Municipal Bonds & Native American Tribal Bonds
General Obligation and other Tax-backed Bonds
General obligation bonds have historically provided funding for basic governmental facilities for State and local governments. The bond lawyers at Howell Linkous & Nettles have served as Bond Counsel and Disclosure Counsel for the State of South Carolina and many political subdivisions across the South in the issuance and sale of general obligation bonds or warrants. We have also served as bond counsel and as underwriter’s counsel in the issuance of general obligation bonds and notes issued for Native American Tribal Finance. Our extensive experience includes bonds issued by counties, municipalities, school districts, and special purpose districts for a large variety of projects such as public buildings, parks & playgrounds, utility systems, roads & highways and greenbelts. Although we have regularly served as bond counsel for some of the largest local government issuers of general obligation bonds in South Carolina, we provide the same attentive service to our smaller clients who are financing firetrucks or other equipment or vehicles with bond issues under $100,000.
In addition to traditional general obligation bonds or warrants payable from property taxes, our bond lawyers have assisted local governments with the issuance of “double barreled” bonds, additionally secured by a pledge of sales taxes, local option taxes, utility revenues, or parking facility revenues. Howell Linkous & Nettles has also provided bond counsel and underwriter’s counsel services in connexion with the issuance of bonds secured solely by sales taxes or other local option taxes. Sam Howell’s experience includes serving as bond counsel for the first “double barreled” general obligation bond issued by a local government in South Carolina, and as bond counsel for the first competitively sold advance refunding general obligation bond issue in the State.
Not only can our bond lawyers provide traditional bond counsel or disclosure counsel services to a local government, but we can also provide the legal services often necessary in obtaining referendum approval for the bond issue. Our extensive in-house experience as attorneys to local government entities gives us a unique perspective on the operations of local government in planning, approving, and issuing general obligation or other tax-backed bonds. Our bond attorneys are prepared to provide the appropriate level of support to the local government’s general counsel, finance staff, and governing body to ensure an orderly and timely bond issuance process.
Native American Tribal Bonds
The municipal bond market is a vital component in the federal-state relationship, providing infrastructure to the nation through local decision-making and access to the capital markets. For Native American Tribes, bond financing is one of the tools in the economic toolbox available to tribal governments as indicia of their sovereignty. The reason for financing tribal projects with bonds is simple – it matches the payment of the cost of expensive, long-lived facilities with their useful lives. Bonds are a way for an American Indian tribe to acquire facilities it truly needs while allowing each generation that uses or benefits from the facility to share in its costs. In this way, the larger needs of the community may be met by sharing the costs over time.
While the terminology of bond financing is new to many in Indian Country and can be baffling, the concept is not. Bonds are simply loans to tribal or other governmental entities, but with longer repayment terms and, usually, lower interest rates than are available to most individuals or businesses. States, cities, other local government entities, or their agencies as well as Native American Tribal Governments and enterprises issue bonds to raise capital for building infrastructure. Projects which may require public financing include schools, affordable multi-family housing, recreational facilities, water treatment plants, hospitals, sewers, and parking facilities, to name a few examples. The means, security, and other terms of a bond transaction can be as complicated, or as simple, as needed to accomplish the tribe’s goals.
Bond financing may not suit the needs of every tribe, but it is important to note that this financing tool has a much broader application than tribal gaming facilities. In fact, the vast majority of bond financing is actually used for more traditional facilities, and our experience at Howell Linkous & Nettles has principally been the financing of traditional governmental facilities for tribal governments.
Combining innovative ideas while tailoring the transaction to the tribe’s specific culture and needs is a hallmark of our representation of Native American tribes in bond financing. For example, Howell Linkous & Nettles was the first firm to successfully structure an Indian tribal bond issue with the backing of an offshore insurance company which does not have the exposure – and related problems – of many of the monocline bond insurers. This structure provided credit enhancement to the tribal government without the financial risks associated with bond insurers and sub-prime mortgage market.
