How does this affect us? We just purchased a home in TV and have not closed yet? It's in Sumter Co. We have been told that we have a monthly bond fee. Although it is low they say. Will this be affected? This is disturbing news.

No. The infrastructure bond for your home is not part of this IRS dispute. It involves bonds issued by the central districts to purchase amenities from the developer.

Mike, thanks for clarifying that. So how, if at all, could this affect us homeowners????

Any definitive answer is pure conjecture at this point

Worst case scenario I've seen proposed on this board is that the central districts wind up paying tax, interest and penalties which depletes the amenities funds to the point that amenities suffer. Others have wondered if the homeowners will have to cough up those funds, which doesn't appear possible since the dispute is with the central districts which are separate from the residential districts.

There is a history and timeline of the dispute on the district website. I would also direct you to the POA website and look at back issues. They have, to me, the most complete discussion of the dispute.

At a recent POA meeting, the president made several points. One, this isn't over by a long shot. Two, the developer, through the central districts, which he controls, will fight this aggressively because a negative result will severely reduce his take from the sale of amenities south of 466. Third, her belief that the developer will not allow the residents to suffer if the finding goes against TV.

But, as posted above, nobody really knows how this will end and the net effect, if any, on the residents.

Hope this helps.

Thanks Mike, you put it in words I can understand!

My friend and I are due to visit TV next week with a view to purchasing a home. I find all the comments interesting but also somewhat disturbing. I fail to understand why over $300,000 was paid in legal fees etc. by the home owners. My friend and I were first attracted to The Villages because it was a well run community and it provided a lifestyle that attracted us both, we are now having second thoughts. We have absolutly no problem with how much money the Morse family have made, they had a good idea and it has paid off for them. However some of the comments on this thread would seem to indicate that certain residents have severe doubts as to the honesty of the Morse family. I would like to ask these residents why they continue to live in your community? To end we had originally planned to purchse our home on this trip but unless we are given a witten guarentee that we will not be financially harmed in any way, if the final ruling on this matter goes against The Villages, either by reduced services or have to pay additional $'s, we most certainly will NOT be puchasing our new home in The Villages at this time.

Then I can assure you that you won't be purchasing your new home in TV at this time.

I'm afraid EdV is right...you almost certainly will not get any written guarantees.

But on the other hand, I think you would be making a mistake to put too much emphasis on the what the doomsayers say regarding this issue. Do your own research and make your own decision of course. But I would strongly suggest you not make a decision based solely on what you've read on this site.

A lot of residents, myself included, are wondering why the home owners are paying $300,000 per month in legal fees for the developer.

As was stated previously, you will not be given any written guarantee that you will not be financially harmed in any way.

Rumor Control please! The figure you're quoting is the TOTAL legal expense for the five years this has gone on. Less than the cost of a bad divorce. $3.00 per resident.

And many of the critics continue to sing the same song with the same lyrics, year after year after year after year.

And they still have the same beautiful lifestyle, year after year etc.

Worst case scenario?
 

I’ve been watching the various information about the IRS ruling. Is it possible to know what is the worst that could happen. There are so many of you that understand this issue. This is way beyond my ability.

If you want some assurances in writing, here is what you will get if you do decide to purchase:

1. The Declarations and Restrictions document (contract) that you sign when you purchase a home in TV states that any increase in the amenity fee paid to the one of the two special district(s) cannot exceed the increase in the consumer price index in any given year. And no “special assessment” fees are provided for in that document.

2. Other than the amenity fee, the special district(s) have no taxing authority over you or your home in TV. They can exercise a lien on your home if necessary, but only for unpaid amenity fees.

3. The annual maintenance fee that you pay to your numbered district for maintenance of the common grounds within your numbered district is set by that district’s resident elected board of supervisors, and not by the developer or his two special districts.

[quote=bike42;710462]As I recall, the last published figure for total attorney fees was $700,000. That was some time ago. The total must be about $1 million now. However, as long as we continue to get our amenities at the promised level, I guess we can't complain as Villagers. (Maybe we can as US taxpayers, since we have been subsidizing the Developer.)

