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CONTENTS President's Column (Floyd C. Newton III) 1 Washington Saga (William L. Larsen) 3 National Office News (Patricia F. Appelhans) 6 Stuart Scotten Joins NABL's D.C. Office 7 Actions by the Board of Directors on July 15 and 16, 1999 (Carolyn Truesdell) 8 Shared Tax Observations (Sharon Stanton White) 11 Bob Baker's Letters from Albania 16 The Woman Who Saved Mt. Vernon (Thomas Fleming) 19 Voice from the Past (Manly W. Mumford) 22 Legal Assistants' Corner What is a FAST Bond? (Ann L. Atkinson) 24 Employment Opportunity 24 Bond Dogs 25 Editor's Notes 28 Quarterly Limericks (Orin Macgruder) 30

The Bond Lawyer: The Journal of the National Association of Bond Lawyers ("NABL") (formerly The Quarterly Newsletter of the National Association of Bond Lawyers) is published on or about

March 1, June 1, September 1 and December 1 of each year, for distribution by special standard rate mail solely to members and associate members of the Association. Membership

information may be obtained by writing to Patricia F. Appelhans, Executive Director, NABL, 1761 S. Naperville Road, Suite 105, Wheaton, IL 60187, or by calling 630/690-1135. ©1999,

NABL. Copyright is not claimed for any portion hereof prepared by any official or employee of the United States of America in the course of his or her official duties, nor for articles or

other items separately copyrighted by their authors.

THE BOND

LAWYER

°° °° The Journal of the National Association of Bond Lawyers

Volume 20, No. 3 September 1, 1999

The Bond Lawyer September 1, 1999

National Association of Bond Lawyers Officers and Directors Floyd C. Newton III .......................................................................................................................................................................... President King & Spalding Atlanta, Georgia

Howard Zucker ........................................................................................................................................................................ President-Elect Hawkins, Delafield & Wood New York, New York

Carolyn Truesdell.............................................................................................................................................................................. Secretary Vinson & Elkins L.L.P.

Houston, Texas J. Hobson Presley, Jr.......................................................................................................................................................................... Treasurer Maynard, Cooper & Gale, P.C., L.L.P.

Birmingham, Alabama Linda L. D'Onofrio .............................................................................................................................................................................. Director Whitman Breed Abbot & Morgan LLP

New York, New York William L. Gehrig................................................................................................................................................................................ Director Arter & Hadden

Washington, D.C. William J. Noth.................................................................................................................................................................................... Director Ahlers, Cooney, Dorweiler, Haynie, Smith & Allbee, P.C.

Des Moines, Iowa J. Douglas Rollow................................................................................................................................................................................ Director Ballard Spahr Andrews & Ingersoll

Philadelphia, Pennsylvania Lisa P. Soeder ...................................................................................................................................................................................... Director Nixon, Hargrave, Devans & Doyle LLP

Hartford, Connecticut David A. Walton.................................................................................................................................................................................. Director Jones Hall San Francisco, California

Mary Jo White ..................................................................................................................................................................................... Director Nixon, Hargrave, Devans & Doyle LLP

Washington, D.C. William H. Conner .............................................................................................................................................................................. Director Squire, Sanders & Dempsey L.L.P. Immediate Past President

Cleveland, Ohio Frederick O. Kiel ............................................................................................................................................................... Honorary Director Cincinnati, Ohio Editor of The Bond Lawyer ° ° Patricia F. Appelhans ........................................................................................................................................................ Executive Director

Wheaton, Illinois Publisher of The Bond Lawyer William L. Larsen .....................................................................................................................................Director of Governmental Affairs Washington, D.C.

Because opinions with respect to the interpretation of state and federal laws relating to municipal obligations frequently differ, the National Association of Bond Lawyers ("NABL") has given the authors who contribute to The Bond Lawyer, and its editor, the opportunity to express their individual legal interpretations, opinions, and positions. These interpretations, opinions, and positions, whether explicit or implicit, are not intended to reflect any position of NABL or the law firms, branches of govern-ment, or organizations with which the authors and editor are associated, unless they have been specifically adopted by such organizations. For educational purposes, the authors and editor may employ hyperbole or offer suggested interpretations for the purpose of stimulating discussion. Neither the authors, the editor, nor NABL can take responsibility for the completeness and accuracy of the materials contained herein; readers are encouraged to conduct independent research of original sources of authority. The Bond Lawyer is not intended to provide legal advice or counsel as to any particular situation. Errors or omissions should be called to the editor's attention: mail to 1095 Nimitzview Drive, Suite 103, Cincinnati, Ohio 45230, or e-mail to [email protected]. Cheers.

The Bond Lawyer September 1, 1999

PRESIDENT'S COLUMN A number of recent events have occurred which are of significance to the members of NABL. First, the Opinions Committee completed its Model Underwriters' Counsel Opinion and Commentaries. This project has been approved by the Board of Directors and distributed to the members. It reflects careful thought and consideration by both the Opinions Committee and the Board of Directors, and I urge you to consider it carefully when the need arises. Similarly, the release of an exposure draft of the Model Indenture has been approved. This project, which has been several years in the making, reflects the considered judgment of members with a variety of practices. The commentaries to this work are very helpful in addressing the background to various indenture provisions and alternative methods of handling issues which arise in indenture drafting. This exposure draft is being released with the hope that members of NABL will review its provisions and offer to members of the Model Indenture Committee further comments and thoughts about its provisions. On August 10, the House of Delegates of the American Bar Association considered, and rejected, a proposal by the ABA Ethics Committee that the Model Rules be amended to preclude an attorney from accepting a legal engagement if the lawyer had made a political contribution for the purpose of obtaining or retaining a legal engagement. This result was a surprise to many who have followed this issue over the last several years, since the House of Delegates had adopted a resolution last year at the ABA Annual Meeting asking the Ethics Committee to specifically consider and recommend such a rule. NABL, which first considered the issue several years ago, has maintained its position that making political contributions for the purpose of retaining or obtaining bond counsel engagements is improper. The next step in this discussion is uncertain, although it is unlikely that the proponents of a rule such as the one rejected by the ABA House of Delegates will give up the fight. I expect that the fight will move to the states, particularly New York, where a number of "pay-to-play" proposals have been made and are under consideration. In July, the New Jersey Supreme Court issued its decision in the controversy over proposed New Jersey Opinion 33, which would have required all individuals serving as bond counsel on New Jersey bond issues to meet the requirements to practice law in New Jersey. These include being a member of the New Jersey bar and meeting the New Jersey bona fide office requirement. The decision by the New Jersey Supreme Court attempts to strike a balance between the competing interests of assuring that attorneys qualified to practice law in New Jersey are involved in New Jersey bond issues and permitting New Jersey issuers to access attorneys with needed expertise who do not meet the New Jersey bar or office requirements when the issuer or its counsel deems it necessary to do so. The decision has been interpreted in different ways and a number of questions relating to counsel roles in connection with bond issues remain undecided. I anticipate that this decision will lead to considerable discussion among NABL members, and will be discussed at the upcoming Bond Attorneys' Workshop. While this controversy related particularly to New Jersey, the principles considered by the New Jersey Supreme Court are relevant in every jurisdiction.

The Bond Lawyer 2 September 1, 1999

WASHINGTON SAGA Greetings

from the nation's capital. With Congress out for the August recess, this is the time when

Washington quiets into somewhat of a state of sus-pended ani-mation. The weather all summer has been steamy and the drought hereabouts is so bad, people have actually been

hoping we'll have a hurricane so we can finally get some rain. Meanwhile, Congress has been suffering through a drought of a different kind — a drought

of bipartisanship. The Republican Tax Bill Encouraged by rosy economic predictions and widely accepted reports of a massive $3 trillion budget surplus, Congress passed a $792 billion tax cut bill just before leaving town. Typical of the party line polarization characterizing the debate on most issues in recent sessions of Congress, the vote on the Taxpayer Refund and Relief Act of 1999 (H.R. 2488) went almost completely along party lines. Despite some early efforts to float a compromise smaller tax cut, no Democrat voted for the final tax cut package in the Senate, and in the House, only five did so. The Democrats say that H.R. 2488 cuts too much and for the wrong purposes. The Republicans say cutting taxes is the only way to prevent Congress and the White House from spending the surplus. The looming certainty of a Presidential veto led Congressman Rangel of New York, the ranking Democratic member of the House Ways and Means Committee, to analogize passage of H.R. 2488 to Congress drawing up a lavish

There are a number of changes underway at the Internal Revenue Service which may affect NABL members. In addition to revisions to the audit guidelines and the implementation of the Appeals process, the IRS is undergoing a major reorganization that will affect NABL members. Details of the reorganization plan are still being discussed, particularly with respect to the attorneys in the Office of Chief Counsel who consider tax exempt bond matters. The IRS has also announced that a Tax Exempt Advisory Committee will be formed, which will include individuals who are interested in matters relating to governmental entities, Indian tribes and tax exempt bonds, the three major groupings in the Tax Exempt area in the reorganized IRS. NABL is considering making suggestions to the IRS for appointments to this Advisory Committee. From an internal standpoint, NABL's educational functions have had record attendance thus far this year, and the early indications are that the Bond Attorneys' Workshop will similarly have very high attendance. The popularity of NABL's educational efforts is a testament to the hard work which goes into these functions by the NABL members involved. Education and improvement of the profession continue as NABL's primary goals. I would also encourage you to check regularly the NABL website (www.nabl.org). The site has undergone substantial revision, and procedures are being implemented to make sure that information useful to NABL members is posted as quickly as possible. This website is also an excellent source for finding materials which have been released by governmental agencies. I look forward to seeing you at the Workshop.

