Caution is a natural instinct that serves us well when tempered with common sense. Paranoia is a learned process that in some gets worse with age.

I respectfully disagree with the notion that our immediate and best course of action is to “sue the Developer.” Mistakes and various other Developer imperfections notwithstanding, our community would never have grown into what it has without the leadership and vision of Gary Morse. It seems to me the best way forward is, with respect to the IRS issue, for the residents’ and Developer’s interests to be aligned where possible. At least give that a chance before suing him. The IRS ruling, while unwelcome news, is also not unexpected given the bureaucratic proclivities of our beloved tax collection agency.
In any event, the Developer still has a very large stake in the success of his commercial ventures. Likewise, we (the residents) have a large stake in preserving our lifestyle and home values. Why start fighting with each other? The common opponent here is the IRS.
Thus, I am trying to put myself in the Developer’s shoes, and ask what I would do? I don’t know much about Gary Morse except that he’s in his mid-70s, is a gifted businessman / leader, and worth a billion or more. Good for him … American Dream etc. I also have to think that he has a certain level of pride and attachment to his creation.. ie TV. He spent his whole adult life building this place. My instinct, were I he, would be to contest the issue, minimize the $$ damage, and find a way to keep the community going. OTOH, if I’m mid-70s, have all the money I’d ever need and the residents of what I created immediately ganged up to “sue me” and in general, be unpleasant about it, I think I could find myself saying “to heck with it” and set a course to Barbados aboard the yacht Cracker Bay.

Now this is "wisdom".

Thank you so much for your insights and call for harmonious problem solving.

Everybody talks about what a genius Gary Morse is for creating such a wonderful development. Did it not ever occur to him over the past decade or more that what he was doing was not legal in the eyes of the IRS? How did he reconcile this in his mind?

It seems that this is economics 101, that you can't use tax-free bonds in a profit making enterprise.

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.

Everyone here seems to have an "opinion" and it is just that, an opinion. In my "opinion", I know that I can not just go out and sell bonds. Someone has to approve the sale of these bonds and the bonds must comply with rules and regulations. Who approved and endorsed the sale of these bonds? If I buy that bond and the interest is tax free, that is a good deal for me. So...if the IRS decides these bonds are not tax free; do I, as owner of theses bonds now owe tax on these bonds. It would seem to me that if indeed the bonds are not "legal", who is responsible for the sale of the bonds to the public? I think the issue is FAR more complicated than whether Gary Morse was pulling a fast one. There are far more unanswered questions.

TexaninVA: I appreciate, respect and understand your rationale.

Let me first point out that what I said was (apparently not clearly) that an attorney should have or must be hired to follow this case and explore our options. Secondly, my personal view is that the Developer could care less about anyone or anything other than his financial interests and quite honestly I find no fault with that since this is all about business. Everything he has done and the manner in which he accomplished it tells me that is the case. Third the Developer is way ahead of all of us on the IRS thing and if he had any intentions of hiding assests, etc it is already done or in the making to do so.

If one recalls the Amenity Lawsuit filed by the POA was the only way to get the Developers's attention.

The reasons are unimportant but I abhor lawsuits and it is the last thing that I would want to do. However in my personal opinion our derrieres are up against the wall.

So far all that has been done hasn't exactly addressed the residents exposure and interests and since the residents were not a party to these agreements it seems we have been placed in a very bad situation. If the IRS decisions stands and if the Developer doesn't step up ( an unlikely happening) then one of two things will occur. We will either have to raise amenities to pay the tax bill or drastically reduce services.

While one viable option in the decision model is to do nothing I personally believe we need to begin gathering facts and potential scenarios to protect our interests.

Rubicon.......well put !

The reason to issue tax free bonds is so Someone can make money.

Thank you... nice summary.

I agree - we need to protect our interests, and be ready to step up legally if the need be.

If the CDD issued bonds to pay the developer back for the amenities -who did they issue these bonds to??? and who is the recipient of all this tax free money???

A reasoned and well thought out comment. An exception to most on this subject:wave:

tax exempt bonds
 

this is a link to the story
IRS officials: Villages not a "government" that can issue tax-exempt bonds - Orlando Sentinel

In part the article states...

I'm feeling the same way about the whole thing Asianthree. Quite frankly tired of hearing about it.

