WASHINGTON — The Internal Revenue Service has closed an audit without changing the tax-exempt status of $20.7 million of variable-rate demand revenue bonds that were issued by Colorado’s Crystal Valley Metropolitan District No. 1 in October 2004.
James Lane, partner with Sherman & Howard in Colorado, said the district recently received a no-change letter from the IRS.
The IRS had notified the district about the audit in a Feb. 21 letter. However, the district just disclosed the letter in an event notice it filed with the Municipal Securities Rulemaking Board’s EMMA system earlier this week. The district has not yet disclosed the IRS closed-audit letter on EMMA.
The IRS said it routinely examines municipal debt issuances to determine compliance with federal tax requirements, according to the original notice. “At this time, we have no reason to believe that your debt issuance fails to comply with any of the applicable tax requirements,” the IRS said.
The CVMD No.1 was organized in 1986 with the second district, which is another quasi-municipal corporation and political subdivision of Colorado. The two districts are located in the town of Castle Rock.
The bonds were issued to provide funds to finance construction, development and equipping of water, sanitation, safety control and other improvements to benefit the first and second CVMD districts.
Brownstein Hyatt & Farber PC was bond counsel. Wells Fargo Brokerage Services, LLC was underwriter.