The Maryland Health and Higher Educational Facilities Authority has disclosed that the Internal Revenue Service has closed an arbitrage rebate-related examination of $39.3 million of revenue bonds it issued in 2002 without changing their tax-exempt status.

The closure of the audit was disclosed last week in a material event notice that the issuer sent to the nationally recognized municipal securities information repositories.

The notice stated that the IRS indicated to the authority that it was selected for examination as part of the IRS' arbitrage rebate compliance initiative. The IRS announced earlier this year that it planned to audit roughly 200 bond issues under the initiative.

The examination was concluded just a few months after it was opened. The authority disclosed in a notice dated May 29 that the IRS had selected the 2002 issue as part of the initiative.

The bonds were issued at the request of the Board of Child Care of the Baltimore-Washington Conference of the United Methodist Church Inc., which used them to finance the acquisition, construction, renovation, and equipping of certain child welfare facilities located in Maryland and West Virginia.

Banc of America Securities LLC was underwriter on the deal.

Piper Rudnick LLP of Baltimore, now DLA Piper US LLP, was bond counsel on the deal, and Ballard Spahr Andrews & Ingersoll LLP was counsel to the underwriter.

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