The bond attorneys at Howell Linkous & Nettles are recognised for their bond counsel experience across the South as well as in Indian Country. We are one of the few bond counsel firms located outside of New York or Los Angeles experienced in tribal bond financing. Bond counsel for your tribe must know three areas of law: federal income tax law; federal securities law; and the tribal law. As the tribe’s bond counsel, our bond attorneys will provide all of the legal services needed under tax and securities laws. We will work closely with the tribe’s general counsel in addressing the requirements of tribal law, because we realise that each Indian nation is unique. Thus, all of the component legal areas of bond law are addressed without imposing on the tribal culture the corporate culture of a large, multi-office, multi-state law firm.
Howell Linkous & Nettles does not adopt a standardised approach to bond financing; we realise that there is no “standard” tribe. Instead, a bond financing should be an exercise in self-determination by a tribe, where tribal culture, and not business culture, should control.
Utility Revenue Bonds and Public Power Projects
One of the largest sectors of the public finance market consists of bonds issued for public utility systems, power projects, and private utility systems. The bond lawyers at Howell Linkous & Nettles have routinely provided bond counsel and underwriter’s counsel services for utility system financings across the South, and public utility finance comprises a large portion of the municipal finance practice for the firm. These systems include both municipally-operated and privately-operated water treatment facilities and distribution systems, wastewater treatment facilities and collection systems, electric distribution systems, and natural gas distribution systems. Our experience includes not only financing transactions for traditional utility systems, but also more unique transactions such as a landfill gas (methane) collection, treatment, and distribution system.
Not only do our bond lawyers have experience with traditional utility revenue bond issues sold in the bond market, but we also represent governmental clients who finance utility systems using federal or State programmes such as Rural Development (USDA) and State Revolving Fund Loans (EPA), as well as commercial bank loans.
Off-street parking facilities, including parking garages, parking lots, and even a system of parking garages, are regularly financed with municipal bonds. Although parking facility financings are most common for urban areas, they can also be essential for more rural settings that enjoy high volume visitor traffic, such as Native American Tribal facilities and other destination resorts. In addition, utility facilities are often funded with municipal bonds as economic development incentives for industrial, commercial, or residential real estate development. Financing techniques for these types of developments include tax increment financing (TIFs), special assessment financing (CDDs, MIDs, etc.), multi-county industrial parks, and special source revenue bonds (SSRBs). The bond lawyers at Howell Linkous & Nettles have hands-on experience with all of these development tools.
Our bond lawyers constantly work to develop techniques to meet the challenges of the rapidly developing, and often fickle, municipal finance marketplace. For example, our firm was instrumental in the development, along with a forward-thinking investment bank, of the standby purchase agreement to secure bond anticipation notes (BANs). This contract involves a standing obligation of an underwriting firm, for a period of years, to purchase the BANs or bonds of a municipality, providing the take out necessary for the annual sale and renewal of BANs pending the issuance of water and sewer revenue bonds to provide permanent financing of the utility project. This structural feature was noted by the rating agency as important in assigning its highest rating for the BANs. We firmly believe that our determination to find financial solutions to the evolving challenges faced by local governments and developers sets us apart.
Healthcare Finance
The bond lawyers at our firm have hands-on experience with healthcare finance for non-profit hospitals and other healthcare providers, having served as bond counsel or issuer’s counsel for hundreds of millions of dollars of tax-exempt conduit revenue bonds issued to fund such facilities. These facilities range from large acute care hospitals, to rural medical centers, to governmentally-owned nursing homes, to retirement facilities and assisted-living facilities.
We have also assisted for-profit hospitals with economic development incentives designed to give some measure of parity for those institutions that are unable to avail themselves of tax-exempt bond financing because of the restrictions of federal tax law, but that nonetheless pay property taxes and assessments, unlike many of the non-profit hospitals.
The bond attorneys in our firm come from backgrounds with experience in addressing the myriad of issues confronting the financing of healthcare facilities. Even with a complex transaction involving many parties, we strongly believe that the only thing clients give up by working with our firm instead of one of the large bond counsel firms is high overhead. By concentrating our practice in just a few related areas of law, and allocating our resources solely in those areas, we can provide public finance law services to our healthcare clients in a focused and efficient manner.
