[shuffleboard]

Your missing the point... These bonds are mostly for the pure profit for the developer.

For Example, The Savannah performing center cost the developer 7 million to build. He sold it to the CDD (his appointed individuals) for 25 million based on an income stream asset valuation, over the next 30 years. The CDD issued bonds for 25 million which the residents are paying off with ammenity fees. The difference of 18 million went into the profit column of the developer. That's what has the IRS concerned about and why they are questioning the tax free status of the bond.

[Cassie325]

Does anyone have a real description or explanation of the recreational bonds from the CDD's? I have looked and can't find anything. I would think they are the ones to go to for answers. At least their explanation of them.

Again, I think a lot of answers would be found at the Thursday morning orientation classes at Sumter Landing CDD at Laurel Manor.

I have been to the class and feel it is very informative...but I need to go again to understand even more.

[katezbox]

Originally Posted by shuffleboard

Your missing the point... These bonds are mostly for the pure profit for the developer.

For Example, The Savannah performing center cost the developer 7 million to build. He sold it to the CDD (his appointed individuals) for 25 million based on an income stream asset valuation, over the next 30 years. The CDD issued bonds for 25 million which the residents are paying off with ammenity fees. The difference of 18 million went into the profit column of the developer. That's what has the IRS concerned about and why they are questioning the tax free status of the bond.

To a point....

Why would the developer build the Savannah Center if not for a profit? He sold it for $25M based on the present value of a future earnings stream. Did he make a lot of money? Yes. But the Savannah Center provides entertainment for a price, which presumably the CDD then recovers.

As far as the tax free status of the bonds - let's wait and see. We can speculate until the buffalo return, but ...

Kate

[Russ_Boston]

Originally Posted by Lauren Ritchie

Did you get a really sweet deal on your house? Did you pay far less for your house than people in other retirement communities pay? I think not.

Laureen, thanks for the detailed info but I do have a problem with the part of the quote I left above. I know that you are not a reporter but a columnist which means you can state your opinion but what the heck does that statement above have to do with the bonds or taxable/nontaxable portion of same?

Who ever said that people in TV felt they paid less for their house than people in other retirement communities? If you read the board, like I have for two years, then you'd realize that the vast majority of TV owners think just the opposite. But they don't mind the extra cost for the lifestyle that is provided for them to enjoy. And this lifestyle does have a cost.

Other than the taxable issue which will be ruled on there are no surprises in your column that I can see. Do you really feel that you are doing some sort of great community service by exposing something?

The taxable issue will need to be addressed when the ruling is final and all TV residents will be billed in some fashion if the ruling goes against them. But TV will sell out the remaining 15K-20K homes over the next 5 years or so and 100K people will be enjoying a great life. Albeit paying a little bit more than their Stonecrest etc. neighbors.

[jflynn1]

Great article. Thanks for keeping us informed.

[Bryan]

The bonds on our homes I think most of us understand - basically recover costs of the infrastructure where we live. A lot of past complaints over those bonds concerned how well they were (or were not) explained by sales representatives - not about the validity of the bonds.

This current hoopla is about bond debt that we, as residents, have no say in. We can't agree or disagree to the debt - we just get stuck with it because we live here. If the residents of TV generally thought the sale of such stuff as The Savannah Center or golf courses was made to the CDD's at a "fair market value", they would probably be a lot less upset. Too many feel we are being taken to the cleaners and saddles with enormous debt without any say ourselves in the process. Some would say "taxation without representation" while others might say "The fix is in".

Bottom line, whether you agree or disagree with the debt, way too many of us feel we did not get value for our money NOR did we have any say in whether it was even a good idea to make the purchase or not. The tax exempt status of all the (unearned?) profit for the Developer is what the IRS case is all about, but only a prepherial issue to most residents. Our voice in even incurring this debt in the first place is our real issue - and the current IRS case will do nothing to address that issue.

[Russ_Boston]

Originally Posted by Bryan

The tax exempt status of all the (unearned?) profit for the Developer is what the IRS case is all about, but only a prepherial issue to most residents.

