Last week amendments to the SEC continuing disclosure rules for municipal bonds went into effect. Under the new rules, municipalities that are planning a public offering of municipal bonds must update their continuing disclosure agreements to include covenants to disclose each of the following:

  • Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material.
  • Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

If you aren’t up to speed yet on the new rules, don’t panic – we’ve been following the issues relating to the implementation of the new rules closely since their announcement in August 2018. For more information, please see our prior commentary, available here and here.

We will continue to monitor industry response to the new rules and will be providing additional updates throughout the year as issuers, underwriters and their professionals adjust to them. Stay tuned!

On February 12, 2019, Representative Tina Davis introduced a bill proposing to establish a new regulatory commission with oversight over municipal water and wastewater authorities.   H.B. 494 would establish a Municipal Water and Wastewater Authority Oversight Commission (“Authority Commission”).  Representative Davis previously sponsored H.B. 798, which would have amended the Public Utility Code to subject municipal water and wastewater authorities to regulation by the Pennsylvania Public Utility Commission (“PUC”).  Introduced in 2017, H.B. 798 failed to move out of the Consumer Affairs Committee. Continue Reading New House Proposal Would Subject Municipal Water, Wastewater Authorities to Additional Oversight

“Oh, don’t go that way.  You want to avoid the Beltway.” It’s a common chorus in many American cities.  Harrisburg is no exception and backups on its Beltway encroach onto Front Street and other arterial and connector roads on a daily basis.  In recent years, the issues have been exasperated as we continue to see populations trending from rural to urban locations while, at the same time, continue to experience aging and weakening transportation infrastructure.  But plans to bring relief to Harrisburg’s Beltway have been in the works for 15 years.  In 2003, the Pennsylvania Department of Transportation (“PennDOT”) prepared an I-83 Master Plan, the purpose of which was to identify, plan, and program future transportation improvement projects for the I-83 Capital Beltway.  The Master Plan proposed numerous improvements to the Beltway to address: (1) worsening road conditions; (2) high-traffic volumes and congestion; and, (3) safety.  Obviously, the Master Plan will affect municipalities and businesses alike. Continue Reading The I-83 Capital Beltway Project: PennDOT’s Right-of-Way Acquisition and Power of Eminent Domain

With the Pennsylvania General Assembly officially starting its new legislative session this January, now is a good time to take stock of the legislative proposals affecting municipalities that were approved by the Assembly and signed into law by Governor Wolf during the 2017-2018 session. In the last two years close to 250 bills were signed into law by the Governor; this article will examine 13 of them. Continue Reading A Look Back at the 2017-2018 Legislative Session

Republican Representative Garth Everett, in a cosponsorship memorandum posted on February 1st, announced plans to reintroduce a package of bills that would expand the ability of municipalities throughout Pennsylvania to assess stormwater management fees. These proposals, contained in former House Bills 913 through 916 (2017-2018 session), died in the Senate last term after being passed with bipartisan support by the House. Continue Reading Stormwater Fee Proposals Reintroduced in Pennsylvania General Assembly

The Internal Revenue Service celebrated New Year’s Eve this year by issuing two rule-making notices of interest to the tax-exempt bond community, on the topics of public approval of private activity bonds and reissuance.

The first notice contains final regulations on the public approval requirement of section 147(f) of the Internal Revenue Code, 26 U.S.C. §147(f). You can access a copy of the final regulations here.

The final regulations on section 147(f) make several significant modifications to the proposed regulations, which were published by the Service on September 28, 2017 (read our prior analysis of the 2017 proposed regulations here). Some of the key highlights of the final regulations are as follows:

