The Internal Revenue Service has closed an audit of $55.4 million of student housing revenue bonds issued by the Anson Education Facilities Corp. without a change to the tax-exempt status of the bonds, the issuer disclosed Monday.

The corporation disclosed the IRS action in a material event notice filed with the nationally recognized municipal securities information repositories.

The notice states that it received a letter from the IRS announcing that it has closed its examination of the 2002 bonds with no change to their status as tax-exempt debt.

According to bond documents, the proceeds were loaned to Waterview Park Apartments LLC to finance the costs of acquisition, improvement, and rehabilitation of a student housing project designed to hold over 2,000 beds, as well as related facilities located on the campus of the University of Texas at Dallas. Waterview assumed responsibility for paying debt service on the bonds, as well as transaction-related costs.

The documents also indicate that the Utley Foundation - a nonprofit organization established strictly for the benefit of the university but not controlled by it - would assume ownership of Waterview before Oct. 1, 2003. The foundation still maintains ownership of the housing complex, according to the Waterview Park Web site.

In 2005, the university called for an independent investigation of the complex, after reports claimed the facilities were unsafe and poorly maintained and alleged that the Utley Foundation raised student rent prices solely to obtain higher profits. The recommendations stemming from the probe called for the creation of a new residential housing office dedicated to maintaining the quality of the facility, as well as a series of quality benchmarks for the housing development.

It is not clear from the notice whether the IRS audit was related in any way to the university investigation.

While the bonds were underwritten by George K. Baum & Co., they are not connected to the number of pooled hospital bonds deals underwritten by Baum that have recently come under IRS scrutiny. In those deals, the IRS claims Baum rigged bids for the guaranteed investment contract in which the bond proceeds were invested, in an attempt to divert arbitrage.

Some of those examinations have been settled, with issuers using an unidentified third party payment to fund the settlement in order to protect the tax-exempt status of the bonds.

In this transaction, which was not a pool financing, Hoops & Levy LLP in Houston served as bond counsel and issuer's counsel on the deal, while Vinson & Elkins LLP served as underwriter's counsel. ACA Financial Guaranty Corp. provided bond insurance.

Officials with the Anson Educations Facilities Corp. and the Utley Foundation could not be reached for comment.

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