Registration Open for the 2013 Ehlers Minnesota Public Finance Seminar
Who doesn't want to take a cruise in the middle of winter? Join us for the Ehlers Cruise: Sailing the Seas of Public Finance at our annual Minnesota Public Finance Seminar February 7-8, 2013 at the Marriott Minneapolis Northwest.
This year's Thursday morning opening session is lead by 47-year media veteran, Don Shelby.
We look forward to seeing you February 7-8!
Click here to view the brochure and register for the Seminar.
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Finding the Right Tool for the Project: What Instruments are Needed in Your Community's Transit Toolbox
by Jessica Cook, Financial Specialist
What are the gaps in the existing tools available to cities and counties to promote effective development and redevelopment adjacent to light rail transit (LRT) stations, in particular the Southwest LRT line? Ehlers explored this question for Hennepin County and Southwest Corridor Community Works (including Minneapolis, St. Louis Park, Hopkins, Minnetonka, Eden Prairie - all cities along the line), in conjunction with the Urban Land Institute and the Family Housing Fund.
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IRS Work Plan
by Gail Robertson, Senior Arbitrage Specialist
The Tax-Exempt Bond (TEB) office of the Internal Revenue Service (IRS) has announced work plan priorities for 2013. The plan identifies specific measures to be taken by IRS agents over the next year to determine whether issuers of tax-exempt bonds are complying with post-issuance responsibilities.
Click here to read more.
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Ehlers Market Commentary
Are you up to date with current market trends? If not, be sure to check out the Ehlers Market Commentary, which is released every other week.
Be sure to sign up to receive your email copy, or read past articles here.
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Ehlers 3060 Centre Pointe Drive
Roseville, MN 55113
Phone: 651-697-8500
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Greetings!
As we begin 2013, we have a number of newsworthy articles in this issue of The Advisor.
Refundings were a popular theme both in our bi-weekly market commentaries as well with many of our clients. We'll outline a sample of some of the savings that may apply to your community too.
The Cities of Fertile and Nowthen, Minnesota, are showcased as to how growth and economic development are furthering these two communities.
Two tax-related articles will touch on the 2013 IRS Work Plan and how federal budget balancing could increase municipal borrowing interest rates. We'll also update you with recent Dodd-Frank events and how they will apply to you.
The annual Ehlers Minnesota Public Finance Seminar is just a few weeks away on February 7-8, 2013. Be sure to look at the brochure and register to attend. We hope to see you there!
Steve Apfelbacher
President and CEO
sapfelbacher@ehlers-inc.com
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2012: The Year of Refundings
2012 saw investors turn to municipal bonds as a safe and secure investment, driving down yields to historic lows. In November of 2012, we saw the lowest tax-exempt municipal bond yields in 47 years. Over the past year in Ehlers' bi-weekly market commentaries, we regularly chronicled the decline in interest rates and the common refrain "interest rates reach record lows".
Many communities have refunded existing debt issues for savings.
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In July of 2010, the President signed the Dodd Frank Consumer Protection Act into law. Among many changes, the Act regulated Financial Advisors, like Ehlers, as Municipal Advisors.
While Municipal Advisors are regulated under temporary rules by the Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB), the final rules have not been established by the MSRB.
The MSRB is still waiting for the SEC to finalize the definition of a Municipal Advisor. This definition is the same proposed rule that would have made appointed public board members subject to the Municipal Advisor rules. The SEC took comments on this rule in March of 2011 but still has not made a final determination as to who is a municipal advisor.
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Breaking Fertile Soil: Developing Senior Housing
The City of Fertile, located in northwestern Minnesota, broke ground on its first senior assisted living development. The new 19- unit building is attached to the City-owned nursing home and will serve the 5,000 people living in and near Fertile. The Fertile Economic Development Authority (EDA) is the long-term owner.
"This project will create jobs, build on our base of economic development, and provide a missing housing option for seniors," said City Administrator John Frohrip. The project will also take advantage of its proximity to the nursing home to share the commercial kitchen, staffing, and management, making both operations more financially viable.
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Federal Budget Balancing Could Increase Municipal Borrowing Interest Rate
Currently governmental entities are able to issue debt with interest to investors being exempt from federal income taxes. This exemption results in debt interest rates that can be up to 2% lower than comparable taxable interest rates. Congress and the President continue the battle to find an approach to balance the federal budget.
Eliminating or capping the exemption of interest for tax exempt debt on individual federal 1040 tax forms are approaches that are being suggested. All of these approaches will result in higher borrowing costs for governmental entities. There are four good reasons not to change the treatment of interest earned on federal tax exemption for municipal bond interest.
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Nowthen: A City That Still Feels Like Country
Nowthen, Minnesota is a small city with big plans. Located on the northern edge of the Twin Cities metropolitan area, Nowthen has seen its population increase by 25% in the last ten years. "That's a lot of growth for a rural town like ours," said Jeff Pilon who sits on the City Council. "As we transition from a rural area to a small city, our residents expect more city services."
"Our goals," said Councilmember Pilon, "are to pave and maintain our streets and provide police services for our residents - without big spikes in our taxes. We know our property tax levy will rise, but we want it to do so in a measured way. Nobody likes surprises."
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