Final Agenda & Session Descriptions

(Updated October 21, 2021)

THURSDAY – OCTOBER 28th

Session 1 POST-ISSUANCE TAX COMPLIANCE BASICS (30 min)

Post-issuance tax compliance continues to be a focus of the IRS. Developing a program founded on best practices related to policies and procedures, private business use (“PBU”), arbitrage rebate, and other areas will equip organizations with the tools to withstand IRS scrutiny in this area. This session will review the components of an effective post-issuance tax compliance program, discuss the benefits of such a program, and provide participants with an introduction and basis for the detailed topics to be covered in other sessions at the Workshop.

Panelists:
Alan Bond, BLX
Aviva Roth, Orrick

Session 2 UNDERSTANDING PRIVATE BUSINES USE RULES AND EXCEPTIONS (50 min)

The federal tax rules and regulations relating to PBU are complex and can be difficult to understand. Complying with the IRS rules relating to tax-exempt debt is critical to ensuring that the tax-exempt status of such debt is not compromised. This session will provide a detailed review of the federal tax rules and tax-exempt bond regulations relating to PBU (and Unrelated Trade or Business Use for nonprofit organizations). In addition, this session will review the available exceptions to PBU, including short-term use and incidental use. Understanding the relevant PBU restrictions and applicable exceptions will allow issuers and borrowers of tax-exempt bonds to make sound decisions about the activities occurring in their tax-exempt bond financed facilities. In today’s economic environment, this information is increasingly important as issuers and borrowers look to maximize revenue generating activities in their facilities.

Panelists:
Alan Bond, BLX
Ed Oswald, Orrick

Session 3 SPONSORED RESEARCH IN TAX-EXEMPT FACILITIES – IRS RULES AND SAFE HARBORS (50 min)

In connection with sponsored scientific research, certain arrangements may give rise to PBU depending on how rights to use intellectual property resulting from the research are managed. This session will discuss the difference between basic and applied research and the IRS safe harbor rules regarding sponsored research as provided in Rev Proc 2007-47. As the trend continues for organizations to undertake more sponsored research, participants will be better equipped to make decisions regarding the use of their bond financed facilities in sponsored research endeavors and to structure agreements to be safe harbor compliant.

Panelists:
Andrea Ball, Orrick
Ed Oswald, Orrick
Larry Sobel, Orrick

Session 4 MANAGEMENT AND SERVICE CONTRACTS IN TAX-EXEMPT FACILITIES – IRS RULES AND SAFE HARBORS (50 min)

Management contracts and other use agreements with outside parties may give rise to PBU if occurring in bond financed facilities. The IRS has provided guidance in the form of Rev Proc 2017-13 with respect to safe harbor requirements for contracts for services performed in tax-exempt bond-financed facilities. While this revenue procedure is generally helpful, issuers and borrowers will need to carefully navigate these principle-based concepts to help minimize the impact that these contracts have on their PBU percentage. This session will review Rev Proc 2017-13 and how its application will impact the determination of PBU. Specific techniques and guidance for structuring contracts and agreements to be “safe harbor” compliant will also be discussed.

Panelists:
Andrea Ball, Orrick
Richard Chirls, Orrick

Session 5 Infrastructure Legislation and Other Current Events (50 min)

On September 15, 2021, the House Ways and Means Committee approved the tax provisions in the Build Back Better Act (the “Act”) as part of the budget reconciliation process. This session will address the potential direct and indirect effects of the Act on the municipal bond market. In addition, this session will also address the impact on the bond market of the suspension of the sale of State and Local Government Series Securities (SLGS), currently in effect.

Panelists:
Richard Chirls, Orrick
Amy Kron, BLX
Ed Oswald, Orrick

Session 6 CALCULATING PBU AND UTILIZING QUALIFIED EQUITY TO MINIMIZE PBU (75 min)

Accurate and timely calculation of PBU is an essential element of an effective Post-Issuance Compliance Program. This session will review specific examples of PBU and examine the methods for calculating PBU. The discussion will include examples of the calculation of PBU of bond financed facilities involving typical problem areas such as: central utility plants, sponsored research activities, management contracts and leases, summer use of facilities, and physician group contracts. This session will also discuss how funding a portion of a project with “qualified equity” will impact the calculation of PBU and how PBU is carried forward in a refunding transaction. This session will allow participants to gain a better understanding of the impact of various types of activities or uses on the overall allowable PBU limitation within a single tax-exempt bond issue and provide participants with information on properly applying and maximizing the benefit of floating equity.

