Tax Exempt Bond Compliance Conference 2017

Session Descriptions and Presentations

(Click on the session titles to download available presentations)

Monday, December 4, 2017

Primer: Fundamentals of Compliance
Michael Allen, Ice Miller LLP and Jeff Lewis, Ice Miller LLP

MSRB Glossary of Municipal Securities Terms.

New to tax‐exempt bond compliance? This foundational pre‐conference session is a great way to become familiar with the concepts, vocabulary, and key elements of bond compliance. Presented in an interactive session, municipal bond counsel will explain: 
1.    the importance of a compliance policy
2.    initial and continuing disclosure requirements
3.    limitations on bond proceeds investments, spend down analysis for arbitrage and rebates
4.    restrictions around third party use and the bond lifetime requirement to track this use
5.    annual reporting obligations, including the Form 990 schedule K for many private institutions; and
6.    key roles of certain compliance partners.

At the end of this primer, participants will be able to:
•    understand the higher education tax-exempt bond compliance environment
•    identify federal regulations applicable to compliance issues
•    recognize specific areas of compliance and regulation regarding maintaining a tax‐exempt bond portfolio
•    conceptualize a compliance plan for their respective organization

Developing and Strengthening Your Compliance Policy & Monitoring Compliance
Lori Johnson, North Carolina State University; Regina Wright, The Ohio State University; Gerri Magie, Swap Financial Group; and Steven Kantor, Hilltop Securities, Inc.

Polling Results

One of the first steps towards post-issuance compliance is creating and adopting an institutional policy which serves as a roadmap for compliance. This session will focus on developing a compliance policy including reviewing the critical components of the policy. Does your compliance policy identify the individuals responsible for different aspects of post-issuance compliance? Do you gather, internally, to discuss issues and review your policy at least once a year? Just as external requirements may change, internal processes may change as well, in addition to employee turnover, your policy should not be so specific, nor too general such that it cannot withstand system and employee changes. Are there some compliance responsibilities that are not included in the policy that should be documented, separate from the policy? This session will review the pros and cons of adopting a policy, suggested components and issues to address in your policy and some best practices. 

At the end of this session, participants will be able to: 
•    identify issues to address in the post‐issuance compliance policy
•    select internal / external stakeholders to include when drafting your policy
•    recognize why the tax certificate is not acceptable as your post‐issuance compliance policy
•    determine how often the policy should be reviewed and updated
•    determine if there are certain compliance tasks that may be excluded from the compliance policy

Using the Financial System & Other Reporting Tools for Compliance Reporting
Whitney Henry, Southern Methodist University and Jeff Minch, Hilltop Securities Inc.

University issuers go through a variety of processes for reporting, accounting, and ongoing monitoring to ensure that tax-exempt reporting is properly maintained. Some issuers utilize automated methods to reduce top side entries, cut down on manual processes, and reduce the questions from bond counsel during deal due diligence. This session will allow practitioners to share the processes, types of reports and other tools used to internally manage the data collection and analysis for required external reporting.

At the end of this session participants will be able to:
•    identify which reporting needs are being met internally and which processes could be improved and potentially automated
•    learn about some of the reporting tools available to alleviate manual processes and reduce human error
•    recognize the limitations of automating all processes
•    determine optimal reporting time frame for interim reporting needs

Deep Dive: Voluntary Disclosure
Linda Eremita, GK Baum & Company and Guy Yandel, GK Baum and Company

SEC scrutiny related to continuing disclosure by borrowers was highlighted with the Municipalities Continuing Disclosure Cooperation (MCDC) initiative and continues through routine reviews and, in some cases, corrective actions.  This has forced borrowers, underwriters and disclosure counsels to re-evaluate how they contemplate disclosure requirements. We all know about routine EMMA filings – but there is so much more!

This deep dive will give participants insight to the following issues: 
•    what disclosure is appropriate in-between EMMA filings - voluntary or otherwise? 
•    what might you do when investors phone? Or request a visit? 
•    how much disclosure do your trustees receive vs. your investors? 
•    what needs to be provided for Direct Bank Debt / Private Placement Disclosure? 
•    how might the SEC interpret their own regulations when there’s been little or no guidance? 


Tuesday, December 5, 2017

From Simple to Complex ‐ the Private Business Use Calculation
Joel Levenson, University of Central Florida; Deanna Gregory, Pacifica Law Group and Justin Hughes, DAC Bond

This session will start with a brief overview of private business use before diving into the specifics regarding the private business use calculation.   Participants will analyze the different agreements that give rise to private business use (leases, management contracts, naming rights, etc.) and the methods for measuring their impact (square feet, revenue, time).  The presenters will illustrate simple to complex calculations of private business use, including analyzing financings of a single building vs. multiple buildings, financings with non-refunding proceeds vs. financings that also have refunding proceeds, and calculations for a single reporting period vs. a calculation over the life of the bond.  Along with providing these examples of complexity, the presenters will also provide practical guidance on how to handle the tracking and calculating of private business use when these scenarios arise.   

Takeaways from this session will include:
•    understanding the different activities which might generate private business use
•    detailed review of the private business use calculations for simple and complex financings
•    practical guidance for tracking private business use

New Allocation Rules for Mixed Use Projects
Kelly Farmer, University of Minnesota and Alison Benge, Pacifica Law Group

New Allocation Rules for Mixed Use

In October 2015, the IRS issued final regulations on allocations and accounting for "mixed‐use projects" – projects that are financed with tax‐exempt bonds and other funds and are expected to have some private business use. The guidance provided by the IRS is generally favorable, but being thoughtful about structuring transactions can maximize the benefits and aid with compliance over the life of the tax‐exempt bonds.

