Was This A Legally Required Disclosure?
 

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Billionaire Morse

IRS questions bonds from GOP donor development - Businessweek

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

"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

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.

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?

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.

Support the POA
 

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:

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 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.

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

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
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.

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.

Newer Amenity Facilities
 

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.