Public Finance

On August 22, 2024, a proposed rule (the “Proposed Joint Rule”) mandated by the Financial Data Transparency Act of 2022 (the “FDTA”) and adopted by nine federal financial regulators, including the U.S. Securities and Exchange Commission (the “SEC” and, together with the other eight regulators, the “Covered Agencies”), was published in the Federal Register. 

In a decision that should help restore investors’ faith in the protections afforded municipal bondholders under the United States Bankruptcy Code (the “Bankruptcy Code”), on June 12, 2024, the United States Court of Appeals for the First Circuit (the “First Circuit” or the “Court”) held that the bondholders (the “Bondholders”) of certain Puerto Rico Electric Power Authority (“PREPA”) electric revenue bonds (the “Bonds”) have a non-recourse claim against PREPA’s estate in PREPA’s reorganization proceedings under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, 48 U.S.C. §§ 2161-78 (“PROMESA”), for the full principal amount of their outstanding Bonds, plus matured interest, of approximately $8.5 billion, and that the Bonds are secured by PREPA’s current and future Net Revenues.

On June 7, Governor Pritzker signed into law House Bill 4582, Public Act 103-0591 (the “Act”). Among other items, the Act amends the School Code, the Local Government Debt Reform Act (Debt Reform Act), and the Property Tax Extension Limitation Law (PTELL).

On May 16, 2024, the IRS released Notice 2024-41 (the “Notice”), which provides updated guidance on the domestic content bonus energy credit available for qualifying energy projects under the Inflation Reduction Act of 2022 (the "IRA"). The Notice modifies existing guidance on the domestic content bonus under Notice 2023-38 (“Notice 2023-38”) and establishes a new elective safe harbor (the “New Elective Safe Harbor”) that allows project owners to determine certain projects’ eligibility for the domestic content bonus using predetermined cost percentages provided by the IRS.  

On December 22, 2023, the Internal Revenue Service unveiled its online pre-registration portal for elective pay (or “direct pay”) and transferability of tax credits under the Inflation Reduction Act (the “IRA”). Separately, on December 28, 2023, the IRS released Notice 2024-9, which provides relief for taxpayers facing a phaseout of elective pay tax credits related to a failure to meet certain domestic content requirements.

Chapman's Seema Ganatra Patel is speaking on a panel at Connected America 2023. Chapman partners Hillary Phelps and Larry White are attending.

Chapman's Hillary Phelps is serving as Chair of the National Association of Bond Lawyers (NABL) U Presents The Institute.

Chapman attorneys Kent Floros, Kyle Harding, and Anjali Vij are speaking at the 2023 Illinois Association of Park Districts / Illinois Park and Recreation Association Soaring to New Heights Conference.

Chapman served as underwriter's counsel in a first-of-its-kind limited public offering for commercial and residential broadband expansion in Montana.

Chapman partner Ryan Bowen spoke at the NALHFA 2022 Fall Educational Conference. 

On June 14, 2022, the Securities and Exchange Commission charged the City of Rochester, New York, Rosiland Brooks-Harris, the former finance director of the City, Everton Sewell, the former chief financial officer of the Rochester City School District, and Capital Markets Advisors and its principal Richard Ganci with fraud in connection with the 2019 sale of $119 million in municipal bonds.

On June 2, 2022, the Securities and Exchange Commission charged the Town of Sterlington, Louisiana, its former mayor, Vern A. Breland, the town’s unregistered municipal advisor, Twin Spires Financial LLC and its owner, Aaron B. Fletcher with fraud in connection with the sale of $5.8 million in municipal bonds in two offerings in 2017 and 2018. 

Chapman's Hillary Phelps is serving as Vice Chair of the National Association of Bond Lawyers (NABL) U Presents The Institute. Chapman's Brent Feller is speaking on the panel, "Capitalizing on Financing Interest."

