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.

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

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

The United States Department of the Treasury recently published its Final Rule implementing the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program established by the American Rescue Plan Act of 2021 (ARPA).  The Final Rule adopts with amendments the Interim Final Rule published by Treasury on May 17, 2021. The Final Rule updates the rules governing the expenditure of funds received by public entities under the program.
Continue Reading Treasury Issues Final Rule on Expenditure of State and Local Coronavirus Recovery Funds

Recognizing the importance of The American Rescue Plan Act of 2021 (ARPA), our  colleague, Attorney Tim Horstmann, wrote the first article in this series titled “The American Rescue Plan Act of 2021. Here’s What to Expect” in April 2021 and in July 2021 Tim penned an article titled “ARPA Windfall: What May Pa. and Its Municipalities Do With This Money?” Adding to this series, we will now discuss what to expect in an ARPA audit.  This article will focus on Pennsylvania’s $13,450,275,500.40 portion of the $350B Coronavirus State and Local Fiscal Recovery Funds Program (CSLFRF), which is the specific program under ARPA that provides new funding to tribal governments, states, territories, and local governments across the United States to aid in their recovery from the COVID-19 pandemic.
Continue Reading ARPA Audits– What to Expect and What You Can Advise Your Clients to Do Now

On Friday, September 10, 2021, the House Ways and Means Committee released the text of a bill – known as the “Build Back Better Act” – that would restore the ability of state and local governments to issue tax-exempt “advance refunding” bonds, i.e., bonds issued more than 90 days before the redemption date of the bonds to be refunded.
Continue Reading Tax-Exempt Advance Refundings Included in Proposed Build Back Better Act

In a previous article, I discussed the enactment of the American Rescue Plan Act of 2021 (“ARPA”), which provides for almost two trillion dollars of new federal spending to combat the ongoing impact of the COVID-19 Pandemic. ARPA provided approximately $350 Billion of new funding to tribal governments, states, territories, and local governments, $14 Billion of which was estimated to be received by Pennsylvania and its municipalities. Initial federal ARPA funding to the states and their political subdivisions was estimated to begin as early as May.

By now, Pennsylvania and its municipalities have received at least a portion of their ARPA funds. But what can they do with it? On May 17, 2021, the United States Department of the Treasury (the “Department”) published an interim final rule providing guidance to recipients on the use of ARPA funds. Consistent with ARPA, the Department in the interim final rule established four broad categories of authorized spending, (i) Public Health and Economic Impacts; (ii) Premium Pay; (iii) Revenue Loss; and (iv) Investments in Infrastructure. Each of these categories is discussed below.
Continue Reading ARPA Windfall: What May Pennsylvania and its Municipalities Do with this Money?

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