  • 7-Day Notice Period: The current regulations, at 26 C.F.R. §5f.103-2, require that the public notice be given at least 14 days before the date of the public hearing. The IRS had previously issued proposed regulations in 2008, shortening this requirement to 7 days, but went back to 14 days in the 2017 proposed regulations. The stated reason for this decision was a reference in the legislative history to a 14-day notice period. However, in response to comments to the 2017 proposed regulations, the IRS has determined to restore the 7-day notice period, as the statutory text makes no mention of a 14-day notice period.
  • Website Notices: The current regulations require that the notice must be published in a newspaper or announced by radio or television broadcast. The 2017 proposed regulations introduced website notices, but required that the issuer offer to residents without access to the Internet an alternative method for obtaining the information contained in the website notice. The final regulations drop this “alternative notice” requirement. Therefore, a notice that is published solely through the governmental unit’s website will satisfy the public notice requirement of section 147(f). The notice must appear in an area of the government’s website that is used to inform residents about events affecting the residents.
  • Deviations and Ability to Cure: The 2017 proposed regulations introduced the concept of insubstantial deviations, that is, deviations from the notice and public approval that are so minor as to not cause the notice and public approval to fail to meet the requirements of section 147(f). Additionally, for deviations that were substantial, the 2017 proposed regulations afforded issuers the opportunity to cure the resulting violation through a supplemental notice and hearing that met the requirements of the regulations. The final regulations largely implement these concepts as originally proposed.
  • Effective Date and Retroactive Use: The final regulations are generally effective April 1, 2019. However, the IRS in response to comments it received agreed to afford issuers the option of retroactively applying the “deviation” provisions (including the ability to cure) to any bond issued pursuant to a public approval that occurred prior to April 1, 2019. This presents an excellent opportunity for issuers of bonds with faulty public approvals to reduce their audit risk.

The second New Year’s Eve notice from the IRS contains proposed regulations on the reissuance of tax-exempt bonds, particularly qualified tender bonds. You can access a copy of the proposed regulations here. The proposed regulations follow the guidance previously provided by the IRS in Notices 88-130 and 2008-41, related to qualified tender bonds. Each of those Notices will be rendered obsolete once the regulations are finalized.

The proposed regulations are not intended as a departure from previous guidance. Thus, the proposed regulations, like the Notices before them, provide that the existence or exercise of a qualified tender right of a qualified tender bond will not, in and of itself, result in a reissuance for tax purposes. And, the terms “qualified tender bond” and “qualified tender right” carry meanings substantially similar to the definitions that were ascribed to these terms in the Notices.

The IRS is requesting that any comments to the proposed regulations or requests for a public hearing in connection with them be delivered by March 1, 2019.

 

After months of deliberation, on August 20, 2018, the U.S. Securities and Exchange Commission (the “SEC”) announced its final approval of new amendments (the “2018 Amendments”) to Rule 15c2-12, 17 C.F.R. §240.15c2-12 (herein, “Rule 15c2-12” or the “Rule”). Rule 15c2-12 requires dealers, when underwriting certain types of municipal securities, to ensure that “obligated persons” enter into a written commitment (called a continuing disclosure agreement, or “CDA”) to make periodic disclosure filings to the Municipal Securities Rulemaking Board (the “MSRB”). An “obligated person” means any person, including the issuer, that supports the payment of all or part of the obligations on municipal securities to be publicly offered for sale. Continue Reading What is Material? The SEC Says You Decide

As the executive and legislative branches of County government, the County Commissioners are responsible for most of the work of the County. However, County government is also served by a number of independently elected row officers, who are also vested with significant authority. That includes the authority to hire, fire and supervise employees within the office, even over the objections and direction of the County Commissioners. Continue Reading County Row Officers, 1620 Rights, and Arbitrating Arbitrability

Earlier this year, our colleague Claudia Shank blogged about the revival of the Environmental Rights Amendment (the “ERA”) after the Pennsylvania Supreme Court’s decision in Pennsylvania Environmental Defense Fund v. Commonwealth, 161 A.3d 911 (2017). The PEDF decision breathed new life into the 1972 amendment to the Pennsylvania Constitution, but also left many unanswered questions about the ERA. One such unanswered question of particular interest for municipalities and developers was the meaning of the revived ERA in the land use context.

Last week, the Commonwealth Court took a first step in answering this question, when it handed down a decision in the case of Frederick v. Allegheny Twp. Zoning Hearing Board, 2018 Pa. Commw. LEXIS 593 (Commw. Ct. Oct. 26, 2018). Head on over to the McNees Land Use Blog for an analysis of this decision by our colleague Jon Andrews.