The Public Finance Initiative (PFI) and the National League of Cities (NLC) have launched the Bond Markets and Racial Equity Project to identify the factors in a municipal bond issuance that signal progress toward racial equity and income equality to investors and other stakeholders. Additionally, PFI and NLC will use the Project to develop resources that can be used by governmental issuers to center racial equity in municipal bond-funded infrastructure investments and to measure how social determinants of equity change over time on a uniform basis. The unprecedented Project is funded by a $4M grant from the Robert Wood Johnson Foundation. By funding the Project, the Foundation aims to help issuers leverage the municipal bond market in a meaningful way to help correct racial and economic inequities. 

The Internal Revenue Service (“IRS”) has released a revised Form 8038‑CP, Return for Credit Payments to Issuers of Qualified Bonds, including new Schedule A, Specified Tax Credit Bonds Interest Limitation Computation and related instructions. The form and instructions were updated to accommodate electronic filing of Form 8038‑CP in 2022.

Chapman's Ryan Bjerke is attending the Utah School Board Association 2022 Conference.

Chapman’s Larry White joins industry leaders at an Illinois Government Finance Officers Association (IGFOA) Virtual Roundtable discussion.

This article in the Journal of Taxation of Financial Products outlines tax-exempt municipal debt securitization transactions and associated tax issues. Chapman authors, David Nirenberg, Brent Feller, and Steven Kopp, provide an in-depth look at the primary tax issues for parties to both single-class and multiple-class tax-exempt bond securitization transactions.

Chapman attorney Sharone Levy will be speaking at the National Federation of Municipal Analysts (NFMA) Introduction to Municipal Bond Credit Analysis Webinar Series.

Chapman is sponsoring and attorney Joe Saverino is speaking at the US P3 Forum.

Chapman attorney Rick Cosgrove is speaking at The Bond Buyer's California Public Finance Conference. 

Chapman attorney Juliet Huang will serve as Second Vice Chair of The Workshop: Hybrid 2021, hosted by the National Association of Bond Lawyers (NABL). Chapman attorneys Sarah Breitmeyer, Nancy Burke, Brent Feller, Katherine Gale, and Sharone Levy will be speaking at the event. 

On September 16, 2021, the Securities and Exchange Commission charged Sweetwater Union High School District, a San Diego County, California, school district serving approximately 47,000 students, and its former Chief Financial Officer, Karen Michel, with making material misstatements and omissions in connection with the District’s April 2018 $28 million bond issue.

Chapman attorney Larry White spoke at the Illinois Government Finance Officers Association (GFOA) Annual Conference.

Lenders and investors are taking different approaches to building ESG portfolios based on the entity’s own preferences and values. However, one widely used tool involves screening of select assets or transactions that align with those values.

In 2017, the Financial Conduct Authority, the U.K. authority that oversees the London interbank offered rate, announced that LIBOR may be phased out after the end of 2021. The announcement applied to all currency and term variants of LIBOR, including U.S. dollar denominated LIBOR.

The date of the General Primary Election to be held in 2022 has been changed from March 15, 2022, to June 28, 2022. On May 31, 2021, the Illinois General Assembly adopted Senate Bill 825, which became Public Act 102-0015 after being signed into law by the Governor on June 17, 2021. 

Chapman attorney David Sykes spoke at PACENation Summit 2021.

Chapman attorney Ryan Bowen, Bren Feller, and Evelyn Irwin attended the 2021 National Association of Local Housing Finance Agencies (NALHFA) Virtual Conference.

Chapman attorney Ryan Bjerke will be attending the virtual Utah League of Cities and Towns 2021 Midyear Conference.

At today’s Earth Day Climate Summit, President Joe Biden announced to world leaders that the United States is committed to cutting its greenhouse gas emissions by 50% to 52% from 2005 levels by 2030.

Last week the Loan Syndications and Trading Association, the Loan Market Association, and the Asia Pacific Loan Market Association jointly published their first ever Social Loan Principles.

Chapman attorney David Cholst spoke at a National Association of Bond Lawyers U Now webinar.

The Securities and Exchange Commission this month announced that the Divisions of Corporation Finance, Examinations, and Enforcement are all undertaking climate or ESG-related initiatives. 

