Change in Use

July 20, 2009

An electric and gas utility can demolish tax-exempt bond-financed pollution control facilities that are no longer in compliance with environmental standards without jeopardizing the tax status of the bonds. See Bond Buyer, “IRS: Utility Can Destroy Facilities But Dabe Tax Status,” July 14, 2009.  IRS PLR 200928018 – Change in Use upon Demolition.

Calendar of Assessments in Colorado

July 9, 2009

Preliminary Assessed Valuations:

Preliminary assessed valuations available by August 25 of each year. The valuations are certified by the county assessor to the State (Section 39-5-128 C.R.S.). The various state and county entities then calculate mill levies based on the preliminary valuations.

Final Assessed Valuations:

If changes occur to the assessed valuations between August 25 and December 10, county assessors must re-certify final assessed valuations to the state and various taxing entities. This will allow such entities to recalibrate mill levies, if necessary (Section 39-1-111, C.R.S.).

See the Assessor’s Reference Library for a general discussion of the role of assessors and the assessment certification process in Colorado.

Recovery Zone Bonds (RZEDBs and RZFBs)

July 8, 2009

Allocation of Volume Cap Limitation:  Volume cap allocated to counties and municipalities (or waived to states) must be used before January 1, 2011 under Sections 1400U-2 and 1400U-3, for RZEDBs and RZFBs, respectively. The allocation made by the IRS in Notice 2009-50 is a one-time allocation and is not an allocation only for 2009.

Purchase of Real Property:  Real property may not be financed with RZFBs but may be financed with RZEDBs (such acquisition will be a capital expenditure for economic development purposes).

For a general description of RZEDBs and RZFBs, see IRS Notice 2009-50.

Financing of Office Space:  Some bond counsel have concluded that office space may be financed with Recovery Zone Facility Bonds even though I.R.C. 142(b)(2) generally prohibits financing office space unless the requirements of the paragraph are satisfied.  This conclusion is not supported directly within I.R.C. 1400U-3.  Instead, based on how I.R.C. 1400U-3 integrated RZFBs as “exempt facility bonds,” it appears reasonable to say that paragraph (b) does not apply.  Paragraph (b) applies only if the exempt facility bond is described in a paragraph of subsection (a).  RZFBs are not, in fact, described in a paragraph of subsection (a) – they are described in I.R.C. 1400U-3!  In either case, the broad authorization to finance recovery zone property provides sufficient cover to permit the use of proceeds for office space, even if the office space does not expressly satisfy the I.R.C. 142(d) limitations.

Information Reporting Filing Deadline

July 2, 2009

Per section 149(e)(2) of the Code, the information reporting form must be filed with the Internal Revenue Service not later than the 15th day of the second calendar month after the close of the calendar quarter in which the bond is issued.

Bonds issued between…
… January 1 and March 31: Deadline is May 15 of that year
… April 1 and June 30: Deadline is August 15 of that year
… July 1 and September 30: Deadline is November 15 of that year
… October 1 and December 31: Deadline is February 15 of the next year