:mad::mad:That is exactly the problem here and why the IRS ruled the way it did. We as residents have NO clout. The developer controls the media, movie theaters and hand picks the 2 major CDD members who hold all the cards. Put all the spin you want to it but this has been on going for 5+years and the warning shots from the IRS sounded well before that. No matter what, if any, settlement is reached it will involve lots of $ and be assured residents will pay for it some how.:$:

POA Alert
 

For the benefit of those of you who are not members of the POA, here is the e-mail alert that the POA sent its members last night. Incidentally, if you have yet joined the POA, you might think about doing so now. If the IRS investigation does not end well, the POA is the only organization that we Villagers have to protect our interests.

IRS UPDATE – JUNE 6, 2013
On June 6, 2013, the Daily Sun, buried on page 6 of the Local Section, published the following article:
“District weighing options after IRS ruling by David Corder
THE VILLAGES - In a nonbinding opinion*, the Internal Revenue Service has ruled the Village Center Community Development District is not a political subdivision of the state. The ruling, contained in a memorandum released Wednesday to the district, means that about $364 million of the CDDs bonds could be declared taxable. ‘It’s a setback for the district, but it’s not the end of the process,’ said Perry Israel, the attorney representing the VCCDD. We’re going to be continuing with the examination process. ’Israel maintains the IRS is overstepping its bounds. ‘I’m concerned the IRS seems to still be trying to make law through the enforcement process rather than through the regulatory process,’ he said. ‘They have the ability to write regulations. They didn’t do that. What they did is they came up with a rule that’s not easy to interpret.’”
*The POA is unsure what this statement means, as this language was not found in the IRS Opinion.

In the April, 2013 POA Bulletin we advised that there were actually three questions, not just one, that had to be answered affirmatively in order to achieve tax exempt status, which are identified below. On February 23, 2009, the IRS Agent notified the VCCDD that after reviewing all of the documents, he had three questions regarding the tax exempt status of thebonds:

1. Is the VCCDD, the Issuer of the Bonds under investigation, a qualified issuer of tax exempt bonds? (This is the subject of today’s IRS finding that the VCCDD is not qualified to be an issuer of tax exempt bonds because it does not meet the criteria to be a political subdivision of the state.) It should be noted that by using the “income approach” (Revenue minus cost and expense) for determination of the acquisition price for the various amenity transfers, it made no difference to the District if the bonds issued were tax exempt or not. The issuing of tax exempt bonds by the District simply increased the Developer’s profit on the transaction, by lowering the interest cost.

2. Did the Series 2003 facilities acquisition price reflect the fair market value of the assets? i.e., were the Bond Issues properly sized to carry out the government purpose of the Bonds or were the amenity facilities overpriced and thus the bonds over-issued? (This is the subject of the April Bulletin article dealing with the valuation procedures in which the VCCDD claimed 'victory'. 3. Were the Bond proceeds used for an essential governmental function or do the nature of the facilities acquired with the Bonds result in private business use, and hence are the Bonds Private Activity Bonds? A negative response to any of the three questions could result in the bonds not being tax exempt.

The potential impact on the Villages amenities system of an IRS finding that the bonds are not entitled to be tax exempt has been discussed in earlier issues of the POA Bulletin. In a nutshell, the amenities system would be threatened if the outcome of the IRS investigation leaves the Center Districts with such large financial liabilities that the Districts can no longer continue to maintain and furnish the amenities. A complete analysis can be found in the August 2009 Bulletin, which is available on the POA website: poa4us.org. (Click on archived Bulletins) Copies of relevant documents can be found at districtgov.org, by clicking on the IRS Updates link.

The POA's Position. Because of the potential implications for Villagers of an adverse determination on valuation of the assets, the POA sincerely hopes the IRS (or a court, if litigation ensues) eventually agrees with Mr. Israel’s analysis. With respect to the entire IRS investigation, the POA has not taken a position on the relative merits of the positions of the IRS and the VCCDD / SLCCDD, although we sincerely hope that the VCCDD and SLCCDD are able to prevail in regard to all three questions. The POA's objectives in this matter are to keep residents informed of developments and to try to protect your rights by doing what we can to try to ensure that any resolution of the IRS investigation does not jeopardize your amenities or result in the costs of an IRS victory being passed on to you. We have previously written to the IRS to express our concerns, and we will continue to report to you at POA meetings, in the Bulletin, and in the E-Mail alerts to our members all publicly available news in this matter.

Speculation!

I agree Advogado. The POA has always looked out for the residents.