Chapman attorneys Jim Heiser and Juliet Huang spoke at an Association for Governmental Leasing and Finance webinar.

Chapman attorney Larry White spoke at the Illinois Association of School Business Officials (ASBO) Bookkeepers Conference.

Chapman attorneys Brent Feller, Juliet Huang, and Hillary Phelps spoke at The Institute, hosted by the National Association of Bond Lawyers.

Environmental, Social and Governance investing in the United States has reportedly reached an estimated $250 billion in assets under management and is expected to see continued growth in 2021 and beyond. 

On January 26, Moody’s Investors Service announced it had published a new methodology for rating US public school districts that provide education or educational services.

Chapman attorneys Sarah Breitmeyer and David Cholst were named the Federal Tax Portfolio Authors of the Year by Bloomberg Tax & Accounting.

Chapman served as counsel to the underwriter in connection with a first-of-its-kind $236 million tax-exempt “receivables” financing of the Lincoln South Beltway public-private partnership project, which was named The Bond Buyer’s 2020 P3 Deal of the Year.

Ryan Bowen, a partner in Chapman’s National Public and Health & Education Finance Department, was named the Texas Association of Local Housing Finance Agencies 2020 Member of the Year in recognition of his work on behalf of housing issuers in the State of Texas.

Chapman attorney Rick Cosgrove spoke at The Bond Buyer's California Public Finance Conference. 

Under the expanded Medicare Accelerated and Advance Payments Program, more than 22,000 Medicare Part A providers and 28,000 Medicare Part B suppliers requested and received accelerated or advance payments from the Centers for Medicare & Medicaid Services to help ease financial strain and uncertainty caused by the COVID-19 pandemic.

Chapman attorneys Amy Cobb Curran and David Kates participated in a webinar hosted by Warbird Consulting Partners. 

Chapman attorney Rick Cosgrove spoke at the Virtual US P3 Forum 2020.

Chapman attorneys Sarah Breitmeyer and David Cholst spoke at the National Association of Bond Lawyers's The Workshop.

Chapman attorney Sarah Breitmeyer spoke at an Illinois Government Finance Officers Association Educational Webinar.

Chapman attorney Brent Feller spoke at the 2020 National Association of Local Housing Finance Agencies Virtual Conference. 

In 2017, the UK authority that oversees the London interbank offered rate, announced that LIBOR may be phased out after the end of 2021. The announcement applied to all currency and term variants of LIBOR, including US dollar denominated LIBOR.

On June 16, the Securities and Exchange Commission issued an order granting registered municipal advisors an emergency, temporary conditional exemption from broker registration under Section 15 of the Securities Exchange Act of 1934 in connection with certain direct placement activities.

The General Assembly passed Senate Bill 2135 on May 23 and the Governor signed the same on June 12. The Act provides greater flexibility for public bodies to conduct business remotely when in-person attendance is not feasible due to a disaster.

On June 11, the Federal Reserve Bank of New York issued an updated Notice of Interest for the Municipal Liquidity Facility to reflect the expansion of eligibility for the facility.

On June 3, the Federal Reserve announced expanded eligibility for its Municipal Liquidity Facility. Under the new terms, a State that does not have at least two total counties or cities that meet the minimum population requirements will be able to identify a city or county to be an Eligible Issuer.

On May 23, the General Assembly passed Senate Bill 2135, providing for amendments to Sections 2.01 and 7 of the Open Meetings Act of the State of Illinois. The changes provide greater flexibility for public bodies to conduct business remotely when in-person attendance is not feasible due to a disaster.

The Federal Reserve today issued an amended term sheet establishing pricing criteria for its Municipal Liquidity Facility last described in our April 29 Client Alert. The Federal Reserve Bank of New York also issued today a revised FAQs for the facility.

On May 4, the SEC Chairman and the Director of the Office of Municipal Securities issued a public statement encouraging issuers, conduit borrowers and other obligated persons of municipal securities to make disclosures describing the effects of the COVID‑19 pandemic on their finances and operations.