Education Financing
Educational institutions of all types are some of the largest beneficiaries of tax exempt bonds. In addition to their considerable experience in serving as bond counsel to many public school districts, our bond attorneys have handled public finance transactions for state colleges and universities, private colleges and universities, charter public schools, and private elementary and secondary schools, including church affiliated schools. These financings can take the form of the direct issuance of bonds by the institution, or the use of conduit state or local issuers to issue revenue bonds on behalf of the school or university.
For public school districts, the financing can often involve the issuance of general obligation bonds, and, where necessary, the approval of the voters in a bond referendum. In addition, school districts may also access public finance by means of lease-purchase and other annual appropriation financing techniques and other alternative financing methods. The bond lawyers at Howell Linkous & Nettles have plenty of experience in assisting school districts in accessing the municipal bond markets for their funding needs using any of these financing techniques.
Using financing tools provided by the Stimulus Act (ARRA), our firm served as bond counsel to a charter public school in structuring a first-of-its-kind tax-exempt, bank qualified bond issue for a charter school in South Carolina.
Our bond lawyers have served as bond counsel and underwriter’s counsel for State and private higher education institutions, as well as for private and religious schools. One of issues that church affiliated schools and universities may face in bond financing is the First Amendment issue of separation of church and state. Having served as bond counsel to several church affiliated institutions, our bond attorneys are very familiar with ways to address this issue.
Howell Linkous & Nettles has served as bond counsel, underwriter’s counsel, and issuer’s counsel with the financing of academic buildings, administrative facilities, dormitories, dining facilities, research facilities, and athletic facilities. Some of our more intricate deals have included public/private partnerships in which the private sector brings its strengths to a project for the benefit of a public university or college.
With regard to the selection of bond counsel, we believe that the educational institution is smart to look for the bond lawyers that the school’s administration and governing board feel will be most responsive to its needs, and who will work most diligently, effectively, and economically. The institution needs lawyers who are accessible to its staff throughout the financing process. The bond lawyers must be willing to spend all the time necessary to counsel the school or university through what may be a lengthy process. After all, the financing put in place today will significantly impact the financial path of the institution, which will certainly be around long after the individuals who work on the financing. Our lawyers relish the opportunity to provide this quality of service to the firm’s educational institution clients.
Ports Facilities Financing
Whether the project involves a public port facility or a privately-owned or operated port facility, our lawyers can provide experienced guidance in obtaining taxable or tax exempt bond financing for capital projects. We can assist with funding for public port bond issues or, as an alternative, we can provide bond counsel services for project-finance port facilities transactions.
Our bond lawyers have successfully negotiated public-private partnerships for port facilities, and where traditional commercial financing has not been available (upon reasonable terms) to provide funding for port projects, we have successfully created bond finance structures based on usage contracts with major customers of the facilities. In one such financing, our client, the owner/operator of the port facility, enjoyed an investment grade bond rating on its financing due to the creativity of the financing, when traditional commercial lenders refused to finance the project on reasonable terms.
We can assist you with unique approaches to tailoring the financing to meet your company’s or authority’s requirements.
Tourism Facilities Financing
As tourism increasingly becomes one of the leading industries in the South, our lawyers have become more involved with bond financing for tourism related facilities. In 1987, Sam Howell successfully argued the test case in Hucks v. Riley, where the South Carolina Supreme Court held that hotels can be financed with conduit revenue bonds because they are facilities that are necessary for the promotion of tourism, a public purpose for local governments in the State. Since that time, tourism facilities in South Carolina of all types have been financed by using tax exempt bonds. Tourism facilities financings can provide funding for cultural institutions, public parks and playgrounds, or infrastructure necessary for tourism. Financings with which our bond attorneys have served as counsel include funding with general obligation bonds (often with voter approval in a bond referendum), revenue bonds secured by net revenues of the facilities, or annual appropriation lease financings backed by local option sales taxes.
