Village Center Community, Fla., told that its bonds may violate criteria for tax-exempt interest

By Toni Weeks

San Luis Obispo, Calif., Jan. 22 – The Village Center Community Development District of Florida received a letter from the U.S. Department of the Treasury, Tax Exempt and Government Entities Division, on Dec. 17, informing the district that several series of its bonds violated one or more requirements for interest to be excluded from gross income of bondholders.

The bonds in question are the

• $60,175,000 series 1998A recreational revenue refunding bonds issued Jan. 6, 1998;

• $5,575,000 series 1998B subordinated recreational revenue bonds issued Jan. 6, 1998;

• $5.34 series 1998C million subordinate recreational revenue bonds issued Jan. 6, 1998;

• $14.22 million series 1999A recreational revenue bonds issued June 22, 1999;

• $7,665,000 series 1999B subordinate recreational revenue bonds issued June 22, 1999;

• $36,455,000 series 2001A recreational revenue bonds issued March 30, 2001;

• $2.01 million series 2001B subordinated recreational revenue bonds issued March 30, 2001;

• $57.25 million series 2003A recreational revenue bonds issued March 31, 2003;

• $7,005,000 series 2003B recreational revenue bonds issued March 31, 2003;

• $39,425,000 series 2004A recreational revenue bonds issued June 15, 2004; and

• $11.16 million series 2004B subordinate recreational revenue bonds issued June 15, 2004.

Specifically, the Treasury department asserted that more than 10% of the bond proceeds were used for private business use by the developer and that more than 10% of the bond proceeds were directly or indirectly secured by an interest in property used or to be used for a private business use, or payments in respect of such property.

The bonds were issued to finance the purchase of amenity facilities built by the developer, the Villages of Lake-Sumter, Inc., a Florida company that develops community development districts, 10 of which are residential and one is commercial.

The district, based in the Villages, Fla., was given 30 days to reply to the letter.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.