The Internal Revenue Service is auditing $49.67 million of tax-exempt general obligation bonds that were issued by the Oregon University System in April 2006 for university projects.
The bonds were part of a $64.80 million issue of tax-exempt and taxable bonds.
The university disclosed the audit in an event notice filed with the Municipal Securities Rulemaking Board on Jan. 7.
The IRS’ letter informing the state of the audit, however, was dated July 6, 2012.
In its letter, the IRS told university officials that it “routinely examines municipal debt issuances to determine compliance with Federal tax requirements.”
The university officials said they are cooperating with the IRS in its examination of the 2006 bonds and believe the bonds comply with all applicable requirements of the Internal Revenue Code.
The bonds were used to finance various Oregon University System projects, including the construction of new facilities and the remodeling of existing facilities, according to bond documents.
The Oregon state Treasurer issues bonds for the Oregon University System for construction, reconstruction and acquisition of campus facilities and equipment.
The university consists of seven public four-year institutions and other institutions of higher education under the state board of education. The largest of these institutions is Portland State University located in Portland, Oregon.
Larry Groth, Deputy Director of the debt management division at the Oregon State Treasury, said that they normally don’t disclose audits unless problems are found. Groth said that the audit is ongoing but they have not received any indication from the IRS that there are problems with the bonds.
UBS Investment Bank and Citigroup were co-managing underwriters. Preston Gates & Ellis LLP was bond counsel. Stoel Rives LLP was underwriter’s counsel.
