March 2010 Report to NAHEFFA on Washington Developments Affecting 501(c)(3) Financing - PowerPoint PPT Presentation

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March 2010 Report to NAHEFFA on Washington Developments Affecting 501(c)(3) Financing

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March 2010 Report to NAHEFFA on Washington Developments Affecting 501(c)(3) Financing

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  1. March 2010Report to NAHEFFA on Washington DevelopmentsAffecting 501(c)(3) Financing Charles A. Samuels Mintz Levin Cohn Ferris Glovsky and Popeo PC 701 Pennsylvania Avenue, NW Washington, DC 20004 Phone: 202-434-7311 Email: casamuels@mintz.com

  2. 2010 vs. 2009 • Market improved but still rocky-- variable rate debt, expiring LOC’s • Important TEB provisions enacted but need to be extended (some Administration support) • Turmoil in Congress • Partisanship • W&M leadership turnover • Increased SEC interest in TEB’s • Animus toward Wall Street and big banks

  3. Ways and Means Committee • Chairman Rangel (NY) -- out Rep. Levin (MI) -- in • Mostly same approach and interests but emphasis on “regular order”(markups, amendments, conferences) • Impact on TEB’s and 501(c)(3)’s

  4. Jobs/Stimulus Bills and TEB Provisions • Legislation containing TEB provisions coming in tranches? • Hiring Incentives to Restore Employment Act (HIRE) -- BAB’s extended to 4 types of tax credit bonds (schools, energy projects) but at reduced subsidy. H.R. 2847 adopted by Senate, signed by President

  5. Jobs/Stimulus Bills and TEB Provisions cont’d • H.R. 4849 - small business and jobs bill extends BAB’s 1 1/2 years but reduces current subsidy • As year progresses, extender opportunities for bank deductibility, FHLB LOC’s, and BAB’s expansion

  6. Bank Deductibility • Incentive for banks to purchase munis, particularly small charities with low or no credit rating and for small amounts • Increased exemption ($10 million to $30 million) and measure exemption at borrower level -- facilitate state issuers offering BQ debt • Examples - clinics, community health centers, small hospitals and colleges • Main Street, not Wall Street; revenue loss barriers to extension

  7. Build America Bonds • Proven to be very popular so far -- efficient distribution of subsidy? • Administration -- make permanent program and expand to 501(c)(3)’s but lower subsidy • SIFMA priority - convert tax credit bonds to BAB’s and extend existing program • Sen. Grassley (IA.) and other Republican concerns about fees • Sen. Kyl (R. Az) -BAB’s encourage states to take “greater risks.”

  8. FHLB LOC • 2008 Housing Act amended IRC to permit FHL banks to credit enhance non-housing tax exempt bonds • Program should be made permanent or extended • Has helped non-profits suffering from collapse of bond insurers • Mostly used for restructuring • Collateralization requirement self-limits use

  9. HUD 242 • Essentially a federal guarantee of bond repayment • Ambition to expand program stymied by HUD conservatism and problems in residential market • Limited use, small number of financings • Emphasis on liberalizing refinancings to make them more workable

  10. Community Health Centers • Concerned about perceived lack of state/local issuers and inability to finance • Proposal for national issuer and federally guaranteed bonds • Unclear need, feasibility and value • Conflicts with principle of local control and oversight?

  11. Financial Reform Legislation • House passed bill, Senate bill unveiled • Attempt to obtain uniform ratings between municipal and corporate debt -- probably inapplicable to 501(c)(3)’s. • Will SEC propose direct regulation of issuers/borrowers?

  12. Financial Reform Legislationcont’d • Enhanced MSRB authority -- FA’s (but not for “obligated persons” or borrowers), swap advisors, and investment brokers • Diversify MSRB board • GAO Study

  13. Greater Oversight of 501(c)(3)’s and TEB’s • SEC - IRS Task Force • Form 990 and IRS non-profit Inquiries • Reorganized, enhanced SEC oversight and enforcement. • Issues of frequency and speed of disclosure.

  14. Thank you!Questions? Charles A. Samuels: casamuels@mintz.com