The Internal Revenue Service is auditing $250 million of Build America Bonds issued by Denver School District No. 1 in December 2009 to finance construction, renovation, and repair of school facilities.
The district disclosed the audit in an event notice filed with the Municipal Securities Rulemaking Board’s EMMA system Dec. 30 that did not appear on the site until Friday.
The IRS asked the district to provide documents and information regarding the pricing of the bonds and the use of proceeds, the district said.
However, the IRS told the district that it routinely examines debt issuances to determine compliance with the federal requirements and, at this point, has no reason to believe there is a lack of compliance on the district’s part.
“The district believes that it has complied with all federal tax requirements applicable to the 2009C bonds and is working with its counsel to respond to the [Information Document Request],” the issuer said in its notice.
The $250 million of BABS were issued as part of a $318.02 million transaction that included two series of tax-exempt refunding bonds, one totaling $24.7 million and the other $43.32 million, according to the official statement for the bonds.
The BABs were to be used to finance: repairs and renovations at almost every school building or grounds in the district; improvements in computer technology; replacements of deteriorating school playgrounds; construction of a new K-8 school and a new high school to accommodate rapid student growth in the northeast part of the city; and expansion of classroom capacity.
The managing underwriter was George K. Baum & Co. The underwriting syndicate included Piper Jaffrey & Co., Harvestons Securities Inc, Stifel, Nicolaus & Co., JPMorgan, Wells Fargo Securities, and RBC Capital Markets.
Bond counsel was Kutak Rock LLP, which filed the event notice on behalf of the district. Sherman & Howard LLC was special counsel and underwriters’ counsel was Bookhardt & O’Toole.