[BobKat1]

Originally Posted by Talk Host

Wouldn't it be nice if the Villages weighed in on this in some fashion. After all, there are hundreds of people who are clamoring for the straight of it.

It would be nice if TV would give their postion on the issue.

But from a sales and development standpoint I can see why it would be in their best interests to not discuss or bring it up. A big majority of potential home buyers most likely are not aware of the issue.

[The Shadow]

Originally Posted by BobKat1

It would be nice if TV would give their postion on the issue.

But from a sales and development standpoint I can see why it would be in their best interests to not discuss or bring it up. A big majority of potential home buyers most likely are not aware of the issue.

If the developer is not divulging this information to the buyers and the IRS torpedoes the TV destroying the lifestyle will the developer be inviting lawsuits from 30,000 (my number) shafted home buyers.

[BobKat1]

Originally Posted by The Shadow

If the developer is not divulging this information to the buyers and the IRS torpedoes the TV destroying the lifestyle will the developer be inviting lawsuits from 30,000 (my number) shafted home buyers.

Good point.

My guess (an uneducated guess only) is that they probably receive legal advice on such issues and go with that.

No doubt some risk(s) involved with such a stategy if that is the case.

[Mikeod]

Originally Posted by The Shadow

If the developer is not divulging this information to the buyers and the IRS torpedoes the TV destroying the lifestyle will the developer be inviting lawsuits from 30,000 (my number) shafted home buyers.

The developer has too much at stake in future home sales to have the lifestyle and their reputation destroyed.

[Lauren Ritchie]

Originally Posted by Jakel

If the Morse family has "cashed out", by selling bonds, based on the Amenities revenue stream, and then used State regulations to sell these Bonds as "Tax Free Bonds", and then pocketed the profits from these sales....shouldn't the CCDD's involved be run by elected officials, by the property owners, and not controlled by the developer himself??

hey jake,
that's the precise point that the IRS continues to make in each and every analysis of the situation. you have hit the root of the problem. however, the developer has set up these two big districts so that he will always control them -- until he chooses not to.
lauren

[graciegirl]

Originally Posted by mikeod

The developer has too much at stake in future home sales to have the lifestyle and their reputation destroyed.

You are right. And it really is chump change to the Morse family who have spent so much money on this place. It must be the principle of the thing.


But...I am sure that THE SHADOW will point out that "It isn't the money, it's the principle of the thing" is like saying, "the check's in the mail" or "I have a vasectomy." It is what people say to cover their bottom.

The developer is entitled to make money.

Whether or not it is illegal has not been established.

I am in a bad mood. I had better stop posting before you all discover that Gracie is a despicable person.

[Lauren Ritchie]

Originally Posted by The Shadow

Interesting to say the least. “us” is not responsible for the wrong doing of the CDD. “us” will not be asked to pay by the IRS. If “us” said “us” will pay to make this right. Now who is “us”? Who determines who “us” is? Maybe the people who let the dog dump in their backyard will not be so forgiving of the CDD. Will every resident want to pony up when it is the CDDs fault? Will the Home Owners Association go door to door collecting donations?

It is the CDDs fault.

The CDDs will be responsible to pay if found guilty. The CDD can not negotiate a settlement if they do not have the money to pay, if they have the money to pay they over charged for the amenity fees.

If they can not pay, what does the IRS typically do, confiscate assets and auction them off.

yes. shadow, you totally get it. thank you. and you point out an interesting what's "us" question. the district and the developer often get mixed up, and no wonder. they're not separate entities in these two districts.

[Lauren Ritchie]

Originally Posted by EdVinMass

Ritchie’s rebuttals are too erroneous and misleading for me to ignore.

Ritchie: BUT the sad thing is that the villages homeowners ARE paying for these ammenities through fees that to to the village center and sumter landing districts. that’s because those ammenities were purchased from the developer by the district . that’s what the bonds were for.

EdV: First of all it’s amenities, not ammenities. Jeez , you’d think after railing about the amenities fee for the past year she’d know how to spell it. But aside from that, what’s wrong with the idea that homeowners pay for these amenities? Or is she one of those people who thinks everything in TV should be free?

Ritchie: The state of florida did NOT allow the developer to create districts for the reasons that edvin stated. developers are allowed to create districts to govern the area.

EdV: I honestly can’t make heads or tails of her comment here, but for what it’s worth, here’s what’s in the first paragraph of the Chapter 190 CDD law establishing the intent of that law:

(a) There is a need for uniform, focused, and fair procedures in state law to provide a reasonable alternative for the establishment, power, operation, and duration of independent districts to manage and finance basic community development services.

