[Lauren Ritchie]

Hello Villagers,

I'm Lauren Ritchie, the Sentinel columnist who wrote the 3/1 column about the Villages and the IRS. I've been reading your notes about how my columns are "slanted."

Yes, they are. They are supposed to be slanted. That's what the Sentinel pays me to do. I am not a news reporter. Those folks are paid to get all sides of the story and lay it before you without comment.

I'm a columnist, which means that I write opinion. I'm paid to research, form an opinion and write it in a way that convinces readers. I DO have an opinion about this IRS investigation and about the way that the developer has used the community development districts to his benefit -- at terrible expense and liability to Villages residents. Do you realize, for example, that the outstanding bond debt on each of your homes is roughly $18,000? I wonder whether you would have bought your place if that had been tacked onto the purchase price up front? And, in addition, that $18K is the face value. Over the life of the bonds, homeowners will pay another $18K-$20K in interest. (Consider that the amortization schedule of the $64 million in bonds the IRS is investigating is about $134.5 million over the life of the bond.)

I have a second column about the IRS investigation that is to be published on Wednesday. If you don't get the paper, you can access the column online at www.orlandosentinel.com/lake and look for my picture with a list of columns by it.

In any event, I hope this helps you understand what I do. Regardless, the real question here is about the validity of the bonds, not what anyone might write about them.

Lauren

[Canabarrybarb]

Thank you for making us aware of this issue.

[graciegirl]

I appreciate your taking the time to tell us this.

Lauren. I do believe that most of us are aware of the bond debt before we buy. I certainly hope so. We discuss it here a lot I know.

What do others think?

[starflyte1]

Aren't there two bond debts? One that is added on to the cost of each new home, and the over all bond debt of the owners of homes in TV that pays for the purchase of the golf courses, entry gates and various other things that are sold by the developer to the homeowners?

[aln]

I know when I looked at a home in the Village of Winefred in 2004, the bond to be TACKED on was $10,000.

When I looked at a home in the Village on the Shores of Lake Miona in 2008, the bond to be TACKED on was $50,000.

I don't know if that's the same bond Lauren is talking about and if there's more I'd like to know.

[tucson]

Thank you for all your research and info on all that affects us here re; bonds. I'm very grateful, keep up the GOOD work...

[SteveZ]

Good grief! Another Slantinel Slap at one of the few things that actually work without "government" help.

Ms. Richie. We are not a bunch of doddling old fools who need protection from the big bad developer. We're well seasoned on how people make money from other people, and don't really mind as long as we get something of value for our funds.

Yes, there is a "bond" that is tacked on, and while the marketing and presentation of it sounds strange to some, it's no different than when "shipping and handling," "tax," and a host of other add-ons appear.

Yes, if one decides to finance a $10-50K bond for 20-30 years, it will indeed result in interest equivalent to the size of the loan - just like any other 20-30 year loan. Duh!

And yes, there is an annual common-area fee similar to what a homeowner's association (Orlando is full of them!) levies on all within a development for maintenance and upkeep of the common areas. Why is that such a surprise?

The CDD concept is not all that bad, in that when it works, it works very well.

I wonder if The Villages advertised in The Sentinel if there would be a slanted piece trying to make this place sound like a rip-off? There was a time when Disney didn't advertise in The Sentinel, and negative articles about Reedy Creek Development Corp. appeared with some regularity. Or is it because The Villages has its own newspaper and The Sentinel sees such articles as a possible way to break into the market here?

With all of Orlando's problems - examples: South Orange Blossom Trail is still an "interesting" place, Avalon Park's developers are still being chased, Metro West has its share of "history," and the Winter Park / Orlando Naval Base property acquisition saga is still a gem - one would think there was plenty of things within a ten-mile radius of Lake Eola for commentary before venturing into the far reaches of Sumter, Lake and Marion counties.

But then again, us old fools need protecting.....

[Whalen]

Originally Posted by graciegirl

I appreciate your taking the time to tell us this.

Lauren. I do believe that most of us are aware of the bond debt before we buy. I certainly hope so. We discuss it here a lot I know.

What do others think?

There seems to be a bond issue that is in addition to or separate from the bond that is tacked on to the purchase of a home in TV.
Explanations sound like the discussions about derivitives or default swaps and are not very clear.
Can someone please explain.

[Russ_Boston]

Originally Posted by Lauren Ritchie

Do you realize, for example, that the outstanding bond debt on each of your homes is roughly $18,000?

Lauren, Steve, V7, anyone help please:

Is this the bond that we know about when we purchase the home or is this something that is yet to come down the pike?

If it is the former then what the heck is Lauren talking about. Every new homeowner knows about the bond that can be paid off over the 30 years or just paid up front like any other home debt.

What am I missing?

Thanks for the help.

[villages07]

Ms Richie is talking about the Recreation Bonds that are used to purchase amenity facilities (Rec Centers, golf courses, etc) from the Developer. We pay our amenity fees to the Central commercial Districts (Sumter or Villages Central districts). These central districts are run by a board essentially appointed by the developer. These districts establish budgets for the amenity fees. Approx 60% of our amenity fees go to payoff the recreation bonds. The other 40% goes to ongoing maintenance and operations of the amenities. I believe it is these recreation bonds that are in question by the IRS as to whether they are floated for a municipal govt and hence should be tax free. Whether they are tax free or not affects how marketable they are up front and what interest rate they will be floated for. Not tax free then higher interest rate and more expense for us to pay back.

There is a whole separate issue on whether the cost that the central CDDs agree to pay for amenity purchases is fair value or not. I have some concerns about these terms as well since those agreeing to the purchase price with the developer are appointed by the developer. But, this issue is different than the IRS investigation.

The bond each of us pays on our homes is a differnent bond...it paid for the upfront infrastructure in our neighborhoods. These are considered tax free municipal bonds and I don't believe they are in question.

[Russ_Boston]

Thanks V7 - so if the IRS rules against us will we be socked with some new fee? Or will the amenities fee need to be raised beyond its usual cost of living increase?

[collie1228]

Ms. Ritchie's column brings to light my biggest concern about the structure of The Villages financial foundation. And that concern is that I don't understand it completely, and need more information before I would ever consider a purchase. I appreciate her bringing up these issues, even if some in this forum think her columns are "snarky" or "slanted". If she's incorrect about something, call her on it! All I've seen in rebuttal so far are "snarky" comments from the other side of the argument. Wow, if she replied to our comments with "Good grief" or "Duh", we would all be writing letters to her editor calling for her scalp. I guess we have the right to our opionions, but the paid opinion writer doesn't have the right to hers . . . . I, for one, appreciate the fact that she is concerned enough to address our issues in this forum and in a subsequent column. I look forward to reading it.

[Russ_Boston]

Collie - I appreciate the 'let's give her a chance theory' but when we do that we get back and forth comment about what a columnist should or shouldn't be etc.

Let's try and keep this thread to a real fact based thread. Q & A about the issue at hand.

So where do we stand if the IRS rules against the deal?

[golfnut]

She has had a chance to see all of our comments now, if she's done a thorough investigation at this point hopefully she will be able to explain it to us..............GN

[Halle]

I feel I have a good understanding of the Bond Issue and I agree with V07 the real issue is how the Non-Taxable status may change and the effect that may have on our Amenity Fees.