To Avocado......….

As DeWilson so nicely said.

Historically, selling this unit is consistent with the Developer's master plan (all generations, not just the current family members). They have done this with several restaurants, The Villages Transportation and The Villages Entertaiment and The wonderful Furniture Store.



They start companies/services to support The Villages, get it up and going (and yes, make money) and then sell it off. This allows them to focus on their core business.......Development.


Good Business Model.

P.S. Many of us don't trust or like the POA.

His handle is Advogado. English Translation of “advogado” | Collins Portuguese-English Dictionary

Not Avocado. Avocado - Wikipedia

I may regret asking this question, but this has been bugging me.

Does anyone know who paid to create the Central Sumter Utility Co? Did the Developer buy the land and equipment and set this up out of his own pocket? (Like the newspaper or like Villages Health)

Or was it funded as infrastructure in one of the bonds?

The following Q & A was sent to all NSCUDD board members today by CDD District manager Richard Baier. I am posting what I received as a public record.


North Sumter County Dependent District (NSCUDD)
Questions and Answers in reference to the pending acquisition of Central Sumter Utility, LLC (CSU)

Q: How did the pending acquisition of CSU come to be?
A: The seller presented an offer to NSCUDD to purchase CSU in September of 2019.
Q: Did the NSCUDD Board approve the Purchase and Sale Agreement?
A: Yes, the NSCUDD Board approved the Purchase and Sale Agreement at their meeting on September 19 by a 6-1 vote.
Q: What were the parameters of the Purchase and Sale Agreement to determine a Purchase Price?
A: Each party was to engage a consultant to formulate a purchase price based on an income approach. Once the consultants concluded their purchase price, the two values would be compared to determine what the difference was. If the difference was less than 5% apart, the lesser of the two values would be the purchase price. If the values were between 5%- 10%, then an average of the two would be used. Over 10%, the Consultants would come together to reconcile their differences and come to a conclusion as to purchase price.
Q: Any other inspections?
A: Yes, the NSCUDD Board also engaged Jones Edmunds to perform a facilities condition assessment report. The seller has engaged a firm to conduct a Phase I environmental assessment.
Q: Have the valuations been completed, and if so, what are they?
A: Yes the valuations have been completed and presented to the NSCUDD Board at their meeting on October 17th.
Q: How far did the consultants forecast income in their income approach?
A: Both consultants forecasted out 30 years in their respective reports when establishing income and expenses.
Q: What were they?
A: The NSCUDD consultant valued CSU at $93,880,000 and the Seller’s consultant valued CSU at $103,056,159.
Q: How did these values fall within the parameters of the agreed upon and Board approved agreement?
A: The difference was 9.77% which was between the 5%-10% range which indicated a purchase price of the average of the two values.
Q: What is the agreed upon purchase price?
A: The average of the two valuations, which was $98,468,075.
Q: Did the valuation include a provision for Renewal and Replacements funds?
A: Yes, the income approach included an allocation for R&R funds annually. Initial R&R allocation is approximately $180,000, with the fund growing to approximately $1MM over the next 5 years.
Q: What happens now?
A: The District will start preparing for financing of the acquisition of CSU.
Q: How will the financing be done?
A: The District will work with the Financial Advisor, Underwriter, Bond, Tax and Issuer Counsel to start the process to issue debt to purchase.
Q: What type of debt will be issued?
A: Tax exempt financing will be issued for the purchase price plus cost of issuance and any other required funding.
Q: Who will determine the water and waste water rates?
A: The NSCUDD Board will determine the water and waste water rates in a public hearing. The request to advertise the Rate Rule adoption was approved by the NSCUDD Board on October 17th. This Rate Rule Adoption will have no impact on the current North Sumter Utility (NSU) rates.
Q: Why does NSCUDD want to purchase CSU?
A: As a local government, NSCUDD is a Utility Dependent District with a mission to manage, oversee utilities as a provider of public service. There is no focus on profit, only to serve the public as a transparent public utility.

Did anyone ask the question: How will transferring the ownership of CSU to NSCUDD, resulting in the utility no longer paying County property taxes, effect the tax rates of the homeowners in the county going forward? That is a question that I am sure many Villages homeowners would very much like to hear the answer to.

If you would look at Exhibit A found in the Offer to Sell ....
Coversheet


A figure of $315 per month or $2,205 total through July, 2019 is listed for property taxes.

Hmmmm, if I multiply the $315 per month by 12 it equals $3,780 per year for property taxes. That figure is not much higher than the property taxes on my modest Sumter County home that is worth less than $300,000. The average of the two appraisals on the Utility is about $98.5 Million dollars. What's up with that?

From the Valuations found here -> NSCUDD

"The Buyer retained PFM Financial Advisors LLC (“PFM”) as its valuation consultant. Using the income approach PFM has come to a Preliminary Valuation for CSU of $93,880,000 as of October 15, 2019.

and from Stantec

"Section 5 “Purchase Price; Payment” of the signed Agreement for Purchase and Sale (“agreement”) states: “Both Seller and Purchaser shall each select a separate valuation firm… Each valuation shall be based upon, and prepared in accordance with, the income approach of valuation.” The income approach calculates the net present value of income available for debt service net of debt service coverage and contributions to a Renewal & Replacement Fund (R&R fund). As such, the valuation discussed herein reflects a projection of annual revenues net of projected annual expenses such that projected annual income is calculated for 33 years (FY 2019 thru FY 2052)1.

I understand the appraisals, that's not what I am trying to figure out. I am trying to reconcile how a taxable entity (under current ownership) valued at around $98.5 million pays only $3,780 in property taxes?

The property tax value of my house is not based on "the valuation discussed herein reflects a projection of annual revenues net of projected annual expenses such that projected annual income is calculated for 33 years (FY 2019 thru FY 2052)."

Yes, I understand that. But I am still struggling to reconcile how a house with a value of roughly $300 thousand pays about $3 thousand a year in property taxes and an entity with a market value of roughly $98.5 million pays under $4 thousand a year in property taxes. That would seem to imply that the entity with a $98.5 million market value is only accessed for taxes at about $400 thousand. That's a very large disconnect between accessed value and market value. The value difference seems way to good to be real for the property owner, or maybe not considering the current owner?

Utility costs are pass-thru costs. Rates are based on costs. So, you should be cheering property tax expenditures are low


:boom:

Does that imply that utility providers are subject to a different mill rate and/or accessment process than other residential or commercial property owners? Just trying to understand how an entity with an appraised value of roughly 98.5 million is only accessed at about 400 thousand? I know we all wish our homes were accesses at 4/10 of 1% of their market values, how sweet would that be! And the property in question is not my utility provider in District 1.