There was a recent update article from Janet Tutt, CDD manager, on the IRS issue. I don't recall if it was in a Thur Rec News "Our Place" column, the Daily Sun, or the VHA newsletter.

Anyway, the gist was that the issue has been elevated within the IRS. The original investigating agent has been moved to another position and a new employee has been assigned to this case. Ms Tutt implied that negotiations could be more reasonable with the thorny agent out of the picture (my words, not hers) and indicated that The Villages still feels the IRS will rule in our (TV) favor. She predicted (as I recall) a resolution within a reasonable period of time.

Personally, I don't see this as a major deal breaker for existing or potential residents, but, to each his own on your opinion.

Being a newbie here in the villages(5 months) I've heard little snippets about problems with the IRS.Could someone tell me more about the case.In order to not hijack the thread you could send me a personal message with a recap of the specifics..Thanks!!

Be afraid, Be very afraid
 

That's what I was told by a rep. showing me Summer Glen. She said to avoid CDDs and developer ameneties like the plague. When the dev. moves on he will force the homeowners to buy all the ameneties or close them down. Of course, she was trying to sell a home to me in Summer Glen. What worries me is I also heard a similar story from the people at On Top Of The World. Please say it ain't so.... I love what I've seen at TV and don't want to stress over this. What is your theory on this matter?

“force the homeowners to buy all the ameneties”
That is bull. The CDD in question owns the amenities. The CDD sold tax free bonds to buy the amenities from the developer. That is why the IRS is involved.

That is an excellent idea! Our thinking exactly.

Dirigo

The wife and I equate TV to a Cruise Ship. You have to evaluate how much space you want to eat, sleep, and shower in, and if you want a port hole or not (i.e. a view). All the activities are outside the cabin!

Army Guy

Anyone heard rumors of the developer acquiring more land for development? There appears to be lots of open land on the perimiter of TV that could be purchased for the right price. Hard to believe the developer will shut down development that is profitable. One of the tools some developers use is to keep expansion plans under cover to give the impression that you need to buy now or be left out. I'm not familiar with Florida development laws. Would farm land need to be rezoned to residental before building? Just a thought.

We have had the same question
 

Hello everyone. So we've been lurking in the background for quite a few months viewing everyone's wonderful posts (and the fun you all have creating them!) and this particular thread called out for our first actual post of our own. We were having exactly the same conversation this past weekend. The size of TV is, it seems, at once its strength and its potential downfall. Huge number of costs associated with the on-going business of maintaining TV as it is today. Then I did the math, and please correct me if I have not done it right. I have heard that the target at build out is about 125,000 residents. If that's correct, then let's assume that there are 1.75 residents for each property (assuming more couples than singles). If that's correct, then at build out, there would be approximately 70,000 "paying units" to support TV assuming the developer is providing no funds whatsoever. I believe the current average Amentites fee is about $135 monthly, or about $1600 annually, and the "average" CDD Assesment is about $200 per month, or $2400 annually. That means that each "paying unit" is providing $4000 per year in funds. For 70,000 units, that's $280 Million dollars per year. It would seem that with a solid group of people involved in the management of this level of funding, then should the developer completely remove himself from the scene at build out, there would still be ample funds to maintain everything that you currently enjoy. By the way, we plan to become TV residents in 2011, right after I retire, or as soon as the house in Virginia sells! There are already a number of TV folks that we know from my home town on NH (including 2 high school classmates) and we can't wait to get there. Thanks everyone for all of your great input in these threads. Oh Oh, I've almost reached Boomer Level in the post!

Bill (The "B" in "bands" in our sign in name) Maybe sometime I'll come up with a cool cover name.

The Rose
 

Great analogy. We did the same thing. Real estate agents try to convince you to "buy as much house as you can afford". In retirement, that didn't make sense for us. Like Russ, Dirgo and Army Guy, we took the opposite approach, preferring to be able to afford more activities.

The other big sales pitch, of course, is "location, location, location," which makes all the sense in the world when you're trying to grow a business. When buying a house in TV though, it seemed, at least for us, that it would have meant same lifestyle, same amentities, pay more, (house and bond), and keep spending more (furnishing, decorating, upgrades, landscaping).

