Kate I was hoping you'd post on this matter again. Your previous posts on this topic were very informative.

I'm wondering if you've had the opportunity to read the IRS documentation regarding this matter which has now been published, and if in your professional opinion they have grounds to pursue this? The reporters put their slant and opinion on their columns, but what does the actual IRS correspondence to the VCCDD tell you?

I know you have better things to do living in The Villages than read this stuff, but next time we have a rainy day maybe you could take a look.

Hope you're enjoying your new home in the beautiful village of Bonita!

Here's the link to the IRS documents in case anyone didn't see it.
http://www.orlandosentinel.com/media...5/47202149.pdf

While it is way too early to draw any conclusions or get anxious about the potential IRS ruling, if the ruling finally made is to deem the bonds to be taxable instead of tax free, and the CDC has to either find a way to fund the increase in the interest rate or repurchase the bonds, there would then be another lengthy negotiation or litigation (depending on the position of the developer), because the implication would be that the developer was paid too much for the properties sold to the districts. The liability would most likely revert to the developer who profited from the sale of the amenities to the district at "fair values" that would be quite different were tax-free financing not available at the time of the sale to the district. I suspect the developer will take more of a hit from an adverse ruling than will the home owners.

snok,

the developer and the district are legally separate entities. the developer will not take a hit on this, unless he decides for reasons of his own that he wishes to become involved. he was simply the seller in a series of transactions, and he has two appraisals showing that the price is reasonable. (the IRS disagrees with the appraisal methods, but that only goes to the issue of whether this was an 'arm's length' transaction. the IRS doesn't care whether the district overpaid.)

the IRS is NOT investigating gary morse. as i've said in other posts, he paid taxes on his gains. he is not liable for any taxes on the bonds because he didn't issue the bonds -- your district did.

think of it as selling a car....if you sell a car to someone who gets a loan, you get paid, right? if later, the bank realizes that the person paid too much for the car and maybe didn't fill out the loan forms right, the car doesn't come back to you, does it? well, it's the same here.

these sales were structured so that morse is simply a willing seller and the district a willing buyer.

any "liability" that morse might have would have to come from a judgment in court...if someone takes him there. but it won't be the IRS.

hope that helps.
lauren

Reply to Lauen Ritchie
 

Lauen,

If the costs resulting from resolution of the IRS investigation prevent the Center Districts from delivering the amenities that the residents were promised by the Developer, the residents will presumably take the necessary legal action to hold the Developer accountable. When amenities previously declined, the residents initiated a class action and won a settlement, as I recall, of about $43 million--now being paid by the Developer in annual installments.

The posters in this thread who are taking an "It's-not-my-worry approach" to the present situation are the benefiting today from the efforts of their neighbors who did worry, got involved, and spearheaded that class action. The rest of us owe those neighbors a vote of thanks for our ability to continue to enjoy our amenities and the lifestyle we were promised when we bought our homes.

If the IRS prevails here, it may well be class-action time all over again because it would appear that the continuation of our amenities system will, at the very least, be threatened. (In that situation, the IRS documents will provide the basis for a particularly good case against the Developer.) If events do reach that point, the residents will be very fortunate to have the Property Owners' Association to help represent their interests-- because there is no other organized group of residents that will do so.

Lauren,

Please stop referring to it as Your district. As I've said in my previous posts, it's His district!

What is it about this that you don't seem to get? Read what I said before and if there's anything you don't understand, I'll be happy to explain it to you.

Reply to EdV
 

EdV, hey, let's be nice to Lauren. Her writing may, from time to time, need to be more precise (this situation is complicated), but she is on your side here, as am I.

Minor point: The Developer is technically an "it" (The Villages of Lake Sumter, Inc.) not a "he". In fact, Gary Morse and the family may attempt to hide behind the veil of that corporation if this IRS problem really goes south, but we all know the reality of the situation. It would certainly be comforting for the Morse family to step up, at this point, and reassure the residents that we have nothing to worry about and that the family will ensure that our amenities are continued, no matter what. Instead, thus far, all we have is silence and non-reporting by the Daily Sun.

I take exception with your representation that Lauren Ritchie is a "reporter". She is not. Reporters report news without bias, just facts. It appears to me that Ms. Ritchie contrives and selectively reports components of a story that support and advance her preconceived opinions and prejudices. To her credit, I believe she acknowledged this fact in one of her prior postings. She is a columnist and not required to be objective in her writing. I do not have my head in the sand....I just wish a real reporter would write or post, "Just the facts ma'am, just the facts". Attribution and apologies to Sgt. Joe Friday.

