Talk of The Villages Florida - The Villages and the IRS. From Lauren Ritchie

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/)

- - The Villages and the IRS. From Lauren Ritchie (https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/villages-irs-lauren-ritchie-20583/)

Quote:

Originally Posted by bike42 (Post 289269)

The tax-free bonds are bought by investors, and are available through any stockbroker. They are NOT the same as the bonds on our homes. They are bought mostly by institutions. You can buy them yourself but the minimum increment is $10,000. My broker told me that the last issue (a few weeks ago) was snapped up within an hour, so apparently many qualified institutional investors still regard them as a desirable investment.

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.

Quote:

Originally Posted by EdVinMass (Post 289285)

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

EdV

You don't want her in Stonecrest, Spruce Creek or wherever it is you live?

Aftermath and unintended consequence

Under normal circumstance, I prefer to view the glass as half full. However, the bond controversy inspires more questions to those who are curious by nature.

In a worst case scenario, what happens to the status of the CDD amenities? Is there a window of opportunity for political entities such as Lake County, Sumter County, the City of Lady Lake or Marion County to enter the equation in a way that would open up access to all Villages amenities to their non-Villages residents? Is the current amenity regulatory process designed to restrict access to property owners? Is there any outcome that would provide access rights to incorporated municipal or county entities within the Villages boundaries?

From a few years ago, I have a vague recollection of an access interest to a certain amenity by a local agency....can't remember which one but it may have been from Lake or Marion. I am not certain, but possibly posted in TOTV. I really can't remember the specifics....sorry.

It is not my intention to exacerbate this complex issue. However, unintended consequence has often been a hallmark of government regulation. Perhaps my curiosity is misdirected and without merit. I hope someone with knowledge and insight on this matter will take the time to debunk any suspicions it may generate.

Have another great day in The Villages.

Quote:

Originally Posted by English Ivy (Post 289297)

You don't want her in Stonecrest, Spruce Creek or wherever it is you live?

She only mentioned Royal Harbor or Arlington Ridge in her post, as being comparable to TV for less money.

Quote:

Originally Posted by Taj44 (Post 289277)

The Morse's interpretation of CDD may have given us a nice lifestyle, but if it is an illegal interpretation, as determined by the courts, it doesn't do us much good. What good is a castle if it is built on quicksand?

It just appears to me that the Morse's tweaked the interpretation of the CDD definitions to benefit themselves financially. Not a problem - this is what business people do. But if it is deemed illegal at some point in the future, I just hope the residents aren't left holding the bag. Bike42 thinks the Morse's will settle up so the residents aren't harmed. I have a feeling that if it involves handing over millions of dollars, the Morse's won't pony up. It was to their advantage when the tornado went thru - they were in the business of selling homes and they wanted things to look good for prospective buyers. When its time to settle up with the IRS, the development will most likely be finished and I'm guessing the Morse's will have sold out and moved on to their next business venture. Call me jaded, but I think whenever large sums of money are involved, not so good things happen.

�I have a feeling that if it involves handing over millions of dollars, the Morse's won't pony up.�

I have known a few millionaires in my day none as successful as the Morse�s however. They all had one thing in common; none had large sums of money laying around. Millionaires do not put money in the bank to collect a half percent interest. They tend to reinvest money back into what made them money in the first place. If a business man can make an investment of one million by putting down $100,000 and borrowing $900,000 at 6% interest to make a 200% profit he will.

Two points Morse does not have the money to give to the IRS. His money is invested in what he knows best, and Team Tutt is the IRS target.

Bank accounts are insured to $250,000.

Quote:

Originally Posted by EdVinMass (Post 289308)

She only mentioned Royal Harbor or Arlington Ridge in her post, as being comparable to TV for less money.

Yes, both RH and AR (Stonecrest too) are nice. Lots of choices in Central Fl. Something for everyone.

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??

Is this really a big deal?