Panelists:
Caleb Lansky, BLX
Ed Oswald, Orrick
Larry Sobel, Orrick

Session 7 ESG AND MUNICIPAL BONDS – THE STATE OF THE MARKET (30 min)

Socially and environmentally responsible tax-exempt bond issues are gaining popularity as more issuers and borrowers incorporate ESG factors into their strategic planning. This session will provide an overview of the growing ESG municipal bond market and leading bond designation standards. Against the backdrop of a self-regulating industry, prevailing guidelines for issuing “Social”, “Green”, or “Sustainability” bonds in the U.S. are emerging from foreign organizations. Topics to be discussed include the International Capital Market Association’s Green and Social Bond Principles and the Climate Bonds Initiative’s framework. This session will help participants identify eligible projects and gain an understanding of related requirements and best practices.

Panelists:
Nancy Kummer, BLX
Dan Kurz, Morgan Stanley
Zach Solomon, Morgan Stanley

CONCURRENT BREAKOUT SESSIONS (60 min)

Session 8-A [501(c)(3) Organizations Track] 2020 IRS SCHEDULE K REVIEW

This session will provide a review of the 2020 IRS Schedule K with commentary on the information being requested on the form and on specific calculations required by nonprofit borrowers with respect to their outstanding tax-exempt bonds which must be reported on the form. The panel will also discuss the relationship of certain questions on the form that may not be obvious to some and provide guidance with respect to answering specific questions. This session will allow 501(c)(3) organizations to better understand the information being provided to the IRS on an annual basis and why the information being requested is important to the IRS.

Panelists:
Caleb Lansky, BLX
Aviva Roth, Orrick

Session 8-B [Governmental Issuer and Public Entities Track] OPEN FORUM AND HOT TOPICS

This roundtable discussion will cover areas of post-issuance compliance unique to governmental bond issuers. This session will allow participants to raise and discuss issues they are observing day-to-day and share ideas and concerns with fellow finance professionals. Orrick and BLX participants will share their views and insights on the topics discussed.

Panelists:
Alan Bond, BLX
Jenna Magan, Orrick
Ed Oswald, Orrick

FRIDAY – OCTOBER 29th

Session 9 UPDATE ON IRS AUDITS (30 min)

The Tax Exempt and Government Entities (TE/GE) division at the IRS has an active enforcement process relating to tax-exempt bonds, with the focus changing on a yearly basis. In addition, recent bond audits confirm that the IRS is actively monitoring Schedule K responses. This session will provide an update on the TE/GE priorities for FY 2021 and recent IRS tax-exempt bond audit activity. Orrick has extensive experience with respect to tax-exempt bond audits and will provide guidance on what issuers and borrowers should be aware of when responding to an IRS audit.

Panelists:
Richard Chirls, Orrick
Sandee Stallings, BLX

Session 10 CONTINUING DISCLOSURE AND SEC RULE 15C2-12 (75 min)

This session will provide an overview of recent events relating to SEC Rule 15c2-12, including discussions surrounding statements by the SEC regarding COVID-19 related disclosures, implementation of recently adopted 15c2-12 event notices with emphasis on recent federal stimulus programs, and other related 15c2-12 issues. This session will assist participants in navigating their continuing disclosure requirements under their CDAs and potential voluntary disclosure notices.

Panelists:
Robyn Helmlinger, Orrick
Jeff Higgins, BLX

Session 11 MANAGING ARBITRAGE COMPLIANCE (75 min)

Make sure that your organization understands the arbitrage requirements, is adequately documenting compliance, and is aware of potential rebate payments. This session will review the arbitrage rebate and yield restriction requirements relating to tax-exempt bonds. Topics to be discussed include Federal reporting and filing requirements, contrasting the rebate and yield restriction requirements, and developing a compliance plan that includes making timely payments, document retention and compliance substantiation. This session will equip participants with the knowledge to better understand the complex arbitrage rebate regulations and provide participants with the tools to effectively manage compliance.

Panelists:
Glenn Casterline, BLX
Sandee Stallings, BLX

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