A bill introduced by Representative Kate Harper (R-Montgomery) would impose a new public meeting requirement on municipalities considering selling or leasing their water or sewer systems. The bill was recently approved in the House unanimously, and has been referred to the Senate Consumer Protection and Professional Licensure Committee.

House Bill 477 would require municipalities to hold at least one public meeting prior to entering into an agreement to sell or lease a municipal-owned or operated water or sewer system. The bill would also apply to systems operated by municipal authorities, if the transaction contemplated the dissolution of the authority by the municipality. The meeting would have to be advertised at least twice, on successive weeks, not more than 60 nor fewer than 7 days before the date of the meeting. If the system served customers outside of the municipality considering the sale or lease, public notice would also have to be provided in the municipalities where those customers resided.

Additionally, the potential purchaser or lessee of the system would be required to attend the meeting – presumably to present its plans for the system and to answer questions.

In the event the Senate acts favorably on the proposal, and the Governor signs it, the new public meeting requirement would go into effect in 60 days. Municipalities considering selling or leasing their water or sewer systems should keep a close eye on the status of House Bill 477 to ensure they comply with its requirements in the event it become law.

McNees attorneys Tim Horstmann, Ade Bakare and Kathy Pape recently provided an update on municipal storm water management to the membership of the Pennsylvania State Association of Boroughs. Their presentation addressed recent changes in Pennsylvania laws governing municipal storm water management in boroughs, permissible user fee structures, and additional funding streams that are available to municipalities to pay for necessary projects.

Interested in learning more? A copy of the Power Point presentation is available online.

For Pennsylvania municipalities facing a rising tide of costs from implementing storm water management plans, the available funding options vary depending on where you are and what you are – but that could change as soon as later this year. The General Assembly has passed several laws that authorize certain municipalities and municipal authorities to impose “reasonable and uniform” fees to fund storm water management plans – and several additional bills are pending that, if passed, would extend these funding mechanisms to municipal entities across most of Pennsylvania. Continue Reading New Funding Mechanisms for Municipal Stormwater Management

It has traditionally been a fairly common practice in the municipal bond arena for issuers to either select or have significant input into the selection of underwriter’s counsel in connection with the issuance of municipal bonds. On July 27, 2017, the Municipal Securities Rulemaking Board (MSRB) issued a strong warning to the industry against continuation of these practices by publication of Notice 2017-14. Continue Reading MSRB Issues Warning Guidance On Issuer Involvement In Selection of Underwriter’s Counsel

Are municipal pension costs eating your budget alive?  Are streets, bridges, water and wastewater systems crying out for capital investment?  Are public safety costs pushing your budget to the brink?  If so, now may be the time to explore unlocking the value of your municipal assets.

Over the past five years, the Pennsylvania General Assembly has enacted several laws that have changed the landscape of municipal water and wastewater assets.  These changes make the sale of water or wastewater assets to a public utility more attractive.  These changes may also result in an increased sale price if your municipality decides to sell. Continue Reading Broken Budget? The Fix May be a Sale of Assets

Pennsylvania State Senators John Blake, John DiSanto, and Mike Folmer recently introduced a trio of new municipal debt reform bills that follow on the package of reform bills introduced in the Senate in March. The new bills – Senate Bill 694, Senate Bill 695, and Senate Bill 696 – would expand the power of the Office of Attorney General to prosecute political crimes at the municipal level, increase the statute of limitations for such crimes, and require third class cities to put out for competitive bid all contracts for professional services.

Continue Reading Pennsylvania Senators Introduce New Municipal Debt Reform Bills

On June 7, 2017, new IRS regulations that change the way state and local governments issue tax-exempt bonds went into effect. The new rules change the way municipal issuers determine the issue price of tax-exempt bonds they issue, and amend existing IRS regulations under section 148 of the Internal Revenue Code. The new rules have produced immediate changes to many common documents used by municipal issuers and their advisors in municipal bond transactions.

Continue Reading New IRS Regulations Change the Game for Municipal Bond Issuers

Following his inauguration on January 20th, President Trump issued several Executive Orders, one of which was issued on January 25, 2017 and titled, “Enhancing Public Safety in the Interior of the United States” (referred to herein as the “Order”). Among other things, this Order punishes so-called “sanctuary jurisdictions” by stripping them of federal grants. As justification for this punitive measure, the Order states that “sanctuary jurisdictions … willfully violate Federal law in an attempt to shield aliens from removal…. These jurisdictions have caused immeasurable harm to the American people and to the very fabric of our Republic.”

In the months since the Order, many state and local entities have parsed the Order to determine whether they would be considered a “sanctuary jurisdiction,” what funding may be in jeopardy, and whether they can modify their policies to limit or eliminate application of the Order. In the midst of these uncertainties, many municipalities also have been faced with the issue of how to address the potential consequences of “sanctuary jurisdiction” status in their public offering documents when they are considering issuing municipal bonds for sale to the investor public.

Continue Reading Sanctuary Jurisdictions and Municipal Bond Disclosure

The National Association of Bond Lawyers (NABL) and the Securities Industry and Financial Markets Association (SIFMA) recently released model issue price documents in connection with the soon-to-be effective Treasury Regulations on establishing the issue price of a tax-exempt bond issue. NABL’s model documents can be accessed here; SIFMA’s documents can be accessed here.

These model documents have been issued in response to the finalized Treasury Regulations on issue price, published by the Department of the Treasury on December 9, 2016.  The final regulations – which become effective on June 7, 2017 – retain the existing rule that in general, the issue price of a series of bonds is the first price at which a substantial amount (10%) of the bonds is sold to the public. The regulations add two special rules, however, which may be selected by the issuer in connection with the determination of the issue price: a special rule for competitive sales, and a special rule where the underwriter or underwriters agree to “hold the price” on the initial sale of the bonds to a price that is not higher than the initial offering price.

The model documents published by SIFMA and NABL provide a uniform solution for underwriters and issuers to ensure compliance with the final regulations, in particular in determining which of the three rules for determining issue price apply, and ensuring that the requirements for application of the rule are met. It is expected that both SIFMA and NABL will finalize these forms in the coming weeks after receipt of any comments from the public. Professionals working in the public finance industry should carefully review the forms now to get familiar with their requirements in advance of the effective date for the final regulations.