A municipality or school district that is issuing debt (referred to herein as an “issuer”) needs to employ legal counsel to assist it with the debt issuance process. There are several legal roles in a bond issuance, two of which involve representing the issuer. To begin with, the issuer already has its regular solicitor who serves as the issuer’s general counsel on a wide range of legal issues, such as labor matters, bidding and contracts, land development, and litigation. When an issuer decides to issue debt to finance or refinance a capital project, it should also retain a special counsel, known as bond counsel, to assist both the issuer and its solicitor with the debt issuance process. Bond counsel firms specialize in the legal aspects of debt issuance, including tax law, securities law, and state statutory law. Continue Reading The Relationship of Bond Counsel and Solicitor in a Bond Issue
On May 26, 2020 Representative Rob Freeman (Democrat – Northampton County) introduced House Bill 2548 in the Pennsylvania General Assembly, to provide a temporary reprieve to municipalities enrolled in Pennsylvania’s Municipal Financial Recovery Program. Mr. Freeman is the minority chair of the House Local Government Committee, the committee to which the bill was referred for consideration. Continue Reading COVID-19 Related Extension Proposed for Pennsylvania Municipal Financial Recovery Program
Attending public meetings is a big part of any municipal law practitioner’s routine, and, if I’m being honest, one of my favorite parts of my job. Before the COVID-19 pandemic, members of my group, myself included, frequently attended County, township and borough meetings. While I understand that a township board of supervisors meeting might not be everyone’s idea of a fun Thursday night, I like watching government at work. In today’s world, how many spaces exist where citizens can engage directly with their elected officials? Continue Reading Public Meetings in Pajama Pants
By now, public sector employers have navigated the first two weeks of employee eligibility for paid leave under the Families First Coronavirus Response Act (“FFCRA”). At the same time, public employers have tried to digest the CARES Act and whether its provisions provide any economic relief. Together, the two laws tell a single story – public sector employers have the same obligations as private sector employers but not the same level of financial support. You are generally on your own to figure out how to manage and pay for your workforce during these unprecedented times. Some aspects of the laws, however, can provide relief valves, provided the appropriate decisions are made and implemented. Continue Reading The Consolidated Impact of the FFCRA and CARES Act on Public Sector Employers: You’re on Your Own (for the most part)
With the onslaught of negative economic news related to the ongoing coronavirus crisis, many municipalities are scrambling to determine the impact of the pandemic on, among other things, their finances. Many may be staring down unbudgeted expenses related to this public health emergency, while at the same time anticipating substantial deficits due to drop-offs in real estate and income tax collections. Continue Reading Tax Anticipation Notes: A Short-Term Cure for the Coronavirus Budget Deficit?
COVID-19 has rightfully dominated the news over the last several weeks, leaving municipalities, nonprofit organizations and businesses scrambling to determine the impact of this pandemic on, among other things, their finances. Many organizations have contacted their lenders in the past two weeks to seek out short-term deferrals of their payment obligations on loans. But what are the tax implications of such deferrals when an organization has a tax-exempt loan? Continue Reading Considering a Temporary Deferral on a Tax-Exempt Obligation? Don’t Forget About the Reissuance Rules
On March 30, 2020, President Donald Trump declared that a major disaster exists in the Commonwealth of Pennsylvania (the “Commonwealth”) and ordered Federal assistance to supplement Commonwealth and local recovery efforts in the areas affected by the Coronavirus Disease 2019 (“COVID-19”) pandemic beginning on January 20, 2020, and continuing. This declaration follows Governor Tom Wolf’s request on Sunday for a major disaster declaration from the President.
Under the major disaster declaration, state, county and municipal governments, as well as eligible private non-profits, can receive reimbursement for up to 75 percent of eligible expenses related to the response to the COVID-19 outbreak. Eligible expenses can include but are not limited to costs associated with paying overtime, or materials and equipment purchases. The declaration also provides direct federal assistance, which provides federal materials and supplies to support state and local response efforts.
In the coming weeks, staff from the Pennsylvania Emergency Management Agency will reach out to potential applicants to review the application process and necessary documentation. As the response period for the COVID-19 outbreak is continuing, the process will take weeks. All reimbursements will be handled electronically.
Governor Wolf said his request for other federal aid remains under consideration.
In determining if the declaration was warranted, the President considered state fiscal capacity and resources availability, uninsured home and personal property losses, disaster impacted population profile, impact to community infrastructure, casualties and disaster-related unemployment.
According to the President’s announcement, additional designations may be made at a later date if requested by the Commonwealth and warranted by the results of further assessments.
We will continue to monitor developments related to COVID-19 and the President’s declaration. For any questions regarding the declaration, please contact a member of the McNees Public Finance & Government Services Group.
Collectively, Pennsylvania has more than 2,500 counties, townships, boroughs and cities, each of which is required to comply with Pennsylvania’s Sunshine Act (the “Act”). The Act requires agencies to deliberate and take official action on agency business in an open and public meeting. An “agency” is any state or local government body and all sub-units appointed by that body that perform an essential government function and exercises authority to take official action or render advice. It can include boards, councils, authorities, commissions and committees.