Ultimately, we paid under $180,000, including closing costs and bond, for a turnkey (dishes, cookware, linens, etc.), beautifully furnished and decorated, two-bedroom Austin with a large, private lanai, mature landscaping, and beautiful palm trees.

Centrally located? no. BUT... it's close to shopping, two championship courses, walking trails, fitness center, community pool and it's in TV. We have more money for activities and made an investment we can afford to take a hit on, if that's what the future holds. We love our neighbors and our neighborhood. We're just a longer-- enjoy the ride and view-- golf cart ride from the squares and southside clubs.

Of course, our choice is not for everybody. Different people have different and equally valid preferences, priorities and dreams.

My point though, is that TV is to a large extent, as affordable as you want it to be and as adjustable to risk tolerance.

Despite all my previous and future comments about kool-aide, I fully acknowledge the risks. I really don't even try to rationalize them. I think they're real. The CDD's could very well lose their fight with the IRS and be forced to repay millions early and with penalties. BTW here's an excellent link:

http://www.thevillagesfloridabook.co...s-irs-problem/

Amenity fees could escalate when the developer pulls out. (Our Villages real estate agent told us the developer's projected build-out is 2014. Maybe, maybe not). Common grounds and facilities could deteriorate if the CDDs can't get the support from TVers, the same prices the developer gets or whatever.

Another bad scenario could be the developer or CDDs eventually trying to raise more money by selling amenity packages to non Villagers. That would increase traffic, diminish our access via overcrowding and reduce TV property values.

Yes, there are risks at TV. So are there risks to property values and quality of life in Ohio and Georgia and Oregon.

For us, the right decision was go for the lifestyle of our dreams while managing (i.e., minimizing) our investment risk.

It is, after all, "the dream afraid of waking, that never takes the chance."

B.... congrats on your first post. Hope to see many more. A little clarification on your math.

For the amenities.... yep it'll be about 60K houses at some future increase above today's $130'ish per month. Using very rough numbers, this will be about $100M/year. That's a lot of money!!! But, it will be used to support close to 40 exec golf courses, 70 or so pools, 30 or so rec centers, etc. (all very round numbers). Also, in today's world, approximately 40% of the amenity fee goes towards paying off the bond issued to originally purchase them from the developer. The other 60% is for ongoing maintenance, operations, salaries, and renovations/upgrades. Time will tell if the level of amenity fee we have come to expect will be sufficient to keep everything running and up to standards.

On the CDD assessment side.... I think you got the $200/mo, $2400/year from the annual bond payment associated with each home. This 'revenue' is basically spoken for to retire the debt that comes with your home for its initial contribution to infrastructure construction (roads, sidewalks, rec trails, etc). So, it is not a managed source of revenue.

Each of us pays approx 400-500/year in CDD maintenance assessments used to keep the common infrastructure (landscaping, lighting, sidewalks, rec trails, etc) maintained and operating. This CDD maintenance only applies to Marion and Sumter Counties. Lake county residents pay these expenses as part of their county services/tax bill. These are managed revenues but are wholly separate from the amenity funds.

It is a very complex budget/funding puzzle but it does seem to work. The million (or is that billion) dollar question is will it still work 20 years from now.

Excuse me for sounding stupid but we have just started looking at TV. When you are talking about the $130 maintenance fee that is what everybody pays no matter when and where they bought, correct? And there is another $200 on top of that PLUS the bond fee? Or is that $200 the bond fee which may or may not have been paid off depending where you buy?

We too have the worry about substainability, in 20-25 years will there be new residents who want to buy into TV? Or will all the homes fall into foreclosure, sitting empty, etc? No residents = no fees

Post #50 by Pturner makes a lot of good points. But I gotta tellya that I laughed when I saw it just now.

The reason I laughed is because I was just getting ready to write almost the exact same words about Army Guy's cruise ship analogy. I loved it.

And then I was also going to write about how I am zeroing in on how the bottom line in all this comes right down to individual risk tolerance. -- including risk vs. benefit.

But my internet connection kept fading in and out.

And now that I am connected again (I think I am) Pt has already said that stuff, and if I write about those things now, it will look like I copied her homework.