Quote:

Originally Posted by Lauren Ritchie (Post 289166)

hello villagers,

i have hopped on your forum to answer some of your questions and explain a little more. i�ll start by explaining how the villages CDDs differ from every other CDD in florida. that is the key to understanding why the IRS is on the villages case and not the case of any other CDD in the state. i noticed that many of you said this stuff is difficult to understand. it is, without question. but i�m going to give it a try. please email me with questions: lritchie@orlandosentinel.com

then i�ll respond to individuals � not the snippy ones. there�s no point in witty little exchanges bashing each other. this issue is too weighty for that sort of levity.

in florida, statutes (state laws) allow for the creation of a form of government called a community development district. the villages� CDDs were created in the usual way, which is to ask the county commission to allow the district to be established. the commissions in lake, sumter and marion all said yes in this case.

the so-called �numbered districts� function in the same way as every other CDD in florida: they were created to pay for the infrastructure of the community � i.e., roads, sewer plants, water plants, street lights, stuff like that. the developer controlled all the seats on the governing board of the CD. that�s the way the law is set up, and that is perfectly legitimate. the CDDs sold bonds to pay for hard, tangible assets, such as those mentioned above. as the development was sold, more folks who owned lots were entitled to seats on the governing board. eventually, the homeowners controlled the board. the set fee rates so that the community would continue to run and the bonds could be repaid. i don�t personally care for this setup, but it�s not illegal. so, no problem.

however, the village center district and the sumter landing district work differently. those CDDs were created in the same way as the ones mentioned above.

however, no residents actually live in the VCCD and SLCDD districts. it�s mostly commercial property that is either owned or controlled by the developer. if you doubt this, get online and read the bond statements. they clearly state that the property is either owned or controlled by the morse family.

so the VCCD and SLCDD board members are morse employees or associates. they are looking after morse�s interests, not those of the villages� residents. if you are thinking that they are concerned about the residents/homeowners, you should stop reading right here because i cannot help you.

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.

so, these two developer-controlled districts bought -- from the developer -- the recreational ammenities and the right to collect the fees for 30 years. in that transaction, the developer essentially cashed in on thirty future years of fees for himself and bought the recreational assets from himself. if the board members had not voted to buy the right to collect fees, the boards would not have had to issue bonds. rather, gary morse and his family would have had to collect their ammentiy fees over a period of 30 years � not in a lump sum.

following me?

every bond must have a stream of money from which it will be repaid. in this case, your ammenity fees are pledged to repay those bonds.

and that�s the catch.

why is this a �catch� you might ask?

the answer is that this is the ultimate form of taxation without representation.

you as a homeowner have no representation on the VCDD or SLCDD � the developer owns or controls the majority of land and seats on the governing board. and despite the purchase with YOUR ammenity money, you do not now and never will own the assets. that�s because the developer controls the governing boards and owns most of the property in the district.

here�s where the IRS comes in.

to be able to issue tax-free bonds, governments have to be real governments, like cities or counties or townships or boroughs. they have to exist for the public good. they cannot exist to make one person rich or to conduct transactions that benefit a single person or persons. purchases have be what�s called �arm�s length� � in other words, �disinterested.� what that means is there can�t be a conflict of interest.

of course, in this case, there is a very big conflict of interest. the developer is essentially buying from himself and issuing tax-free bonds to do it � and you, the homeowner, are paying for it. and wont� even own the assets when the bonds are paid off.

that annoys the IRS, whose agent says the VCDD and SLCDD bonds should not be tax-free because they don�t meet the tests of being for the interest of the people. in fact, the agent used the word �perverted.� he said the government so �perverted� the intent of how CDDs should function under florida law that the bonds should not be tax free. i totally agree with him, but you may have a different opinion, and that is OK because this is still america.

now, on to the comments, but totv says i must do it in another post. so stand by....

What if Lauren is right? The bottom line to us is minimal. See I2RideHd who estimates $400 (I agree ith that #).

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.

Quote:

Originally Posted by misky (Post 289343)

What if Lauren is right? The bottom line to us is minimal. See I2RideHd who estimates $400 (I agree ith that #).

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.

Quote:

Originally Posted by The Shadow (Post 289356)

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.

Oooo, Oooo, more scary stuff!

Seems to me that the IRS can not only impose fines, back taxes etc. but can put people in jail that commit tax fraud. Maybe that's why it's taking so long... Now I'm just saying that it was very clever to collect 30 years amenities in advance and then use tax free bonds to further reduce cost or say line the pockets of; well you know who.

How much are we talking?

Russ has indicated there are appox 50k homes. If you use the figure I had read somewhere (17-20k per home) it comes to 850 million to 1 billion dollars. That does sound high to me also. If you use the $400 per home it comes to 20 million dollars. That seems low to me! I have "red eyes" from reading so much, but I can not seem to find the true amount. Does anyone know what the total cost might be? Ms Ritchie?

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.

Quote:

Originally Posted by Talk Host (Post 289402)

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.

Does anyone really have "the straight of it"? Wouldn't it be premature for TV to offer what they might do? TV has shared what has happened and the status of the case with the IRS. Until the IRS makes its next statement.....what is there to tell?