Originally Posted by bkcunningham1 (Post 576212)

Did anyone else read the short story in the Daily Sun today, Saturday, November 3, 2012, regarding the "tentative" opinion from the Internal Revenue Service that the Community Development Districts are "not political subdivisions"?

According to the story, "If the IRS were to eventually determine such a position, district bonds would no longer qualify for tax-exempt status.

"That 'tentative' opinion has drawn considerable attention across the nation. The National Association of Bond Lawyers has voiced its concern, stating that such a position 'is not supported by existing authority and could substantially undermine the market for special district bonds, a long-standing form of financing utilized by a wide range of issuers n many states.' "

The article goes on to quote Richard Lehmann, publisher of the Distressed Debt Securities newsletter, who described the potential ruling by the IRS as, "as a real can of worms" that could apply to projects across the country. "It could shut off all future issuance of bonds by CDDs and raise costs significantly," Lehmann said.

The Daily Sun article said the Village Center Community Development District attorney Perry Israel, "emphasizes that even though the IRS has reached a tentative adverse ruling in the context of the technical advice memo, it does not necessarily mean that the agency's final conclusion will be adverse."

Originally Posted by bkcunningham1 (Post 576212)

Did anyone else read the short story in the Daily Sun today, Saturday, November 3, 2012, regarding the "tentative" opinion from the Internal Revenue Service that the Community Development Districts are "not political subdivisions"?

According to the story, "If the IRS were to eventually determine such a position, district bonds would no longer qualify for tax-exempt status.

"That 'tentative' opinion has drawn considerable attention across the nation. The National Association of Bond Lawyers has voiced its concern, stating that such a position 'is not supported by existing authority and could substantially undermine the market for special district bonds, a long-standing form of financing utilized by a wide range of issuers n many states.' "

The article goes on to quote Richard Lehmann, publisher of the Distressed Debt Securities newsletter, who described the potential ruling by the IRS as, "as a real can of worms" that could apply to projects across the country. "It could shut off all future issuance of bonds by CDDs and raise costs significantly," Lehmann said.

The Daily Sun article said the Village Center Community Development District attorney Perry Israel, "emphasizes that even though the IRS has reached a tentative adverse ruling in the context of the technical advice memo, it does not necessarily mean that the agency's final conclusion will be adverse."

Originally Posted by PeteDz (Post 576245)

Can someone explain how this impacts me as a homeowner in The Villages? My Bond is Paid. :shrug:

Originally Posted by PeteDz (Post 576245)

Can someone explain how this impacts me as a homeowner in The Villages? My Bond is Paid. :shrug:

Originally Posted by graciegirl (Post 576235)

Doesn't sound hopeful.

Originally Posted by kentucky blue (Post 576311)

Gracie,unfortunately it never did sound hopeful.Some of us researched this situation like it was a final exam in college.Our conclusion was the Morse family will not win the tax exempt status,but will have to reach a settlement at some point.The IRS is not going away,and all the legal maneuvering by the Morse family lawyers will not discourage them.By the way,do you know who has been paying the legal fees to fight the IRS over all these years.........................???????????

Originally Posted by mickey100 (Post 576409)

Good point KB - yes, we the homeowners have ended up paying the legal fees. I assume at some point if the decision goes against the Morses, there may be another class action lawsuit against them to recoup any losses that residents have or will incur. For those that are not familiar with the IRS lawsuit, it contends 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.

The IRS contends that the districts' governing boards are controlled by The Villages developer, Gary Morse, and their bond sales have benefited him, not residents.:oops:

Originally Posted by 2 Oldcrabs (Post 576401)

The IRS does not like to LOSE!:rant-rave:

Originally Posted by quirky3 (Post 576410)

Can someone help explain what losses the residents may incur?

Originally Posted by Advogado (Post 576441)

First, a few observations: The situation is both complex and POTENTIALLY very serious. Anybody who tells you the contrary either doesn't understand it or is lying. The Developer-controlled Daily Sun and Villages Homeowner's Association have never explained the matter and have spun the facts in the Developer's favor. So, the only objective reporting on the matter has been contained in the POA Bulletin, which a poster in another thread was complaining about having delivered to his house, and by Lauren Ritchie in the Orlando Sentinel, who has been crucified by a number of posters to this forum.

The most complete analysis of the implications for Villagers can be found here: http://www.poa4us.org/bulletins_file...etin200908.pdf

Originally Posted by bkcunningham1 (Post 576212)

Did anyone else read the short story in the Daily Sun today, Saturday, November 3, 2012, regarding the "tentative" opinion from the Internal Revenue Service that the Community Development Districts are "not political subdivisions"?

According to the story, "If the IRS were to eventually determine such a position, district bonds would no longer qualify for tax-exempt status.

