Missouri Issuer Seeks To Resolve Audit Under VCAP Program
WASHINGTON – The University Place Transportation Development District affiliated with the University of Missouri-St. Louis is seeking agreement with the Internal Revenue Service under the Voluntary Compliance Agreement Program involving tax-exempt bonds issued in 2009 for construction of a parking garage.
The pending VCAP involving an adverse ruling by the IRS on the tax-exempt status of the bonds was publicly disclosed last week in an event notice on the EMMA database of the Municipal Securities Rulemaking Board.
The ruling appears to have involved private use of the parking garage which is located in a research and development office park for private companies to develop “cooperative relationships and to provide for shared resources” with the university.
The 24.17-acre transportation district was created to enable the construction of roads and parking adjacent to Interstate 70 for development of the office park.
The proposed settlement involves the Jan. 3 issuance of $7.3 million in transportation development refunding revenue
bonds that are being used to defease the outstanding remainder of $9.55 million in tax-exempt bonds issued in 2009 for construction of a parking garage. The proceeds will also be used to make a cash payment to the IRS. The issuer hopes those things will resolve the tax audit.
The major occupant of the office park is Express Scripts Inc., which is headquartered there.
The new issue was split into two series, one of which is taxable and the other tax-exempt.
The $4.6 million in taxable 2019A series bonds have an interest rate of 5.875% and $2.695 million in tax-exempt 2019B series bonds have an interest rate of 4.375%.
The bond counsel for the issuer, Rachel Orr of Armstrong Teasdale, declined to comment on the case, instead referring questions to the official statement released last month for the 2019 bonds.
The OS said the “district expects to enter into the closing agreement with the IRS, the purpose of which is to preserve the exclusion of interest on the Series 2009 bonds from gross income for federal income tax purposes” shortly after the issuance of the 2019 bonds.
VCAP negotiations and signings, however, have been suspended during the partial government shutdown. ◽