Floyd C. Newton III August 12, 1999

[Larsen Photo]


Christmas list, "knowing that Santa's not coming." To deprive the President of a grandstand opportunity to veto the H.R. 2488 when Congress is out of town, the Republicans did not send the bill to the White House before leaving on recess. They will see how the tax cut plays in their districts and set a strategy for the political battle that will begin in September. The President's veto threat sets the stage for the fall's tax-cut negotiations. One scenario may be a complete standoff resulting in no tax bill at all. Indeed, some commentators assert that having no tax-cut bill would be the best result for the country in its current surplus situation. However, the more likely scenario is for both sides, after the requisite political posturing, to hammer out a compromise measure which makes fewer tax cuts than the Republicans want, but more than the President has said he would accept. Running along a parallel track to the tax bill, but receiving perhaps a little less attention than they deserve, are the appropriations bills. The appropriations committees have been wrestling with the budget caps still in place from the 1997 balanced budget agreement. To stay within the caps so far, appropriators have had to be a little tricky. For example, Congress funded the Constitutionally-mandated 2000 census with a $4.5 billion "emergency" appropriation. Several billion dollars of assistance to farmers got the same emergency treatment, even though only some of the assistance is truly emergency in nature. By using the emergency-spending loophole in the balanced budget agreement, Congress can fund huge programs and still maintain the appearance of being within budget targets. Budget gimmickry can go only so far, however. Congress has used up next year's estimated $14 billion non-Social Security surplus on the spending bills it has already approved. Completing the rest of the appropriations process this fall will put Con-gress in a tremendous budget bind. Popular programs in the areas of labor, health and human services, and education must go on the chopping block if Congress is to stay within the budget caps. Assuming deep cuts won't happen, federal programs have to be funded from some source of revenue. The question is whether projected surpluses are substantial enough to support funding for both existing programs and major tax cuts without forcing Congress to raid the Social Security cookie jar. The tax cut and budget debates are in

this way inextricably intertwined. Bond Provisions of H.R. 2488 Whatever your philosophical position is on the merits of a big tax cut, H.R. 2488 contains a number of provisions favorable to municipal bonds. Foremost, H.R. 2488 raises the private activity bond volume cap by 50% over five years. The higher cap would begin in 2000 and reach the greater of $225 million or $75 per capita by 2004. While slower to take maximum effect and without the inflation protection of single-purpose measures such as H.R. 864 and S. 459, which were introduced earlier this year, H.R. 2488 nonetheless provides welcome vol-ume cap relief. Second, in keeping with this session's Congressional focus on school infra-structure issues, H.R. 2488 amends section 148 of the Internal Revenue Code in two ways to provide arbitrage rebate relief to issuers of school bonds. The bill increases by $5 million the current arbitrage rebate exemption for small issuers of governmental bonds used to finance educational facilities. This means issuers would not have to pay arbitrage rebate on issues up to an aggregate of $15 million, provided $10 million is issued to finance public school capital expenditures. A second school-related arbitrage relief reform of H.R. 2488 allows issuers of public school construction bonds to spend bond proceeds over four years, instead of two, without having to pay arbitrage rebate. In another provision favorable to tax-exempt bonds, H.R. 2488 authorizes use of private activity bonds to finance up to $15 billion in highway infrastructure projects. In designating bonds issued to finance selected highway infrastructure projects as exempt facility bonds, this measure incorporates the approach of the previously pending S. 470 and H.R. 859. H.R. 2488 also increases the ceiling on the state low-income housing credit to $1.75 per capita over five years beginning in 2000 and establishes an inflation adjustment mechanism thereafter. The credit is used in conjunction with tax-exempt bonds in housing transactions. Finally, H.R. 2488 phases out the alternative minimum tax for individuals beginning in 2005 and eliminates it after 2007. This measure would increase the attractiveness of tax-exempt bonds as an investment. That provisions favorable to tax-exempt bonds made it into a Congressionally-adopted tax bill is good news. It suggests that the legislative climate for tax-exempt bonds is much improved since the mid-1980s. While there is no guarantee that these


measures will stick when the horse-trading begins in September, the fact that the Republican leadership appears to favor most of the provisions offers reason for cautious optimism. So too does the comparatively low cost to the Treasury of the volume cap acceleration and the arbitrage relief for school-related financing, which makes it less likely that these bond provisions will get knocked out of any surviving legislation just to save money. Other Bills Although the tax bill has the most momentum of any of the bills we have followed this session, we are keeping an eye on several other measures. Both the Senate Energy and Natural Resources Committee and the Energy and Power Subcommittee of the House Commerce Committee have held hearings on deregulation and restructuring of the electric power industry. More hearings are planned. As noted in my last column, members have introduced several bills attempting to set the future course of the electric power industry, including the use of tax-exempt financing. Senator Gorton (R-WA) unsuccessfully attempted to attach S. 386, a measure favored by the public power community, to the Senate tax bill. The Senate Finance Committee plans post-recess hearings on how much tax-exempt debt municipal utilities should be allowed to use in a competitive electricity market. Hearing plans notwithstanding, it remains to be seen if Congress will have time to act on comprehensive deregulation of the electric power market this year. He has not introduced a bill yet, but Chairman Gramm (R-TX) of the Senate Banking Committee has solicited suggestions for securities law reforms to include in future legislation. Among the responses he received was a call by The Bond Market Association (TBMA) for a study of the impact of imposing on municipal issuers disclosure standards that are functionally comparable to those applicable to corporations under the securities laws. The Government Finance Officers' Association (GFOA) is vigorously opposing the study concept as a threat to the Tower Amendment, which limits federal securities regulatory authority over municipal issuers. There has been no action yet on S. 224, Senator Moynihan's (D-NY) proposed Stop Tax-Exempt Arena Debt Issuance Act. The bill was not incorporated into H.R. 2488. Two other bills that could negatively affect tax-exempt financing have

been introduced. House Majority Whip Tom Delay (R-TX) introduced H.R. 2398, which purports to restrict the use of tax-exempt financing of facilities where parties have negotiated to arrange the financing in exchange for preferential use of the facility. There was a press report that the bill targets a Las Vegas Convention Center expansion project. Three concerns about the bill are its retroactive effective date, its broad language, and its attempt to legislate in an area where there are already IRS regulations. Similar concerns arise in connection with H.R. 2756, recently introduced by Congressman Hall (D-TX). H.R. 2756, another broadly worded and retroactive bill that may have unintended negative effects, purports to deny tax-exempt financing for facilities that compete with nearby existing private facilities. Neither H.R. 2398 nor H.R. 2756 was incorporated into the H.R. 2488 tax legislation. It is unclear whether the bills will progress, but we will monitor them. The bills described above, as well as other legislation of interest, are available on the NABL Website: www.nabl.org. IRS Appeals Meeting On July 20, John Cross, Linda Schakel, David Walton (via telephone conference call), and I represented NABL at a meeting convened by Tom Louthan, Director of Alternative Dispute Resolution and Customer Service of the IRS Office of the National Director of Appeals. Other private sector attendees included Sunita Lough, who represented the ABA's Tax-exempt Finance Committee, and Brad Waterman, a private practitioner in the tax controversy area. Other IRS staff included Jerry Sack of Exempt Organizations, Bruce Serchuk and B.J. League of Branch 5, and Ted Cichaski of Appeals. Discussion in the meeting centered on the pending final version of Revenue Procedure 98-58, and appeals procedures generally. The group spent considerable time discussing early referral. However, the discussion did not result in much clarification of the circumstances where early referral would be permissible. It appears that the IRS is prepared to adopt NABL's comment letter position that adverse determinations by the District prior to transfer of the case to Appeals and expiration of the 30-day period are actually preliminary. During the discussion of this issue, we raised questions


regarding what constitutes "final action" by the IRS and under what circumstances the IRS issues a final notice of the disposition of a case. This has been a rather murky area of the law. We recommended that the IRS clarify what constitutes final action. In response, IRS staff agreed that it would be a good idea to add a section to the Rev. Proc. dealing with final action, and they appeared favorably disposed to do so. The IRS expects that the final Rev. Proc. will be issued in late August. Although the meeting ended with no discussion of intermediate or alternative sanctions, it appears there will be an opportunity to meet again in the next couple of months. SEC Roundtable The SEC recently announced that it would be sponsoring a roundtable discussion among representatives of various municipal market participants. The one-day roundtable discussion will be held in Washington on October 14, 1999, and will feature 4-5 panel discussions. The SEC Office of Municipal Securities asked for NABL input on possible topics for discussion. NABL's Securities Law and Disclosure Committee suggested the following topics: · Roles and Responsibilities of Parties –

Issuers, Borrowers, Underwriters, Financial Advisers and Counsel.

