[mickey100]

Originally Posted by EdV

...

I see a big difference between the words "seems likely" rather than "I'm confident" or "I'm certain" or stating unequivocally that something will or will not happen. Subtleties of language. And I didn't try to predict what the IRS or any government agency would do or how they would rule, or certainty about whether housing prices would go up or down. Those are factors well beyond our control. I was talking about the reaction of residents if faced with a loss of their amenities. And since I am a resident and have discussed this issue with other residents, I guess I'm qualified to voice an opinion regarding possibility in that area.

[EdV]

“seems likely” is making a prediction!

And where in my post #294 did you see me use the words "I'm confident" or "I'm certain" or stating unequivocally that something will or will not happen. In fact I said it was speculation did I not?

Or were you referring to someone else’s post as being “foolish”? Just trying to understand what your point is.

[mickey100]

Originally Posted by EdV

“seems likely” is making a prediction!

And where in my post #294 did you see me use the words "I'm confident" or "I'm certain" or stating unequivocally that something will or will not happen. In fact I said it was speculation did I not?

Or were you referring to someone else’s post as being “foolish”? Just trying to understand what your point is.

I never referred to any of your posts. I'm trying to see your point in re-posting my posts.

[Advogado]

A reminder: POA meeting Tuesday 7:00 p.m. at Laurel Manor. The IRS investigation will undoubtedly be one of the main topics of discussion. (Sorry I can't attend since I am up north for the summer.)

[Advogado]

Originally Posted by mickey100

I never referred to any of your posts. I'm trying to see your point in re-posting my posts.

Mickey100, from what I have seen, both you and EdV are truly interested in understanding the implications for residents of the IRS investigation. Suggest you shake hands and be friends.

[mickey100]

That would suit me fine.

[justjim]

Originally Posted by Advogado

A reminder: POA meeting Tuesday 7:00 p.m. at Laurel Manor. The IRS investigation will undoubtedly be one of the main topics of discussion. (Sorry I can't attend since I am up north for the summer.)

We too are up north. It would be terrific if somebody who attends the meeting would give us an update (if there is one) on the IRS investigation.

[mickey100]

I hope there will be one in the next POA bulletin. You can find them online at:

Property Owners, Association of Florida

[Advogado]

This is from Fitch, a bond-rating agency: IRS Ruling Unlikely to Impact Village's Residential CDDs

I would feel better, however, if Fitch hadn't qualified its opinion by saying that is "unlikely" that the ruling will impact the bonds issued by the residential (numbered) districts. Those are the bonds that are "attached" to our houses.

[Mikeod]

I attended the POA meeting last night. The president discussed the IRS issue at the start of the general meeting. She pointedly differentiated between the bonds for the infrastructure which are attached to our homes and not issued by the central district, and the ones issued to purchase the amenities and income stream. She mentioned that the guarantee for the bonds is the amenity stream. She commented that the real risk to residents is the depletion of amenity funds to pay whatever costs arise from a negative result.

She expects the district to fight this to the end because if the district cannot use tax free bonds to purchase amenities south of 466, the net income to the developer will be significantly reduced. She related a formula that I had trouble following but appeared to be: total appraised value including revenue stream value less bond face amount less bond service (interest payable over the life of the bonds) equals the net to the developer. Therefore, the higher the interest (tax free vs. taxable), the less goes to the developer.

After all that, she indicated she expects the developer will not allow the residents to be negatively affected whatever the final ruling. She referred to the developer settling the lawsuit in 2008, rather than fighting it.

[villagerjack]

Originally Posted by Advogado

This is from Fitch, a bond-rating agency: IRS Ruling Unlikely to Impact Village's Residential CDDs

I would feel better, however, if Fitch hadn't qualified its opinion by saying that is "unlikely" that the ruling will impact the bonds issued by the residential (numbered) districts. Those are the bonds that are "attached" to our houses.

I don't think they did.

"Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) WILL NOT IMPACT Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook."

The HEADLINE you quote, was likely written by someone else, not FITCH.

[Advogado]

Originally Posted by villagerjack

I don't think they did.

"Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) WILL NOT IMPACT Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook."

The HEADLINE you quote, was likely written by someone else, not FITCH.

The headline is on the Fitch website, so, unless their website was hacked, I guess Fitch must have written it. I don't know how Fitch reconciles the headline with the wording in the text of the article--maybe just poor proofreading. In any event, with or without the word "unlikely", the gist of the article is still good news for Villagers. I read the latest IRS Memorandum in the same way as Fitch does, but it is still reassuring to have a bond-rating agency make a public statement like Fitch's.

