ritchie is flat out wrong on this point. The legitimate criticism in this regard is the lack of disclosure by the Developer.

Nobody reasonably expects that the price of a home anywhere is going to include the free use of neighborhood amenities, and Ms. Ritchie is being disingenuous when she implies otherwise. However, the Developer does not, in his advertising, disclose the existence of the infrastructure bonds, which are unique to The Villages, amount to about 10% of the price of the new homes, are a lien on the property, and an obligation of the buyer. No other business could get away with understating the real price of its merchandise by 10%.

In fact, some buyers of new Villages homes apparently don't find out about the bonds until they have already contracted to buy a new home. In addition to those buyers, such unethical advertising also prejudices both (a) the Villagers who are trying to sell their pre-owned homes in competition with the new homes and (b) the independent realtors who represent those Villagers. In fact, it is surprising to me that the realtors haven't lodged a complaint with the Federal Trade Commission.

Originally Posted by eweissenbach (Post 974481)

What Is deceptive is the way the homes are marketed. I have heard more than one Villages salesperson attempt to minimize or dismiss the impact of the bond. The developer made a decision long ago to charge the homebuyers a separate fee to pay for the infrastructure, rather than wrapping those costs in the price of the home as is done almost everywhere else in the world. The cost of the bond is actually more than if it were in the overall price of the house - it is charged a higher rate of interest, the interest is not income tax deductible, and paying off the bond does not theoretically, increase ones equity in the home. (I say theoretically because the seller can try to recoup that outlay, but they may or may not get a buyer to agree. The price can then be advertised as lower than the true cost by not including the bond. Good marketing strategy, but unless fully disclosed prior to a buying decision, it is dishonest and deceptive. I have wondered if the salespeople are being devious about the bond on their own, or if that is the way they are trained (I have worked with Tony Trussler and he is very open about the bond and how it works) BTW I don't hate the developers and admire what has been built here, but this is concerning to me.

Originally Posted by Advogado (Post 974531)

Agree. However, since the bond can be immediately prepaid, it would not be "actually more than if it were part of the house"-- IF IT WERE DISCLOSED BY THE DEVELOPER IN HIS ADVERTISING. As you correctly point out and as I indicated in my earlier post, the Developer's not disclosing the existence and amount of the bond is deceptive advertising and puts Villagers who pay off the bond at a competitive disadvantage when they resell their homes.

Do I think that the Developer will voluntarily disclose the bonds? Not a snowball's chance in hell.

Originally Posted by justjim (Post 974535)

The State of Florida passed CDD legislation as an incentive for economic development and to allow Developers to build without having to put huge amounts of their monies upfront for all that goes into a 55 plus community like The Villages. I think it was a super idea.

There are no free amenities---somebody has to pay for them. Would The Villages be the same without this CDD legislation? That is a good question and debatable.

Obviously, the developer has profited from all the commercial properties for which he maintains total control. As I understand the IRS issue of tax free bonds, this is where the "rub" with the IRS comes into play. I am not an attorney, but I cannot envision the residents being liable for any of the IRS issues with The Villages Developer.

Originally Posted by justjim (Post 974535)

The State of Florida passed CDD legislation as an incentive for economic development and to allow Developers to build without having to put huge amounts of their monies upfront for all that goes into a 55 plus community like The Villages. I think it was a super idea.

There are no free amenities---somebody has to pay for them. Would The Villages be the same without this CDD legislation? That is a good question and debatable.

Obviously, the developer has profited from all the commercial properties for which he maintains total control. As I understand the IRS issue of tax free bonds, this is where the "rub" with the IRS comes into play. I am not an attorney, but I cannot envision the residents being liable for any of the IRS issues with The Villages Developer.

Originally Posted by Advogado (Post 974572)

The residents will certainly never be liable for any of the IRS issues. Some earlier remarks by Lauren Ritchie notwithstanding, that has never been viewed as a risk by anyone with an understanding of the matter.

To explain a complicated matter in a few words: At least so far, the IRS issues are not directly "with the Villages Developer". Instead, the IRS issues are with the Center Districts, which issued the purportedly tax-exempt bonds and which own a big chunk of our amenities. The risk to Villagers (which may or may not ever materialize) is that the resolution of the IRS issues may impose such a huge cost on those Districts that that they are unable, financially, to continue the amenity system. If that happens, things get dicey.

Originally Posted by eweissenbach (Post 974544)

In real world terms, if it were immediately prepaid it would still be more. For example, I would be paying say $300k for a home with a $30k bond - if I get a mortgage the mortgage will be based on a $300k sales price rather than $330k. Thus I would have to come out of pocket for the down payment PLUS the bond payoff. After paying off the bond if I had to sell right away for some reason, if I asked $330k, (without consideration for sales commission of 6%) I would be at a disadvantage competing with new homes just like mine advertised at $300k. If I sell ten years down the road and a potential buyer looks up what I paid for the house, the county site will reflect that I paid $300k, which may affect the offer they are willing to make. All of these are costs that I need to be prepared to absorb if I pay the bond off immediately.