· Insider Trading and Continuing Disclosure

– Is there any risk of insider trading liabili-ty?

· Electronic Disclosure – What are the risks

posed by Websites? How can electronic disclosure be used to satisfy disclosure obligations?

We expect NABL to be represented on the panel discussions. Other participants will likely include the MSRB, and other interest groups such as the GFOA, National Federation of Municipal Analysts, TBMA, and the Investment Company Institute. MSRB Land-secured Financing Forums The MSRB has announced that it will host forums on land-secured disclosure in September. The forums will be in Washington, D.C., Houston, Texas, and Costa Mesa, California. See the NABL Website for further details.

Visit NABL's Website: www.nabl.org


Treasury Position Still Open The Treasury Department is still trying to fill the Office of Tax Legislative Counsel attorney-advisor position recently vacated by Ed Oswald. The position is important because Treasury looks to this individual for expertise in municipal bond matters. Interested candidates should contact Joseph Mikrut of Treasury at (202) 622-0180. NABL Website We continue our efforts to make the NABL Website (www.nabl.org) as useful as possible to members. We are trying to get relevant pending legislation and other important documents posted as soon as we can. For example, we posted H.R. 2488 shortly after Congress passed the bill on August 4. Similarly, we posted the decision of the New Jersey Supreme Court in the matter of Opinion 33 the day after the decision. In addition to timely postings, we are assessing how we can improve the appearance, format, and searchability of the Website. We view the Website as a great resource for NABL and are doing our best to learn more about the technology involved. We welcome your suggestions for site content and improvement, and invite you to use the Website often. Washington Office News We welcome Stuart Scotten as Washington Office administrative assistant. Stuart's bio is featured elsewhere in this issue. In addition to assisting in answering your questions and infor-mation requests in the government affairs area, Stuart will be a key liaison to the Website. Feel free to contact him. Handicapping the 2000 Presidential Race I will attempt to close my second column for The Bond Lawyer on a high note. Recently, I came across a unique approach to handicapping the 2000 Presidential race, propounded by Jay Mathews of The Washington Post. While it borders on tall tale status, one could even call this approach the height of nonsubstantive political analysis. This theory largely does away with the need to analyze what the candidates are saying on the issues. On the other hand, you do need to focus on where the candidate stands in relation to his (or her) rivals. In short, the theory holds that the 2000 presidential election will go to the tallest candidate.

Stilted allusions to Abraham Lincoln aside, Mathews notes that in the twelve presidential elections held since the television era began in 1952, shorter candidates prevailed only twice (in 1972 and 1976). That suggests that maybe we'd better start taking the candidacy of 6-5 Democrat Bill Bradley a little more seriously (as 6-1 Al Gore has already started doing). It also suggests that if either Bradley or Gore wins the Democratic nomination, he'll have the high ground over Republican frontrunner George W. Bush (5-11) in the general election. As for the other candidates, they end up on the short list. If this theory has any credence, it could mean that we'll witness an elevated level of Presidential debate next year. Such lofty expectations would be a good thing. After all, whoever said politics is for the small-minded? Bill Larsen Washington, D.C. August 17, 1999 NATIONAL OFFICE NEWS It just keeps getting bigger and bigger! The 1999 Bond Attorneys' Workshop promises to boast a record number of attendees. At this writing, the National Office has 105 more Workshop registrants than last year at this time. Perhaps the BAW phenomenon is due, in part, to the fact that the current number of NABL members stands at 3,031, which shows tremendous growth over years past. Then again, perhaps the growing popularity of the

Bond Attorneys' Workshop is a direct result of the hard work and quality of

education provided by the

countless contributors

associated with making BAW a success year after year. This year a big thanks goes to J. Douglas Rollow, Cynthia Weed, and Eric Ballou as Chair and Vice-Chairs of this year's

[Appelhans photo]


event. Mark your calendars for October 26, 1999! The Association is sponsoring a one-half day teleconference on ethics and professionalism. The teleconference will be an audio conference, with registrants calling a toll-free number. The teleconference will take place at a Chicago area hotel on Tuesday, October 26, 1999, from 12:30 p.m. until 5:00 p.m., EDT. Limited space will be available on a first come, first served basis. The teleconference will be conducted in panel format, providing in-depth discussions of topical ethical and professionalism issues. Topics expected to be covered include: 1) recent developments in ethics, including (as applicable and to the extent pertinent) confidentiality (e-mail and other types of communications), multi-disciplinary practice, multi-state practice (i.e., NJ Opinion No. 33), lawyer advertising and solicitation, and pay-to-play; 2) conflicts of interest/multiple representations; and 3) professionalism, including mentoring. The faculty will include practitioners with significant expertise and involvement in this important area. The registration fee for the conference is $150.00 for members and $195.00 for nonmembers. For additional information, please call the NABL office at 630/690-1135. When calling the National Office, you may hear another new voice. NABL has welcomed a new staff member, while bidding farewell to Liz Thiltgen. Liz is leaving to begin her career as a teacher. We wish her well. In the meantime, Judy Bean has joined the NABL team. Judy will be responsible for all accounting tasks and membership marketing. Judy has more than 20 years' experience in association management, administration, and development of member services programs. She was previously employed for ten years at the Association Forum of Chicagoland, which is an association for associations. Judy was the Director of Administration and Membership before moving to Director of Career Services. Her experience in accounting, marketing, and career services will benefit all current and new members of NABL. Although the National Office is kept plenty busy, we do welcome all comments and suggestions from our members. Please feel free to send any ideas to us at [email protected]. As always, we look forward to hearing from you. Patricia F. Appelhans

Executive Director STUART SCOTTEN JOINS NABL'S D.C. OFFICE Stuart Scotten, pictured at left, joined the Association's Office of Governmental Affairs on June 14 as Administrative Assistant to Director of Governmental Affairs Bill Larsen. Stuart received his BSc (Hons) Politics (First Class) from the Uni-versity of North London in 1997, and thereafter served the Institute of Public Policy Research in London as Coordinator to the Government Program and Office Manager. Stuart maintains the NABL Website with a gimlet eye, and would be happy to hear ([email protected]) from members who have comments or corrections with respect thereto.

Scotten photo


ACTIONS BY THE BOARD OF DIRECTORS ON JULY 15 AND 16, 1999 The Board of Directors met on July 15 and 16, 1999, in Banff, Alberta, Canada. President Floyd C. Newton III presided. Also present were: J. Hobson Presley, Jr., Treasurer; Carolyn Truesdell, Secretary; Directors Lisa P. Soeder, David A. Walton, William L. Gehrig, Linda L. D'Onofrio, William J. Noth, J. Douglas Rollow and William H. Conner, Immediate Past President; Patricia F. Appelhans, Executive Director; and William L. Larsen, Director of Governmental Affairs. President-Elect Howard Zucker, Director Mary Jo White and Honorary Director Frederick O. Kiel were absent. Direc-tor White was present for a portion of the meeting by conference call as indicated below. Executive Director's Report Executive Director Appelhans reported that as of July 6, 1999, the Association had 3,002 members (2,561 regular members, 238 associate members, 193 legal assistant members and ten retired members). Executive Director Appelhans also reported that 223 people attended the Washington Seminar and that the reviews of that seminar were very positive. She reported further that the first mailing regarding the Bond Attorneys' Workshop was sent out June 7th, with a second mailing scheduled for July 9th. As of July 6, 230 people were registered for the Bond Attorneys' Workshop, compared with 193 at the same time in 1998. Finally, Executive Director Appelhans reported that Judy Bean has been hired as a second full-time employee in the national office. Ms. Bean has more than 20 years' experience in association management and administration. Her main areas of responsibility will be accounting, member services and marketing. Report of Director of Governmental Affairs Director of Governmental Affairs Larsen reported that the Association's Washington office had moved to its new location in May, and that new computer hardware will be acquired. The new address, telephone and facsimile numbers and e-mail address have been provided to the membership, as well as listed in The Bond Lawyer and on the Association's Website (www.nabl.org). Director of Governmental Affairs Larsen also reported that he had hired Stuart Scotten as his

