WASHINGTON — The Internal Revenue Service is auditing $26.56 million of first mortgage revenue and refunding bonds issued in 2008 by Lakeland, Fla. to help the nonprofit, Carpenter's Home Estates, Inc., finance the expansion of a continuing care retirement community.
The IRS has also closed an audit of $237.64 million of revenue bonds issued in 2007 by the New York City Industrial Development Agency for the Bronx Parking Development Company LLC project, with no change to the tax-exempt status of the bonds. But the IRS warned that any restructuring of the debt under a recent forbearance agreement could result in a reissuance of the bonds and possible tax law problems.
The closure and opening of the audits were disclosed in separate event notices posted on the Municipal Securities Rulemaking Board's EMMA system.
John A. Thompson, chief financial officer of Carpenter's Home Estates, said the IRS notified Lakeland, Fla. of the audit of its bonds in a letter dated April 22 that said, "At this time, we have no reason to believe that your debt issuance fails to comply with any of the applicable tax requirements." Thompson added that Carpenter's Home Estates also has no reason to believe there are any such violations.
EMMA states that no official statement or refunding documents were filed pertaining to the 2007 bonds, but the preliminary and final OS' appear to have been filed under "Other Financial/Operating Data."
The 2008 bonds were used to refund $13.04 million of the original 1998 bonds still outstanding and to finance renovations and the addition of 32 independent living units and other capital projects at a continuing care retirement community known as the Estates at Carpenter's.
The CCRC, located on about 33 acres in a suburban area of Lakeland, consisted of 340 independent living units, 49 assisted living units, and 72 skilled nursing beds in 2008. Herbert J. Sims & Co., Inc. served as underwriter on the 2008 bonds and Holland and Knight was bond counsel.
The other audit, closed by the IRS, involves some defaulted Yankee Stadium garage bonds and a delay until 2056 for the payment of money owed to New York City under terms of a deal in the works to build a new soccer stadium in the Bronx. The New York City Economic Development Corp. issued nearly $238 million of tax-exempt civic facility revenue bonds for the Bronx Parking Development Co., LLC in 2007 to finance the garages, which were to be built as part of a city deal with the Yankees to construct a new stadium next to the old one. Baseball fans, however, shunned the garages, priced as high as $48 for valet service, for alternatives, including rail and free parking several blocks away.
Under a forbearance agreement, agreed to last December, the reorganized company would not pay rent for 42 years for roughly 20 acres of city-owned land adjacent to other city-owned garages. All revenue Bronx Parking received from the proposed soccer site as well as from the company's other sites would go to bondholders.
The IRS warning stems from federal tax rules that state that certain material changes to bonds allow the IRS to consider the bonds reissued subject to the latest tax law requirements.
