Internal Revenue Service Rulings and Notices

August 29, 2009

May 8 ruling: Bonds allowed for Investor-Owned Power Plant Purchase (

Notice 2012-44:  Qualified Energy Conservation Bonds (Clarifications)

Notice 2010-35: Direct Payment Subsidy Option for Certain Qualified Tax Credit Bonds and Build America Bonds

Notice 2009-35:  Qualified School Construction Bond (QSCB) Allocations for 2009

Notice 2009-33:  New Clean Renewable Energy Bonds Application Solicitation and Requirements

Notice 2009-29:  Qualified Energy Conservation Bond Allocations for 2009

Notice 2009-26:  Build America Bonds and Direct Payment Subsidy Implementation

Exemption from State Securities Registration

August 17, 2009


It is unlawful for any district to issue bonds or for any other person to make a distribution of such bonds unless they are first registered with the securities commissioner under section 11-59-108, C.R.S. or unless the issuance of bonds is exempted under section 11-59-110, C.R.S.

Claims for exemption must be filed at least five days (not business days) prior to the first sale of such bonds (Section 11-59-110(2), C.R.S.).

Procedure for Private Placements

In the case of a private placement without disclosure documents, the exemption form is to be submitted to the state division of securities indicating an expected issue date along with a substantially final resoluton (and indenture, if applicable). Upon issuance and delivery, the final resolution (and indenture) is to be accompanied by a copy of the approved exemption form on which the final issue date is noted. Procedures may vary by state, and the description above applies only to one particular state, intentionally not identified by the author.

Entities Subject to Exemption Form

Entities subject to exemption include special districts, municipal general improvement districts, municipal special improvement districts, county local improvement districts and county public improvement districts (Section 11-59-103, C.R.S.).  Parks and recreation districts are special districts (Section 32-1-103(14), C.R.S.).  No exemption filing is needed for business improvement districts.

Related Entries

State Securities Laws

Miscellaneous District Financing Rules (Form DLG-32)

Hedge Bonds and Refundings

August 10, 2009

Section 103(a) does not apply to “hedge bonds.” Section 149(g) of the Code discusses hedge bonds. A refunding bond is not a hedge bond if the original bonds met the requirements of Section 149(g) of the Code.

Section 1.149(g)-1 of the Regulations further explains that the refunding bond is a hedge bond unless there is a “significant governmental purpose” for the issuance of the refunding bond.  For example, an advance refunding to realize debt service savings or to relieve the issuer of overly burdensome document provisions would satisfy the significant governmental purpose requirement.

There is a special rule for refunding bonds and the application of Section 149(g) of the code:

  1. A refunding bond meets the requirements of Section 149(g) only if the original bond (i.e., the refunded bond) met the requirements of Section 149(g) (i.e., must have had the reasonable expectation as to when proceeds would be spent, must have reasonably expected that 85% of the spendable proceeds of such issue would be used to carry out the governmental purpose within the 3-year period and not more than 50 percent of the proceeds of the issue were invested in nonpurpose investments having a guaranteed yield for 4 years or more).
  2. A refunding bond is deemed to meet the requirements of Section 149(g) if certain special requirements apply vis-a-vis the refunded bond, as described in Section 149(g).

Section 149(g) of the Code was added by the 1989 Act in order to curtail the issuance of bonds prior to the time the proceeds thereof are actually needed for their governmental purpose in order to “lock in” lower interest rates that may not be available in the future. See 1989 Act House Report at 1377-78.