Talk of The Villages Florida
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Talk of The Villages Florida (https://www.talkofthevillages.com/forums/)
-   The Villages, Florida, General Discussion (https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/)
-   -   Latest Development in the IRS Tax-Exempt-Bond Investigation (https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/latest-development-irs-tax-exempt-bond-investigation-40713/)

Advogado 08-04-2011 03:08 PM
VCCDD Attorney Fees
 
Quote:
Originally Posted by JimJoe (Post 377555)
Where does the money come from for the legal fee budget? Is that budget funded by amenity fees?.. that is my question... Can you answer that please?.
It comes out of the amenity fees.

EdV 08-04-2011 03:12 PM
Quote:
Originally Posted by JimJoe (Post 377555)
Where does the money come from for the legal fee budget? ...
It comes from the nearly 60 million dollars per year that the two special CDDs receive in amenity fees and other charges such as trail fees and rec facility rentals.

JimJoe 08-04-2011 03:24 PM
Quote:
Originally Posted by EdVinMass (Post 377571)
It comes from the nearly 60 million dollars per year that the two special CDDs receive in amenity fees and other charges such as trail fees and rec facility rentals.
Thanks.. now.. if the attorney fees and costs of defense are being paid from those funds, what makes you think those same funds would not be used to pay the judgment if any?
Do you think the Developer would pay it to avoid an impact on amenities?.. Why would you think that? Didn't it take a lawsuit in an unrelated amenities dispute previously to get the 39 million over 10 years?

EdV 08-04-2011 03:40 PM
Quote:
Originally Posted by JimJoe (Post 377575)
Thanks.. now.. if the attorney fees and costs of defense are being paid from those funds, what makes you think those same funds would not be used to pay the judgment if any?
Do you think the Developer would pay it to avoid an impact on amenities?.. Why would you think that? Didn't it take a lawsuit in an unrelated amenities dispute previously to get the 39 million over 10 years?
I already explained that.

EdV 08-04-2011 03:46 PM
Quote:
Originally Posted by Advogado (Post 377550)
Three questions of EdVin, and they are honest ones:
1. Are you confident that the IRS will not expand its investigation still further?
I am confident that the IRS will not go after the bonds issued by the numbered CDD’s since they were primarily issued to build the infrastructure of the residential villages within them.

Quote:
2. Do you have any information about the present net worth of The Villages of Lake Sumter, Inc. (I don't think the financial statements are public.)?
No, it’s privately held I believe.

Quote:
3. Who do you think will take the necessary legal action to actually collect from the Developer in the event that an IRS "victory" results in the VCCDD not having adequate cash to continue the amenities system? I note that the Developer is sticking the VCCDD with the responsibility for paying the legal fees involved in defense of the IRS investigation and has not issued a word of assurance to Villagers about the possible impact on them of the investigation..
If the IRS ruling is upheld by the courts and the two CDD’s refuse to comply with the court order, the IRS will foreclose on the two CDDs. This is something that the developer and/or the corporation he hides behind cannot afford to let happen under any circumstances.

JimJoe 08-04-2011 03:51 PM
Quote:
Originally Posted by EdVinMass (Post 377578)
I already explained that.
I guess I was not convinced that they would not use amenity fees .. for two reasons.
1. I wonder whether they have any other source... if they had another source, wouldn't the attorney fees and costs of defense would be paid from that source?
2. Your statement:
And they’re not going to try to siphon off amenity funds by drastically cutting back on maintenance of the amenities. Remember that a few years ago they got a little too cavalier about dealing with mold issues in some Rec centers as well as trying to pass off maintenance of the multimodal paths onto the numbered CDDs that had these paths. The Villages Property Owners Association (POA) sued them and got an out of court settlement of 40 million dollars to be pumped back into the special CDD over the next nine years. The first major benefit of this was the funding of widening of the paths that was just completed.

Why would you think the developer would voluntarily pay an irs claim without a lawsuit this time? I am sorry but I just don't get it.

EdV 08-04-2011 04:51 PM
Jim, the lawsuit that the POA brought against the developer had nothing to do with the IRS. It was simply based on the developer's CDDs not living up to the contractual amenity agreement. And the POA prevailed.

And once the the US Tax Court rules against you, either pay up or turn over the assets. There’s nothing voluntary about it.

JimJoe 08-04-2011 05:33 PM
Quote:
Originally Posted by EdVinMass (Post 377602)
Jim, the lawsuit that the POA brought against the developer had nothing to do with the IRS. It was simply based on the developer's CDDs not living up to the contractual amenity agreement. And the POA prevailed.

And once the the US Tax Court rules against you, either pay up or turn over the assets. There’s nothing voluntary about it.
I knew the POS lawsuit had nothing to do with the IRS.. I said that in my post. I referred to it as "unrelated amenities dispute".

