Revolving Funds / Bond Banks

  • Overview
  • Attorneys

In the last two decades Kutak Rock has been involved in several dozen revolving fund/bond bank financings for at least 10 states in various capacities. Most were state revolving funds for Clean Water or Safe Drinking Water facilities; a few are for transportation projects and others are simply bond banks. Our clients include bond issuers and bond underwriters; in addition, we often counsel the local governmental entities utilizing such programs. The depth and breadth of our practice and experience create a firm foundation to provide our clients with up‑to‑date proactive legal advice reflective of current industry thinking, and the ability to complete challenging financings, all on a timely, cost‑effective and user‑friendly basis.

The security features for these programs often include the leveraging of federal capitalization assistance, but also include the leveraging and use of other funds or various forms of moral obligations or the equivalent. We regularly deal not only with security issues, but also related federal tax and disclosure issues, as well as the federal statutes and regulations governing the various programs. For example, an early issue in the financing of the SRF program resulted from the federal government’s decision to provide a federal capitalization grant (through a letter of credit mechanism, since replaced by automated clearing house funding) in lieu of cash for the program. The issue was whether such a federal letter of credit would cause bonds secured by the program to be federally guaranteed, which would void tax exemption. We requested and received a private letter ruling from the IRS determining that use of the federal letter of credit would not cause bonds to be taxable.

Our national practice group includes a dedicated team of tax attorneys focusing on tax‑exempt finance rules, disclosure and securities laws relevant to particular types of financings, and the rules underlying the programs being financed. Our tax attorneys are augmented by a national team of attorneys in other specialized areas, such as bankruptcy, real estate, derivatives, banking and liquidity. This combination of skill sets enables us to provide clients with assistance far exceeding standard legal advice. Not only do we provide routine services—such as providing tax advice, drafting, reviewing and negotiating bond documents, and so on—but we also offer solutions for issues that may arise and suggestions on improving the end product for our clients.