Treasury Department guidance issued on April 22 summarizes three requirements for the use of payments from the Coronavirus Relief Fund. On May 4, FAQs were issued that “supplements” the guidance by answering a long series of questions about Eligible Expenditures and a shorter list of questions about the Administration of Fund Payments. 

On April 27, the Federal Reserve issued a press release announcing changes to the Municipal Lending Facility described in previous client alerts. At the same time, the Federal Reserve Bank of New York, as sole Reserve Bank lender for the facility, issued a FAQs for the facility.

The Paycheck Protection Program and Health Care Enhancement Act was signed into law today. This alert summarizes key portions of the Act and recently released information from the Department of Health and Human Services explaining its plans to allocate and distribute the Provider Relief Fund money.

On April 9, the Federal Reserve issued term sheets for six “new” funding facilities under the CARES Act. This client alert describes in detail the Municipal Liquidity Facility.

Earlier today the Federal Reserve announced it would establish six new funding facilities supported by Treasury funding authorized by Section 4003(b)(4) of the CARES Act.

In these uncertain times, parties to bond documents (including documents such as continuing covenant agreements) may wish to waive, modify or renegotiate certain provisions, including the forbearance and deferral of debt service, the waiver of provisions or the exercise of certain options.

The Federal Reserve Bank of New York has posted FAQa for the Commercial Paper Funding Facility described in our March 19 client alert, and amended as described in our March 24 client alert.

The Federal Reserve has established a webpage that provides links to a FAQ and other documents for the Money Market Fund Liquidity Facility described in earlier Chapman client alerts.

This client alert has been updated from our March 31, 2020 client alert to reflect guidance from the U.S. Treasury Department and the Small Business Administration.

The $2 trillion stimulus bill is the largest stimulus bill in U.S. history and Congress’ third major piece of legislation to address the COVID-19 crisis. This client alert summarizes notable CARES Act provisions for Institutions of Higher Education.

The Coronavirus Aid, Relief, and Economic Security Act, a bill designed to provide financial support and resources to individuals and businesses affected by COVID-19 pandemic, was signed into law on March 27. This client alert summarizes notable CARES Act provisions for health care businesses, including hospitals and physician practices.

This Client Alert focuses on some major programs established by the Coronavirus Aid, Relief, and Economic Security Act to financially support, through loans or grants, (1) small businesses, (2) larger businesses, and (3) states and municipalities. 

Today, Chapman Partner Hillary Phelps was named a member of the Municipal Securities Rulemaking Board's Market Transparency Advisory Group. 

On March 23, the Federal Reserve issued further amendments to add negotiable certificates of deposit and all short-term municipal securities to the list of eligible collateral. 

On March 23, the Federal Reserve added municipal issuers and amended the pricing for the commercial paper funding facility announced on March 17 and issued other “program terms and conditions” posted on the website of the Federal Reserve Bank of New York.

This morning, the Board of Governors of the Federal Reserve System announced sweeping actions to help the economy.

On March 17, the Federal Reserve Board announced the establishment of two emergency funding facilities that closely mirror facilities established in 2008 during the last financial crisis in providing liquidity to both short and long term funding markets.

On February 18, the SEC issued an order approving a proposed MSRB rule change updating the MSRB’s Electronic Municipal Market Access system website.

On February 7, the SEC Office of Municipal Securities published Staff Legal Bulletin No. 21 that addresses the application of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934.

On February 10, the SEC’s Fixed Income Market Structure Advisory Committee approved a series of recommendations designed to improve the timeliness of disclosure in the municipal securities market.

The IRS has released a new Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, along with new instructions. Form 8038-CP is used by issuers to claim payments from the federal government representing all or a portion of interest payable on direct pay bonds

Chapman attorneys Kent Floros, Kyle Harding, and Anjali Vij spoke at the 2020 Illinois Association of Park Districts / Illinois Park and Recreation Association Soaring to New Heights Conference.

