Florida IDA and Maine University Undergo IRS Audits

WASHINGTON — The Internal Revenue Service is auditing $31.59 million of Series 2004A first mortgage revenue bonds that were issued by the St. Johns County Industrial Development Authority in August 2004 to help Presbyterian Retirement Communities Inc. and its affiliates finance improvements to eight retirement centers in Florida.

In a separate matter, the IRS is auditing $43.02 million of Series 2002 revenue bonds that were issued by the University of Maine System in January 2002 for the construction and renovation of residential and other facilities at four campuses and for the procurement of a resource planning program for managing finance, human resources and other administrative departments.

The audits were disclosed in event notices the issuers filed with the Municipal Securities Rulemaking Board’s online EMMA system last week by PRC and the University of Maine System. School officials noted that the Series 2002 bonds under audit were refunded by the system’s Series 2012 revenue bonds.

PRC, which consists of seven not-for-profit retirement care communities in Florida, said the authority was notified about the audit by the IRS in a Jan. 24 letter. “At this time, we have no reason to believe that your bond issue fails to comply with any of the applicable federal tax requirements,” the IRS said in the letter.

Herbert J. Simms & Co. was the lead underwriter. Rogers Towers P.A. was bond counsel and counsel for the borrowers, and Greenberg Traurig LLP was underwriter’s counsel, according to bond documents.

The University of Maine System said that it was informed about the audit in a June 14, 2010, letter and that the IRS said it “routinely examines municipal debt issuances to determine compliance with federal tax requirements.”

The authority said nothing in the notice or in document requests suggests that the IRS is focused on any specific issue relating to the Series 2002 bonds.

“The University System is not aware of any issue relating to the Series 2002 bonds that would affect the exclusion from gross income of interest on the Series 2002 bonds,” it said, adding that it “has been cooperating, and intends to cooperate, fully with the Service in connection with its examinations but cannot predict the outcome of the examination.”

The bonds were underwritten by UBS PaineWebber Inc., now UBS Financial Services Inc., and Salomon Smith Barney, now Citi.

Preti, Flaherty, Beliveau & Pachios LLP was bond counsel. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. was underwriters’ counsel.

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Higher education bonds Healthcare industry Tax Washington Maine Florida
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