Key Highlights this Week! (as shared last week, today’s edition is being published on Tuesday as the team was at a conference)
- BREAKING: Debt Limit Suspension until 2017 if Budget Passes – multiple links
- VCAP – An Appealing WIN – Student Loan Bonds NOT taxable – see link
- Today: Treasury issues Final Allocation and Accounting Regs – full link inside
- Edward Jones to Quit Negotiated Bond Deals Business – link inside
- More on Super Chapter 9 for Puerto Rico – disturbing details inside
- Don’t Miss Out! Registrations are Coming in for FREE “Best Practices” CPE: Get 3 hours of dedicated Post Issuance Compliance training with CPE in November in Sunny AZ – registration details and link inside!
- It’s Free Access Week at the Bond Buyer… if you enjoy the latest news in the muni marketplace as a bond issuer, you should consider checking out the Bond Buyer. Link inside!
So…here goes…today’s Monday Muni Minutes!
Enjoy and have a great week! Deb
CURRENT EVENTS
Breaking Today: US Debt Limit Suspended until 2017 if Budget Vote Passes Tomorrow
In a variety of articles posted since late Sunday, all eyes are turning toward Washington DC as budget discussions could effectively eliminate the nation’s debt ceiling until March of 2017…as well as add another year of sequestration on BABs subsidies.
Here are 3 main points discussed in the various articles – do you concur?
- The debt limit suspension would eliminate the threat of a downgrade of the United States’ credit rating and the ratings of the state and local governments
- Both bond dealers and BABs issuers (like public utilities) expressed disappointment in the additional sequestration measures – and they believe it will undermine similar direct-pay debt options like BABs or the proposed America Forward Bonds in the future
- Discretionary spending will be increased in 2016 and 2017, but there will be cuts to Medicare, Social Security and some military retirees
Here are several articles for more information!
Wall Street Journal – Leaders reach Tentative Budget Deal
US News – Speaker Boehner Pushes for Budget before Leaving House
Businesswire – Fitch: Tentative Budget Deal Reduces Debt Limit Threat
Bond Buyer – Budget Deal would Suspend Debt Limit and Extend BABs Sequestration
I hope you find these links valuable – and please leave a comment below and let us know your thoughts!
IRS Appeal & Win: Majority of New Hampshire Student Loan Bonds are Not Taxable
Several months ago, we talked about the surge of VCAP applications based on Announcement 2012-14 for student loan bonds, and just how lucrative settlements for these bonds were becoming…
How lucrative? Like most of the $67 million in FY 2013 for the TEB.
In this particular case, the New Hampshire Health and Education Facilities Authority had requested VCAPs on 11 different series of bonds as the TEB was concerned about what they called “loan swapping,” which the IRS says is inappropriate and creates arbitrage bonds.
So, what is loan swapping?
According to the article, loan swapping is where the issuer reallocated loans made or acquired with the proceeds of one bond issue to another…
Here’s how each side viewed the issue:
“The issuers were unable to establish the bond issues to which the student loans were properly allocable as purpose investments and, as a consequence, the issuers could not establish that the bond issues involved were other than issues of arbitrage bonds,” the IRS said.
The Authority’s attorney, Brad Waterman stated, “Loan swapping did not deprive the federal government of revenue to which it was entitled. TEB did not explain in Announcement 2012-14 or elsewhere why it believed otherwise. In any event, its general assertion to the contrary clearly was incorrect.”
In the end, the Authority won the appeal for nine of the 11 series of bonds…which it had earlier been prepared to settle in VCAP. Good call…
You can read the full Bond Buyer article here.
Member Minute Alert: Just Released Today: Treasury issues Final Allocation and Accounting Regs under Section 141 of the Code
Breaking information another gracious fellow issuer member shared yesterday…
Treasury Issues Final Allocation and Accounting Regs
Treasury has issued final allocation and accounting regulations under Section 141 of the Code. The regulations are expected to be published in the Federal Register tomorrow. The Final Regulations generally apply to bonds sold on or after 90 days after publication in the Federal Register. The rules regarding remedial actions, however, apply to deliberate actions that occur on or after 90 days after publication. The Final Regulations allow permissive application of (1) the partnership provisions, the allocation and accounting rules, and certain corresponding rules for qualified 501(c)(3) bonds in whole, but not in part, to bonds to which the 1997 Final Regulations apply; and (2) the multipurpose rule to bonds to which the refunding rules apply.
The text of the final regulations is available here.
[Editor’s Note: Special thanks to fellow issuer member Erick S. who shared this information yesterday for your benefit!!]
Free Access Week at the Bond Buyer! You can get premium access by registering here!
OUT & ABOUT
Conferences:
There is a big Bond Buyer Conferences this week:
- Healthcare and Higher Education Conference – October 27
Additionally, there are several other conferences and regional events for the last quarter of 2015…
You can go to this Bond Buyer link to review what’s coming up and register!
Resources:
Download NABL’s “Crafting Disclosure Policies” Report
IRS Interim Guidance on BABs and Other Direct-Pay Bonds
IRS 39-Page Memo TE/GE-04-0715-0019
See the full article in the August 3rd Edition of the Muni Minutes!
Replay: Webinar: MCDC – What Comes Next for Muni Underwriters
By: DIVER by Lumesis and hosted by the Bond Buyer
IT was AWESOME! In case you missed it…
Here is the replay link and the slides.
Munivestor.com
Track, search, analyze and keep up on critical bond news – looking at it from the bondholder’s perspective.
On-Demand Post Issuance Compliance Training for Issuers
“Compliance Basics” – a FREE, 3-part video Compliance Framework training, plus the Monday Muni Minutes.
Just Released – with a valuable and amazingly cost-effective “team learning” option!
