The Inflation Reduction Act, Public Law 117-168 (the “Act”), was signed into law by President Joe Biden on August 16, 2022, but the impact of some of its provisions is just beginning to be felt. Among those are the substantial federal subsidies the Act provides for state and local government investments in clean energy projects.
A bond issue (a debt obligation of a local government) is often perceived as a mystery for many Pennsylvania local government officials and solicitors. The securities and tax regulations governing municipal bonds have grown increasingly complex in recent years further adding to the challenge of understanding the path toward a successful bond issuance.
Updates in the Inflation Reduction Act could provide tax credits as an avenue for funding opportunities for municipalities to make seemingly impossible project possible. McNees invites you to join our panel of industry experts led by attorney Ryan Gonder for a roundtable discussion on:
- An overview of the recent changes in the Inflation Reduction Act
The Pennsylvania Commonwealth Court recently issued a long-awaited opinion in a prevailing wage appeal brought by Ursinus College, captioned at Ursinus College v. Prevailing Wage Appeals Board, No. 828 C.D. 2021 (Pa. Commw. Ct. 2022). The College was appealing a decision by the Pennsylvania Prevailing Wage Appeals Board (the “Board”) finding that the Pennsylvania…
All attorneys representing municipal and other public sector clients should be aware of the potential for a United States Securities and Exchange Commission (SEC) investigation of their clients’ public bond deals. Issuers generally will hire a team of professionals with specialized experience in public finance to assist them in completing a financing; such professionals commonly include bond counsel, disclosure counsel, and a municipal advisor. But even the general practice solicitor that handles all day-to-day legal issues for the client will play an important role in the financing process.
Continue Reading Solicitors: Help Avoid Targeting by the SEC in Municipal Bond Offerings
Since September 2021, the United States Securities and Exchange Commission (the SEC) has brought five enforcement actions regarding municipal bond financings. The issuers of these bonds are Sweetwater Union High School District (Texas); Crosby Independent School District (California); Town of Sterlington (Louisiana); City of Rochester (and its school district) (New York); and Johnson City (Texas). In each case, the issuers and other involved parties were charged with providing false and misleading information to municipal bond investors. Enforcement was not limited to entities; individuals representing the issuers were also targeted. Additional information about these cases (and earlier cases) is available on the SEC website, at https://www.sec.gov/municipal/oms-enforcement-actions.html.
Here are seven lessons to be learned from these cases:
Continue Reading Seven Lessons to be Learned from Recent SEC Enforcement Actions Involving Municipal Bond Financings
The Securities and Exchange Commission (SEC) recently charged two chief financial officers of school districts with misleading investors in municipal bond offerings. This should be a warning to municipal CFOs to be very careful to make appropriate disclosures when involved in their public entities’ bond issues. An SEC official recently stated that “the SEC is committed to holding bad actors in municipal securities offerings accountable for their misconduct.” Don’t be the CFO bad actor that the SEC targets!
Continue Reading Municipal CFOs: Be Careful of your Bond Disclosures; the SEC is Gunning for You
The American Rescue Plan Act (“ARPA”) was enacted in March 2021 providing an unprecedented $1.9 trillion in direct relief to combat the effects Covid-19, whether it be negative economic impacts, public health implications, revenue loss, or identified needs in infrastructure. Pennsylvania and its municipalities received approximately $14 billon in those federal ARPA funds!
ARPA funds come with certain new reporting requirements. For municipalities, the first round of that new reporting (the “Project and Expenditure Report”) is due to the U.S. Treasury by April 30, 2022. Every municipality that received ARPA funds must file this report (even if you haven’t spent anything yet).
Furthermore, and this is especially important,
Continue Reading ARPA Reporting due April 30, 2022!
In December 2017, former President Donald Trump signed into law the Tax Cuts and Jobs Act. Among the many provisions of the Act was a provision that eliminated the tax exemption for municipal bonds that advance refunded another series of bonds. Prior to its passage, issuers had the ability to issue such bonds on a tax-exempt basis, and did so for a variety of reasons, including to achieve debt service savings. With the loss of tax-exempt status for advance refunding bonds issued after the passage of the Act, issuers and their advisors have searched for alternatives to the traditional tax-exempt advance refunding model.
In this article, we explore some of the alternatives that issuers have applied to achieve the same or similar benefits that would be achieved with a traditional tax-exempt advance refunding. First, we discuss the use of “forward delivery” bonds, where the bonds are sold, but not delivered to investors until a much later date in the future; second, we consider so-called “Cinderella” bonds, which are issued taxable but later convert to tax-exempt; and finally, “tenders and exchanges,” where issuers, often in conjunction with a current issuance, make an offer to investors to acquire their outstanding bonds, either for purchase or exchange.
Continue Reading Four Years On, Alternatives to Tax-Exempt Advance Refundings Continue to Proliferate in Municipal Bond Market
McNees Public Finance attorneys Timothy J. Horstmann and Ryan T. Gonder will present “Preparing for an Audit of ARPA Expenditures: What to Do Now,” at the Pennsylvania State Association of Township Supervisors annual conference in Hershey, Pennsylvania, this April.
Continue Reading McNees Public Finance Attorneys to Present on ARPA Expenditures