Funding for tourism related facilities can often be time-consuming and difficult to obtain. Due to the autonomous nature of our firm, we can devote our time and resources in a very focused manner without having to answer to a firm management committee. In this way, the bond lawyers at Howell Linkous & Nettles will be available to help you formulate the right approach to the financing of your tourism project regardless how long it takes to develop, and our fees will be reasonable.
Sports Facilities Financing
Similar in some respects to tourism facilities, sports facilities bring their own unique challenges when it comes to public finance. In addition to the sometimes problematic tax issues involved with private business use of sports facilities, such as professional team usage, professional performing artists, and corporate boxes in arenas, stadiums, and ball parks, there can also be credit concerns if the facilities are financed on a stand-alone basis. The bond lawyers at Howell Linkous & Nettles have years of experience with these difficult issues in assisting governmental entities with financing strategies for their community’s sports facilities.
The bond attorneys in our firm have addressed the myriad of issues confronting the financing of collegiate sports facilities and community professional and semi-pro facilities. Even with a complex transaction involving many parties, we strongly believe that the only thing clients give up by working with our firm instead of one of the large bond counsel firms is high overhead. By concentrating our practice in just a few related areas of law, and allocating our resources solely in those areas, we can serve our clients in a focused and efficient manner.
Solid Waste Disposal Facilities
With continued population growth in most of the South, solid waste disposal consumes more time and resources of local government. The bond lawyers at Howell Linkous & Nettles bring a vast array of experience to bear for clients tackling this difficult issue. From traditional landfills, to resource recovery facilities (“trash to cash”), to hazardous and medical waste incinerators, we bring to municipal finance knowledge gained from years of working “in the trenches” on these issues.
As bond counsel, we have worked with communities that rely on landfills and on incinerators that generate energy (in the form of steam) that is sold to offset the disposal costs. Our lawyers have served as bond counsel for regional landfill authorities, where the local governments combine resources to address this need.
Our bond attorneys have also assisted private waste disposal companies in financing landfill facilities with tax exempt bonds and have assisted private manufacturers with tax exempt bond financing for recycling facilities. And, recently, our firm has assisted clients with the preparation of applications for Clean Renewable Energy Bonds (CREBs).
Among the more challenging structures for which our firm has served as bond counsel has been the sale of methane produced from landfill facilities to a manufacturing facility. This financing involved the use of governmental purpose bonds, tax exempt private activity bonds, and taxable private activity bonds to fund a system designed to address Clean Air Act requirements, whilst recycling the methane for use as a fuel.
With this quality of experience, your financing team will be enhanced with the addition of the bond lawyers from Howell Linkous & Nettles.
Public/Private Partnerships
Public/private partnerships can combine the best aspects of the private sector with the strengths of government to provide community facilities that are otherwise unattainable by either government or business acting alone. Our lawyers have grappled with the difficult issues that challenge those entrepreneurs and civic leaders who strive to improve their community by joining forces. Whether it is housing for students at the local community or state college, recycling and use of landfill gas to fuel a manufacturing plant, or the provision of transportation and parking facilities necessary for economic development, the lawyers at Howell Linkous & Nettles can assist your development team with the right ideas to get the deal done.
IRS Audit and Tax Controversy
At Howell Linkous & Nettles, we regularly assist clients in resolving a variety of challenging tax issues that arise in tax exempt bond financing. Our attorneys offer legal advice and guidance with respect to structuring and tax compliance, both before and after closing.
Our firm represents issuers whose bonds are being audited by the Internal Revenue Service. And, when the tax exempt status of bonds is called into question, our firm’s legal services include both litigation and IRS settlement negotiations. Our attorneys have successfully represented issuers and borrowers before the IRS with respect to private letter rulings related to tax exempt financed facilities, audits of tax exempt debt, and closing agreements with the Service.
Our experience, our attorneys are prepared to conduct a thorough analysis and, if necessary, defense of tax compliance and tax obligations, and seek practical resolutions for your tax related issues.