Ritchie: edvin’s idea of rent control is pretty bizarre. HALF of what you pay goes to repay bonds –with interest. if these bonds have to be recalled, the only source of income is YOU, the owner. if you have a set amount you have to pay, then where you think the money will come from? it can come from one place and one only: it will come from that set ammenity fee you pay. if you get less in the way of ammenties because MORE than half is going to settle this mess, then so be it.

EdV: Another crafty yet misleading argument. What she conveniently forgets to mention is the fact that prior to purchasing the golf courses etc. that are in question here, the two CDDs were RENTING those facilities from the developer. So, that rent is now being paid to the bondholders in the form of principle and interest. So before the sale, HALF the amenity fee went to rental of the amenities and now HALF the amenity fees are paid to the bondholders instead. What’s her problem.

Ritchie: this comes from simple observation. consider this: clearly, the villages has more ammenities than any other community. but consider your 1,500 square foot house or whatever. what price could you buy that same size house for at say, royal harbour, or arlington ridge or some other community? it is roughly the same price, i believe. you aren’t getting a discount. so, some other communities have at least SOME of the same ammenities and those folks are paying the same amount. but YOU are paying another $20K to $25K extra for your ammenities. plus interest on bonds. ouch.

EdV: I’ll let you TV folks handle this one.

Ritchie: this analogy is not appropriate. cable companies are private, for-profit businesses. the CDD is a government, and as such is supposed to act in the best interest of its citizens, the people who are paying taxes. in this case, the “tax” or ammenity fee, is paid by people who are not living in the district, thus the IRS issue. EdVIn asks who cares how the money is spent? the answer is YOU should care. of half your ammentity fee weren’t going to repay bonds that were issued with the sole purpose of making the develper rich, then you would have some seriously cool ammenities.

EdV: The cable companies may be privately held, but they are a Utility and highly regulated at the Federal and Local level. The analogy stands. And as for seriously cool amenities, no they’d have the same ones as before the sale, just renting them instead of owning them.

Ritchie: those board members of the VCCD and SLCDD at various points since 2003 voted to buy both tangible assets, such as swimming pools and gate houses for example, and to buy the right to collect your ammenity fees for 30 years. that’s a little weird – they bought a right. the right to collect fees is NOT a tangible asset. by that, i mean it is not something you can touch. it’s what is called a “blue sky” or “intangible” purchase because it’s an idea, not a “hard” asset.

EdV: Wrong again. When the developer established the two special CDDs, it made them the designee for the collection of amenity fees. And each homeowner's contract states that "Each Owner hereby agrees to pay to the Developer, or its designee, a monthly fee or charge ("Contractual Amenities Fee") against each Homesite for these services described herein." So that right was already granted before any amenity was sold to the CDD.

ed,
are you actually gary morse in disguise writing this? please tell me this is a joke.

what you're saying is that it is equally cheap to: 1. "rent" facilities from the developer on a year-to-year basis and 2.) take out $355 million worth of loans for 30 years of advance amenity fees and pay back the loans with 30 years of interest to buy the same amenities. (thanks for catching my spelling -- that WAS a stupid error)

that's just absurd. that's like saying it's just as cheap to lease one car as it is to take out loans and buy cars that you're going to use over the next 30 years. um, no. that's simply impossible.

i understand your argument in the sense that the homeowner is paying his or $100 or $135 a month, depending on when they bought. your argument is that they'll be paying it no matter whether they "own" or "rent" the facilities.

mine is that you would not be paying $135 a month if you hadn't had to give the developer 30 years worth of advance fees TODAY. and then repay them with interest, which is staggering.

we can argue all day long on the esoteric points, but that's really all that's going on here.
lauren

[Lauren Ritchie]

Originally Posted by English Ivy

The bonds your broker is referring to are not the same bonds the IRS is investigating. I believe they were the bonds to finish the infrastructure for district 8 and maybe starting district 9. Those bonds did not buy any recreational facilities or the right to collect ammenity fees.

If you want more details check it out on www.districtgov.org.

English Ivy,
you are correct. these bonds are being sold by CDDs that are operating in the correct way. they should not be confused with the recreational revenue bonds issued by the sumter landing and village center districts. they are completely different, and to my knowledge, there is not the slightest question about them.

lauren

[Lauren Ritchie]

Originally Posted by EdVinMass

May I suggest Royal Harbor or Arlington Ridge, you could save $20k - $25k.

EdV

ed,

i realize you meant this to be a witty stab, but as you may or may not know, arlington ridge's CDD has raided its reserve fund to avoid default on its bonds. just another fine example of why i think CDDs are a ripoff to the buyer. don't worry, my friend. you won't catch me buying a home in a community with a CDD.

lauren

[Lauren Ritchie]

Originally Posted by bkcunningham1

I have a question Ms. Ritchie. What is the date of the most recent news story on the subject in the Sentinel?