With calls to stay home and avoid gathering in public as a result of COVID-19, Pennsylvania’s agencies are left wondering how they can continue to safely serve their constituencies while still complying with the public meeting requirements contained in the Act. This is not an issue unique to Pennsylvania and, in fact, states nation-wide have taken various measurers to address and alter requirements contained in their respective open meeting laws. For example, governors in Texas, Illinois, Louisiana, Massachusetts, Rhode Island, Michigan, Florida and Nebraska have all recently issued executive orders and proclamations that permit public bodies to meet virtually amid the spread of COVID-19.
In Pennsylvania, the Office of Open Records has issued guidance (the “Guidance”) to agencies on best practices for compliance with the Act in light of COVID-19. According to this Guidance, public meetings should generally be held at public buildings with open public participation. However, if an official emergency declaration prevents that from happening, a meeting via teleconference, webinar, or other electronic method that allows for two-way communication is permissible in most circumstances. According to the Office of Open Records, any agency taking that step must provide a reasonably accessible method for the public to participate and comment pursuant to Section 710.1 of the Act. Further, the Office of Open Records strongly recommends that any agency holding such a meeting should record the meeting and proactively make the recording available (preferably online) so that a full and complete record of the meeting is available to the public.
In arriving at its conclusion, the Office of Open Records is relying on 35 Pa.C.S. § 7501(d), which allows agencies under a “declaration of disaster emergency” to suspend the need to comply with certain “formal requirements.” In context, any such suspensions must be related to the emergency.
In addition to the Act, Pennsylvania municipalities are subject to general governance laws, e.g., the Borough Code, the First Class Township Code, etc., that limit the ability of municipalities to take official actions at remotely-held public meetings. To provide additional clarity to municipalities on their ability to take official action at such meetings, the Pennsylvania General Assembly is considering a proposal, House Bill 1564, which would allow municipalities to hold meetings remotely when the Governor has made a declaration of disaster or emergency. Among other things, HB 1564 includes the following requirements:
- All members of the municipal governing body must be able to speak to and hear the comments and votes.
- To the extent possible, the municipality must allow for public participation.
- The municipality must post notice of the meeting on its publicly accessible Internet website and, except where emergency circumstances dictate otherwise, via a newspaper of general circulation.
- The meeting must be livestreamed, recorded, or at a minimum, the draft minutes be made available within 48 hours of the meeting’s conclusion.
HB 1564 received third consideration and final passage (on a unanimous vote) by the House of Representatives on March 25, 2020. The bill has not yet been acted on by the Senate.
For any questions regarding the guidance issued by the Office of Open Records or HB 1564, please contact a member of the McNees Public Finance & Government Services Group or a member of the McNees Real Estate Group.
The National Association of Bond Lawyers (“NABL”) recently sent a letter to Congress, outlining some measures it recommends Congress adopt to combat the economic downturn related to the Coronavirus COVID-19 Pandemic. The suggestions are a mix of previously-made requests and new suggestions to inject additional liquidity into the market.
NABL’s recommendations, addressed to the top Republican and Democrat members in both the House and Senate, consist of the following:
- Reinstate ARRA-Era Bond Programs, such as Build America Bonds, at non-sequestration subsidy levels
- Relax the working capital rules in Sections 1.148-1(c) and 1.148-6(d) of the Regulations for coronavirus-related deficit financings
- Authorize the direct purchase of state and local bonds by the federal government (e.g., through passage of the Bond Market Emergency Relief Act)
- Eliminate or limit the prohibition of federal guarantees of tax-exempt bonds under Internal Revenue Code section 149(b)
- Reinstate tax-exempt advance refundings
- Remove, or substantially increase, the $10M cap on qualified tax-exempt obligations under Code section 265
- Temporarily permit institutional investors to count municipal securities towards their liquidity coverage ratio
- Temporarily suspend the private activity bond rules under Code section 141 to encourage additional partnerships with private enterprise
- Authorize additional types of private activity bonds previously eliminated by prior tax reform measures, to help small businesses
- Eliminate volume cap limits on single- and multi-family housing bonds for next three years
As Congress is still debating additional stimulus measures in response to the growing crisis, it is possible that some of these suggestions may appear in a final bill. The attorneys of the McNees Public Finance Group will continue to monitor this fast-moving situation as it develops.
At McNees, we understand that our clients are facing unprecedented challenges as a result of the spread of the coronavirus, COVID-19. In light of these challenges, the McNees Public Finance Group is closely monitoring any legal developments that may impact the municipal market, as well as the continuing disclosure obligations of our issuer clients and other obligated persons.
Earlier this year, the U.S. Securities and Exchange Commission (the “SEC”) Chairman Jay Clayton released a general statement deeming COVID-19 as an “uncertain issue where actual effects will depend on many factors beyond the control and knowledge of issuers.” Consequently, the SEC, as well as the Municipal Securities Rulemaking Board (the “MSRB”), have been closely monitoring the impact of COVID-19. Although neither the MSRB nor the SEC’s Office of Municipal Securities have issued any public statements directed at municipal issuers, the MSRB has issued a reminder to regulated entities regarding the supervision of municipal securities and municipal advisory activities and that of their associated persons.
Until further notice or guidance has been issued, issuers and other obligated persons still must comply with their SEC Rule 15c2-12 continuing disclosure obligations.
We will continue to monitor developments related to COVID-19. If you are unable to comply with your continuing disclosure obligations as a result of a shutdown or shelter in place order, or just have questions or concerns about COVID-19, please contact a member of the McNees Public Finance Group for assistance.