The panelists will brief you on these new rules and shed some light on these changing boundaries. 

Learning objectives include:
•    allocating funding sources to private business use
•    defining your project
•    determining what “qualified equity” applies to your project
•    when to do a final allocation

Administering Management Contracts and the New Safe Harbors
Nancy Burke, Chapman and Cutler LLP and Brent Feller, Chapman and Cutler LLP

Contract Guidelines

This panel will discuss recent IRS guidance on the new safe harbors for management contracts involving bond-financed property.  These new safe harbors may affect your negotiations with vendors and may also affect your strategy for managing possible private business use of bond-financed property. The panel will discuss (i) a case study that illustrates provisions of the new safe harbors, (ii) differences between the new safe harbors and previous IRS guidance, and (iii) suggested form language for certain contract provisions.

At the end of the session, participants will:
•    become familiar with the new safe harbors and their impacts
•    acquire suggested language to include in certain contract provisions.

Public/Private Partnerships (P3) in Higher Education
Dawn Rodriguez, University of South Florida and Brian Fender, GrayRobinson, P.A.

Higher Ed has been among the most effective public sectors in implementing advantageous P3 transactions nationally. This session will provide a brief overview of public-private partnerships, a more detailed review of P3 transactions in the Higher Education sector and a case study of a recent P3 transaction implemented by the University of South Florida to construct a mixed-use / dormitory facility.

The session will provide participants with knowledge and insight into the: 
•    P3 transactions being done across the country, with primary focus on P3 transactions implemented by our nation’s Universities; 
•    process of structuring a Higher Ed P3 project from start to finish; 
•    benefits and risks associated with P3 projects, including those that should be considered at the various stages of structuring a Higher Ed P3 project; 
•    tax considerations involved with P3 projects; 
•    credit rating agencies’ analysis and review of certain Higher Ed P3 projects.

Deep Dive: Private Business Use Calculation
Chad Franks, KPMG LLP and Felicia Tucker, KPMG LLP

Session Charts

This session will demonstrate the various ways to calculate private business use in bond financed facilities using practical examples.  The examples will focus on private business use in athletic facilities, student union buildings, and research laboratories.  The session is intended to be interactive and provide participants with best practices and methodologies around calculating private business use in mixed use situations.  

The learning objectives in this session:
•    enhance the participants’ ability to structure the private business use calculation of complex mixed use financings.


Wednesday, December 6, 2017

IRS Form 990 – Schedule K
John Sanchez, Tufts University; Chad Franks, KPMG LLP; and Felicia Tucker, KPMG LLP

This session will provide insight along with explanations for the purpose of completing the IRS Form 990 Schedule K and an annual disclosure requirement for certain institutions issuing tax-exempt bonds.  Although the Schedule K is mandatory for private-school issuers, the content and format of the Schedule K can also benefit public institutions seeking to evaluate and organize tax-exempt bond data, and better measure and evaluate post-issuance compliance. Presenters will illustrate examples of how the IRS reviews Schedule K data to examine a bond issue, including the use of bond proceeds. This detailed review will provide an emphasis on private business use, arbitrage, bond policies and the voluntary compliance measures.

In this session, participants will:
•    develop a high-level, hands-on practical approach in completing the Form 990, Schedule K  
•    learn the purpose of each section of the form
•    evaluate the value of the data repository created with the 990.

Deep Dive: Reallocations
Michael Allen, Ice Miller LLP and Jeff Lewis, Ice Miller LLP

Once the bonds are issued, best practices for potential change in use or other compliance issues might suggest an issuer “reallocate” the bond proceeds. Why is this useful? How is this accomplished? Bond counsel will address these questions through a review of a recent successful reallocation. 

The learning objectives in this session:
•    Participants will gain the understanding of the practicality and process to optimize allocations or resolve a potentially non-compliant situation.

Strategic Debt Planning
Kelly Farmer, University of Minnesota; John Sanchez, Tufts University; and Antonio Martini, Hinckley Allen & Snyder LLP
Putting it all together. Colleges and universities can face some daunting issues when contemplating a tax‐exempt financing. Utilizing concepts learned over the course of the conference, presenters will share strategic planning techniques that can help you address challenges that can arise in tax‐exempt financing including naming rights, bridge loans for fundraising, using the definition of project to your institution’s advantage, and alternative financing structures to meet special needs.

The learning objectives in this session:
•    Participants will gain a greater practical understanding of how tax law requirements can be anticipated prior to debt issuance to manage IRS compliance and IRS audit risks.

Deep Dive: Refundings
Justin Hughes, DAC Bond

One of the biggest challenges in accurately calculating private business use comes with issues that have refunding proceeds. This interactive discussion will provide participants with an understanding of those challenges, including what do with partial refundings, issues that refund several other issues, and multi‐purpose allocations. The discussion will use actual tax certificates to provide participants a real world example of how to identify when these different scenarios arise. The discussion will also add to the methods for calculating private business use that are introduced in the session, From Simple to Complex – the Private Business Use Calculation.

Learning objectives participants will achieve in this session include:
•    Understand the different scenarios that arise when calculating private business use for refundings
•    Learn where to look in a tax certificate for items such as multi‐purpose allocations that may impact the calculation of private business use
•    Develop a process to help alleviate the difficulties of tracking refundings and calculating private business use

Deep Dive: Understanding Private Business Use Exceptions
Chad Franks, KPMG LLP and Felicia Tucker, KPMG LLP

This session will walk participants through the various exceptions to private business use including a discussion of how to analyze research and management contracts under the applicable safe harbors.  

The learning objectives in this session:
•    Through the use of a case study, this session will illustrate the application of the exceptions and share best practices around documenting the conclusions.