I do have some more to say though -- imagine that -- on the topic of selling and buying houses. But this connection is threatening to disconnect again so I will have to write all that at another time.

I think this thread is really helpful. Lots of great information and comments. Lots of things to talk about. Thanks everybody.

Boomer

Boomer, glad I could bring a smile to your day. But to me and the wife it is exactly how we describe TV to others. Like a Cruise Ship on dry land, gosh all we need is the Casino!
But yes, we all make our OWN choices, and that is why I put the uniform on each day and what makes the country great. We can decide for ourselves what we want to choose for our futures. Like PTurner, we wanted less house and yard in retire so we can do more. Or, as I tell people, I want to wake up read the paper and decide, "Do I play 9 or 18 today, or do I ride the Harley?"
And the risk factor yes, again as PT puts it is everywhere. We have lived in several places and see changes when we got there and when we left. But feel that the way TV is set up, and is set up to be governed once down is a pretty good model and should be succesful. Will fees go up? You bet it is a fact of life, prices go up. How much? We can't say at this juncture, but will me and Mrs AG pay it to preserve our lifestyle? You bet. TV is still the most affordable place we have found while we were searching. And, I do believe that most want TV to continue as it is, so they will also pay. If they don't want to they can move, and I believe there will be others ready to buy and pay to get what we all have.
I guess I tend to be overly optimistic but I truely feel, that TV will survive and thrive once build out is here and when/if the Morses leave.

Army Guy

That is certainly one way to look at it. However, TV will never go "under". The worst case scenario is that some of the amenities may be less than what they are now (e.g., less music in the squares, higher fees for championship golf) and hence TV may not be the perceived nirvana that it is now. Hence, this assumes that if things go south you will bail out and sell. However, have you considered which type of property is most likely to retain its value in this situation? One could argue that a house on a golf course or with a view of some sort will hold its value better and be easier to sell than a "commodity" house on an interior lot.

My comments are inserted in the above quote.

In the latest, just out, February 2010 POA Bulletin it states on page 7,

Staff Reports:
Staff counsel reported that the IRS audit
of VCCDD bonds continues to move through
the process with the IRS chief council focusing
on the “political subdivision” issue at this
point.

http://www.poa4us.org/bulletins_file...etin201002.pdf

just in case somebody needs to know this, but does not
 

Are you lost in a tax law time warp?

If you are not lost in a tax law time warp, you can just close your eyes while you read the rest of this post.

But if it turns out that you are lost, you might really like what I am about to tell you here.

I realize most of you probably know this, but sometimes we find that we don’t always know what we need to know because we have had no reason to need to know it yet. (I recently had a conversation with somebody in my real life about this and he did not know it and he was quite happy to hear it. So I decided to write about it. Maybe I can make someone else happy.)

And if you have not sold a house for a long time, you would not necessarily know this. Unless you are as boring as I am and so you like to keep up on tax law changes.

Anyway, when the talk in this thread turned to how individuals view the house size they decide upon when buying in TV, I thought maybe I should write a post about my truly great fondness for the Taxpayer Relief Act of 1997.

Because so many of us here are of an age and because a lot of us have owned several houses through a few decades, we probably have kept folders full of receipts and records of improvements made in all those homes we owned along the way. We were really careful about those records. The receipt for even a can of paint might have been filed in those folders.

We were watching out for our cost basis because of the capital gains law that was in place at the time. Before 1997, the tax law said that $125,000 profit on the sale of a home could be excluded after age 55. I am a little fuzzy on all of that but it seems like it was a once-in-a-lifetime exclusion.

So that was the nod to the 55 and up crowd. All along the way though, up to age 55, the real kicker was that if you sold a house, you had to invest in a more expensive property or pay capital gains tax on the profit, no exclusions. That law was one of the drivers in the real estate market because it helped to drive the philosophy of buying as big as you could afford because, otherwise, you would have to give back a bunch of profit because you would owe capital gains tax on the amount not reinvested in a more expensive home.

But now, that tax law from the 90's means that you just might be able to keep a serious amount of change and not have to pay capital gains tax.

