Washington, DC Update – June 2016

GFOA Issues Alert on Rule G-42 



The Municipal Securities Rulemaking Board’s (MSRB) new rule, G-42, Duties of Municipal Advisors, becomes effective on June 23.  Rule G-42 stems from the Dodd Frank Act and the SEC’s subsequent Municipal Advisor rule that places a federal fiduciary standard on MAs serving state and local governments. While the rule does not place any responsibilities on issuers, it does create new and numerous responsibilities on municipal advisors, who are hired by state and local governments. This GFOA alert provides information to our members on the types of information and written correspondence that MAs will now be sending issuers, including disclosures of conflicts of interest and acknowledgement of the scope of services for which an MA is hired. The primer also includes information on various aspects of the overall MA Rule and the types of exemptions that are in place when a party other than an MA wishes to provide advice to issuers.    

Please click here to access the Alert.

GFOA Issues Alert on MCDC Initiative Settlement Terms for Issuers

Issuers who self-reported under the SEC’s Municipalities Continuing Disclosure Cooperation (MCDC) initiative can expect to receive settlement offers containing standard provisions to which they must consent in the near future. The SEC is requesting an extraordinarily short turn-around for the settlement (5-10 days) but has indicated it will extend the settlement offer if the issuer requests. This alert serves to provide governments with an overview of the process and with GFOA’s recommendations that state and local governments participating in the MCDC initiative become familiar with the standard terms that are expected to be in the offered settlements. This alert addresses expected settlement parameters and is not intended to be legal advice. GFOA strongly recommends that issuers seek legal advice prior to finalizing or signing the proposed SEC settlement agreement and fully understand the consequences of the proposed settlement.

Please click here to access the Alert.

GFOA Accepting 2016 Standing Committee Membership Applications

Thursday, June 9, 2016

Applications to become a GFOA standing committee member are being accepted through July 22. Serving on a standing committee is an excellent opportunity for GFOA members to contribute their experience and knowledge to the entire membership. GFOA's seven standing committees meet twice each year and develop best practices, advisories, and policy statements for the approval of the Executive Board and membership. GFOA associate members from the private sector may also apply to be advisors to one of the committees.

The GFOA’s seven standing committees are: Accounting, Auditing and Financial Reporting; Canadian Issues; Economic Development and Capital Planning; Governmental Budgeting and Fiscal Policy; Governmental Debt Management; Retirement and Benefits Administration; and Treasury and Investment Management.

Click here to apply.

GFOA Testifies at IRS/Treasury Department Hearing on Political Subdivisions

On Monday, June 6, Pat McCoy, President-Elect of GFOA and director of finance for the Metropolitan Finance Authority in New York testified on behalf of the organization at a hearing held by the Internal Revenue Service regarding the Department of the Treasury’s proposed rule on political subdivisions.

The Treasury proposal would place greater restrictions on the definition of political subdivision for the purpose of being able to issue tax-exempt bonds. McCoy’s testimony reiterated concerns from the GFOA member survey; specifically, that it issimply not possible to construct a one-size-fits-all definition of what constitutes acceptable governmental control of a political subdivision, given the varied nature of states and tens of thousands of local governments. The proposed rule creates a great level of uncertainty as to the status of political subdivisions authorized by governments and creates a high level of risk for many entities across the country, as to their availability to issue tax-exempt bonds. This is especially true in cases where districts are designed intentionally to reach across multiple jurisdictions in order to create service delivery efficiencies directly to citizens. 

McCoy underscored the heart of GFOA’s argument against the proposed regulations stating that they “question the legitimacy and authority of bodies that enacted the enabling legislation that created the political subdivisions in the first place.” Taken together, the additional requirements of the Treasury’s proposed rule attempt to regulate governing matters that, in the absence of abuse, should be left to the States, as has been the case for decades.

To read Pat McCoy’s testimony, please click here