Ok I see - If the IRS rules and says that they are not tax exempt then the devolper (who reaped the profit) is liable for the taxation not the homeowners. Of course this could impact future turnover of the centers since the cost may have to be increased to cover taxation.

[JimJoe]

http://www.orlandosentinel.com/news/...4865936.column

[starflyte1]

I understand the bonds. What I do not understand is how the home owners would be liable for the tax when it is the developer who sold the bonds and made the profit and is making the interest income.

[Muncle]

When my copy of the Orlando Slantenal arrived early this AM, I hurried to read Ritchie's follow-up story on the dreaded bond issue. I had gotten the impression that Sunday's article had promised some detail, some actual facts. Ah well, I've been disappointed before.

Basically all today's screed seems to be is a rehash of Sunday's with a bit more infatuation with our hero, the evil fighting IRS agent, Dominick Servadio. The gist of the matter is that rugged, macho Dom does not like the CDD concept, nor does his boss in the the IRS bond division (that last part actually was new info). Dom evidently believes:

*The district doesn't qualify under IRS rules as a valid issuer of tax-free bonds.

*The transactions didn't benefit the general public -- a requirement of tax-free bonds -- but instead, only the developer.

*The Village Center Community Development District issued $53 million more than the properties it bought were worth and handed the cash to Morse, who declared it as a gain on the sale on the corporation's 2003 tax return. Issuing bonds for more than 5 percent more than what's needed throws the bonds into the taxable realm under IRS arbitrage rules, the agent contended.

*The appraisal firms that set the value of the properties were tools of the district who did what they were told. They were not independent appraisers, as the IRS requires.

Ritchie never seems to get around to explaining why Dom has these views. That might have been a good time to explain Florida Statute 190 and the CDD concept, but I guess Ritchie couldn't be bothered with the research. I think there's going to be a big argument over whether CDDs are government entities entitled to issue such bonds. Next, Dom & Ritchie state flatly that the transactions do not benefit the general public -- I guess that's us. Don't know about you, but I benefit greatly from the golf courses, rec centers, sewer plants, etc. The last two items also appear to be matters on semantics, something the lawyers will love.

Again, Ritchie throws around that $18,000 per household herring without really putting any meat into it. It is apparently one of the possible 3,472 outcomes of doom Ritchie sees for TV and the hated Morse family.

Ritchie dismisses with total disdain any response from TV and it's legal representatives. She makes a point of further glorifying Dom because he chose to ignore a letter requesting a meeting and ascribes panic to TV because they want to get the matter settled quickly because the open case would be detrimental. And of course gets another cheap shot at the Morse demon.

As I and others have said, expect this battle to continue for quite a while. CDDs are very big in Florida and other states and the outcome of this case may well affect many. Meanwhile, I look forward to the continuing saga of Ritchie and Dom. She seems to have no problem getting access to him and the correspondence he receives from the subjects of his investigation. In the interim, maybe she can investigate the dog park on 466A or the lack of indoor pools. And don't be surprised if she picks up a freelance gig, say something like a monthly column in the POA bulletin.




`

[Russ_Boston]

Originally Posted by Muncle

And don't be surprised if she picks up a freelance gig, say something like a monthly column in the POA bulletin.

Now you've opened up the floodgates Uncle Muncle. Priceless!

[iaudit]

Bryan wrote:

"The tax exempt status of all the (unearned?) profit for the Developer is what the IRS case is all about, but only a prepherial issue to most residents."

I do not believe this is correct. It was the central district that issued the tax exempt bonds, not the developer. He claimed a gain on his income tax return and paid taxes on that gain. The central district is on the hook if the tax exempt status is changed for the bonds. They may have to call the bonds and settle with the bondholders because of the lower interest rates the bondholders received and the taxes that they will have to pay. They will then have to issue new bonds at taxable rates, which are normally higher, however, during this economic climate that may not be the case.