Another Take On CDD's
 

IRS ruling on the Villages tax-free bonds a long time coming - OrlandoSentinel.com

(kudos to ilovetv)

How would one really know?!

I'm really sorry, but I'm about to demand that the Aministrators shut down this thread, because it has become far too political, rife with unsubstantiated rumors or hear-say, or unsubstantiated "facts."

I have no personal axe to grind, here, and frankly believe that many posters do!

I have, since becoming a resident in January 2005, been strongly opposed to the always-negative approach of the POA. Yes, they may have, over the years, won some things for residents, but their on-going, relentless, negativity is, frankly, off-putting in the extreme!

My fear is that most of those who have posted an opinion in this thread have really very little knowledge of the true facts of the on-going tussle between the IRS and The Villages; indeed, their knowledge of the issue is, most likely, based upon sadly unsubstantiated "media reports."

I know that many of you will not only ignore my efforts at reasonableness, but will even work to counter them. That makes me exceedingly sad!

SWR
:beer3:

Why would you read posts that offend you so much? Let people rant if the choose to do so and there will always be rumors and false information being shared when there are human beings involved. Sorry you are so offended by this thread, but I find interesting things talked about that encourage me to delve deeper.

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.

Well said.

I understand your point completely and also agree with you Steve, as I usually do.

I support your post.

I share your concern in that even well meaning posters will confuse, scare, etc. other posters for no reason.

This is not a simple issue, and I have my doubts about the precise knowledge of those posting and advising others.

You are right when you say that the subject is not simple, but some of us have spent enough time studying the publicly available details so that we have a pretty good understanding of it. We are willing to share, in Talk of the Villages, that understanding with those residents who don't have the background, time, or inclination to delve into all the details. We are also willing to exchange thoughts and ideas about what actions Villagers can take to protect their interests.

The idea of shutting down this thread is totally absurd. This thread is about the most important issue facing The Villages today, and one that has been under-reported and misreported by both The Daily Sun and VHA Bulletin. It certainly deserves to be discussed here.

To understand the nationwide reporting of this the latest development, which is the subject of this thread, Google: irs "the villages" florida tax exempt bonds community development district

Limit the Google search to the last week.

You will see that it has been reported int the news media throughout the country. When this subject, affecting all of us, has received such nationwide attention, how can anyone seriously propose that it be censored out of Talk of the Villages??? To censor it out, it seems to me, would defeat the whole purpose of Talk of The Villages and turn TOV into a meaningless bit of fluff.

CORRECT..discussion is great, and you are correct that it "May" be an important issue. It is MAY because this has a long life, and from my perspective when I read so much MISinformation, with talk of hiring lawyers, to statements of KNOWING the developer has off shore assets specifically to flee the issue, THAT is irresponsible discussion. And irresponsible on an important issue as you say.

Right now the issue is between the developer and the IRS with us residents as very interested spectators.

If you have solid information that we all need a lawyer or should sue the developer, as has been suggested, OR know for a fact he is fleeing with assets, act on it, but a discussion of rumors on this issue serves WHO ?

PS..And certainly the snide comments on political leanings are nothing but inflammatory posts and it appears the moderator is taking steps to quell them

None of the quotes that you cite is attributable to me, and I am not sure why you imply that they are-- but they are part of free speech and, if you don't like them, you are free to ignore them. Members of TOV, I presume, are intelligent enough to discern what posts they want to believe and which ones they want to discount.

Furthermore, you may wish to correct your statement that this "the issue is between the developer and the IRS". That is, unfortunately, not the case. If it were, it wouldn't be of great concern to the residents.

Instead, the issue, right now, is between the IRS and the Center Districts (controlled by the Developer). Those Center Districts own a good chunk of our amenity facilities and need to be able to financially continue to furnish our amenity services to us. Please read the 2009 POA Bulletin article on the subject for a better understanding of the matter.

You are "spot on" for all three statements! Unfortunately the world is full of armchair legal and tax experts who seem to know a little something about everything.

In reality the IRS has issued a ruling in its investigation. There is an informal and formal appeal process and eventually a legal contention process which is available to the taxpayer before a tax case must finally be settled. Given the dollars involved, now and in the future, the possible ramifications to other CDD's, and financial strength and smarts of our Developer and his tax lawyers, I assume that this case and its outcome has a long way to go before it is settled in some negotiated way.

It took the IRS many years and a few different Agents to finally come up with a ruling. With all that, I am sure there are more than a few points of contention which will be used in the appeal process and settlement process if it comes to that.

