[rubicon]

Originally Posted by KeepingItReal

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.

I have been saying since this situation was discussed in 2009 that that the Professional Liability insurance carriers for both the Developer and the district needed to be notified.

Too many posters are beating that same dead horse, defending the Developer, etc. But the bottom line is what are we as residents going to do to protect our interests? IMHO that's all that matters now

[rubicon]

Originally Posted by NJblue

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.

Just a thought one of the issues the IRS raised in their initial filing had to do with the manner in which the flow amenity income was calculated which was also their question cocnerning the physical assets.

As to the amenitity fees posters keep reaching for agreements. However, depending on the outcome I personally feel that the status of that agreement is going to depend on the size of any IRS penalty, if they prevail, and to whom it will be attached.

Because the district is defending this with our amenities fees, which brings into play another question it seems likely at this point a likely target. I believe it was in the POA or perhaps the Village voice ahs to some $250,000 expended in defending this action and that was about a year ago.

[kbace6]

Originally Posted by njbchbum

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?

If this is in fact a non-binding descision, then why is everyone so upset? Did they not read the entire article or is there something about a non-binding descision that IS binding?

As far as I can tell this is mearly only a step in the direction to what everyone is so upset about in the many (not all) posts in this thread.

Am I missing something?

[rubicon]

Whew! Gotta take a break, I am exhausted

[mickey100]

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[njbchbum]

based on personal experience, i share many of the same feelings re homeowner associations as villagerjack. if anyone does not now have a poor opinion of cliques, just wait until your neighbors replace the developer reps and start running the place. if that were ever to happen, i think i would have to start a movement on the historic side for secession!

btw - the 6/12 amenity auth comm agenda has been posted and irs updates is an item untder the reports and input section; audience comments is another item listed there!
http://www.districtgov.org/PDFView/P...20130612aa0201
wed 6/12 1:30pm Savannah Center - Ashley Wilkes Room

[graciegirl]

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.

[gomoho]

Gracie - one can only hope!

[villagerjack]

Originally Posted by graciegirl

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.

I hope you are correct Gracie. The Dell Webb facility I referred to previously started in 1995 with a buildout of 8200 homes. They still have 1000 to sell. Last year tbey sold kess than 100 new homes. Some homes are selling at just above prices paid in 1995. Average selling price is $112 s/f. Amenity fees $500/3 months. Taxes are lower than here. After 18 years they still have amenities to build because their formula is based upon number of rooftops as compared to TV Morse who gives us a lot of these facility/amenities up front. They attract very few snowbirds so their golf courses, tennis, pickleball are used heavily at all times of the year. Lack of sales is also attributed (by me) to inability to attract snowbird buyers who do not have to sell their homes. We were there 10 years. Teams monopolize Tennis, Pickle Ball, Croquet, pools etc. When we came for the winter of 1997 we were told that there were 800 members on the pickle ball club and we would have to wait a year to play. That was after owning there 8 years. Niw they have a modified Chelsea. So for all you folks who think that it is wrong for Morse to have control, I caution you to be careful. You may get your wish. I will put my future in the hands of the Morses anyday rather than some of the folks on this board who are dying to get control, even if it means denegrating Mr. Morse by comparing him to Madoff. Disgraceful, really.

[rayschic]

Originally Posted by Bucco

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.

Nothing is being hidden at all. Anyone that desires can read all the IRS Updates that have been posted on the districtgov website since this began. You can read all the letters that went back and forth over the years.

Village Community Development Districts

[rayschic]

Originally Posted by manaboutown

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.

If you want to read it all. Just click on this and start at the very beginning. Has all the info you need about the IRS issue.

Village Community Development Districts

[rayschic]

[quote=villagerjack;689098]

Originally Posted by Advogado

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.

I believe the numbers you are looking for are on page 4 of this link.
http://www.districtgov.org/images/IR...M%206.5.13.pdf

[PennBF]

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..

[rayschic]

Originally Posted by villagerjack

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? "

Here's a link to the decision.

http://www.districtgov.org/images/IR...M%206.5.13.pdf

[graciegirl]

Originally Posted by PennBF

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..

We all moved here knowing just how this place worked. We "voted" with our wallets. No one forced us to come here, it was our own free choice and we can leave in exactly the same way. I do not see a CDD as anything but a very well designed deed restricted community and I liked it when I saw it.