There is one consideration in this regard that hasn't been mentioned in any of the posts on this matter: Every year, the amenity fee seems to be increased by the amount of the CPI. The CPI is supposed to be a cap on increases. If the Center District were not spending amenity-fee revenue defending the Developer's use of tax-exempt bonds, maybe our annual increases would be less. But who knows?

That consideration aside, in all fairness to the Developer, SO FAR it appears to be "no harm, no foul" and no basis for another class action by Villagers. We will see what the future holds.

[quote=Advogado;710493]

That still doesn't answer the question of why are the residents paying to defend the developer's bottom line?

Actually Advocodo that’s not the way it works. You see, if you read your contract carefully in the amenities section you’ll find this carefully worded declaration:

“the Contractual Amenities Fee is a fee for services and is in no way adjusted according to the cost of providing those services.”

What this actually means is that they can raise the fee if the CPI goes up but are not required to lower it if it were to go down. Furthermore, it means that they can (and do) subtract the actual cost of running the amenities from the amenity fee income and then hand over the balance to the developer as management fees. (see the published VCCDD budget)

That’s something most TV residents just don’t understand.

For those who are interested in staying informed, here is today's news that was posted on the Distict Gov website: http://districtgov.org/IRSupdate.aspxl

Still no resolution of the dispute. It will be interesting to see the Daily Sun / VHA spin on this.

[quote=Advogado;710493][quote=janmcn;710509]Hey, I am not happy about the whole situation.

But to answer your question, technically the Center District, as the issuer of the purportedly tax-exempt bonds, is paying its attorneys to defend its actions. My point in my earlier post is that what the residents are entitled to, in exchange for our amenity fees, are the amenities at the same level as when our house was originally sold by the Developer. As long as we get that, we are not hurt by the District's paying attorneys to defend what is really the Developer's financing scheme.

IF the attorney fees and, more importantly, the other costs resulting from loss of the tax-exempt status of the bonds render the Center District financially unable to continue to provide the amenities, THEN we have a basis for a claim against the Center District and the Developer. But for right now, life goes on.

I don't think that you and I are in disagreement.

The Daily Sun has reported on this in today's edition, on page C5, in an article entitled "Attorney refutes IRS memo regarding tax-exempt bonds". The reporting is straight forward, but it once again fails to give the reader the background information necessary to understand what is going on.

"Attorney refutes IRS memo regarding tax-exempt bonds" Am I correct in interpreting this to mean The Villages is telling the IRS they do not know what they are talking about?

What would you expect the Attorney for the developer would say ?? The min problem is the VCCDD set up. Those who don't know, the VCCDD controls most fiancial decisions north of 466. The committee that makes the actual decisions are "elected" by the property owner in that district. The only property owner in the VCCDD happens to be the developer. This district is bounded by the Spanish springs business area and there are no residents living within those boundaries. I have little faith in the Attorney Perry Israel and know from experience that attorneys love to drag out cases. Simply put, the longer a case lasts, the more money a attorney makes.

Wow!!! You go dudes! After much painstaking thinking. And reading about this matter, I've decided to have some faith. The developer is obviously a pretty wise individual and has a truck load of attorneys working for him. This is really his issue. The residents are not involved in the matter. The people the developer has set in place to run TV and keep it running smoothly have done an outstanding job. My opinion: Relax and enjoy your beautiful community, my father always said.. Don't worry about something until you have something to worry about! Just saying...

Nightmare
 

Dreamer I love your optimism but there is a but. Your statement is not quite correct, "If" the IRS rules against the bonds being tax free there is no doubt we might have to pay up. As I said in an earlier posting the Developer has total control over the VCCDD and the election of the committee members. It is my understanding that the VCCDD sold the bonds in question to purchase properties. Now here is where things get sticky. It is important to realize the VCCDD represents the Villages Residents eventhough it is controlled by the Developer. YThe VCCDD sells the bonds on our behalf to buy properties from the Developer. The Developer pockets a nice profit, and we (the Villagers) must pay back the borrowed money (the bonds). So, who's responsibility is it to pay if the IRS says no to the ineligible tax free bonds.

