Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#31
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#32
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What About The Disney Bonds?
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My understanding has been that The Villages bond issuances for the construction of utilities, roads and common facilities in the districts were closely patterned after how Disney financed much of it's development in Orlando, particularly the City of Celebration and other residential developments they've done in and around the theme parks. But I've never read about any IRS challenge of the Disney bonds. Or have I just missed that news?
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Politicians are like diapers--they should be changed frequently, and for the same reason. |
#33
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Residents?
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The other party that may be at the most significant risk is the law firm or law firms who issued the legal opinions at the time of each bond issuance that each specific issuance was tax exempt. Both the issuer (the Developer and the CCD's) and the buyers of the bonds relied on that legal opinion. The law firm almost certainly contracted with a bonding company to insure the risk created by their issuance of an opinion. Even if they didn't, most law firms are organized as partnerships or limited liability corporations for the specific purpose of limiting liabilities such as this. So even if a ruling favored the IRS, the first party in line to assume the costs of a reversal of the tax exemption would be the law firm and their bonding company, then the issuer, then the holder of the bonds. And like I said, I can't see how the residents are at risk at all. But one thing is for certain--even if a ruling favors the IRS, there will be additional years of litigation over who will actually pay any resulting unpaid taxes.
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Politicians are like diapers--they should be changed frequently, and for the same reason. |
#34
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I always took the position of not being too concerned over this issue as I always thought it would be many years before this would get resolved. If I had to stay up nights worrying over this issue, I would have never moved here. Why worry when you have no control over something. IMHO
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"It doesn't cost "nuttin", to be nice". MOM I just want to do the right thing! Uncle Joe, (my hero). |
#35
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Good question. I have often wondered that myself. However, I have not reviewed the operations of Celebration and The Villages side-by-side so I cannot address the similarities or differences. "The devil is in the details." There are also a number of CDD type communities in other states. But, it appears that the IRS' current use of the 10% rule concerning the private security or payment test pretty much singles out The Villages.
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#36
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My opinion, and my opinion alone, is that the residents are liable precisely because of what you stated. "Obligors to repay the bonds." How this shakes out is anybody's guess.
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#37
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I have never known a lawyer/firm to incur liability for giving bad advice unless there was personal gain involved. The recipient of that legal advice can either accept that advice or reject it. Once the recipient accepts that advice it becomes his/her position. But again, that's my personal understanding and opinion.
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#38
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The first party is the bond holder and the second would be the party that issued the bonds. Remember here that technically the VCCDD issued the bonds on behalf of the village residents. In this case I believe there are facts that will alter that view. Again my personal opinion. My statements are only meant to stimulate thought and discussion. Please consider my caveats throughout this thread.
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#39
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Underwriters and Bond Counsel must be very nervous.
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"All that is necessary for the triumph of evil is that good men do nothing" Edmund Burke 1729-1797 |
#40
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While I agree they must be nervous, they rely upon the statements and information provided by the client. This could be an epic "he said" "they said" situation when it plays out.
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All the great things are simple, and many can be expressed in a single word: freedom, justice, honor, duty, mercy, hope. Winston Churchill |
#41
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The answer is: The original, shotgun attack on CDDs by the IRS could well have made all CDD bonds taxable. However, as time passed, the IRS seemed to conclude, without ever admitting it, that it had bitten off more than it wanted to chew, and narrowed its rationale so that it would only make Villages Center District Bonds taxable. The current IRS rationale would only apply to The Villages because apparently none of the other CDDs pushed the envelope the way the Developer did when he set up the forever-Developer-controlled Center Districts and then used them to purchase and administer the amenity facilities from the Developer--issuing the "tax exempt" bonds to finance the purchase. Again, for a coherent explanation of what is going on, refer to the 2009 POA article that I cited in an earlier post. Post-2009 developments are described in subsequent POA Bulletins. Allegations that all this has to do with Obama targeting the Morse family are totally groundless. The investigation started under Bush, was part of a general IRS crack down on perceived abuses of municipal-bond financing, and the issue remains the same as originally raised. In fact, with the passage of time, the IRS has toned down the vehemence of its attack on the Developer. However, the fact that the investigation has dragged out this long, without some kind of conclusion, gives credence to allegations concerning the incompetence of the IRS. Incidentally, there is no doubt that our amenity fees are being used to pay the attorney bills in this matter. This has been widely reported and can be confirmed by just calling the District Office. |
#42
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As usual Advogado, your comments are spot on. From what i've read, most of the CDD's do not operate like the Villages, and do in fact, have governing boards that are controlled eventually by the residents, unlike The villages. However, it appears Disney could be on shaky ground. The following link is to an article entitled "As IRS Cracks down on The Villages, Disney Watches". As IRS Cracks Down on The Villages, Disney World Watches
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#43
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It is interesting that Reedy Creek/Disney is going to issue additional purportedly tax-exempt bonds, while the Villages Center District, controlled by the Developer, has blinked and issued taxable bonds to pay off its purportedly tax-exempt bonds. See: Village Center CDD to Sell Taxable Refunding Bonds - The Bond Buyer |
#44
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The article did say there were some key differences between Disney and The Villages, but didn't say what they were. Maybe Disney's attorneys think this gives them an edge with IRS. I found it interesting that Reedy Creek was created by the state legislature, but is privately run.
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#45
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United States: IRS Decision on Florida CDD: Commercial Is Out; Residential May Be In
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MI, Pontiac, Waterford, Southfield, Farmington, FL.--> Ron's my name and pool's my game. |
Closed Thread |
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