Chapman is proud to have served as counsel to the banks and swap providers on a $6.5 billion financing that was named The Bond Buyer's 2019 Deal of the Year at an awards ceremony held December 4 in New York.

Chapman attorneys Hillary Phelps and Anjali Vij spoke at the Illinois ASBO Debt A-Z Academy.

Chapman attorney Kelly Kost spoke at the 2019 IAPD Legal Symposium.

Chapman attorney Ryan Bowen spoke at the 27th Annual Texas Association of Local Housing Finance Agencies Educational Conference.

Chapman attorneys Juliet Huang and Hillary Phelps spoke at The Bond Buyer's California Public Finance Conference.

Hillary Phelps, a partner in Chapman's National Public and Health & Education Finance Department, was named a 2019 "Rising Star" at The Bond Buyer's California Public Finance Conference. 

Chapman attorneys Nancy Burke and Juliet Huang spoke at The Workshop, which was presented by the National Association of Bond Lawyers. 

Chapman attorneys Larry White and Seema Patel spoke at the Illlinois Government Finance Officers Association Annual Conference. 

Chapman served as special counsel to an Illinois county in the state’s first transaction under a commercial property assessed clean energy (PACE) financing program, which allows property owners to obtain upfront financing from private capital providers for energy efficiency and renewable energy projects in new and existing buildings.

In a decision that upends the expectations of the municipal bond market, a three-judge panel of the U.S. Court of Appeals for the First Circuit has ruled that the “special revenue” provisions of the U.S. Bankruptcy Code do not compel the payment of debt service on certain municipal bonds during the pendency of a bankruptcy proceeding.

Chapman attorney Joe Saverino spoke at the Illinois Municipal Treasurers Association Annual Conference. 

Chapman attorney Rick Cosgrove spoke at the US P3 Forum 2019. 

Chapman attorneys Laura Appleby, Dan Bacastow, Rick Cosgrove, and Juliet Huang spoke at The Bond Buyer's Midwest Municipal Market Conference.

Chapman attorney Juliet Huang spoke at the 39th Annual Association for Governmental Leasing and Finance Conference. 

Chapman attorneys Kyle Harding and Anjali Vij spoke at the 2019 Illinois Association of School Business Officials Annual Conference. 

Chapman attorney Sharone Levy spoke at the Illinois Community College Chief Financial Officers Spring Conference.

On March 28, the Securities and Exchange Commission charged the former controller of the College of New Rochelle, a New York-based not-for-profit college, with violating, and aiding and abetting violations of, the antifraud provisions of the federal securities laws.

Pension shortfalls. Crumbling infrastructure. Wage pressures. These are only a few of the budgetary pressures facing state and local governments. It’s no surprise that, with so many demands on limited tax dollars, funds needed to address social problems are being diverted.

Toi Hutchinson, Chapman's Director of Community Relations and Social Responsibility, spoke at the 2019 Chicago Women in Public Finance Conference. 

Chapman attorneys Sarah Breitmeyer and Brent Feller spoke at the National Association of Bond Lawyers's The Institute. 

Effective February 27, 2019, there are two new reportable events for which an issuer must provide notice to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) website.

The SEC Rule 15c2-12 amendments will be effective on and after February 27, 2019 with the effect described in the Release. In addition, the Release describes the SEC’s position on certain material financial obligations that may have an impact on primary offerings in addition to disclosures of reportable events made in the future under Rule 15c2-12.

Chapman attorneys Kyle Harding and Anjali Vij spoke at the 2019 Illinois Association of Park Districts / Illinois Park and Recreation Association Soaring to New Heights Conference.

A recent court decision has provided guidance regarding the meaning of “governmental unit” under the U.S. Bankruptcy Code.This determination is important because if it is a “governmental unit,” an entity would only be eligible to file a bankruptcy petition if it is a “municipality” under the Bankruptcy Code and meets the other eligibility requirements for filing a municipal bankruptcy petition.

In October, the U.S. District Court for the Southern District of New York entered a final judgment against Christopher St. Lawrence, the former Supervisor of the Town of Ramapo, New York and Director of Finance and President of the Ramapo Local Development Corporation.