Originally Posted by Advogado (Post 974472)

In my view, Lauren Ritchie performs a valuable service for Villagers since she reports on stories, like the IRS investigation, that the Daily Sun either buries or distorts. The problem is that, while her articles tend to get the basic facts right, the articles sometimes misinterpret those facts.

For example, in this article:

Ritchie criticism: The price of the Villages homes does not include the use of amenities and the cost of infrastructure. Therefore, Villagers are paying twice for those when they pay their amenity fees and the bond amortization/interest charges.

Legitimate criticism: True, the price of the new houses does not include the infrastructure costs or use of amenities. However, mathematically, we clearly are not paying twice for those, and Ms. Ritchie is flat out wrong on this point. The legitimate criticism in this regard is the lack of disclosure by the Developer.

Nobody reasonably expects that the price of a home anywhere is going to include the free use of neighborhood amenities, and Ms. Ritchie is being disingenuous when she implies otherwise. However, the Developer does not, in his advertising, disclose the existence of the infrastructure bonds, which are unique to The Villages, amount to about 10% of the price of the new homes, are a lien on the property, and an obligation of the buyer. No other business could get away with understating the real price of its merchandise by 10%.

In fact, some buyers of new Villages homes apparently don't find out about the bonds until they have already contracted to buy a new home. In addition to those buyers, such unethical advertising also prejudices both (a) the Villagers who are trying to sell their pre-owned homes in competition with the new homes and (b) the independent realtors who represent those Villagers. It is surprising to me that the realtors haven't lodged a complaint with the Federal Trade Commission.

Originally Posted by janmcn (Post 974615)

The developer walks away with one billion dollars in profits, by selling the facilities that he built to himself at greatly inflated prices, verified by his very own appraiser. And the IRS is only investigating the sale of amenities north of CR466.

What happens when the developer begins his march from CR466 all the way to SR44, selling all those wonderful facilities that residents have enjoyed so much? Will they have the nerve to use tax-free bonds to finance the sale of these facilities, or have they learned their lesson? What do I have wrong?

Originally Posted by Advogado (Post 974697)

I agree with your concerns.

On a technical point, however, I believe that you will find that the IRS is actually (commencing July 2, 2009), investigating bonds issued by the Sumter Landing Community Development District, i.e., pertaining to the sale of facilities south of 466, as well as the bond sales pertaining to the facilities north of 466. (Go to poa4us.org for a summary.)

As to future use of tax-exempt bonds, it looks like the Developer has thrown in the towel on that strategy. Otherwise, the Villages Center Community Development District would have issued new tax-exempt, rather than taxable, bonds to raise the cash to pay off the old purportedly tax-exempt bonds.

Whether or not tax-exempt bonds are used in the future, I hope that somebody (the POA, I guess) takes a sharp look at the prices that the Developer basically pays himself when he sells facilities to a Community Development District that he controls. We Villagers should try to ensure that they are arm's-length.

Originally Posted by applesoffh (Post 974621)

It is my understanding that the homes being built in The Villages of Fruitland Park will have the bond built into the price of the house since Lake County does not allow a developer's bond, per se.

It is also my undertanding that Celebration, the Disney-owned development outside of Orlando, is also a community of CDDs.

I know I read the above information somewhere. Please don't attack me if I mis-stated anything. If I've got it wrong, I'd appreciate being corrected - but not vilified.

Originally Posted by mulligan (Post 974766)

Infrastructure bonds for the Fruitland Park area were issued about a month ago. So much for that rumor.

Originally Posted by Advogado (Post 974572)

The residents will certainly never be liable for any of the IRS issues. Some earlier remarks by Lauren Ritchie notwithstanding, that has never been viewed as a risk by anyone with an understanding of the matter.

To explain a complicated matter in a few words: At least so far, the IRS issues are not directly "with the Villages Developer". Instead, the IRS issues are with the Center Districts, which issued the purportedly tax-exempt bonds and which own a big chunk of our amenities. The risk to Villagers (which may or may not ever materialize) is that the resolution of the IRS issues may impose such a huge cost on those Districts that that they are unable, financially, to continue the amenity system. If that happens, things get dicey.

Originally Posted by ROCKETMAN (Post 974956)

Some people forget laura richie is a not a news reporter but a columnist. All she does is examine issues and writes her opinion, like it or hate it. I actually like to read different opinions on current issues. She does do her homework, i give her credit for that.

Originally Posted by graciegirl (Post 974987)

Lauren Ritchie has never written anything that I remember that makes The Villages look wonderful. The view of The Sentinel is very different than the slant of The Daily Sun too. And therein lies part of the rub.

Originally Posted by livsea2 (Post 975080)

Well the Villages Sun exisists solely as a marketing tool for the developer... Hopefully the Orlando Sentinel does not... perhaps therein lies the whole rub?

Originally Posted by livsea2 (Post 975080)

Well the Villages Sun exisists solely as a marketing tool for the developer... Hopefully the Orlando Sentinel does not... perhaps therein lies the whole rub?