[EdV]

What’s next for the IRS vs. the VCCDD district?

Well, the IRS having finally ruled (after 3 years) in a Technical Advise Memorandum that concluded that “the Issuer is not a division of a State or local government”. So the next thing that we should expect from the IRS is a Proposed Adverse Determination letter to the two special CDDs.

As described in this IRS procedural document, the developer will have 30 days to respond and request a final appeal. That request can and probably will include a request for an extension. This appeal is sent to the IRS Tax Exempt Bond (TEB) division which has been handling the case from the outset.

The TEB will review the appeal and then eventually pass it on to the Appeal division for a final ruling. This is where the real negotiations will actually transpire between the developer and the IRS. It’s the highest level where such a case like this can go because opening a case in the US Tax Court is not an option.

There are only two outcomes from this stage. Either an agreed settlement is reached or the Proposed Adverse Determination becomes a Final Adverse Determination and the IRS goes after the taxes due from the bondholders.

The latter seems unlikely to me because the developer has his entire family and longtime business associates involved with the development and operation of TV. I just don’t see him subjecting them to the embarrassment and ridicule in the press that would surely result from that.

Now it’s true that he let dispute by certain POA member go all the way to civil court, but he did settle it out of court to the tune of $40 million which resulted in the widening of the paths north of 466 among other things.

[downeaster]

Originally Posted by Advogado

This is from Fitch, a bond-rating agency: IRS Ruling Unlikely to Impact Village's Residential CDDs

I would feel better, however, if Fitch hadn't qualified its opinion by saying that is "unlikely" that the ruling will impact the bonds issued by the residential (numbered) districts. Those are the bonds that are "attached" to our houses.

Originally Posted by villagerjack

I don't think they did.

development for retirees located in central Florida. VCCDD, created by the developer to sell the development's recreational facilities to the residents, issued $426 million of tax-exempt bonds to finance the purchase of the facilities.

Following a five and a half year investigation, the IRS ruled on May 30 that VCCDD is not a political subdivision and consequently cannot issue tax-exempt bonds. Therefore, the existing bonds of VCCDD were decla"Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) WILL NOT IMPACT Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook."

The HEADLINE you quote, was likely written by someone else, not FITCH.

19 Jun 2013 3:28 PM
IRS Ruling Unlikely to Impact Village's Residential CDDs
Fitch Ratings-New York-19 June 2013: The recent Internal Revenue Service (IRS) decision regarding the Villages Center Community Development District (VCCDD) will not impact Fitch-rated Village community development district bonds as they have different governance structures, Fitch Ratings says. Village Community Development District's No. 5 (CDD No. 5) and No.6 (CDD No. 6) special assessment bonds are rated 'A', with a Stable Outlook.

We are not aware of any current or pending investigation into the taxability of bonds issued by CDDs No. 5 and 6 and believe their independent governance structure insulates them from the IRS decision. They are exclusively residential and governed by representative boards elected by residents within the districts. The developer has no control over the internal affairs of either district. In our view, this structure is positive as the interests of the developer, property owners and bondholders are not always aligned.

We do not rate bonds issued by VCCDD. The Villages is a popular red taxable. The IRS noted the developer's exclusive control of the VCCDD board over the past 20 years and actions taken by the developer during that period to perpetuate that control. The IRS stated that the VCCDD board, by not being "accountable, directly or indirectly, to a general electorate" did not meet the definition of a political subdivision under Section 103 of the Internal Revenue Code.


There seems to be some contradictions and/or confusion in the above report from Fitch. Or, are they mixing the two CDD's? Aren't 5 and 6 in SLCDD and not part of the IRS decision?

I would also like to hear Edv's opinion on this.

[EdV]

The CDDs north of Rt. 466

CDDs 1 through 4 – Residential CDDs not under IRS investigation

VCCDD Village Center Community Development District – Consists of all of the amenities scattered throughout the area north of Rt. 466. Developer owned/controlled and under investigation by the IRS

The CDDs south of Rt. 466

CDDs 5 through 10 – Residential CDDs not under IRS investigation

SLCDD Sumter Landing Community Development District - Consists of all of the amenities scattered throughout the area south of Rt. 466. Developer owned/controlled and under investigation by the IRS