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Six Changes Impacting Issuers' Relationship with Public Finance Professionals
President and CEO
Congress passed legislation that will affect how Issuers borrow money and how public finance professionals like Ehlers provide financial advisory services. How does federal law impact city, village, and county managers and administrators? Some processes will change in the best interest of issuers.
It is important for issuers to understand the MSRB's rulemaking efforts to date and the direction the final rules will likely take.
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FINRA Imposes GASB Fee
On February 23, 2012, the Securities and Exchange Commission (SEC) approved a rule change impacting accounting support fees for Governmental Accounting Standards Board (GASB), taking effect April 1, 2012. The Financial Industry Regulatory Authority (FINRA) rule change initiates from the Dodd-Frank Wall Street Reform and Consumer Protection Act in an effort to sustain funding for the GASB. The fee will be assessed to FINRA member firms and is not to be assessed on new bond transactions. The Government Finance Officers Association (GFOA) maintains, "State and local governments are not responsible for paying this fee, and GFOA members should monitor any actions by underwriters to assess new fees on issuers in an effort to recoup their costs for paying the new FINRA/GASB fee." Follow these links to read more about the rule changes: SEC Notice FINRA Regulatory Notice |
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Ehlers
375 Bishops Way
Suite 225
Brookfield, WI 53005
Phone: 262-785-1520
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Greetings!
In this issue of The Advisor, we bring to your attention recent changes to Federal Return Form 8038-G stressing the importance of written compliance procedures.
Those of you who read Ehlers' bi-weekly Market Commentary know that the rise and fall of interest rates are a popular reoccurring theme. We take a look at how interest rates impact the refunding of bonds.
If you weren't able to attend the Ehlers Public Finance Seminar this past February, we talk about highlights and remind you to save the date for the Seminar next year on February 14-15, 2013.
I also discuss six important changes when issuing bonds that impact Issuers' relationship with Public Finance professionals.
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IRS Stresses Importance of Written Compliance Procedures
by Todd Taves, Financial Advisor
 Recent changes to Federal Information Return Form 8038-G have highlighted the importance of having written compliance policies in place regarding federal tax requirements. This form, which is generally prepared for you by your Bond Counsel, is filed anytime you issue tax-exempt obligations.
The form now specifically asks whether an Issuer has adopted written procedures for compliance with arbitrage rules and remedial action requirements. The IRS has indicated that Issuers who have such policies in place will receive more favorable treatment in the event that there is a tax problem with respect to one of their issues.
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To Refund or Not to Refund? That Is a Popular Question.
 As we have noted in Ehlers' bi-weekly Market Commentary, when interest rates reached their lowest levels in 45 years in January of this year, many governmental units scheduled sales of bonds. Refinancing, or "Refunding" of existing bonds has particularly increased since the beginning of this year. Why do communities refund debt and what criteria should be used to determine if a refunding is appropriate? Refundings are typically undertaken for one of two general reasons. First, to achieve lower debt service costs resulting in savings to the community. Second, to restructure debt service payments to match the revenue stream paying the debt service. A common example of debt restructuring is decreasing debt payments to account for reduced increment collection from a Tax Incremental Finance District.
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Ehlers Public Finance Seminar
 The 2013 Ehlers Public Finance Seminar will be held February 14 and February 15, 2013 at the Kalahari Resort. The 2012 seminar was attended by approximately 135 participants including municipal staff, elected officials and other professionals.
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