WASHINGTON – An Internal Revenue Service audit of $73.6 million of Series A excise revenue refunding bonds issued by the city and county of Denver in 2009 has been closed with no change to the bonds' tax-exempt status.
The city and county of Denver made the announcement in an event notice recently posted on the Municipal Securities Rulemaking Board's EMMA system.
"The IRS stated that it closed the examination of the Series 2009A bonds, with no change to the position that interest paid to beneficial owners of the series 2009A bonds is excludable from gross income," city and county officials wrote in the notice.
The IRS had selected the 2009A bonds for audit as part of a project/initiative involving financings of hotels, convention centers and similar facilities, according to an earlier event notice. The city of Denver received a notice from the IRS on March 11 stating that the 2009A bonds had been selected for random audit. Officials said they received another letter from the IRS on June 1 stating the audit was closed with no change to the bonds' tax-exempt status.
The 2009A bonds were advanced refunded with a portion of $239.4 million of Series 2016A dedicated tax revenue refunding and improvements bonds issued in April.
As of April 6, all of the outstanding Series 2009A bonds were advance refunded and defeased with Series 2016A dedicated tax revenue refunding and improvement bonds issued by the city and county of Denver, according to the event notice. The IRS had previously told the city it had no reason to believe the 2009A bonds failed to comply with applicable tax requirements.
The Series 2009A bonds audited were issued to refund the city's Series 2001A and 2001B excise tax revenue bonds. The latter were used to finance the expansion of the Colorado Convention Center in Denver, according to the supplement to the preliminary OS for the 2016 bonds.
The city's Series 2005A excise tax revenue refunding bonds were also randomly audited by the IRS. Those bonds, used to advance refund Series 2001A bonds, also had no change to their tax-exempt status after the audit was closed.
The series 2009A bonds were underwritten by Morgan Stanley, Stifel Niolaus & Co., and Wachovia Bank, which was acquired by Wells Fargo & Co. Co-bond counsel for the bonds were Sherman & Howard and Garcia Calderon Ruiz, both in Denver. Underwriters' counsel were Bookhardt & O'Toole and Kamlet Shepherd & Reichert, also in Denver.