Given the size and scope of this investigation I assume we, the public, are aware of less than one percent of all the important facts and issues. To predict an outcome at this stage is about as valid or useful as running around yelling " the sky is falling, the sky is falling".:22yikes:

IRS Bond Findings
 

Is anyone having trouble selling their property because of this issue? Who will want to buy the new planned construction with this bond liability affecting our amenities?

Has anyone heard if this matter will be appealed? Has the time for appeals ended? Is interest accruing all while this issue is being debated?

If the issue is a done deal and the taxes are now owed, who is in charge of paying the taxes and what are the plans to pay the bills?

I think it's time for the attorneys to publish a letter addressing these concerns so villagers will know where they stand and what the plan is going forward.

Frankly, I could not advise anyone to buy into The Villages until this matter is resolved and we know what the outcome will be.

I have never predicted an outcome (and I am not sure that anyone, including the involved parties, can with any degree of certainty), and I have never said that the sky is falling. Nevertheless, I and a number of other people are, thanks to Florida's Freedom of Information Law, aware of considerably more than the "one percent of all the important facts" that you mention. If you are interested in learning more, or are feeling particularly masochistic, go to districtgov.org and click on IRS updates and start reading.

swrinfla -

if you have no axe to grind, please stay out of the 'conversation' and leave it to continue! i, for one, learned a lot thanx to advogado's postings; and i hope to learn more - from all opinions!

your demand to have the thread shut down - when you have no axe to grind - seems like an oxymoron of sorts. i see no 'reasonableness' in your effort to stifle us.

so please leave the thread and allow the rest of us to continue to discuss, teach, advise, learn and consider.

thanx

Yes, pls keep the thread going, I find out more here than The Daily Sun..

I think this issue has a long time to work its way thru the process of options for them.

But assuming for a moment the ruling stands what does it it mean in $$ to each homeowner here?

I do not think I "quoted" anyone in my post and was simply showing where this thread was going. I certainly made no criticism of you or any organization.

I would not use information gained this way (message board) as any basis to make a decision on any legal matter, and this one is and will be complicated.

My thoughts were actually for non residents who may wish to settle here and there are many who read here for info, but my opinion is that this much to complicated to use this medium which is getting bogged down in other things, and bias to serve any value.

I am sorry you took my opinion as a criticism of you or any group....if you did that, imagine what folks looking in here might think.

Its All About Business
 

I believe the thread should continue. However those responding need to be cool headed. Secondly it does not help for posters to suggest subjective criteria sch as a cause suggesting residents have something against the Developer. Nor should time be wasted attacking the IRS. The fact remains that the pivotal issue is the definition of a political subdivision and does that accounting rule have application to the 2003 bond Issuance

The main focus here is not about the Developer, VCCDD, the POA, etc but about the residents and their stake/concerns in this dog fight.

Most following this thread know the subject matter. We need to stop rehashing it. The stated problem is the IRS ruled against and would do we do if all appeals, etc fail.

We cannot control what the lawyers do in defending the Developer and the Districts and we certainly at this stage of the game have no say in the matter.

The POA has followed this situation and issued information to its members. However as watchdogs for residents what have they done to protect our interests?

Here are my questions: If the IRS prevails what is the likely outcome? How will this affect our lives? Since the source of income is solely from our amenities does that mean an increase in amenity fees or a reduction in services should the District suffer the tax penalty?
How will the future financing of the build out proceed?

what can residents do to at least have some answers available should the worse occur?

But the biggest issue is that the reason we have all of these questions is no one has stepped up to say that if the worse occurs it will not monetarily affect resident. and before anyone suggest that no one knows then i would counter with then let us know what you already know as you have progressed in your fight against the IRS because surely you have laid out the possible scenarios both if you win and if you lose as to the financial implication and the sources of income to remedy a potential tax penalty and whom it will fall upon. Residents can face the realities and have them embrace them or ignore realityand have it work against them

In regard to your last point, it would be comforting if the Developer would issue a formal statement reassuring residents that everything will continue, no matter what the outcome. However, in the over 5 years that the investigation has continued, the Developer has not done so. The Developer has, instead, obscured or misrepresented the facts, via non-coverage or misleading articles in the Daily Sun. In a real newspaper, a story of this import would have been receiving front-page coverage and in-depth analysis, and we would not have to try to piece it together in an on-line-discussion site.