A decision by the Court overseeing Puerto Rico’s bankruptcy-like Title III proceeding has reiterated what every secured creditor understands — perfection matters. The Court found that bondholders holding $2.9 billion in debt issued by the Employees Retirement System of the Government of the Commonwealth of Puerto Rico were rendered unsecured due to inadequate financing statements.

On August 22, the three federal banking agencies issued an interim final rule implementing the May 2018 banking law’s requirement that investment grade, liquid and readily marketable municipal obligations be treated as Level 2B “high quality liquid assets” under the liquidity coverage ratio rule.

On August 20, the SEC issued Release No. 34-83885 adopting amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. The amendments add two new events to the list of reportable events for which an issuer or obligated person must provide notice to the MSRB's Electronic Municipal Market Access website. 

Chapman’s "Defaulted Securities: The Guide for Trustees and Bondholders" advances understanding and consideration of issues related to trustees and bondholders in both corporate and municipal financings.

On December 15, House and Senate conferees reached an agreement on the Tax Cut and Jobs Act and released the final version of the Bill, which is expected to be voted on this week in the House and Senate.

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain tax-exempt organizations if the compensation to a covered employee is more than $1 million.

Legislation recently passed by the Illinois House could impact every taxing district in the State if it ultimately becomes law. Senate Bill 851, which amends the Property Tax Extension Limitation Law, implements a tax freeze for certain taxing districts, and authorizes the implementation of a tax freeze for other taxing districts pursuant to referendum.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. If enacted into law, the bill would eliminate all tax-exempt private activity bonds, tax credit bonds and all tax-exempt advance refunding bonds.

The United States Treasury Department has withdrawn proposed regulations dealing with the definition of “political subdivisions” for purposes of the tax-exempt bond provisions of the federal tax law. Political subdivisions are divisions of state or local governmental units that can issue federally tax-exempt bonds. 

Following a recent decision by the Court overseeing the Commonwealth of Puerto Rico’s bankruptcy-like Title III proceeding, bondholders should continue to pay close attention to the pledge securing their bonds to determine how those bonds would be treated in a bankruptcy proceeding.

The Municipal Securities Rulemaking Board recently issued a market advisory to increase awareness among market participants, including issuers and obligated persons, of the importance of disclosing material information fairly, equitably and in the public domain.

Chapman Partner David Cholst chaired and Partner Sarah Breitmeyer served on a National Association of Bond Lawyers task force that produced proposals to improve US infrastructure through tax reform.

On August 23, the Securities and Exchange Commission announced settlements in enforcement actions against the Beaumont Financing Authority; Alan Kapanicas, the former executive director of BFA; O’Connor & Company Securities Inc., the underwriter of the BFA obligations; and Anthony Wetherbee, the co-founder and former primary investment banker of O’Connor Securities.

The former Director of Finance for Ramapo, New York, was found guilty by a federal jury of 20 counts of conspiracy, securities fraud and wire fraud in connection with municipal bonds issued by the Town and by the Ramapo Local Development Corporation, a local not-for-profit corporation to further economic development in the Town.

On June 12, the Department of Treasury issued the first report in a series regarding regulation of the financial system. The report recommends that high-grade municipal bonds be categorized as Level 2B liquid assets instead of generally being excluded as HQLA currently.
 

The American Bar Association’s Section of Taxation submitted a white paper on the history of the tax-exemption of interest on state and local bonds to the Internal Revenue Service.

Chapman attorney David Cholst served as drafting counsel on a comment letter submitted to the Internal Revenue Service by the American Bar Association's Section of Taxation.

This white paper addresses pay for success legislation that has been adopted at the state level, pointing out the various functions of the pay for success financing structure and how individual states have treated these components within their legislation.

The Tax Exempt and Government Entities Division of the Internal Revenue Service announced changes to the information document request process in tax-exempt bond and tax-advantaged bond examinations.

On March 1, the Securities and Exchange Commission issued a release seeking comments on proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended.

