The Internal Revenue Service has begun auditing $60.625 million of Build America Bonds issued in June 2009 by Louisiana for transportation projects.
The Louisiana State Bond Commission disclosed the audit in an event notice filed with the Municipal Securities Rulemaking Board’s EMMA system.
The commission said the state received an Information Document Request on the taxable gasoline and fuels tax second lien revenue bonds, 2009, Series A-4, from the IRS on Jan. 25, 2013.
“The state believes the audit is a random audit that does not involve the examination of a specific problems and the state is not aware of any concern with the bonds by examination,” the commission said in its notice.
Foley & Judell, LLP is representing the state in the audit, the notice stated. The firm was also bond counsel for the transaction.
The BABs were issued as part of a $5.2 billion bond-financed highway and bridge program involving 16 projects that was authorized by the Transportation Infrastructure Model for Economic Development Act in 1989.
The BAB issue was to be used to finance highway and bridge projects, including construction of the Huey P. Long Bridge and the New Mississippi River Bridge at St. Fancisville.
The BABs are secured by and payable solely from a second lien on pledged gasoline and fuels taxes according to bond documents. The state has levied a $0.20 tax per gallon on gasoline and motor and special fuels.
The state initially entered into two floating-to-fixed rate swaps with Citi in conjunction with the bonds, but Citi transferred its counterparty role to Wells Fargo. The swaps were slated to terminate in July 2012, but were extended for 15 years, according to Whitman J. Kling, Jr., director of the Louisiana State Bond Commission.
Citi underwrote the bonds. Breazeale Sachse &Wilson LLP was underwriter’s counsel. Government Finance Advisors was financial advisor.