The way it works now is if a homeowner sells a house that has been the primary residence for the qualifying time period, $250,000 in profit can be excluded from a capital gains hit, if the homeowner is single, and $500,000 for a couple. Profit. Tax-free profit..

Under this tax law, you can walk away from a closing table, having sold a house for a significant profit, buy a house that costs less than the one you just sold, and keep all the change – tax free – if the qualifications are met.

This law also applies to any age, no more stuff about being 55 and up. And it is not just once in a lifetime. And so that has driven the market, too, as people sell and buy and sell within the timeframe --well, they used to anyway when the market was hot.

There are still plenty of people who want a big house in retirement, for lots of reasons. But there are many people who don’t. And my guess is that there could be some real estate agents (not all but some) who just might hope that you think you need to buy bigger for tax purposes. Hey. Real estate agents are not supposed to give tax advice anyway. Not their job. And sometimes people might think that it is like the old days and the bigger house still might make sense for tax purposes.

So I just wanted to make sure everybody knew, in case they did not, about the change in the tax law that can let you buy a house for a whole lot less than the one you sold and pocket a lot of change. Just wanted to make sure that everybody had heard about this cha-ching thing.

Here’s a link that tells you more than you probably ever wanted to know about all this. (I could not find the date for this article. Maybe it's on there but I missed it. Of course, anything you read like this has to be checked with a tax accountant before putting it to your own use.)

http://www.bankrate.com/finance/real...-owners-1.aspx

And please remember that my expertise in the field of tax law ranks right alongside my expertise in the field of medicine or the field of investing or the field of financial advising and all those other fields where I can be found wandering and wondering. Heck, I just might be an English major.

Boomer

If you really want to know what will happen, I suggest you watch the series on television "Life after people". That will give you something to worry about. I don't think either that show or The Villages going under is worth losing sleep over.

Does anyone know what the planned oversight structure will be once the developer is out of the picture (except for commercial property interest)? Will the HOA/POA manage the recreation facilities and common areas?

The developer does not manage any of these faciliies now - even the ones he owns. All of the management is done by a professional staff on the CDD. As more and more of the property that the developer currently owns is turned over to the CDD, the management of these properties will be unchanged.

I believe District 1 has already been turned over but I'm not sure exactly when that happened. Seems to be working pretty well as far as I can see.

Reading for a cold day
 

District 1 and all Districts north of C.R. 466 was not turned over to the CDD, the CDD borrowed through tax-exempt bonds $448 million to BUY everything from golf courses to swimming pools, utility plants to guard houses from Morse.

The IRS thinks $448 million borrowed through tax-exempt bonds since 1993 should be taxable. That's because, the agency contends, the community-development districts, which run operations at the retirement community and sold the bonds, don't qualify as "real" governments and shouldn't get tax-free loans as cities and counties do.

In the revenue agent's May 18 letter, he urged the districts to take a dramatic and enormously costly step: recall and pay off $355 million worth of outstanding tax-free bonds.

News flash the CDD does not have $355 million however it does have assets golf courses, swimming pools, utility plants and guard houses. Understand Morse does not own this property the CDD of District 1 and all Districts north of C.R. 466 does.

The BIG OUCH!
http://andrewblechman.blogspot.com/2...n-ritchie.html

Big trouble in The Villages
(First of two parts.)
http://andrewblechman.blogspot.com/2...-villages.html

Big Trouble in The Villages (Part 2)
http://andrewblechman.blogspot.com/2...es-part-2.html

The POA Bulletin
POA Summary of the IRS/Bond Inquiry
http://www.poa4us.org/bulletins_file...etin200909.pdf

34 page document right from the IRS
http://www.ccfj.net/CDDVillagesIRSletter.pdf

That revenue agent has been "promoted" off this case.

Sigh. Guess that will teach me not to procrastinate. I meant to get a handle on all this. I really did. Sigh.

Good pick up Bogie, maybe the "reporter", who some believe has always been anti-Villages, will be "promoted" accordingly as well.

Shadow, your links appear to be dated in the prime of her Village bashing days.

I can think of a number of outside special interests, for an assortment of selfish reasons, who perversely enjoy perpetuating any contrived, exaggerated negative news that attacks The Villages community. I'm not suggesting all these issues are non-existent.

