Non-profit organizations have the opportunity to finance the acquisition or renovation of property where they do their good works using qualified 501(c)(3) bonds, which often provide better financing terms and rates than those available from traditional lenders. The proceeds of qualified 501(c)(3) bonds may also be used by the non-profit organization for working capital or
Municipal Finance and Bonds
Industrial Development Revenue Bonds 101
Federal tax law generally provides that tax-exempt bonds can only be issued to finance property for governmental or public use. If the property to be financed with bonds would be privately used, i.e., in a trade or business, the interest generated from the bonds will be included as income for federal income tax purposes. However,…
SEC Approves Rule Defining Municipal Advisors
After considerable delay and much anticipation by the municipal finance community, the Securities and Exchange Commission (the “SEC”) recently approved a final rule defining municipal advisors for purposes of the Dodd-Frank Act (the “Act”). The SEC had previously noted that, in the wake of the last financial crisis, a number of municipalities suffered significant losses…
New Definition of Sophisticated Municipal Market Professionals
The Municipal Securities Rulemaking Board (“MSRB”) requires a dealer to disclose to its customers all material information about a proposed transaction that is known to the dealer as well as material information about the security that is available to the market from established industry sources. Since 2002, dealers have distinguished their disclosures based on different…
MSRB Strengthens Regulation of Broker’s Brokers
“Broker’s brokers” are intermediaries between selling dealers and bidding dealers of municipal securities. They provide secondary market liquidity in the municipal securities market, which helps ensure that retail investors receive fair and reasonable pricing of municipal securities. One way that broker’s brokers bring buyers and sellers together is through a “bid-wanted,” in which the broker’s…
MSRB Extends Focus on Conflicts of Interest
The Municipal Securities Rulemaking Board (“MSRB”) is seeking comments on a possible proposal to require underwriters and municipal advisors to disclose whether they have made or received certain payments in connection with new issues of municipal securities. The MSRB is concerned about conflicts of interest that impede the ability of municipal market professionals to act…
Underwriters Under the Gun on New Disclosures
Last week, the Securities and Exchange Commission (SEC) approved new rules regarding the disclosure duties of underwriters to municipal issuers of securities that were proposed last summer by the Municipal Securities Rulemaking Board (MSRB). The new rules include explicit and expanded requirements for underwriters aimed at protecting municipal issuers. Current rules already prohibit an underwriter…
Updated Eligibility Criteria for New Markets Tax Credits Released
Last week, the Community Development Financial Institutions Fund (CDFI) began using updated census tract eligibility data that is based on the 2006-2010 American Community Survey (ACS). In 2005, the Census Bureau launched the ACS to replace the long-form census survey. ACS collects socioeconomic and housing information continuously from a national sample and provides a five-year…
Recent Municipal Securities Rulemaking Board Notices
The Municipal Securities Rulemaking Board (“MSRB”) has been quite active lately. On April 3, 2012, the MSRB issued a notice encouraging voluntary disclosure of bank loans by state and local governments on the MSRB’s Electronic Municipal Market Access (“EMMA”) website. EMMA is an information facility of the MSRB for receiving electronic submissions of official statements,…
Standard & Poor’s Proposes New Methodology for Rating Local Governments’ General Obligation Debt
Last week, Standard & Poor’s (“S&P”) proposed a new methodology for rating local governments’ general obligation debt. It would not apply to special purpose districts, such as school districts, or revenue bonds. The new methodology uses the same general factors currently used to rate local government debt, but provides increased transparency regarding how S&P’s ratings…