The municipal industry has seen a significant change in recent years with the increased activity of the SEC Enforcement Division and, in particular, its Public Finance Abuse Unit. This is an updated version of an article Chapman attorney Kelly Kost authored for the October 2016 issue of the Illinois GFOA Newsletter. 

On January 17, 2017, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

On January 10, 2017, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (Order) to the Port Authority of New York and New Jersey (Port Authority) under which the Port Authority acknowledged that it acted negligently in failing to disclose certain risks in official statements for over $2.3 billion of bonds issued between January 2012 and June 2014.

In a December 13 interview, the chief of Securities and Exchange Commission’s public finance abuse unit stated that the SEC does not expect to recommend any further settlements under its Municipalities Continuing Disclosure Cooperation initiative. Instead, the public finance abuse unit will focus on those issuers and underwriters that did not self-report disclosure violations under the initiative.

Chapman is representing a consortium of social service agencies in the State of Illinois' first pay for success initiative, which seeks to improve the lives of youth who are dually-involved in both the child welfare and juvenile justice systems.

The Municipal Continuing Disclosure Cooperation initiative, as named by the Securities and Exchange Commission in March, 2014, has attracted much attention in the municipal industry and with good reason. 

On August 22, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

On August 24, 2016, the Securities and Exchange Commission issued cease-and-desist orders to 71 municipal issuers and obligated persons in response to voluntary self-reporting of potential misrepresentations in municipal bond offering documents regarding compliance with prior disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation initiative. 

On July 18, the U.S. Treasury and the Internal Revenue Service published final arbitrage regulations that contain revisions to the tax-exempt bond regulations relating to, among other things, working capital financings.

The Internal Revenue Service recently released proposed regulations concerning the definition of a “political subdivision” for purposes of tax-exempt financing.

On Oct. 27, 2015, the United States Treasury Department and the Internal Revenue Service published long-awaited final regulations that provide welcome guidance to 501(c)(3) health care organizations that are borrowers of qualified 501(c)(3) bonds.

On March 9, 2016, the U.S. Securities and Exchange Commission issued a cease and desist order against Westlands Water District, a public agency of the State of California, the District General Manager and General Counsel, and the former District Assistant General Manager.

On February 10, 2016, the Government Finance Officers Association alerted its members that the Enforcement Division of the Securities and Exchange Commission has begun contacting issuers in connection with its Municipalities Continuing Disclosure Cooperation initiative. 

On February 2, 2016, in the third round of settlements with underwriters under its Municipalities Continuing Disclosure Cooperation initiative, the Securities and Exchange Commission issued cease-and-desist orders to 14 underwriting firms.

Today, the Illinois State Board of Education approved allocation guidelines and an application process for Qualified School Construction Bonds. Pursuant to such guidelines and process, ISBE expects to allocate $495,602,000 in volume limitation for QSCBs to school districts.

On October 26, 2015, the Department of the Treasury released Final Regulations on allocation and accounting, and certain remedial actions, for purposes of the private activity bond restrictions that apply to tax-exempt bonds.

On October 1, 2015, the Tax Exempt and Governmental Entities Division of the Internal Revenue Service released its Tax Exempt and Governmental Priorities for Fiscal Year 2016. 

The Financial Industry Regulatory Authority is requesting comment on a revised proposal to amend FINRA Rule 2232 governing trade confirmation disclosures. The amendments would require member firms to disclose a “reference price” on customer confirmations for principal transactions in corporate and agency debt securities with retail customers.

The Securities and Exchange Commission recently approved a proposed rule change by the Financial Industry Regulatory Authority, Inc. that would amend FINRA Rule 2210 to require each of a member’s websites to include a readily apparent reference and hyperlink to BrokerCheck.

On September 30, 2015, in the second round of settlements with underwriters under its Municipalities Continuing Disclosure Cooperation initiative, the Securities and Exchange Commission issued cease-and-desist orders to 22 underwriting firms. 

