Tax

A safe harbor that the Internal Revenue Service proposed in private-activity bond rules to make it easier for issuers to obtain public approval for projects would be "almost impossible" to comply with and inappropriate for some bonds, a bond attorney warned.

Presidential hopeful Sen. Barack Obama unveiled an economic recovery proposal on Monday that would create a federal facility to buy state and local government debt similar to the recently announced program to provide liquidity to the commercial paper market.

House Democratic leaders are pushing for Congress to return for a lame duck session after the Nov. 4 election to take up a second economic stimulus bill, which will likely include infrastructure grants for state and local governments that could total nearly $300 billion.

The Council of Development Finance Agencies last week unveiled its recommended practices for managing an effective tax increment finance program, which aims to establish "a set of guiding principles" based on "common procedural elements" for finance officials running such programs.

WASHINGTON - Municipal issuers are pushing to be included in the Federal Reserve's program to buy commercial paper, which the Fed has hinted will not include municipalities under its current terms. The resolution may ultimately boil down to the definition of a municipality, market participants contend.

WASHINGTON - The National Association of Bond Lawyers, in a letter sent to the Treasury Department this week, said certain existing tax-exempt bond issuance rules - especially related to refundings and restructurings of issues that include swaps or other financial products - are posing problems for issuers trying to function in the tumultuous market.

The next administration and Congress should consider a massive stimulus package or federal financial assistance to help states manage debt to help recover from the credit crunch, a number of leading economists and former government budget experts said here yesterday.

WASHINGTON - State and local governments are facing a fiscal crisis that will be far worse than the 2001 recession because sharp declines in income and sales tax collections will lead to more widespread budget cuts in the months ahead, a new Rockefeller Institute of Government report warns.

DALLAS - The Louisiana State Bond Commission gave its approval on Friday to the state's continued holding of auction-rate bonds issued by the Louisiana Stadium and Exposition District that the state purchased in April after the auctions failed.

WASHINGTON - Investors who bought $55.5 million of bonds to help construct the Glebe, an upscale continuing-care retirement community near Roanoke, Va., face major uncertainties with their investments after the facility defaulted on a $15 million bond payment in July because its revenues came in lower than anticipated.

LAS VEGAS - The ongoing crisis in the markets was evident yesterday in the hallways and at the podium of The Bond Buyer's annual Nonprofit Hospital Finance Conference here.

The financial crisis - which led to Lehman Brothers' bankruptcy filing and virtually locked up the variable-rate demand obligation market along with the auction-rate securities market - has led municipal issuers to question how to calculate bond yield for arbitrage purposes in these extraordinary situations.

DALLAS - Louisiana yesterday won a longer reprieve than it expected from the U.S. Treasury Department on converting its auction-rate securities for the Superdome in New Orleans.

WASHINGTON - The Senate was expected last night to approve a modified $700 billion bailout plan that included more than $2 billion of bond-related tax extensions, renewable energy incentives, and disaster relief, as well as a one-year "patch" to the alternative minimum tax.

WASHINGTON - The Treasury Department announced yesterday that governmental issuers can purchase and hold auction-rate securities, variable-rate demand bonds with seven-day put options, and tax-exempt commercial paper until Dec. 31, 2009.

Congress over the weekend approved and delivered to President Bush a continuing resolution that would fund the federal government at current levels for more than five months and authorize $6.5 billion of bond-related community development funds. But a multibillion-dollar economic stimulus package that was approved in the House Friday seemed unlikely to get full congressional approval as of yesterday.

The House and Senate continued their standoff over how many revenue-raising offsets should be included in legislation designed to extend several expiring tax breaks and create tax incentives for renewable energy initiatives, with each chamber pushing its own bills and the clock ticking down to Congress' upcoming adjournment.

WASHINGTON - The House approved legislation Friday that would extend several expiring tax breaks as well as provide tax incentives for renewable energy production, but the Bush administration threatened to veto the measure.

WASHINGTON - The Internal Revenue Service has closed an examination of $373 million of airport revenue bonds that were issued in 2005 by the Minneapolis-St. Paul Metropolitan Airports Commission with no change to the tax-exempt status of the bonds, it was announced Wednesday.

House Ways and Means Committee chairman Charles Rangel, D-N.Y., yesterday introduced another bill containing tax incentives for renewable energy and extensions of expiring tax breaks. Meanwhile, House members Wednesday night signed off on separate bills that would create a one-year "patch" to the alternative minimum tax and a new federal program that would authorize up to $13 billion of private-activity bonds to finance disaster relief.