Administrative Assistant. Mr. Scotten, who began work June 14th, has an undergraduate degree in politics and is experienced in office management. His primary duties will include maintaining the Association's Website. Mr. Larsen also reported on the Washington Seminar, recent meetings of Association repre-sentatives with staff at the Internal Revenue Service and the Securities and Exchange Commission, and on certain congressional legislative proposals, including Chairman Archer's tax bill, which includes volume cap increases beginning in the year 2000, school construction bond financing proposals and the elimination of the alternative minimum tax. Treasurer's Report Treasurer Presley reviewed the statement of revenue and expenses for the period ending June 30, 1999, and indicated that both revenue and expenses are in keeping with or ahead of budget. The Board reviewed the current policy regarding the reserve fund and concluded that a substantial reserve was important to give stability to the Association, and to provide funds to be used for special projects of the Association, capital expenditures, additional member services and possible increased personnel to handle new technology. Model Indenture Committee Secretary Truesdell discussed the current (July, 1999) draft of the model indenture and commentaries. She noted that excellent comments had been received from several Board members, not all of which have been addressed in the current draft because of the varied viewpoints regarding certain issues and provisions. President Newton stated that there would always be different approaches on some terms of the document, and he recommended that the Board authorize circulation of an exposure draft of the model indenture and commentaries. The Board members agreed that the document should be available on the Association's Website and be available in hard copy from the national office. Secretary Truesdell was requested to draft a letter to be sent to Association members in August informing them of the availability of the exposure draft and that it would be discussed in the trustee panels at the Bond Attorneys' Workshop. It is the intention of the Association to encourage review by Association members as well as representatives of other participants in bond financings. Director D'Onofrio made a motion to


authorize distribution of the exposure draft, following approval by President Newton of the letter to Association members. The motion was seconded by Treasurer Presley and approved unanimously by the Board. Bankruptcy Committee Secretary Truesdell reported that the Bank-ruptcy Reform Act of 1999 (H.R. 833) passed the House of Representatives on May 5, 1999, by a vote of 313-108. She reported further that H.R. 833 is pending in the Senate, and that a companion bill, S. 625, has been passed out of the Judiciary Committee and is awaiting scheduling on the Senate floor. Both bills include minimal provisions relating to municipal bankruptcy, in particular an amendment to make the securities contract liquidation provisions of the Bankruptcy Code applicable to Chapter 9 municipal bankruptcy cases. General Tax Committee The Committee is involved in a number of projects, including comments regarding the solid waste regulations being prepared by a task force headed by Association member Charles S. Henck. The Committee also is working with the Internal Revenue Service regarding attendance at NABL functions and is working on an important project relating to alternative sanctions. Director Walton also reported on the meeting held in May, 1999, between representatives of the Internal Revenue Service and the Association. Association representatives included President Newton, President-Elect Zucker, Board member Walton, Director of Governmental Affairs Larsen, General Tax Committee Chair McHugh, Vice-Chair Charles C. Cardall and Association member Henck. In addition, the Committee recently submitted comments to the Internal Revenue Service with respect to IRS Notice 98-58. Director of Governmental Affairs Larsen reported on his recent conversation with Tom Louthan, one of the principal drafters of the Notice, regarding a meeting among representatives of the Internal Revenue Service, the Association and the American Bar Association Tax Exempt Finance Subcommittee regarding the appeals procedures discussed in the Notice. Bond Attorneys' Workshop Director Rollow reported that registration is up for the September, 1999, Bond Attorneys' Workshop, the book is at the printer, the Steering Committee is

still arranging a speaker for the Thursday luncheon, and representatives of the Internal Revenue Service and the Securities and Exchange Commission will be on some of the workshop panels. Legal Assistants Committee Director Rollow discussed the draft Legal Assistant's Handbook, a copy of which was distributed to the Board. He asked that Board members review the draft Handbook and provide comments. The Board generally agreed that this was an excellent project that shows diligent effort by the Legal Assistants Committee, chaired by Ann L. Atkinson. Susan M. Parker of the Legal Assistants Committee has provided the major preparation of the draft Handbook. Securities Law and Disclosure Committee Director White joined the meeting by conference call at this time and referred the Board to the report of Committee Chair William L. Nelson. Led by Director White, the Board discussed the recent draft disclosure guidelines for housing, healthcare and land-secured debt distributed by the National Federation of Municipal Analysts. Comments are due on the drafts by October 15th. The Association has established subcommittees to review the drafts and be prepared to respond with comments. The subcommittees are being chaired by Association members John S. Overdorff (land-secured debt), Monty G. Humble (healthcare) and Elizabeth P. Rippy (housing). It is anticipated that the draft guidelines will be discussed in the appropriate panels at the Bond Attorneys' Workshop. Committee Chair Nelson's report also discussed the status of the Blue Sky project, which is chaired by Association member William L. Hirata, the small issuer meetings being organized by the SEC and the National League of Cities, Association member Andrew R. Kintzinger's Enforcement Subcommittee Report, and the May 12th meeting with representatives of the SEC. Attendees included Paul S. Maco and members of his staff from the SEC; Association member Kintzinger, who chaired the meeting; President Newton; President-Elect Zucker; Director of Governmental Affairs Larsen; and Association members Walter J. St. Onge III and John M. McNally. Director White also reported that the SEC has proposed holding a municipal securities issues round table in October and has requested participation by the Association. New Jersey Opinion 33


President Newton discussed the Association's filing of the Notice of Motion, Certification and Attached Exhibits in Support of the Motion of the National Association of Bond Lawyers to Submit an Oral Argument Transcript and a Corrected Affidavit. Following extensive discussion, the Board determined that President Newton should send a statement to Association members regarding the Board's position on matters relating to Opinion 33. Director Presley moved approval of the draft statement provided by President Newton, with changes as discussed by the Board. Director D'Onofrio seconded the motion, which was unanimously approved by the Board. Investment Policy A draft Investment Policy proposed by Treasurer Presley was discussed extensively by Board members with respect to objectives, budgeting, appropriate reserve amounts, projecting cash flow needs, and flexibility. Board members were asked to make written comments on the draft Policy and provide them to Treasurer Presley. A revised draft will be considered at the September meeting. Insurance Coverage Executive Director Appelhans and President Newton reported that they are still working with the Association's insurance broker to establish a list of all current policies and coverage and recommendations on changes. Bids will then be obtained from several companies. A more detailed report and recommendations will be given to the Board at the September meeting. Education Committee In the absence of President-Elect Zucker, Executive Director Appelhans reported on the activities of the Education Committee. As described in a memorandum from Education Committee Chair Lauren K. Mack, Association member Virginia D. Benjamin has agreed to chair the Ethics Teleconference Seminar scheduled for October 26th. Association member Meredith L. Hathorn will serve as Vice-Chair for the seminar, which will be held at the O'Hare Hilton in Chicago, although most participants are expected to attend via conference call. Topics will include an opening session on current developments, and will also address conflicts of interest and professionalism issues, such as mentoring, training, and quality assurance. The Board next discussed proposals for Chair and Vice-

Chair for upcoming seminars. In accordance with recommendations of the Education Committee, Director D'Onofrio made a motion that Association member Bruce P. Weisenthal serve as Vice-Chair of the Fundamentals Seminar in the year 2000 and that Association member John S. Overdorff serve as Vice-Chair for the Washington Seminar in the year 2000. The motion was seconded by Director Gehrig and passed by unanimous vote of the Board. President Newton stated that the Board would be asked to give a unanimous written consent for the Vice-Chair for the year 2000 Tax Seminar. Also, in accordance with recommendations of the Education Committee, Director D'Onofrio made a motion that the Fundamentals Seminar be held in Denver in the year 2002 and Philadelphia in 2003, that the Tax Seminar be held in San Antonio, Texas, in 2002 and Las Vegas in 2003, and that the Washington Seminar be held at the Capitol Hilton in 2001. Director Noth seconded the motion, which was unanimously approved by the Board. Association Website Director Gehrig reported that timely updating is the main Website issue. Weekly attention is needed to assure members of timely and accurate posting of items on the Website. Director Gehrig indicated that he would work with Director of Governmental Affairs Larsen and his assistant Stuart Scotten to continue to improve the process. The inputting of certain documents that are not Web-compatible is the most time-consuming item. Led by Director Walton and President Newton, the Board discussed whether the Association will need to hire additional staff to handle these matters in view of the importance of Web communication to Association members. Federal Taxation of Municipal Bonds Director D'Onofrio referred the Board to her memorandum dated July 2, 1999, and a memorandum from Association member Kris-tin H.R. Franceschi dated May 7, 1999, regarding continuing discussions and negotiations with Aspen Publishing concerning quality control, timeliness and royalty issues relating to the five-volume loose-leaf, the text book and the CD ROM of Federal Taxation of Municipal Bonds. President Newton also raised the issue of whether additional Association staff was required because of the significance of the product to our members and the enormous amount of time required by volunteer Association members to produce the product. Director Gehrig indicated


that he would explore the possibility of the Association's hiring a consultant to advise on this matter. NABL's Website: www.nabl.org