On August 13, 2015, the Securities and Exchange Commission issued a cease-and-desist order against Edward D. Jones & Co., L.P., in response to alleged improper trading practices by the St. Louis-based broker-dealer. 

The Internal Revenue Service Office of Tax Exempt Bonds has announced a new sequester reduction in amounts paid to issuers of direct pay bonds for which issuers elected to receive a direct payment from the U.S. Treasury pursuant to Section 6431 of the Internal Revenue Code. 

Tax freeze legislation recently passed by the Illinois Senate would impact every taxing district in the State if it ultimately becomes law.

On June 8, 2015, Long Beach Community College District in California paid the Internal Revenue Service $1,013,000 as a result of the private activity use of certain real property acquired by the District with proceeds of tax-exempt certificates of participation issued in 2001. 

Private schools that are exempt from federal income taxation must file an annual information return with the IRS concerning their racial nondiscrimination policies. Schools that file the annual information return, Form 990, Return of Organization Exempt from Income Tax may satisfy this annual filing requirement on Schedule E.

Form 5578 is a half-page form simply certifying that a private school has complied with the racial nondiscrimination guidelines set forth by the Internal Revenue Service. The failure of a private school to annually file this form may jeopardize the school's tax-exempt status under Section 501(c)(3).

On June 24, 2015, Prop. Treas. Reg. §1.148-1(f) addressing the definition of “Issue Price” was published in the Federal Register. The Internal Revenue Service is accepting comments on the Proposed Regulation through September 22, 2015.

On June 18, 2015, the Securities and Exchange Commission issued cease-and-desist orders to 36 underwriting firms in response to voluntary self-reporting of potential misrepresentations in municipal bond offering documents regarding compliance by issuers with prior disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation initiative. 

On June 18, 2015, the Securities and Exchange Commission issued cease-and-desist orders to 36 underwriting firms in response to voluntary self-reporting of misrepresentations in municipal bond offering documents regarding compliance with prior disclosure obligations under its Municipalities Continuing Disclosure Cooperation initiative.

This Chapman and Cutler white paper provides a summary of, and practical guide to, the principal requirements of federal securities laws relating to municipal bonds. Much of the information discussed in this white paper applies to both higher education bonds and other municipal securities, while certain sections focus on securities laws as applied to the high education sector, in particular.

As indicated in our January 20, 2015 Client Alert, the Obama Administration previously announced in general terms its Fiscal Year 2016 budget plans with respect to the maintenance and improvement of US public infrastructure.

On January 16, 2015, the Obama Administration announced in general terms its plans with respect to the maintenance and improvement of public infrastructure, including roads, bridges, ports, water purification plants, and reservoirs, all of which are deemed critical services by the Administration for consumers and businesses alike.

Congress recently authorized an additional $400 million of nationwide volume cap for the qualified zone academy bond program. 

Generally, federal tax laws restrict the use of tax-exempt governmental use bonds by nongovernmental, non-public users, which is referred to as “private business use.”

On November 6, 2014, the Securities and Exchange Commission announced that fraud charges had been issued against the city of Allen Park, Michigan, and two former city leaders.

On October 24, 2014, the IRS issued Notice 2014-67, Private Business Use of Tax-Exempt Bond Financed Facilities.

On October 24, 2014, the IRS issued Notice 2014-67, Private Business Use of Tax-Exempt Bond Financed Facilities. The Notice expands the management contract safe harbor guidelines of Revenue Procedure 97-13 to permit certain productivity awards and liberalizes the requirements for certain types of 5-year contracts that will not result in private business use.

An article based on a recent Chapman Client Alert was posted by the Harvard Law School Forum on Corporate Governance and Financial Regulation.

Issuers and obligated persons are reminded of the approaching deadline for self-reporting materially inaccurate representations in offering documents regarding compliance with continuing disclosure undertakings.

The Internal Revenue Service Office of Tax Exempt Bonds has announced a new sequester reduction in amounts paid to issuers of direct pay bonds for which issuers elected to receive a direct payment from the U.S. Treasury pursuant to Section 6431 of the Internal Revenue Code.