I understand the job of a columnist and I hope people on this forum can grasp the difference in your opinion column and a hard news story. Not to say you are fabricating any of your points. But there is a valid difference.

Here's my take on the issue. The only question is whether the Villages Center Community Development District is treated as a political subdivision and has sovereign power for the purposes of section 103 of the Internal Revenue Code. Moreover, the question is do they have the legal right to exercise these powers in the future for certain undeveloped lands owned by the VCCDD.

This involves the VCCDD and $57,250,000 in Recreational Revenue Bonds, Series 2003A and $7,005,000 in Recreational Revenue Bonds, Series 2003B. There is certain criteria in Florida statutue that makes a political subdivision. The VCCDD lays out the determining factors such as taxing power, power to exercise eminent domain, police powers, upkeep and development of infrastructure et al.

The answer now rests with the IRS. If the answer goes against the VCCDD and they run out of appeals, they will pay the monies and penalties; and most likely will not be able to issue more bonds. End of story.

BK,
you are right that there is a very big difference between a columnist and news reporter. the last news article i recall was when the agent in may 2009 suggested that the district settle the lawsuit by calling the bonds, paying $16 million in tax liability and agreeing never to issue tax-free bonds again. that was more than a year ago.

there is a very long process that these bonds go through during a review in which the IRS maintains that the bonds should have been taxable. from what i can determine they're not even halfway there. in the end, however, i believe you have it right.

lauren

[Lauren Ritchie]

Originally Posted by The Shadow

And then there was light.

Well that clears up one thing, I guess now you all know I am not Lauren Ritchie.

Thank you Lauren for going above and beyond with your detailed post and for offering to respond to individual questions via email.

I think a detail has fallen through a crack; the one about the CDD has to have a police department to qualify to issue tax free bonds. When called on that TV said we have a fire department. Da

hi shadow,

i don't believe the district must have a police department to qualify for tax-free bonds. it is not quite that simple. however, you are correct that it is one of the tests that the IRS applies.

another is the use of eminent domain. the district does have that right but the villages acknowledged that it never has been used. the agent seemed to make a big deal of that in his analysis, but it never hit me as critical. after all, when you build the city, you account for what you need and don't have to use eminent domain to take property for, say, a sewer plant needed because of growth. you have all that in place.

lauren

[Lauren Ritchie]

Originally Posted by Russ_Boston

Thank you Laureen and The Shadow.

I think the only thing we (TV homeowners) want to know:

Bottom line - If all goes against us re IRS - what is the cost? I still content that even in a total loss by the TV lawyers the cost, when split among all of us, would be relatively minor.

Without getting into another 20 paragraph discussion - please just guesstimate the bottom line.

Thanks.

russ,
i wish i could, but i don't have enough expertise to do so, and i explained in a post a while ago that i haven't been able to get anyone who knows enough to lay it out for me.

if the district had to call the roughly $355 million worth of bonds, i'm not sure how that would be accomplished. i do not know whether the district could issue taxable bonds to pay off the tax-free ones. i've speculated about 100 scenarios.

i know that the district's money is your amenity fees, and those are capped. the only other cash it can raise is to levy property taxes on the land ONLY within its district.

that all complicates any "call" situation.

lauren

[Lauren Ritchie]

Originally Posted by Taj44

Lauren, thank you for taking the time to post, and to welcome questions. Certainly above and beyond the call of duty. Many of us in The Villages have welcomed your column and the information you've brought to light.

I do think that in the event of IRS victory, if penalties and costs were passed on to the residents, there would be some sort of class action lawsuit. Of course, considering legal fees, it would be an expensive and messy drawn out process, but c'est la vie. It does sound to me like the Morse's interpretation of CDD's was not in keeping with the original intent of the CDD legislation which could bear on the IRS decision.

dear taj,

it is my pleasure to try to answer questions when i've been the source of raising most of them. i have a clear understanding of the bonds and how they work. but my knowledge is limited when it comes to what happens if the bonds are declared taxable. i agree with you that any final determination that these bonds are not tax-free and must be called would trigger the messy situation you mentioned. i can't even begin to think how it would work.

thanks for you note.
lauren

[Lauren Ritchie]

Originally Posted by graciegirl

Whoa. Wait a minute. The Morses interpretation of CDDs has given us this remarkable lifestyle.

gracie,

it is not the morse's interpretation of how CDDs function that has given you the lifestyle. YOU paid for that -- he didn't. in fact, it would be costing you considerably less for the same amenities without the creative interpretation factor. that's the reason i keep writing this story.

but i'm still with you on the excellent lifestyle.

lauren