Pay-To-Play President Newton discussed the current status of the proposal of the American Bar Association Standing Committee on Ethics and Professional Responsibility regarding a pay-to-play Model Rule. The Model Rule that has been reported with recommendations to the American Bar Association House of Delegates is consistent with the approach taken by the Association in 1994, and therefore President Newton recommended that the Association support the Standing Committee's proposal. President Newton indicated he would draft a statement of support and distribute it to the Board. Immediate Past President Conner made a motion that the Board delegate to the Executive Committee authority to approve the statement. Director Rollow seconded the motion, which was unanimously approved by the Board. Respectfully submitted, Carolyn Truesdell Secretary

SHARED TAX OBSERVATIONS I have just returned from a week of languid days in Paris where the price of a cup of espresso will reserve your front-row sidewalk café seat for

hours. The sparkle of the city has not dimmed; the gentleness of the air and sweet-ness of the light continue; and the exuberance of the French is unabat-ed. But to the practical . . .

Proposed Regulations On August 25, 1999, the Internal Revenue

Service published proposed regulations modifying the definition of “investment-type property” in arbitrage regulations section 1.148-1(e).

[S.White photo]


The proposed regulations make two additions to the existing regulations. First, they clarify that the treatment of prepayments as investment-type property includes prepayments made after the date a contract for property or services is entered into (as well as, presumably, prepayments made on the date of the contract). Second, they provide an example indicating that where a 10-year service contract is prepaid from the proceeds of bonds, and where there is no substantial business purpose for the prepayment other than investment return, the prepayment represents the acquisition of investment type property. The preamble to the proposed regulations establishes January 12, 2000, as the date of a public hearing on the proposed regulations; December 15, 1999, as the date for receipt of outlines of topics to be discussed at the hearing; and December 23, 1999 (Happy Holidays!), as the date for receipt of comments on the proposed regulations. The preamble indicates, by way of explaining the motivation for the proposal, that the court in City of Columbus v. Commissioner, 112 F.3d 1201 (D.C. Cir. 1997), held “a prepayment for property cannot occur after the property is acquired” (some may question this pithy explanation); that the holding suggests that an issuer may avoid investment-type property by prepaying a contract after the date the contract is entered into (which result would be inconsistent with the intent of Code section 148); and that the proposed regulations are intended to address the potential issue created by the court’s holding. The preamble requests comments on whether the effect of the proposed regulations is broader than so intended. The preamble also indicates that comments are requested on whether additional guidance is needed to clarify other aspects of the definition of investment type property. This part of the preamble states that the Treasury and the IRS have become aware of certain commodity prepayment transactions (e.g., agreements with natural gas suppliers) involving commodity swap agreements where “it appears that a principal purpose of the prepayment was to earn an investment return.” This part concludes that the supply contracts are investment type property “unless the requirement [sic] of §1.148-1(e)(2)(i) or (ii) (providing exceptions for prepayments for a substantial business purpose and for customary prepayments) are met” and spe-cifically requests comments on these transactions. (Here’s your chance!)

Final regulations will apply to bonds issued after a date set forth in the final regulations, but the date could be as early as August 25, 1999.

Revised Audit Guidelines On July 8, 1999, the Internal Revenue Service released Chapter 5 of Internal Revenue Manual 7.6.2 setting forth guidelines for audits of municipal financing transactions. The guidelines are clear and concise and a general improvement over the proposed guidelines contained in Announcement 95-61. The general improvement reflects a growth in knowledge and experience. For example, a full explanation of the NRMSIRs contained in the proposed guidelines, and the detailed discussion of the content and nature of a bond transcript, are omitted. In general, most of the training aspects of the proposed guidelines are also removed; for instance, the identification of program participants and explanation of bond documents are deleted. Niceties in the proposed guidelines, however, are also removed. Thus, the phrase indicating that the tax-exempt bond program should “take into account the unique relationship between the federal government and state and local governments” is deleted, as is language to the effect that the prescribed procedures are necessary “to ensure fair and consistent treatment of issuers and bondholders.” In general, the revisions reflect a terse, but tough, approach to examinations. The revised guidelines also reflect the increased responsibility of the District level of the IRS. For example, Key District Directors may negotiate closing agreements without requirements for coordination with Headquarters, and references to obtaining consent from Headquarters before beginning negotiations are substantially deleted (though forwarding of a summary of the issue to Headquarters is required, as is filing of a quarterly report). Similarly, the need for a technical advice memorandum is left largely to the discretion of the agent. Also, appeal procedures are generally referenced. The revised guidelines add special procedures for examining qualified small issue private activity bonds in addition to modifying the special procedures, contained in the existing proposed guidelines, for examining “questions about


arbitrage” (including rebate), secondary market transactions, conduit borrowers (including coordination with conduit borrower cases and 501(c)(3) borrowers) and pooled bonds. Discussions regarding procedures for taxing bondholders and negotiating closing agreements are substantively unchanged. (The “closing agreement amount” is still referenced as total taxpayer exposure with arbitrage profits as an alternative, and bond redemption continues to be emphasized.) Private Letter Rulings Private Payment Test. Private letter ruling 9928036 (April 14, 1999), relating to the private payment test, is an important recent ruling. This ruling’s facts concern a bond-financed stadium used by a professional team and by state universities. In the ruling’s description of the transaction, a state proposes to issue bonds. The proceeds are to be used to make a grant to a city to build a stadium. The stadium is to be leased to a partnership controlled by a professional sports team. The stadium is also to be used by state universities. During the university use, the partnership will operate the stadium, but will not receive all of the revenues.

The issue, therefore, is whether revenues retained by the universities will count against the private payment test. The ruling holds that they will. Those revenues (though not paid to the partnership) arise “in respect of” property used for a private business use. By reason of the lease, the partnership has a special legal entitlement to use the stadium 365 days a year, and under regulations section 1.141-3(g)(4)(iii), if governmental use and private business use occur simultaneously, the entire facility is treated as having private business use. “Although the revenues do not originate from the Partnership, this is not relevant . . . .” Also, the universities are related to the state and, therefore, payments received by the uni-versities are treated as received by the state, and the indirect payment test is met. There is no requirement for tracing the payments directly to the payment of debt service in order for the payments to be private payments.

The ruling also holds that the payments to the state universities arising in respect of the privately-used stadium cannot be disregarded on the theory

that the bond proceeds are to be used to make a grant to the city. In fact, the transfer of funds will not constitute a grant because one of the conditions of the transfer will be that the city provide parking spaces at the stadium to the state during the work week. This is not a condition, within the meaning of regulations section 1.148-6(d)(4)(iii), intended solely to assure that the city spends the proceeds for the governmental purpose of the transfer.

(In fact, the grant agreement provides that the sole governmental purpose of the transfer is to construct the stadium and relocate the team to the state. Did you think that “whereas” clauses were not important?!)

Qualified 501(c)(3) Bonds. Private letter rulings 9927042 (April 7, 1999) and 9929041 (April 21, 1999) both enable flexible organizational arrangements for 501(c)(3) entities without disruption of requirements for qualified 501(c)(3) bonds.

The first ruling permits an affiliation agreement and an “economic agreement” between 501(c)(3) corporations for operation of bond-financed health care facilities as a single regional health care delivery network. The agreements do not create private business use and a transfer of ownership does not arise by reason of the arrangements.

The second ruling holds that the formation of a limited liability company by two 501(c)(3) organizations having taxable subsidiaries (where the LLC will not elect to be treated as a corporation under the “check the box” regulations) does not create private business use of bond-financed facilities. The ruling announces that the purposes of Internal Revenue Code Section 145 are furthered if the LLC is treated as an aggregate, instead of a separate, entity.

Political Subdivision. Private letter ruling 9924063 (March 16, 1999) holds that a public corporation with the power of eminent domain and taxation is a political subdivision. The corporation was created to manage the state’s gas tax revenues and undertake related responsibilities. (One wonders about the substantive scope of the eminent domain power. What might the corporation condemn?)

