WASHINGTON — The Internal Revenue Service is auditing $50 million of general obligation water and sewer bonds issued by Fernley, Nev., in March 2007.
The audit was disclosed on the Municipal Securities Rulemaking Board’s EMMA online system on Thursday.
In a Sept. 4 letter, the IRS told the city that it “routinely examines municipal bond debt issuances to determine compliance with federal tax requirements.” It asked the city to send it copies of bond documents by Sept. 25.
Fernley, which was only incorporated as a city in 2001, said it “intends to cooperate with the IRS in this examination.”
Proceeds of the bonds were issued to finance the construction of building water and sewer infrastructure within Fernley, according to the bond documents. Swendseid & Stern, a member of Sherman & Howard LLC, was bond counsel in the transaction. JNA Consulting Group LLC was financial advisor.
The bonds were secured by pledged revenues and were also insured by Financial Security Assurance Inc., now Assured Guaranty Municipal.
In a separate matter, the IRS is auditing $650 million of GO school bonds and building bonds that the Clark County, Nev., School District issued in 2007. The audit was also disclosed on EMMA.
The IRS told the school district that it routinely examines municipal debt issuances to determine compliance with federal tax requirements and requested documents be sent to it by Nov. 2.
“At this time we have no reason to believe that your debt issuance fails to comply with any of the applicable tax requirements,” the IRS said in an Oct. 12 letter.
The bonds were issued to finance the construction, equipping and improving of school facilities, bond documents said.
Swendseid & Stern, a member of Sherman & Howard LLC, was bond counsel. NSB Public Finance was financial advisor.
