Practice Areas

501(c)(3) Conduit Bond Transactions

The attorneys in Mitchell Williams’ Municipal and Public Finance Group handle conduit revenue bonds for private nonprofit or for-profit universities, colleges, and other educational facilities, hospitals, nursing homes, retirement centers, and other health care facilities, various types of nonprofit charitable organizations, solid waste and resource recovery facilities, various types of water facilities, electric energy facilities, and industrial facilities.  At times, these transactions require additional support from the skilled lawyers on our tax and public finance teams. Leveraging experience of these lawyers helps ensure that all requirements are met to ensure the tax-exempt status of bonds issued in a conduit financing. Our municipal finance lawyers work simultaneously to identify an appropriate public entity conduit issuer and prepare the bond documents for the transaction.

The advantage to the tax-exempt 501 (c)(3) entity is that interest on a qualified bond offering is exempt from Federal income taxation, alternative minimum tax, and usually income taxation in the state in which the Bonds are issued. Typically, bond borrowing rates are substantially lower than interest rates on conventional borrowings, and in some cases, use of bond financing may generate substantial community interest and support for the nonprofit entity.

The field of public finance has undergone dramatic transformation over the past several years. The laws governing tax exemption of debt instruments have become increasingly complex, and novel approaches to structuring transactions have been developed to deal with such complexities. At Mitchell Williams, we have maintained our position as leaders in the public finance area by keeping abreast of these recent changes and anticipating their impact on our clients’ transactions.

Bond counsel should be consulted early to assist in determining whether a project qualifies and in assuring that the applicable legal requirements will be met.