I do not believe the residents are responsible for the bond total no matter what the result of the dispute. The financial transaction is between the VCCDD and the bond purchasers. We are not in the loop. Worst case, IMO, is that the VCCDD has insufficient funds to maintain the amenities due to the costs of IRS tax/penalties, and recalling and reissuing the bonds as taxable. However, we have redress if that occurs.

I do not believe the residents are responsible for the bond total no matter what the result of the dispute. The financial transaction is between the VCCDD and the bond purchasers. We are not in the loop. Worst case, IMO, is that the VCCDD has insufficient funds to maintain the amenities due to the costs of IRS tax/penalties, and recalling and reissuing the bonds as taxable. However, we still have funds controlled by the AAC that perhaps could be brought to that problem..

If what you say is true and residents are "not in the loop", why are the residents paying the legal fees to protect the developer's bottom line? This figure has been estimated to be already approaching one million dollars. If this is true and this amount has been paid from the amenity fees, what was that money originally earmarked for?

the one HUGE worry!!!!
 

Sure they do

The legal fees are being paid out of VCCDD funds, part of which is our amenities fees. The VCCDD has other income sources beyond our amenities fees. Don't forget the VCCDD only gets amenities fees from north of 466.

Just curious. Are you saying residents south of 466 don't pay amenity fees?

No. There are two central districts that collect amenity fees. VCCDD for those north of 466, and SLCDD for those south.

Oh, thanks!

Apparently, in order to avoid potentially digging himself into a deeper mess with the IRS, the Developer has stopped selling amenity facilities to the SLCDD until the current IRS investigation is concluded. Thus, the amenity fees for the unsold facilities south of 466 still go to the Developer, who is still incurring the costs of providing those amenities.

It would be nice if the Daily Sun (or maybe the VHA or POA) would provide residents with an unbiased, basic explanation of the details of the amenity system and its current status since that system is the reason that we all bought here and its prior breakdown engendered the successful class-action suit against the Developer.

Thanks, you're right. I should have known that below 466 our fees still go to the developer since he still owns the amenities.

Who
 

Just who do you think the VCCDD are???? Who do you think provides the funding for the VCCDD ???? ALAS !, it is we the residents !!!!

I believe the VCCDD is a board comprised of representatives of the owner of the town squares, I.e., the developer, not the residents. That appears to be the central problem the IRS has with the tax-free bonds. Essentially, there is no path for resident input or control within the VCCDD, thus the ruling that the VCCDD is not a political entity with the ability to issue tax-free bonds.

Essentially the bonds were issued to purchase amenities from the developer by a developer controlled board with the profits going to the developer. To me it appears to be a mechanism for the developer to change ownership while still exercising control and profit at the same time.

Understand, I live here and like it here. Should the IRS dispute have never happened, I would not have given the transfer a second thought because the successful result of the lawsuit set a precedent for transfer of amenities that seems to ensure their continuation.

From the district website:
Governance of the Village Center Community Development District is accomplished by a five member Board of Supervisors, elected biannually, as described in Chapter 190.006, Florida Statutes. Inasmuch as there are no residential properties contained within the boundaries of the Village Center Community Development District, members of the Board of Supervisors will continue to be elected by the landowners of property within the boundaries of the District.

Latest development-- Notice of Proposed Issue from the IRS
 

On August 15, the VCDD posted the latest IRS communication (an August 13 Notice of Proposed Issue) on the VCDD's website: http://www.districtgov.org/images/IR...-IRSupdate.pdf

The upshot of this is that the IRS does not agree with the VCCDD's attorney's arguments and is sticking with its position, explained earlier in this thread, that the VCCDD could not legitimately issue tax exempt bonds.

That's some Catch, that Catch 22!