The Internal Revenue Service headquarters in Washington, D.C.

WASHINGTON — The Internal  Revenue Service is auditing two bond issues sold in 2007 by Colorado authorities for a university and a health care borrower.

The audits were disclosed in event notices posted on the Municipal Securities Rulemaking Board's EMMA system this week.

One audit involves $39.92 million of bonds the Colorado Educational and Cultural Facilities Authority bonds issued for the University of Denver. The other centers on $68.91 million bonds the Colorado Health Facilities Authority issued for the Parkview Medical Center. Some of the health facilities authority's bonds have matured since issuance.

The disclosures include the letters and Information Document Requests that the IRS sent to the authorities. In the letters to both issuers, IRS agents said that the agency routinely examines municipal bond issues.

The Educational and Cultural Facilities Authority bonds are being audited as part of a project involving qualified 501(c)(3) bonds, the IRS told that issuer.

"The primary purpose of this examination will be to ascertain the compliance of your debt issuance with the federal tax requirements applicable to qualified 501(c)(3) non-hospital bonds," an IRS agent wrote. "At this time, we have no reason to believe that your debt issuance fails to comply with any of the applicable tax requirements."

Under the IRS tax-exempt bond office's market-segment program, agents conduct random audits of bonds in certain categories. TEB director Rebecca Harrigal said in September that her office will conduct audits in sub-categories under a revised version of the program.

The Educational and Cultural Facilities Authority loaned its bond proceeds to Colorado Seminary, which is more commonly known as the University of Denver. The school was to use the proceeds to refund bonds issued in 2001 and 2005, according to the official statement for the bonds. Morgan Stanley was underwriter.  Sherman & Howard LLC was bond counsel and special general counsel to the authority.

The Health Facilities Authority 's bonds for the Parkview Medical Center a nonprofit, included $38.38 million of hospital revenue bonds and $30.53 million of hospital revenue refunding bonds. T The new money bond proceeds were to be used to finance a stand-alone emergency facility and an addition to an existing building. The refunding bonds' proceeds were to be used to refund bonds issued in 1998 and 2001, according to the official statement.

A.G. Edwards & Sons, Inc. was underwriter. Kutak Rock LLP was bond counsel.

In the last 12 months, the Health Facilities Authority has disclosed audits of at least two other of its 2007 issues. However, those bonds had different conduit borrowers.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.