"That 'tentative' opinion has drawn considerable attention across the nation. The National Association of Bond Lawyers has voiced its concern, stating that such a position 'is not supported by existing authority and could substantially undermine the market for special district bonds, a long-standing form of financing utilized by a wide range of issuers n many states.' "

The article goes on to quote Richard Lehmann, publisher of the Distressed Debt Securities newsletter, who described the potential ruling by the IRS as, "as a real can of worms" that could apply to projects across the country. "It could shut off all future issuance of bonds by CDDs and raise costs significantly," Lehmann said.

The Daily Sun article said the Village Center Community Development District attorney Perry Israel, "emphasizes that even though the IRS has reached a tentative adverse ruling in the context of the technical advice memo, it does not necessarily mean that the agency's final conclusion will be adverse."

Originally Posted by The Shadow (Post 576447)

The way I read this CDD's would no longer be able to issue tax free bonds, end of story. No penalties for previous bonds, homeowners, bond buyers or sellers or the recipient of large sums of money as a result of the bond sales.

Then what? After build out the developer would charge $50 for golf?

Originally Posted by The Shadow (Post 576447)

The way I read this CDD's would no longer be able to issue tax free bonds, end of story. No penalties for previous bonds, homeowners, bond buyers or sellers or the recipient of large sums of money as a result of the bond sales.

Then what? After build out the developer would charge $50 for golf?

Originally Posted by Bogie Shooter (Post 576460)

I think the significant news is that people in Florida and around the US are now beginning to ask questions and get involved in the discussion. The financial impact to the future of issuing or not issuing tax exempt bonds will be very large.

Originally Posted by quirky3 (Post 576410)

Can someone help explain what losses the residents may incur?

Originally Posted by Advogado (Post 576472)

True. Hopefully, this factor convinces the IRS to address the issue of Community Development District bonds prospectively-- by issuing regulations to prevent FUTURE abuse, rather than to attack the bonds already issued. However, thus far, I have seen no indication that the IRS is going to take that approach.

Originally Posted by golf2140 (Post 576510)

Let see. At one point years ago the IRS approved these transactions. Now the IRS dosen't approve thees transactions. Gee, is our government broke?

PS: It's not just affecting The Villages, but 1000's of other CDD !!

Originally Posted by janmcn (Post 576552)

The IRS probably never intended that these CDD's be packed with friends, relatives, and employees of the developer as they were here in TV.

Originally Posted by 2BNTV (Post 576558)

What does this ruling mean to future residents?

Does it affect future residents if they buy pre-owned and the bond is paid?

Does future residents have a liability going forward?

Originally Posted by graciegirl (Post 576589)

It isn't the bond paid on individual homes that is discussed here. That is not affected.

NO one can really say for sure what could would should happen to all of us homeowners if the IRS ruled in this or that way, but lots of folks try and it appears to me to be mostly speculation.

No one can concisely explain what the issue is and the IRS has been investigating it for five years now. Back then the Morses could have paid some fee but their lawyers, from what I have been told, felt to do so threatened the structure of the CDD operation. Now I could be wrong and I am frequently, but seems to me that if the Morses wanted to settle it with money they could and would.

This issue comes up for discussion about every four or five months here on TOTV and the same people take the same sides.

Lauren Ritchie a reporter/columnist/writer for the Orlando Sentinel has weighed in on this issue as well. It seems to me that THAT paper rarely says anything positive about the Morses. Wonder why?

Originally Posted by mickey100 (Post 576409)

Good point KB - yes, we the homeowners have ended up paying the legal fees. I assume at some point if the decision goes against the Morses, there may be another class action lawsuit against them to recoup any losses that residents have or will incur. For those that are not familiar with the IRS lawsuit, it contends 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.

The IRS contends that the districts' governing boards are controlled by The Villages developer, Gary Morse, and their bond sales have benefited him, not residents.:oops:

Originally Posted by Bogie Shooter (Post 576573)

How do you know that other CDD's are not run the same way as you suggest??

Originally Posted by ijusluvit (Post 576752)

I'd like to know how you have concluded that the residents of TV have paid the legal bills to contest the IRS challenge to issuing tax free bonds.

My take on this is that these funds would have to come from the Morse's directly, from profits in the sale of homes, lease and rent payments, etc. But this is money they have earned. For it to by "our money" they would have to use funds from amenity fee accounts. With the use restrictions and public disclosure requirements of those funds, I don't see how the Morses could tap into these accounts to pay legal expenses.

Originally Posted by mickey100 (Post 576759)

I read it somewhere in all the myriad of information and articles that are out there that Morse is not paying for the lawyers. It is being funded by the central districts which get there money from our amenity fees.