Mis­souri Is­suer Seeks To Re­solve Au­dit Un­der VCAP Pro­gram

The Bond Buyer - - Front Page - By Brian Tu­multy

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. ◽

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