Any financial penalties or expenses related to this issue will have to be paid by the central district. As I understand it, the central district has two ways to raise funds: payments received for amenity fees (which can only be raised based on CPI) and levying property taxes (which they have not done before but have the authority to do).

As some have mentioned, this may take awhile to play out but in the end, any financial penalties will probably be paid by the village residents in one form or another.

[iaudit]

Originally Posted by Muncle

When my copy of the Orlando Slantenal arrived early this AM, I hurried to read Ritchie's follow-up story on the dreaded bond issue. I had gotten the impression that Sunday's article had promised some detail, some actual facts. Ah well, I've been disappointed before.

Basically all today's screed seems to be is a rehash of Sunday's with a bit more infatuation with our hero, the evil fighting IRS agent, Dominick Servadio. The gist of the matter is that rugged, macho Dom does not like the CDD concept, nor does his boss in the the IRS bond division (that last part actually was new info). Dom evidently believes:

*The district doesn't qualify under IRS rules as a valid issuer of tax-free bonds.

*The transactions didn't benefit the general public -- a requirement of tax-free bonds -- but instead, only the developer.

*The Village Center Community Development District issued $53 million more than the properties it bought were worth and handed the cash to Morse, who declared it as a gain on the sale on the corporation's 2003 tax return. Issuing bonds for more than 5 percent more than what's needed throws the bonds into the taxable realm under IRS arbitrage rules, the agent contended.

*The appraisal firms that set the value of the properties were tools of the district who did what they were told. They were not independent appraisers, as the IRS requires.

Ritchie never seems to get around to explaining why Dom has these views. That might have been a good time to explain Florida Statute 190 and the CDD concept, but I guess Ritchie couldn't be bothered with the research. I think there's going to be a big argument over whether CDDs are government entities entitled to issue such bonds. Next, Dom & Ritchie state flatly that the transactions do not benefit the general public -- I guess that's us. Don't know about you, but I benefit greatly from the golf courses, rec centers, sewer plants, etc. The last two items also appear to be matters on semantics, something the lawyers will love.

Again, Ritchie throws around that $18,000 per household herring without really putting any meat into it. It is apparently one of the possible 3,472 outcomes of doom Ritchie sees for TV and the hated Morse family.

Ritchie dismisses with total disdain any response from TV and it's legal representatives. She makes a point of further glorifying Dom because he chose to ignore a letter requesting a meeting and ascribes panic to TV because they want to get the matter settled quickly because the open case would be detrimental. And of course gets another cheap shot at the Morse demon.

As I and others have said, expect this battle to continue for quite a while. CDDs are very big in Florida and other states and the outcome of this case may well affect many. Meanwhile, I look forward to the continuing saga of Ritchie and Dom. She seems to have no problem getting access to him and the correspondence he receives from the subjects of his investigation. In the interim, maybe she can investigate the dog park on 466A or the lack of indoor pools. And don't be surprised if she picks up a freelance gig, say something like a monthly column in the POA bulletin.




`

Why don't you try reading the IRS reports:

http://www.orlandosentinel.com/media...3/45365631.pdf

You will find that Dominick didn't pick this info out of thin air, but has all the references related to his analysis and conclusions. It is over 100 pages long and Ritchie has done a good job of SUMMARIZING the key points. If you really want to understand it, read it and then respond.

[Canabarrybarb]

Iaudit, I believe that you have summarized the issue correctly.

While it may take some time for this to play out, the issue may further lower our house values in the near term as this issue gets more exposure in the press and gets better understood by the buying public. The prospect of a new local tax would certainly impact some buying decisions. Let's hope that it gets resolved quickly.

[KayakerNC]

Originally Posted by Canabarrybarb

Iaudit, I believe that you have summarized the issue correctly.
While it may take some time for this to play out, the issue may further lower our house values in the near term as this issue gets more exposure in the press and gets better understood by the buying public. The prospect of a new local tax would certainly impact some buying decisions. Let's hope that it gets resolved quickly.

Shooting the messenger may not be the best response to understanding what potentially could be a serious problem.