NEW In-Depth Training, PIC Essentials: The Audit-Proven Blueprint – covering The IDR – Form 4564, Project Accounting Boot Camp and our hot-button friend, PBU!
On-Demand Webinar
Resource: On Demand Replay of Continuing Disclosure after MCDC
Slides: Final Slide Deck for Continuing Disclosure after MCDC
Muni Market Minute Updates
(Quick news bits on topics we’ve covered in earlier MMM editions!)
A quick note: While my shoulder is recovering over the next three or four months, items of interest here will be shorter and, if allowable, links to the full article will be provided for more detailed information.
Edward Jones Quits Negotiated Muni Bond Business
In a surprising announcement, and one that sources say is NOT related to the $20 million SEC settlement in August for overcharging in primary market municipal bond pricing, the underwriting arm of Edward Jones will be leaving the negotiated bond deal space after 2015, although they will still continue to place competitive bids.
Why would they quit?
According to Jim Krekeler, partner and head of their public financing team, there are several reasons:
- A long term strategic decision to focus resources elsewhere
- Although the segment was profitable, it was a small portion of the firm’s revenues
- The firm has advanced trading systems and can supply other areas
You can read the full open Bond Buyer article here.
Muni Professionals, Insurers Criticize US Treasury’s Super Chapter 9 for Puerto Rico
In a follow up to our article in the October 19th Muni Minutes regarding Puerto Rico’s potential SuperBond proposal, this week we learn more disturbing details which are raising concerns from bondholders as well as insurers and muni professionals…which many are calling “dangerous for the broader muni market…”
You can read the full open Bond Buyer article here.
Treasury, IRS Issue Rules Help P3s
Bond attorneys believe that final allocation and accounting rules will help administer public-private partnerships for much-needed 
transportation needs as well as hospitals.
“These final regulations are a great step forward for encouraging public and private funding for projects and therefore for encouraging public-private partnerships,” said Vicky Tsilas, a partner at Ballard Spahr in Washington.
Note: These are the allocation rules in the Member Minute above as shared by Erick S.
You can read the full open Bond Buyer article here.
[Editor’s Note: We hope you enjoy these open article topics this week from the Bond Buyer – as well as the various sources in Current Events on the pending Debt Ceiling suspension!]
We hope you enjoyed this week’s edition of the Muni Minutes!
Due to high demand, we created PIC Basics as a free subscriber resource and then PIC Essentials – The Audit-Proven Blueprint to provide practical, hands-on tools you can use.
Solving the Compliance Puzzle is GREAT for Your Bottom Line!
We have also spoken at local and regional seminars as well as conducted numerous virtual interactive conference sessions…with more to come!
Again, thanks to everyone who participated in the PIC Essentials: Next Steps Survey! We really appreciated your thoughtful comments and the obvious desire for practical compliance information you can use.
So, we have already started working on quarterly trainings to address your three biggest fears – and I am working with a couple of professionals who will likely join me in the sessions as well.
Given the recent news and the IRS’s focus for 2016, our next three trainings will be:
- Beefier “inside the issuer trenches” look at what you need to have in place so you don’t need to worry – even BEFORE an IRS or SEC audit notice
- Succession planning – stopping the compliance “brain drain”
- Streamlining – including some cool policy and procedures tips!
Stay tuned for more information and maybe a few more questions!
In the meantime…
Remember: Take small bites. For more information or other resources, check out our Knowledge Library. You can also ask a question 
in the comments section or reach out to us privately via e-mail and we’ll do our best to help.
You are welcome to download my nationally published AFP article, “A Taxing Dilemma.” In it, I share how we, as issuers, can systematically do a better job of understanding and managing our compliance programs. I think you will see strong similarities in what I experienced and what the IRS and SEC are focusing on…
Want FREE dedicated Post Issuance Compliance CPE?
If you or fellow issuer friends are going to be in the Phoenix, AZ area on November 16th, there will be a FREE 3 hour CPE-eligible post issuance compliance best practices training seminar – with a complimentary networking reception following the training! And yes, I will be one of the five expert guest panelists!
Here is the downloadable flyer and registration link!
We hope you found this week’s edition of the Monday Muni Minutes valuable and informative.
We really do look forward to your feedback – and to provide the best content possible.
Have a GREAT week!
In closing, we are so excited that PIC Essentials: the Audit-Proven Blueprint is now available! A special welcome to members who joined us. We look forward to your comments, questions and chatting with you in the Private Facebook Group – Club PIC!
NOTE: You can still join the learning group here: PIC Essentials: the Audit-Proven Blueprint.
Plus, as we believe so strongly in the team approach to success, we are offering a tremendous “team discount,” where you and four additional compliance members within your agency or company can join the series right along with you…for only $70 more!
We hope you found this week’s edition of the Monday Muni Minutes valuable and informative.
Chat soon!
As always, your comments are welcome…scroll down and let us know what you think about any of the articles!
To your compliance success,
Debbie
The greatest compliment you can pay us is to share this newsletter with your issuer friends….
P.S. Enjoy reading the Monday Muni Minutes each week? Invite your issuer friends to join us on Issuer 2 Issuer so they can get their free online training, PIC Basics! They will also get the Monday Muni Minutes delivered directly to their inbox as well as receive a special “new member” discount offer on the PIC Essentials training!
P.P.S. PIC Essentials: the Audit-Proven Blueprint is now available! You can sign up for the informative, on-demand webinar series by clicking above! Read about the “Team Discount” above! It’s truly a great deal.
P.P.S. Want a one-click way to get faster information? If you are on LinkedIn, you can get access to breaking muni news articles as well as interesting compliance tips and resources, posted by us during the week. Join our private LinkedIn Group Page, and follow us on our Company Page.