Public finance generally consists of two types of financing transactions: traditional and conduit. Traditional financing transactions are used by governmental units to access the tax-exempt and tax-advantaged debt markets to finance their own capital projects and working capital requirements. In a conduit financing transaction, the governmental unit accesses the tax-exempt and tax-advantaged debt markets to provide funds that are used to benefit another governmental unit, a 501(c)(3) organization or, in certain cases, private businesses.
Public finance capital markets are diverse and complex, offering a wide range of options to finance projects, programs and other needs through the issuance of debt, bonds, notes and other types of debt instruments. In addition to the issuer of the debt obligation, this process may involve state and local government entities, financial advisors, banks and other direct lenders, underwriters, private business entities and not-for-profit obligors (including 501(c)(3) organizations), providers of credit enhancement, trustees, rating agencies and other key players. Due to its complexity and the necessity for an approving opinion of bond counsel, it must be handled by knowledgeable and experienced attorneys who understand the involved nature of modern public finance—including an in-depth understanding of the spectrum of financing options aside from bond financing.
Phillips Lytle is listed in the Municipal Bond Attorneys section of The Bond Buyer’s Municipal Marketplace (“Red Book”) as a public finance firm with bond counsel opinions that are accepted within the marketplace. Our Public Finance Practice Team is comprised of highly experienced bond and tax attorneys who have been involved in an impressive list of public finance transactions. Members of our Public Finance Practice work in all of our firm’s offices and counsel clients in connection with the issuance and structuring of debt for a broad range of New York public finance transactions. In addition to serving as bond counsel for debt obligations issued by New York State and local government issuers, we also represent domestic and foreign letter of credit issuers, underwriters, private placement agents, corporate and not-for-profit obligors, and trustees.
Our work and experience in municipal finance extends to collateral and post-issuance matters such as preparation of post-issuance compliance written procedures and training of issuer and conduit borrower representatives responsible for monitoring post-issuance compliance; representation of issuers and conduit borrowers before the IRS on matters relating to the federal tax status of tax-exempt and tax-advantaged bonds, including the Voluntary Closing Agreement Program and audits by the Tax Exempt Bond section of the IRS; and advice concerning post-issuance arbitrage and arbitrage rebate matters.
We have worked on financings for state agencies, local governmental units, special public benefit corporations, not-for-profit corporations, and private entities and banks, as well as on financings involving the privatization of governmentally owned facilities.
In our capacities as disclosure counsel and bond counsel, we prepare the pertinent sections of official statements, private placement and offering memoranda, reoffering circulars and other disclosure documents. We are well versed in relevant U.S. Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) requirements, including SEC Rule 15c2-12.
General obligation bonds and notes are obligations secured by the full faith and credit of the issuer and, among other things, a pledge of the taxing power of the issuing municipality or school district. General obligation bonds, bond anticipation notes, and tax and revenue anticipation notes are issued for capital and working capital needs. In connection with these matters, our attorneys draft and prepare all necessary documentation, including bond resolutions and ordinances, notices of sale, official statements to provide investor disclosure, purchase contracts, certificates of determination and undertakings to provide continuing disclosure.
We have acted as bond counsel in connection with tax-exempt and taxable governmental bonds, qualified 501(c)(3) bonds, exempt facility bonds, special tax-advantaged bonds including tax credit bonds, and industrial development bonds, as set forth below.
We routinely handle both general obligation bonds that are secured by the ad valorem taxes of the local governmental unit that is issuing the bonds, as well as revenue bonds that are payable from, and secured by, assets and/or revenues. Our work includes extensive representation of both issues and borrowers.
Our attorneys are well versed in all types of municipal financing, including:
When it comes to Major Development Project Financing (MDPF), our Public Finance Team draws upon the expertise and depth of our other practice teams. MDPF may include public-private partnerships and facilities that are owned and/or operated by 501(c)(3) organizations in conjunction with governmental or private use. The focus of MDPF involvement may be to maximize the use of tax-exempt financing and to assure maximization of other forms of federal, state and local assistance; securitization of assets and revenues; and compliance with environmental requirements, including State Environmental Quality Review Act (SEQRA) environmental impact analysis and interrelated public (and private) approval and support. MDPF is usually used on high-value, multipurpose developments that involve, but are not restricted to, those that contain more than one of the following:
Many of these matters involve a complex public-private partnership (PPP) arrangement which must balance the private need for risk mitigation and the return on investment with the public need for cost certainty and prudent use of public assets and resources.
We are sensitive to the necessary balance between the competing interests in any corporate retention program, and can structure arrangements that satisfy IDA and municipal public purpose objectives to promote employment that takes into account the local employer’s cost-saving needs. When representing local employers, we are able to focus on, and help evaluate, bottom-line decisions that must be made in a possible relocation scenario. Our Public Finance attorneys pride themselves on crafting arrangements that result in win-win situations.
In addition to public-private partnerships, Phillips Lytle has structured and documented complex ownership, operation and use arrangements that utilize tax-exempt and other tax-advantaged financing, including pool financing, lease-purchase arrangements, true leases, short-term private use arrangements and operating agreements with private businesses for operation and management of governmental and qualified 501(c)(3) financed facilities.
Even in those cases where tax-exempt financing is not the main objective, our Public Finance Team is able to help arrange and document Payment in Lieu of Taxes (PILOT) agreements with local industrial development agencies (IDA) to promote economic development. PILOT agreements can often result in substantial savings on local real property, sales and use, and mortgage recording taxes. The arrangements can also be leveraged into long-term taxable or tax-exempt debt structures to finance a wide array of public and private infrastructure work.