0Governor Signs "Gas Tax Swap" Bills

Despite earlier indications that California Governor Arnold Schwarzenegger would veto ABX8 6 and ABX8 9, the so-called “gas tax swap” bills, the Governor apparently had a change of heart and recently signed both measures.

Currently, motor vehicle fuel is subject to both a 6% sales tax and an 18 cent per gallon excise tax.  The use of proceeds from the sales tax is restricted to transportation-related activities, while revenues derived from the excise tax may be used for other general fund purposes.  Under ABX8 6, as of July 1, 2010, motor vehicle fuel will become exempt from the sales tax and subject to a 17.3 cent per gallon increase in the excise tax, thereby providing the state government with more fungible revenues to help heal its troubled budget.  In an effort to assuage the loss of transportation funds, ABX8 9 allocates $400 million to state transit agencies and provides for an additional $350 million annually starting in 2012.

0IRS Sends Compliance Questionnaire for BABs

The IRS has begun distributing compliance questionnaires to issuers of certain Build America Bonds (“BABs”).  BABs, which are taxable bonds authorized to be issued under the American Recovery and Reinvestment Act (“ARRA”), are the fastest growing component of the current municipal bond market.  BABs provide either an interest subsidy to the issuer or a tax credit to investors and can be issued to finance virtually any project that can otherwise be financed with tax-exempt bonds.

Only direct-pay BABs, including Recovery Zone Economic Development Bonds, are expected to be subject to the questionnaire.  Direct-pay BABs provide state and local governments a federal subsidy equal to 35% of the total interest paid on the BABs (the subsidy is 45% for BABs that are designated Recovery Zone Economic Development Bonds).  The questionnaire is expected to focus on compliance with the requirements imposed on BABs under the Internal Revenue Code and related Treasury Regulations, including questions concerning calculation of issue price, expenditure of bond proceeds, calculation of bond proceeds available for the project, arbitrage yield calculation and rebate, and costs of issuance limitations.

0Goodwin Procter Launches Sustainable Development Blog

Goodwin Procter recently announced the launch of “Sustainable Development,” the firm’s first multi-faceted social media endeavor.  The blog provides professionals in all areas of the real estate market with a single go-to source for sustainable development content and legal expertise to help them navigate the rapidly evolving laws of today’s “green economy.”

Sustainable Development features content developed by Goodwin attorneys, as well as breaking news, industry trends, case studies, and legislative updates.  In addition, the blog provides professionals with a library of resources including governmental organizations at all levels, prominent industry associations, and nonprofits, plus a blogroll of notable industry-related blogs.  Goodwin also plans to leverage Twitter to deliver content to the broadest possible audience.

Please take this opportunity to visit Sustainable Development here.

0Bond Market Snapshot

The yield on AAA-rated municipal bonds has stayed relatively level between February and March 2010 at 4.44% on 30-year bonds and 3.02% on 10-year bonds.  During the same period, Treasury yields increased slightly from 4.63% to 4.73% on 30-year Treasury bonds and from 3.66% to 3.85% on 10-year Treasury notes.

Source: Bloomberg (www.bloomberg.com)