Notice of Remedial Action. Private letter ruling 9922064 (March 3, 1999) grants relief to an agency that created a defeasance escrow as remedial action


but failed to notify the IRS within the 90-day period required by Regulations section 1.141-12(d)(3). The relief is granted under Regulations section 301.9100.

Qualified administrative costs. Private letter ruling 9931043 (May 4, 1999) holds that an investment advisory fee is not a qualified ad-ministrative cost able to be taken into account for the purpose of computing yield on nonpurpose investments. The issue confronted by the ruling has been with us for a significant time, and the ruling provides a helpful discussion of the history of regulatory provisions relating to administrative costs and a useful framework for analysis of those costs. Field Service Advice Letters Shams and Gimmicks. Remember the “rubber check” transactions? And the paper rental-housing projects? These are attacked on various grounds by field service advice letters 1999-1180 (December 24, 1992), 1999-1184 (March 24, 1993), 1999-1185 (March 25, 1993), 1999-1186 (March 29, 1993), 1999-1187 (April 1, 1993), 1999-1188 (April 1, 1993), 1999-1210 (March 24, 1993), and 1999-1223 (undated). In general, the letters advise field agents to assert taxability on the grounds of failure to satisfy the “substantially all” requirement. Several letters state that the agents should tread carefully on arbitrage allegations, as “it may be difficult to prove bad faith” by the issuer.

Zero Coupon Bonds. Field service advice letter 1999-25011 (March 11, 1999) relates to reissuance arising by reason of changes in the underlying security (from a pledge of property taxes to a pledge of U. S. Treasury securities in an escrow), elimination of call provisions, and conversion to accretion bonds. The Assistant Chief Counsel (Field Service) advises that there are probably sufficient facts to support an argument of reissuance, especially at the time the bonds were sold on the secondary market following the sale of land (upon which the bond-financed project was apparently to be located) and subsequent investment in federal securities. The letter states, in part, “We need to ‘step’ the land sale and defeasance with another reissuance [and if] there was a reissuance, then we need to determine whether these bonds were obligations under section 103 or arbitrage bonds.” The letter also suggests that the principles of Rev. Rul. 94-42 (relating to an improper credit enhancement arrangement) may be applicable. “Rev. Rul. 94-42 provides that if a transaction, in substance, closely resembles a taxable arbitrage bond, . . . [that] result will be inconsistent with the purposes of section 103 and the payments will not be treated as payments on

[Happy Booker ad]


a municipal obligation.” (Practice note: pure technical compliance may not be enough to support tax-exemption.) Tribal Business. Field service advice letter 1999-1119 (September 30, 1993) concludes that an off-reservation tribal enterprise is not a private business and upholds pre-1987 Indian tribal bonds as tax-exempt. On Behalf of Bonds. Field service advice letter 1999-1183 (March 23, 1993) expresses skepticism as to the ability of a nonprofit corporation, where im-proper inurement may arise by reason of profits received by holders of subordinate bonds who are also partners in a partnership that was proposed ultimately to be merged with the corporation, to issue bonds tax-exempt under the principles of Rev. Rul. 63-20. The ruling also suggests that enforcement under Section 6700 (abusive tax shelters) may be appropriate. Development Agreement. Field service advice letter 1999-26004 (March 19, 1999) relates to an agreement entered into by an agency and a partnership under which the partnership agreed to build certain infrastructure and convey it to the agency and the agency agreed to repay the partnership at cost. In the facts, the partnership treated all amounts paid by the agency as interest and did not expect to receive principal. The advice letter admits that an obligation incurred under the borrowing power existed, but questions whether the amounts paid under the agreement represented interest (especially since a portion of the repayable costs included the partnership’s development fee). The letter also raises, but does not finally resolve, questions regarding whether the infra-structure is used for a private business use and whether the agency’s pledged tax increments represent private payments under the private payment test. Because the advice letter is recent, it is worth reviewing if you are contemplating a redevelopment or special tax development project involving a developer. Private Business Use of Prison. Field service advice letter 1999-32017 (May 7, 1999) relates to a private corporation’s agreement for management of a governmental prison. The letter concludes that the compensation arrangement must be analyzed under applicable revenue procedures in order to determine whether the agreement gives rise to private business use. It also states that the private

payment or security test may (or may not) be met by reason of a guarantee of debt service by the manager. As a side note, the letter discusses potential conflicts between the trust indenture for the financing and the official statement. The letter concludes that conflicting statements in bond documents “may provide evidence that the economic reality of the financing does not reflect its purported form.” (One more thing to concern bond lawyers, yes?!) Judicial Decision Summary judgment was granted on June 29, 1999, by the U. S. District Court (Eastern District of Michigan, Southern Division) in Walter Johnson v. The Economic Development Corporation of the County of Oakland. This dispute concerned the issue of whether a First Amendment (establishment clause) violation occurred in the case of issuance of bonds to finance a school affiliated with the Catholic Church. The Court concludes that a violation did not occur. In reaching its decision, the Court applied the three-prong test of Lemon v. Kurtzman, 403 U.S. 602 (1971), and found that the bond act had a secular purpose (job creation) rather than a religious purpose; that the primary effect of the bond act was neutral in that it neither advanced nor inhibited religion (any industrial or commercial enterprise may be aided); and that the bond act did not foster an excessive government entanglement with reli-gion. The Court also concurred with the statement in Hunt v. McNair, 413 U.S. 734 (1973), that tax-exemption may be an indirect cost to government that occurs as a result of providing a general benefit to a broad class of recipients, but tax-exemption alone does not show a primary effect of advancing religion. The decision is expected to be appealed. Sharon Stanton White Hunton & Williams August 25, 1999


BOB BAKER'S LETTERS FROM ALBANIA Editor's Note: Member Robert H. Baker took leave of the Chicago office of Jones, Day, Reavis & Pogue, and, with his wife, arrived in Albania in mid-summer for an extended stay among the Kosovar refugees. His first two e-mailed letters — in the grand tradition of Sharon Stanton White's 1989 "Bond Lawyer Abroad" postcards from places like Singapore, Mauritius, Lemnos, and Cannes — follow. Bob can be reached at [email protected]; contributions to aid the Bakers' mission may be sent to Presbyterian Disaster Assistance, 100 Witherspoon St., Louisville, KY 40202; checks should be payable to Presbyterian Church (USA), with "#9-2000137 — Kosovo Project" on the memo line. 19 July 1999 Today was a banner day for me in Albania. Both a letter and package arrived. A first. Actually the package arrived Friday, but no one was at the Presbyterian House to receive it, so we had to go to the Main Post Office today to get the package. The Main Post Office is located in the center of Tirana next to the telephone office. Parking is impossible. Our driver (don't ask) pulled up on the sidewalk, almost knocking down a street vendor. "It's all right." We crossed the street and entered a group of men and boys that looked like a group you wouldn't want to meet day or night. They are trying to sell us something. I know to say "Jo" in a sharp tone. This always causes Dalia, my wife, a problem since "jo" in Albanian is "no," but is "yes" in Lithuanian, Dalia's prime language. The driver says, "It's the Mafia selling fake phone cards." Perhaps, but there aren't that many foreigners in Tirana. Who are these guys selling fake phones cards to? After passing through the Mafia sales con-vention, we enter the Main Post Office with our little delivery slip. We don't know what we are supposed to do, but neither does our driver, and he has an economics degree from the university. (It's a sad comment that economists can make more driving foreign missionaries than using their university training.) The Main Post Office looks like all such offices. Perhaps 20 windows and only 5 clerks, with people lined up out to the street so they can mingle with the Mafia sales convention. This isn't the place to pick up packages; that's next door. We go next door and there are 2 windows with about 15 people crowded together at one of the windows. At the other window, a clerk is filing her nails and chatting with another clerk. Our driver,

university trained, goes to the nail-filing clerk for help. This is Albania, so for 50 Lek (about $.40) she will try to find our package. (I know that someone in the U.S. paid the postage, but that only gets it to the post office.) When in Albania, be Albanian, so I paid the 50 Lek. The clerk, now knowing that I respect her, gets up and finds our package. It took all of 5 seconds to do this so I suspect that there weren't that many packages to be picked up. Do we have the package? Of course not. Our clerk's job is to find the package, not to give it to the customer. For that, the other clerk collects 20 Lek. By now I have gotten into the swing of being a missionary in Albania, and I am thankful that I have a 20 Lek coin in my pocket. The scary thing is that the post office may be one of the more functional Albanian organizations. 31 July 1999 Some quick impressions after a quick 3 day trip to Kosovo: · While geographic distances are short, the

cultural and life style differences are large. We had lunch in a Macedonian town within a few miles of the Albanian border. The town was very pretty; houses had front yards filled with flowers (people growing roses can't be all bad!); the street didn't have 3 foot pot holes; and people drove in marked lanes. You can't imagine my shock when I learned that this was an ethnic Albanian community. Within a few miles of this town on the Albanian side of the border, all is chaos and poverty. Think of the basically Mexican communities on both sides of the Texas-Mexico border. As one person said to us, once the Kosovo Albanians saw and spent time in Albania as refugees, they couldn't wait to get back home regardless of the destruction.