The saddest thing to me is the anxiety among salt of the earth friends, neighbors and retirees, her biased "fishing" and seed planting has created as evidenced by some posters.

Funny thing, no one has ever told be about a Lauren Ritchie column on the economic impact The Villages has had on Sumter, Lake and Marion Counties.Things like jobs, tax revenues increases in per capita income outside TV.

Just my opinions and random thoughts. What do I know.

I have no connection with the developer. IMHO, he's not a candidate for sainthood but he has done a lot more good than bad. Many, including my wife and I have been the beneficiary of the Schwartz/Morse dream and lifestyle.

I believe that SteveZ has articulated the majority viewpoint for Villagers.

There is another group to consider
 

I have been following this subject for many months on this site and as a potential property buyer in TV I just want to comment on an earlier post from another potential buyer who indicated her investment concerns. I understand all the laissez fare post from TV residents because if I already purchased there I would feel the same way.. guess what it is out of their hands so why worry about it.
But I think there may be others besides the previous concerned buyer and me that are concerned about the outcome and possible negative ramifications for the home owners.

Also, Lauren thank you for doing your job.
You people want to see really one sided, agenda based, bias reporting read the Boston Globe.

Orlando Sentinel May 30th article re TV vs IRS
 

I also want to thank Lauren and point out that this issue brings back to light a very important question.
What exactly are you entitled to get for your monthly amenity fee? Is that in writing anywhere? If not why not?? Do you really pay and just hope the money goes for what it is intended? Who decides if the money is really being spend on amenities, if the amounts are fair, and which amenities get funded? From what I can tell there needs to be some clarifications. Why are some things funded and some not? Why pools, game courts, and golf courses but not dog parks, gyms and bowling alleys? Many Villagers love their pets as much as others love their activities. Should not the Villagers decide this? Is this the problem that spawned the lawsuit which was settled for money and promises? This lack of involvement by the Villagers in decision making is the problem. Maybe the Villagers would not have bought the right to collect amenities fees and the tax exempt bonds would never have been sold? Maybe the Villagers would have hired a different bonding firm that would have advised that the bonds could not be tax exempt for the same reasons given by the IRS? If Villagers pay the bills, they should decide. The solution to all of this could be for the villagers to self govern, and isn't really that what Florida law contemplates happening at this point in development?
Maybe it is time to vote.

As a villages wannabee, its funny to see so many different personalties from sensible to self rightous to I told you so to panic.

I wonder if bonds issued in 2003 payed a higher interest then now so if the bonds had to be issued again today with a tanked economy if they would pay a lower interest, even taxfree vs taxed? Does anyone know, not just guess but really know?

Also of course the Daily sun and the Orlando newspaper has their own viewpoints. Every newspaper has their own viewpoint, like someone said about the Boston Globe. And theyre suppose to. They all have different owners with different point of views. Whats the suprise?

Don,

You are so right. Newspapers have always had an editorial bias. If you read American History, you can see how this shaped our nation.

I think the issue with the Sentinel (and many other media and print outlets today), is that it is hard to determine where opinion ends and news begins. This truly feeds the rumor-mongering as so many people only get their news from one place.

I may not always agree with the fairly liberal Boston Globe, but the quality of their writing is excellent and (IMHO) not anywhere near the level of the Sentinel.

Ivy,

My fellow Bonita-er... I have read the IRS document awhile back - but I will try to get around to re-reading and sharing my thoughts.

The problem with TV is that there is no time.... (especially for those of us who are still working).

Kate

I plan on enjoying the Villages everyday and what ever will be will be. Personally to get worked up over something that may or may not be an issue is not how I plan on living.:beer3: :icon_hungry: :pepper2:

I understand that the IRS is not investigating the developer. I am not referring to his taxes on his gain, but to the amount of the gain itself, and wether it was properly calculated, if the cost of financing is changed. While the district is a separate entity, the sale to the district was not an arms length transaction due to the effective control of the district by the developer. The developer was in control of the valuation of the assets and, even if not the entity arranging the financing, certainly very influential in the financing. I think the asset value paid by the district was, at least to some extent, dependent on the lower cost of the tax-free financing to the purchaser. Therefore, the developer profited to some extent from the financing method used. While the developer is not subject to the IRS ruling, I still think the district will have a legitimate claim against the developer for unjust profits based on over valuation of the assets, if the district loses the benefit of low cost tax-free financing. I'm sure there are lawyers that could make a good case if it comes to it. I also suspect that, before the cost is ultimately born by the residents, it will be an issue that must be investigated by the district.