IRS stumps Port Ferdinand investor
United States authorities have ruled against the tax exempt status of an American businessman involved in several building projects here, raising questions about the implications for those Barbados ventures.
Billionaire H. Gary Morse, who is said to have a home here, is an investor in Port Ferdinand Marina, St. Peter’s Bay Development, and other developments involving The JADA Group, did not have the right to offer tax free bonds, funding used to construct his massive Village Center Community Development District in Florida.
That’s the ruling of the Internal Revenue Service, which made its view known in a memo dated May 30, news of which is making the rounds in the US, partly because of Morse’s links to unsuccessful 2012 Republican presidential candidate, Mitt Romney.
Reports out of the US today were that US$426 million in bonds issued by the community district started by Morse were deemed not qualified for tax exemption because it did not have political subdivision status.
“The issuer was not a political subdivision … because it was not a division of a state or local government unit during that period. Because we find that the issuer was not a division, we do not address the delegation of sovereign power,” the IRS memo stated.
The US Treasury Department defined a political subdivision as “any division of any state or local governmental unit which is a municipal corporation or which has been delegated the right to exercise part of the sovereign power of the unit”.
This IRS ruling is considered landmark, as it is likely to negatively affect similar ventures elsewhere in the US and as far as The Villages community venture in Florida was concerned because the issued bonds were thought to be a major source of funding for that project.
It is also the main reason why questions are being raised about the possible fallout for the developments he has a hand in in Barbados.
The Bloomberg Billionaires Index said Morse had a personal fortune of US$2.6 billion “derived from profits selling the homes as well as related business such as issuing mortgages to Villages buyers”.
Bloomberg also claimed that at least US$955 million of his fortune “comes directly from money paid to him from the issuance of tax free municipal bonds — including the bonds ruled taxable by the IRS. Morse’s close links to projects in Barbados are publicly known, including his most recent involvement in the Port Ferdinand marina, which is still being constructed in St. Peter.
This involvement was confirmed as recently as October last year by local business partner Port Ferdinand Chairman, Bjorn Bjerkhamn. In an article published by the Talk Of The Villages website operated by Morse’s community housing project, Bjerkhamn was quoted as saying: “Gary is no stranger to the Caribbean, having done developments in the Bahamas, Montserrat and Jamaica, and has been coming here to Barbados for the last 13 years.
“It is very heartening that a successful businessman like Gary Morse has the confidence in Barbados and in this project. The investment of Gary’s talents, resources and vast experience will help make this development a success.”
“At this time when investors are running for the hills, (Morse) is contributing to the economic well-being of Barbados, as well as helping us to keep more than 1,000 workers at Jada employed,” he added. (SC)