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Taxation

IRS Closes Audit of New Orleans Bonds with No Changes

The Internal Revenue Service has notified New Orleans officials that it has closed an audit of more than $70 million of public improvement bonds issued by the city in 2007 with no change to their tax-exempt status.

The city disclosed the closure of the audit in an event notice filed with the Municipal Securities Rulemaking Board.

City officials said they believe the audit was random and the IRS found no problems.

The Series A bonds were competitively issued by the New Orleans Board of Liquidation.

It was the first bond issue the board sold in the aftermath of Hurricane Katrina and after the city ratings has risen back to investment grade, said David W. Gernhauser, secretary of the board.

The bond issue totaled $75 million and the bonds were insured by the now defunct Radian Asset Assurance, Inc.. The proceeds were used to finance streets and buildings.

The IRS audit, which began in March, had focused on all of the bonds except those that matured in 2009, 2010 and 2011, according to the event notice.

Foley & Judell, LLP, The Cantrell Law Firm and The Godfrey Firm, PLC were co-bond counsel, according to bond documents. Public Financial Management, Inc. in Atlanta was financial advisor.

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