If you are right that "once the US Tax Court rules against you, either pay up or turn over the assets".. who is the defendant in the tax dispute with the IRS? Isn't it the District, not the Developer??.. the district you said is funded with amenity fees and some other fees. What funds will the district use to pay up? What assets do they have that they can turn over?

rubicon 08-04-2011 05:49 PM
Quote:
Originally Posted by JimJoe (Post 377459)
Here is why TV might lose the IRS issue.. and its not TV's fault.
I think the IRS issue is part of the bigger HOT political issue of our time.. Getting rid of loopholes.
I am not arguing either side of this issue... I just want to point out where I think this issue may be heading...
When TV or any other "municipality" uses tax free bonds to finance projects, they are effectively shifting part of the cost of financing the project to every other federal taxpayer. "Municipalities" are allowed to do this because they are for the general welfare and theoretically anyone in the nation could use the public project or promote some general welfare issue. The problem with TV is that the projects are arguably not for the general welfare. They are only available for TV residents or their guests.
I love TV and think it is fantastic... but...
Is it "fair" for people who live outside TV and pay federal taxes to help finances the amenities of "rich" people who bar others from the enjoying the amenities the outsiders helped to finance, including pools, rec centers, golf courses, etc.
If Ocala sells tax free bonds, should they bar villagers from using their pool, attending sporting events, playing on their golf courses, or attending meetings in their public buildings?
I know others get federal subsidies, but can TV really claim it is "poor" or "religion", or providing a "public service".
Don't shoot the messenger. I think if this issue went nation wide, TV would be the new "corporate jet" loophole.

I understand this message involves some politics but everything does to some degree. I think it is important for those interested in the IRS issue to understand what really may be underlying the issue.. not just the legal arguments for or against the IRS.
.JJ
That is part of the dispute. Also that the Developer has exclusive control of TV, which is being denied. Also as mentioned in an earlier post the IRS contends that the facilties purchased by the district as well as the amenities income stream where overstated and hence the amount of the tax free bond issue is more than what was required. These are some of the allegation. How the IRS determined these allegations makes interesting reading

An earlier poster did not believe the Developer would stand by and let the District take the hit..Well from the poster's lips to God's ears but I am not holding my breath. The Developer's main focus revolves around profits..period

Advogado 08-04-2011 05:51 PM
The class-action lawsuit and ultimate liability re the IRS matter
 
Quote:
Originally Posted by EdVinMass (Post 377602)
Jim, the lawsuit that the POA brought against the developer had nothing to do with the IRS. It was simply based on the developer's CDDs not living up to the contractual amenity agreement. And the POA prevailed.

And once the the US Tax Court rules against you, either pay up or turn over the assets. There’s nothing voluntary about it.
Two observations:

First, the lawsuit (which was supported by, but not brought by, the POA), was against the VCCDD AND the Developer. In the lawsuit, plaintiffs alleged that the VCCDD did not live up to its obligations because the Developer overpriced the amenities that the Developer sold to the VCCDD, and therefore the VCCDD had inadequate assets to continue to furnish the amenities. That overpricing is the one of the allegations that the IRS is making. In the lawsuit settlement, the Developer agreed to pay the $40 million to the VCCDD so that the VCCDD would be able to fulfill its obligations.

Second, as indicated in my earlier posts, if the VCCDD incurs huge costs as a result of the IRS's actions, how to get the VCCDD to collect from the Developer becomes the question. Since the Developer seems to still control the VCCDD, it seems somewhat possible that the VCCDD will not be real aggressive in pursuing the Developer or in raising taxes (which could have to be prohibitively high) on properties within the VCCDD. It may or may not be in the Developer's financial interest to "voluntarily" pay, depending on the amount involved and on a number of other factors. E.g., by that time, has the Developer finished building out The Villages and paid out the proceeds to the stockholders of The Villages of Lake Sumter, Inc.?

Again, keep in mind that we have not received one word of assurance from the Developer that everything will be okay. The "don't-worry-about-it" posters on this thread seem a lot more confident than the Developer.

rubicon 08-04-2011 06:06 PM
Quote:
Originally Posted by Advogado (Post 377623)
Two observations:

First, the lawsuit (which was supported by, but not brought by, the POA), was against the VCCDD AND the Developer. In the lawsuit, plaintiffs alleged that the VCCDD did not live up to its obligations because the Developer overpriced the amenities that the Developer sold to the VCCDD, and therefore the VCCDD had inadequate assets to continue to furnish the amenities. That overpricing is the one of the allegations that the IRS is making. In the lawsuit settlement, the Developer agreed to pay the $40 million to the VCCDD so that the VCCDD would be able to fulfill its obligations.

