Originally Posted by KeepingItReal (Post 689563)

Bloomberg Articles

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.

Originally Posted by NJblue (Post 689901)

The going forward implications of this is actually more interesting to me than the amount that the IRS claims that is owed to them from past interpretations of the law/tax code. Quite frankly the amount that is owed is unlikely to be enough on a per household basis (roughly $6,000) to make anyone really change their mind about living here. How, from whom or if that ever gets collected is an interesting discussion, but the forward-looking ramifications are more interesting to me.

First, I'm not sure I agree that the tax exempt versus taxable status of the bonds really has an impact on the selling price of the amenity. (Which is why I fail to see how the developer was the direct benefactor of the tax-free nature of the bonds.) If, for example, you want to buy a car, the seller of the car does not base his price on whether you have to pay 8% interest or 5%. Your negotiated price is based on the value of the car. However, if you are able to secure a 5% loan from a relative versus paying the going rate of 8%, it is you who will benefit - not the seller of the car.

Of course, our situation is a bit more complicated than this. In our case, the amenity fees were set based on the availability of low-rate tax-free bonds. If this changes in the future, it may be necessary to sell new houses with a higher amenity fee associated with them to pay the higher interest rate.

What happens to existing amenity fee contracts is a different issue. I haven't read the fine print of my agreement lately so I don't recall if there is a loophole which allows them to be raised higher than CPI (perhaps by a vote???) If not, I fear that the central CDDs will be forced to cut back on some of what they provide. Personally, I would rather pay an incremental increase in the amenity fee than to see services cut back.

Originally Posted by njbchbum (Post 687921)

thanx. avogado! read it! now gotta ask a] is this related to the earllier decision that amenities were sold at less than their real value; and 2] this is a non-binding determination, is it not?

Originally Posted by graciegirl (Post 690051)

All of this debate will not change anything. I betcha that after it is all said and done, the fines will be reduced and the CDD will remain without the inmates running the asylum.

Originally Posted by Bucco (Post 688078)

Appears that Walt Disney missed your economics 101 class.

This is not as simple an issue as most make it to be. I know nothing was done in secret....everything was on the table, and as one poster stated..this is complicated..those rushing to judgement to post what they just simply KNOW is right, are just WRONG.

This is neither support for or against the developer in anyway...above my pay grade. I do recall about 13/14 years there were free classes to explain it all, and to my knowledge nothing was hidden nor any question left unanswered.

Originally Posted by manaboutown (Post 688598)

These forums provide me with priceless information and BOTH sides of the story. That is why I follow them and post my own thoughts and perspectives now and then. The IRS issue is a HUGE financial black hole at present. I want to hear (or read) it all and make my own decisions.

Originally Posted by Advogado (Post 689065)

True, now may be a better time to issue replacement taxable bonds. However, the current bondholders would presumably claim that the lower current interest rates have increased the value of their existing bonds and thus the current bondholders' losses from the Center Districts' breach of the Districts' warranty that the current bonds are tax exempt. Furthermore, who knows what interest rates will be when, and if, it is necessary for the Center Deistricts to issue replacement bonds. In summary, it cannot be predicted how the issuance of replacement bonds, if that becomes necessary, would work out--but it wouldn't be pretty.[

It depends on the deal. Since you have no numbers,even you cannot predict the outcome. Pretty is in the eye of the beholder.

Originally Posted by villagerjack (Post 689767)

First, there is no hostility, only unanswered questions. Second, I don't have CUSIPS handy.

Second, This is the quote from the lawyers.

“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.”

Where is it wrong? Do you have the Legal Opinion they issued? It is not enough to say "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? "

Originally Posted by PennBF (Post 690097)

It is absolutely astonishing that anyone would wish for and want to be governed by a "non elected" person over representation by persons elected by the people. It is impossible to discuss this since it is so foreign to what we all stood for and fought for. It is totally possible that we as resident will be assessed in the thousands of dollars because of a failure to apply the proper accounting system taxable controls. Enough said..:shrug: