July 27 2017 Newsletter (888) 516 9594
Federal Regulations Spark Important Issue Price Considerations

On June 7, 2017, new issue price regulations were effective (which are set forth in Treasury Regulation Section 1.148-1). These regulations prescribe how issuers of tax-exempt bonds may determine the issue price on these bonds. This is important to municipal bond issuers because there are now multiple ways to establish issue price, instead of the “reasonably expected initial offering price to the public on the sale date” method that existed prior to June 7th.

Due to the multiple considerations, Umbaugh and bond counsel will be talking with issuers about considerations around the various ways issue price may be established. Keep in mind that “issue price” will not impact the amount of bond proceeds that an issuer receives, but rather it relates to the bond yield on the bonds being issued and has tax implications. The regulatory change necessitates a “team approach” because bond and tax counsel will likely walk issuers through tax considerations while Umbaugh, as a municipal advisor, will provide insight into considerations around marketing the bonds and the bond sale.

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Utility Legislative Update (Part Two in a Series)

Legislature Gives IURC Authority to Allow a Customer Assistance Program for Water and Wastewater

The first part in this series discussed the new Infrastructure Assistance Program created by Public Law 233 (formerly Senate Enrolled Act 416). In this part of the series, we look at a different section of the new law that may give water and wastewater utilities the ability to implement what are sometimes known as “lifeline” rates.

In its Principles of Water Rates, Fees and Charges, the American Water Works Association defines lifeline rates as follows:

“Rates applicable to usage up to a specified level that are below the cost of service for the purpose of meeting the social goal of providing so-called minimum annual water requirements to qualified customers at a below-cost price.”

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