· Because of extremely poor roads in Albania and border crossing problems, the approximately 200 miles from Tirana to the Kosovo border took almost 11 hours. It took 45 minutes to get into Macedonia from Albania — one passport and customs officer at each country's border station, and Macedonia requires a visa which must be applied for at the border. Macedonia to Kosovo makes the US-Mexico border seem orderly. There are in effect 4 lanes in each direction: (i) military which has preference;


(ii) diplomatic, UN and NGOs (sometimes); (iii) private cars; and (iv) people on foot. All of this on a 2 lane mountain road. Going into Kosovo we somehow got in the middle of a military convoy and bypassed the truck line (about 3 miles long) and the private car line (about 2 miles long). Going back into Macedonia we were forced into the private car line by the border guards, and it took us 2 hours to cross. One gets the feeling that the Macedonians don't like anybody.

· Because of the border crossing problems (see above and realize that we went through Macedonia because the Albanian crossing is worse), it is very hard to get supplies into Kosovo. This means all the building and food supplies, as well as the normal commerce, have to endure the cost and delays of the border crossing. This is a serious problem for the humanitarian organizations. There used to be a railroad from Macedonia to Kosovo (our bombing made it unusable), and there is some hope that it can be shortly put back into opera-tion. This would help alleviate some of the supply problem.

· Despite the fact that the bulk of the refugees

have been back less than 4 weeks, life is surprisingly vibrant and seemingly normal, at least in the cities we visited. Shops are open, there is food in the stores and being sold on the streets, people walk at night, and the cafes and bars are full. This is testimony to human resilience and the need of people to return to a normal life.

· The seeming normality can't obscure what

has happened. As you drive through the country, in some villages you see one burned-out home after another. In some villages it looks like almost every home burned. Of course, some villages seem to be completely intact. I think you can guess which ethnic group lived in those villages. I suspect that these are the homes that now burn at night. The cities are deceiving. Driving on the main highway, you see some burned-out stores, but many stores are untouched. However, in at least one city, Djakove, the old town which was the center of the Albanian community there was completely burned. I can't begin to describe

the devastation. Everything for block after block is burned-out rubble. I am surprised that there is any gasoline left in Kosovo.

· The historic Serbian churches and mon-

asteries remain untouched so far. Some are over 500 years old, and play an important part in the Serb mythology. In many of the communities, and all that we visited, the Serbs have fled. Can these churches and monasteries remain? NATO has a heavy military presence protecting them, but what if there are no Serbs in the area? Can they survive without local support? Will they be the source of future ethnic friction?

· We saw little evidence of NATO bombing.

Maybe four bomb sites, but only one for sure — a fuel storage area. It made me wonder where the bombs were dropped.

· The heavy NATO presence — troops, tanks

and armored personnel carriers everywhere — provides stability. You can't drive into any city or village without passing a military checkpoint. How long will we be willing to have our troops there? It had better be a long time if we intend for the killing to stop.

· Finally, think about a place where you can't

step off the pavement for fear of a land mine. This is Kosovo. I am sure that there will be some lost lives or limbs this year as people try to harvest their crops and ignore the fact that the area hasn't been completely cleared of mines. (Mine clearance will go on for years.)

I hope you find this useful in understanding the situation in Kosovo. [Northern Bank Note ad]


THE WOMAN WHO SAVED MOUNT VERNON* In 1853 Ann Pamela Cunningham faced an uncertain future. She was 37 years old and disabled. Born on her family’s plantation near Waterloo, S.C., she had attended Barhamville, one of the best women’s schools in the South. Her intelligence impressed everyone. She expected to lead a quiet, cultured life, but shortly after her graduation she was thrown from a horse and suffered severe spinal injuries. The life she’d envisioned for herself was not to be, and more than once she wondered why God had sent her into this world to leave her almost helpless. Each year her devoted mother took her to Philadelphia, then the center of American medicine. There over the course of several months she underwent the latest treatments for her condition, but doctors never gave her much hope of improve-ment. In the fall of 1853, after her mother left her in Philadelphia for more treatments, Ann Pamela felt especially sad and lonely. Soon she received a letter from her mother. Mrs. Cunningham wrote about how she traveled by steamboat down the Potomac River. The first evening she heard the ship’s bell. The boat was passing Mount Vernon, George Washington’s home. Steamboat captains often showed this mark of respect. Mrs. Cunningham went out on deck. A full moon illuminated the landscape. When Washington was still alive, Mrs. Cunningham had visited Mount Vernon. She remembered the impressive white house and the vast lawns. Now she saw nothing but decay. The wharf sagged and bare patches disfigured the lawn. “I was painfully distressed at the ruin and desolation,” she wrote her daughter. “The thought passed through my mind: Why was it that the women of Washington’s country did not try to keep it in repair, if the men could not do it?” In her Philadelphia room Ann Pamela read and reread that letter. I will do it! she vowed, her mind

suddenly ablaze with determination. I will save Mount Vernon! From that moment until her death 22 years later, she never wavered in her conviction that God had given her this unique task. The following morning a visitor found her writing a public letter to the women of the South, urging them to join her in this tremendous undertaking. Published in the Charleston Mercury on December 2, 1853, the missive was signed anonymously, “A Southern Matron.” In those days women were not supposed to have any kind of public role. Ann Pamela was hesitant to violate this tradition, but she soon realized she would have to take the risk. As many women responded to her appeal, she took it upon herself to write the owner of Mount Vernon, John Augustine Washington, Jr., the great-grandnephew of the founder, asking him if he would sell the estate. She received a chilly reply. Washington wanted to sell Mount Vernon only to the state of Virginia or the federal government. No one else, he assumed, would be able to meet his asking price: $200,000. In an era when a laborer was paid a dollar a day, that would be the equivalent of at least four million dollars in 1999. How could a group of women hope to raise such an amount? Ann Pamela had faith that God would help her find a way. In Boston the popular orator and statesman Edward Everett heard about her campaign. Intrigued, he went to Philadelphia to meet her. His own career had been on the wane because of failing health, but he had given a lecture on Washington that won him local acclaim. At first he was not impressed with Ann Pamela. “An invalid maiden lady seems the last person

* Reprinted with permission from Guideposts

Magazine. Copyright ©1999 by Guideposts, Carmel, New York 10512.


to manage a difficult business affair,” he wrote in his journal. But by the time he left Philadelphia he had committed all the proceeds of future Washing-ton lectures to the crusade. Everett’s health improved, and over the next three years he gave his Washington lecture 129 times. Ann Pamela was campaigning on two other fronts. She organized her volunteers into the Mount Vernon Ladies’ Association, with herself as regent, and she appointed a vice regent for each state in the South. She managed to convince the Virginia state legislature to grant a charter to the organization. Then she went to work persuading the owner of Mount Vernon to take them seriously. Ignoring pain and fatigue, in June 1856 Ann Pamela journeyed to Mount Vernon. She became so absorbed in an intense discussion with John Augustine Washington, Jr., and his wife that she missed her steamboat home. She boarded a sailboat and was towed into midstream to meet another boat, but missed that too. Returning to the Mount Vernon wharf, she was too exhausted to travel farther. But at that moment, realizing she would

have to spend the night at the mansion, she felt an inner confidence. God had brought her this close. Mount Vernon will be ours, she thought. She stayed in her room that afternoon and evening, gathering her strength. Then after supper she was carried downstairs to the parlor, where the discussion continued. That night she won Mrs. Washington to her cause. The following morning she reopened the argument with John Augustine. “The spirit moved me as it never had before,” she said later. She dazzled John Augustine with the names of distinguished southern women who had joined the association. Adding a touch of humor, she pointed out that it was a leap year, which meant a woman should get her way. Finally, as he helped her into a waiting carriage, she held out her hand. “With quivering lips, moist eyes and a heart too full for him to speak,” she wrote, “our compact was closed in silence.” Her work was by no means done. John Augustine set a deadline of spring 1858 for the association to raise a down payment of $18,000, with the balance to be paid in four annual installments. Ann Pamela agreed to those terms, though at the

