Public Charter Schools Borrowing With Tax-Exempt Bonds, Second ...

agreements for comparable special legal entitlements that result in private
use of the financed property.
b. Making sure that any specific use or program requirements continue to be
satisfied (like the operating the facility as a public charter school).
c. Keeping detailed records of the foregoing with respect to the original bonds
and any refunding bonds for as long as such bonds (or refunding bonds)
remain outstanding plus three years.
4. Inquiries from the IRS.
During the last few years, the IRS has significantly stepped up enforcement of
the tax rules pertaining to tax-exempt bonds, resulting in increased probability
of receiving inquiries for information from the IRS and possibly an audit
challenging the tax-exemption of the bonds. It is necessary not only to have
comprehensive and accurate records, as noted above, but also to get good advice
in responding to even the simplest of IRS inquiries. Copies of a pamphlet
prepared by the tax department of Orrick, Herrington & Sutcliffe LLP, An
Introduction to IRS Audits of Tax-Exempt Bonds are available on request.
In recent years, IRS officials have repeatedly emphasized the importance of
implementing post-issuance tax compliance programs. Public charter schools
that have effective post issuance compliance procedures are significantly more
likely to respond to an IRS audit both successfully and cost-effectively.
B. Disclosure Responsibilities
The school will have executed a Continuing Disclosure Certificate or Agreement
obligating it to: 34
1. Provide to the Municipal Securities Rulemaking Board’s Electronic Municipal
Market Access system (EMMA) certain financial and operating information on
a periodic basis (typically quarterly).
2. Provide immediate notice to EMMA of the occurrence of any one of eleven
specific events listed in the Continuing Disclosure Certificate.
3. In certain transactions, conduct investor information conference calls on a periodic
basis (e.g., semi-annually) to review financial and operating information. 35
4. Like the IRS, the Securities and Exchange Commission (“SEC”) has significantly
increased its enforcement activity in the tax-exempt bond area. This has lead to
Public Charter Schools Borrowing With Tax-Exempt Bonds, Second Edition 57