Second, as indicated in my earlier posts, if the VCCDD incurs huge costs as a result of the IRS's actions, how to get the VCCDD to collect from the Developer becomes the question. Since the Developer seems to still control the VCCDD, it seems somewhat possible that the VCCDD will not be real aggressive in pursuing the Developer or in raising taxes (which could have to be prohibitively high) on properties within the VCCDD. It may or may not be in the Developer's financial interest to "voluntarily" pay, depending on the amount involved and on a number of other factors. E.g., by that time, has the Developer finished building out The Villages and paid out the proceeds to the stockholders of The Villages of Lake Sumter, Inc.?

Again, keep in mind that we have not received one word of assurance from the Developer that everything will be okay. The "don't-worry-about-it" posters on this thread seem a lot more confident than the Developer.
Exactly right!

villagegolfer 08-04-2011 08:54 PM
Quote:
Originally Posted by rubicon (Post 377622)
That is part of the dispute. Also that the Developer has exclusive control of TV, which is being denied. Also as mentioned in an earlier post the IRS contends that the facilties purchased by the district as well as the amenities income stream where overstated and hence the amount of the tax free bond issue is more than what was required. These are some of the allegation. How the IRS determined these allegations makes interesting reading

An earlier poster did not believe the Developer would stand by and let the District take the hit..Well from the poster's lips to God's ears but I am not holding my breath. The Developer's main focus revolves around profits..period
Are you telling us that this beautiful place is inspired by profits alone? I do not think so. Look around. Do you not see?

iaudit 08-04-2011 09:02 PM
Quote:
Originally Posted by Advogado (Post 377623)

First, the lawsuit (which was supported by, but not brought by, the POA), was against the VCCDD AND the Developer. In the lawsuit, plaintiffs alleged that the VCCDD did not live up to its obligations because the Developer overpriced the amenities that the Developer sold to the VCCDD, and therefore the VCCDD had inadequate assets to continue to furnish the amenities. That overpricing is the one of the allegations that the IRS is making. In the lawsuit settlement, the Developer agreed to pay the $40 million to the VCCDD so that the VCCDD would be able to fulfill its obligations.
This summary above of the settlement is incorrect. Please refer to Villages Kahuna's post number 37 in the following link:

https://www.talkofthevillages.com/fo...ght=settlement

It wasn't about overpricing but rather not creating sufficient reserve funds to maintain the recreation facilities.

Advogado 08-04-2011 09:26 PM
Class action lawsuit and overpricing
 
Quote:
Originally Posted by iaudit (Post 377672)
This summary above of the settlement is incorrect. Please refer to Villages Kahuna's post number 37 in the following link:

https://www.talkofthevillages.com/fo...ght=settlement

It wasn't about overpricing but rather not creating sufficient reserve funds to maintain the recreation facilities.
Basically the same thing.

The class-action lawsuit focused on the lack of an adequate provision for depreciation when calculating the present value of the income stream that was used to value the assets. Had the present value been properly calculated (assuming that present-value methodology is even appropriate), the sale price would have been lower. That is just another way of saying that the assets were overpriced.

In fact, the whole thrust of the class-action lawsuit was that the Developer overpriced the assets. As a consequence, after paying interest on the bonds used to finance the purchase, the VCCDD didn't have enough cash to maintain the amenity facilities-- thus, the deterioration that provoked the lawsuit.

In other words, the whole thrust of the class-action lawsuit was alleged overpricing by the Developer. Why else do you think that the Developer had to pony up the $40 million?

EdV 08-05-2011 06:37 AM
Quote:
Originally Posted by Advogado (Post 377623)
Two observations:

First, the lawsuit (which was supported by, but not brought by, the POA), was against the VCCDD AND the Developer. In the lawsuit, plaintiffs alleged that the VCCDD did not live up to its obligations because the Developer overpriced the amenities that the Developer sold to the VCCDD, and therefore the VCCDD had inadequate assets to continue to furnish the amenities. That overpricing is the one of the allegations that the IRS is making. In the lawsuit settlement, the Developer agreed to pay the $40 million to the VCCDD so that the VCCDD would be able to fulfill its obligations.

Second, as indicated in my earlier posts, if the VCCDD incurs huge costs as a result of the IRS's actions, how to get the VCCDD to collect from the Developer becomes the question. Since the Developer seems to still control the VCCDD, it seems somewhat possible that the VCCDD will not be real aggressive in pursuing the Developer or in raising taxes (which could have to be prohibitively high) on properties within the VCCDD. It may or may not be in the Developer's financial interest to "voluntarily" pay, depending on the amount involved and on a number of other factors. E.g., by that time, has the Developer finished building out The Villages and paid out the proceeds to the stockholders of The Villages of Lake Sumter, Inc.?

Again, keep in mind that we have not received one word of assurance from the Developer that everything will be okay. The "don't-worry-about-it" posters on this thread seem a lot more confident than the Developer.
I stand corrected regarding the lawsuit. It was initiated by active members and officers of the POA but not by the POA itself.

As for assets of the two special CDDs, the IRS would go after all of the assets sold to those two CDDs by the developer. And that would include the facilities and executive golf courses that the IRS agent alleges were overpriced.


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