The Consequences of Tax Exempt Debt for Private Real Estate Development: The Case of The Villages

Fall 2013, Vol. 38, No. 2
Abstract: Tax exempt debt in the United States is commonly secured by special districts to provide a variety of infrastructure routinely treated as public facilities. In some cases, these special districts are largely controlled by private interests, and the infrastructure or services support what might otherwise be viewed as the facilities normally required of real estate development. In this article, the author takes a look at a recent IRS ruling that casts a shadow over the appropriateness of tax exempt debt for such purposes, and raises questions about its use in many real estate projects relying on a similar legal structure.