However, where is the balance? Where are the articles identifying the positive influences directly attributed to the development of The Villages from Lauren Ritchie, et al? Why don't we read or hear about the jobs, businesses, first class charter schools, hospitals, county tax dollars, medical services, library, road improvements, life time learning center, entertainment and cultural venues open to the public, etc., that benefit so many outside the Villages??? I guess some just miss the watermelon patches.

I am not advocating putting blinders on to the occasional concerns that will always surface with the growing pains of a community of 75,000 plus and expanding. I prefer to keep them in perspective and balance them against the overwhelming positive aspects of living here. I prefer to recognize the motivations of detractors whether they are inspired by jealousy, economic considerations, politics, obstruction of progress or plain mean spirited mischief making, for what they are.

Now....I'm off for another beautiful day in The Villages with glorious visions of breaking 90, picking up the mail, greeting my friends and neighbors at the mail station and getting back in time for the neighborhood keg party. So Linda, be of good cheer and have another great day in the Villages.

Thanks, Cabo. If only I could. We are stuck here in Sybericuse this winter :cold: but we are already thinking about when we can get back to the bubble.

I cannot believe this blog. We've been here ten years and have never had a problem with anything other than the lines at a restaurant. You folks are analyzing this to death. Grab you golf clubs and your wife and get down here!! You will love it. I'm not moving again. The Villages will be here long after we are all history. Where else can you live where you can jump in your golf cart and play golf, shop, go to the doc, go to the movie, go to a dance, watch a parade, etc...... So it's been a little cold this winter - sure beats being up north!! You will not find the value for your dollars that you will find here in The Villages anywhere else in the U.S.

Amen!

AND Hallelujah!

Does this mean it is ended?

I have read every single post in this thread and every single link within those posts. It has been interesting to see not only the subjective, but also the objective. And I really do appreciate the time that so many people took to share information and thoughts on this issue. I have a great deal of respect for the opinions found here.

Thank you.

This thread has really helped me to organize my thoughts about this stuff. And I realize that I can't really know for sure where it could all eventually go so I am starting to look at The Lifestyle like a dividend that pays out all along the way, like with a stock. I also think that TV's size is in its favor.

And I hope more information and thoughts will be added to this thread. Both the subjective and the objective. Even though there may be a few who might not agree with that idea. That's OK. But I think this thread has worked like a good conversation. And I hope the conversation continues. It might help others, too.

Boomer

I agree with you Boomer. I do not expect everyone to agree with me or have the same likes or dislikes but I do respect their right to have their own ideas and opinions. Open discussions can be very informative and give new insight on a variety of subjects. We all love TV or we would not be on this website but no one should blindly accept the mantra which may contain hidden motives. Trust but confirm.

Amenity fee
 

Not sure where this would go so I picked the closest subject. Maybe we missed the discussion but we have heard two explanations on the amenity fee. Real quick and easy question, once the fee is set can it change as long as you live in the same home at TV?

We only have one problem with the TOTV sight, we do not have enough time in the day to read all the great information and news that all of the great folks are offering. We know, what a problem to have!!!! Thank you all for the information and comments.

Musings on demographics in TV of late.
 

It seems in the last six months that TV is attracting younger people and those who want bigger houses.

Now I am hoping that the person who keeps careful statistics on sales on this forum can tell us if designers, larger villas and premier models have outsold cottages, ranches and village homes in the past six months.

I don't know how you would get information on the age of the residents who have recently bought here. But I am counting on BK...the supreme information gatherer.

Quick answer, yes. But contractually it cannot be raised by more than the inflation rate (aka Comsumer Price Index) in any given year.

Hi Gracie,

Good questions. I would be interested in knowing too.

Here is a source of info on home price trends in TV

http://realestate.aol.com/The_Villages-FL-real-estate

Here is one on the recent home sales in TV:

http://www.trulia.com/FL/The_Village...e_Villages,FL/

The default setting on Trulia is most recent home sales first. You can also sort by price, sq. ft., # of bedrooms and other criteria. It would take some work to convert the data to sales by home-type by date.

I wonder if your TV agent/friend would have insight about about age of buyers and sales trends by home type. Maybe he would even have some actual data he could share?