WASHINGTON — The National Federation of Municipal Analysts plans to release a paper next week outlining possible negative consequences to a California law dissolving some 400 of the state’s redevelopment agencies.
The paper on RDAs will be one of the first agenda items tackled by the group since Greg Aikman, vice president and primary municipal bond analyst at BNY Mellon Wealth Management, a division of Bank of New York Mellon Corp., became chairman on Jan. 1.
In a recent interview, Aikman — who works in BNY Mellon’s Boston office, which oversees about $25 billion of bonds held by individuals and in funds —discussed the potential impact of the California RDA legislation.
He also described a host of disclosure-related goals for the NFMA in 2012, including publication of revised best-practice papers and the roll-out of a disclosure award program for issuers.
“The recent [California] ruling has the NFMA concerned,” said Aikman, whose group primarily represents analysts at buy- and sell-side firms, credit rating agencies and credit enhancers. “There are $26 billion of [California tax-allocation] bonds out there, and the tracking and identification of cash flow, and the administration, is not clear to us ... bondholders like clarity.”
At issue is the fallout from a California law passed last year that abolishes the state’s redevelopment authorities and transfers their obligations, including bonds, to “successor agencies.” Those successors will be overseen by local oversight boards and government officials.
Supporters of the law, which was upheld by the California Supreme Court in December, say the state’s tax dollars could be better spent on other projects. But Aikman said the law “muddies the waters,” raising uncertainty about successors’ administration, oversight and ability to manage and track incremental tax revenue. “As a bondholder, you might not be able to see how [money] is flowing,” he said.
Aikman said the NFMA’s position paper, due out in the coming days, will discuss the law’s consequences, not its merits. He said the paper will suggest that California pass “clean-up legislation,” or provide uniform guidance to successor agencies.
“The NFMA is in favor of ... more specific guidelines or technical legislation,” he said. “Without clarifications, certain interpretations could harm certain bondholders.”
Aikman said also that the NFMA is also working on a comment paper in response to President Obama’s proposal to limit to 28% the value of tax-exempt interest on municipal bonds, deductions and other tax preferences for upper income taxpayers.
The paper will discuss the possible adverse impact that a 28% cap would have on the municipal bond market, including the effect on issuers and their ability to access capital markets, according to Aikman.
“In the past, the NFMA has taken a pretty strong stand on legislation or regulatory changes that would have a significant disruption in the municipal bond market,” he said, adding that tax changes are “obviously something we are concerned about.”
In addition, the NFMA also will publish a series of “recommended best practice” papers for disclosures in 2012, Aikman said.
The group is also updating decade-old recommended disclosure best practices for issuers of general obligation and tax-supported debt, housing revenue bonds, and hospital and health care debt. The NFMA published disclosure best practices for issuers of variable-rate and short-term securities late last year.
The NFMA has been working with the National Association of Bond Lawyers and other muni market groups to write recommendations for pension discosures for state and local governments.
Aikman is also launching an award program this year to recognize issuers with the best disclosure practices.
“Everyone knows there are deficiencies in secondary market disclosure, some pretty serious,” he said. “But over the past few years I’ve noticed there are some issuers who do a great job with disclosure.”
He said awards will be given to issuers of revenue, general obligation and 501(c)3 bonds and will be presented at the group’s annual conference in April. NFMA members will vote on winners.
He added that he hopes the program will put a “positive spin” on the NFMA’s disclosure efforts.
Aikman, 51, has served on the NFMA’s board of directors since 2004, and has been on the executive committee for the last three years, holding the positions of secretary, treasurer and vice chairman. He was also on the board of the Boston Municipal Analysts Forum, an NFMA affiliate.
He was raised in the rural Connecticut town of Ridgefield, and attended Drew University in Madison, N.J., where he received a bachelor’s degree in economics. He later graduated from the Maxwell School of Syracuse University with a master’s degree in public administration.
Aikman worked on real estate development in the New York City budget office in the mid- to late-1980s before taking a job at Merrill Lynch, now owned by Bank of America Corp.
He later worked for Capital Guaranty Corp. in San Francisco, which was acquired by Financial Security Assurance Inc., now Assured Guaranty Corp. and Connie Lee — the College Construction Loan Insurance Corp. — in Washington, D.C. He joined BNY Mellon Wealth Management in Boston in 1998, where he currently focuses on higher-yielding investment-grade bonds, including health care debt.
Aikman lives in Sharon, Mass., and spends time sailing Narragansett Bay in his 30-foot Bristol sailboat.