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time of the signing she was so ill someone had to hold her hand and guide the pen. And yet she set a more difficult deadline for herself and the Mount Vernon Ladies’ Association. They were going to raise the balance due in 10 months! She wanted to take advantage of the publicity the sale had won for them, and she was keenly aware a civil war was looming. So far most of the money had been raised in the South. It was time to tap the resources of the North. Swiftly Ann Pamela appointed vice regents for the northern states. One of them was New Yorker Mary Morris Hamilton, granddaughter of Alexander Hamilton. With energy worthy of her famous ancestor, Miss Hamilton soon had deputies raising funds in every county of the Empire State. Edward Everett redoubled his oratorical efforts and took on the added task of writing a weekly newspaper column on George Washington, donating the payment to the association. He raised a staggering $69,000. The famed actor Edwin Booth donated the proceeds from one of his performances. Washington Irving, the country’s best-known writer, gave $500. A chess champion named Paul Murphy played four opponents while blindfolded, beat them and raised $300. Even the newsboys of New York City gave their pennies. By December 1858 the Mount Vernon Ladies’ Association paid the first installment of $57,000 to John Augustine Washington, Jr., three months before it was due. On George Washington’s birthday in 1859, they paid another installment. By mid-December that year, Regent Cunningham proudly announced that Mount Vernon was now “the property of the nation.” The timing could not have been more provi-dential. In October of 1859 John Brown had seized the federal arsenal at Harper’s Ferry, hoping to arm Virginia’s slaves. The incident sharply accelerated the slide toward secession and civil war. When the tragic conflict began, the Ladies’ Association persuaded both sides to declare Mount Vernon a neutral zone. When peace returned in 1865 Regent Cun-ningham launched a fund-raising campaign to restore Mount Vernon and Washington’s tomb with exacting authenticity. She set a standard that has made her a guiding force of the historical preservation movement in America. By the time she

died in 1875, Mount Vernon had become what this amazing woman had envisioned: “a bond of Union that will never be eradicated.” Today Ann Pamela Cunningham stands as her own monument to the idea that personal faith and unwavering determination can achieve the impossible. Thomas Fleming New York, New York Editor's Note: Joe Mysak advises that in late 1998, the Economic Development Authority of Fairfax County issued $9.2 million of bonds for the purpose of funding new storage space, a workshop for restoration, a gift shop, a food court, and other capital improvements at Mount Vernon. The well-endowed Mount Vernon Ladies' Association was the obligor.

NABL has a JOB BANK

for members and public sector lawyers seeking employment opportunities

with private law firms.

Contact Patricia Appelhans at

630/690-1135


VOICE FROM THE PAST Chapter 12

The recent death of my old friend and partner George Ramspeck led me to reminisce about our work together on

industrial development

bonds over thirty years ago. George came from the corporate side of Chapman and Cutler and I from the municipal side. To begin

with, he drafted the leases (State statutes then re-quired leases; they did not permit loan agreements nor documents openly called sale agreements) and I the indentures. I had worked on bond issues for port facilities that were supported by lease rentals, and when I had asked my senior partner about a form of lease, he said, “Just let the parties prepare whatever sort of lease they want, and make sure that the lessee is required to pay enough to retire the bonds no matter what.” This attitude was appropriate to the very earliest industrial development bonds that were voted general obligations, but I wondered whether a longer and more complicated document should be used for industrial development revenue bonds. Now I am glad that all those bonds have matured and that the huge number of contingencies covered by more recent lease agreements didn’t mature into problems that anyone brought to my attention. George brought a new form of lease to the deals, one that was known for a few months as the “Dewey Ballantine” form. It became the model for all the financing leases I worked with for many years. This was in the days when some State supreme courts still held that even revenue bonds for industrial development involved unconstitutional loans of credit to the lessees; we had to examine every clause in every section to make sure that nothing would give a court an opportunity for such a holding. This done, I considered the form properly purified and often

used it in my own deals. In those days we had to get a State supreme court decision upholding an issue of industrial development bonds, even revenue bonds, before we could approve such bonds of an issuer in that State. Several States, including Texas and Florida, initially held against such financing. It was a welcome day, from the State constitutional law viewpoint, when the Michigan Supreme Court upheld an issue of IDBs with an opinion declaring that the issuer was a mere “conduit” to bestow federal income tax exemption on the interest on a private borrowing: having no independent liability on the bonds, the issuer would not violate that State’s Constitution by issuing them. This was the first time I had seen the word “conduit” officially used; it was helpful in elucidating to other State courts the true nature of such obligations. It was not so helpful when it came to the Internal Revenue Service and Congress. But their actions were several years in the future. On at least one deal in Louisiana, we were told to draft the documents so that the issuer was in charge of building the facility being financed pursuant to plans and specifications furnished by the company. The issuer let the contracts and directed payments out of the construction fund when approved by the issuer’s representative (who just happened to be an official of the company). The purpose of this exercise was to take advantage of the issuer’s exemption from State sales taxes on the building materials and equipment. If I found out whether it worked, I have now forgotten. This practice had the problem that if the issuer really was the owner and builder, then the laws pertaining to public advertisement for construction bids applied. Further, there was the question about State laws requiring that construction workers on publicly owned projects be paid the “prevailing wage,” a wage that was often determined by reference to local construction trade unions. Those days were busy, indeed hectic. For each of the early deals, George and I both went to an initial meeting, usually in New York, with the underwriter and the company. Then there was a meeting with the issuer in its home territory. Drafting sessions were held in either of those places or sometimes in our offices in Chicago. The sale of the bonds occurred locally. Signing the bonds at the Signature Company and delivery occurred in New York. Sometimes bonds were delivered in Chicago after being signed at the office of a Chicago printer that had a signature machine of less capacity than


the Signature Company’s. The bonds were always issued in coupon form, and we always examined executed bond number one. This involved not only reading the text of the printed bond against the form prescribed by the indenture, and checking the signatures and seal, but also making sure that the coupons were in the right amounts falling due on the right dates and bearing the facsimile signatures of the people who signed the bonds. Sometimes an issuer’s clerk with a name like Aloysius Montgomery Jones would provide specimen signatures bearing his full name for printing the coupons and then, after looking at the huge stacks of $5,000 denomination bonds he had to sign manually, would sign them A. M. Jones. Then he would sign the signature identification certificate Aloysius M. Jones. One of us would have to prepare a special certificate at the pre-closing or the closing for him to certify that all three were his true and genuine signature and that he used them inter-changeably. With virtually all bonds now in fully registered or book entry form, newer bond lawyers don’t realize all the exciting fun they are missing. When Congress enacted the initial laws eliminating the federal tax exemption for interest on industrial development bonds (with exceptions for certain small issues, pollution control bonds, exempt facilities bonds, and the like), the amount of IDBs being issued fell to a trickle. There was not enough work for both George and me, and I went back to working on conventional bonds, including advance refunding bonds. George, however, continued working on most of whatever IDBs were being done by our firm. The small issue, pollution control, and exempt facility business then prospered; he hired more lawyers and eventually developed one of the major departments of the firm. Wisely, George retired before the Tax Reform Act of 1986 decimated that business. Manly W. Mumford [Thorp Reed ad]

LEGAL ASSISTANTS’ CORNER WHAT IS A FAST BOND?*


FAST is an acronym for The Depository Trust Company's (DTC’s) Fast Automated Securities Transfer (FAST) program, in which cooperating banks (or transfer agents) acting as trustee or paying agent hold bonds registered in the name of DTC’s nominee, Cede & Co. The trustee or paying agent assumes several roles as a FAST agent: Custodian. As custodian for the bonds, the trustee or paying agent is required to hold the bonds in a secured area, usually in its vault. Paying Agent. The FAST agent is paying agent as to principal and interest on the bonds and pays that principal and interest directly to DTC, which then disburses it to the bondholders. Recordkeeper. The trustee or paying agent must maintain detailed records with respect to the FAST bonds. Balances are updated daily directly onto DTC’s computer system. The physical bonds that are held by the trustee or paying agent in its vault are confirmed with DTC daily. Also, on a monthly basis, the trustee or paying agent compares its outstanding balance of FAST bonds against DTC’s records. Discrepancies, if any, are researched and resolved. Transfer Agent. A new bond does not have to be issued for each deposit, withdrawal, call, or maturity. The trustee or paying agent records the transaction in its computer records with respect to the bond and the following business day confirms the activity with DTC by way of the daily balance confirmation. This is known as DWAC, an acronym standing for Deposit and Withdrawals At Custodian. What all of this means to those of us preparing the bonds is that the bonds (with the appropriate FAST rider (available from DTC) appropriately at-tached) are physically delivered to the trustee or paying agent at the closing. This saves a con-siderable amount of time, since the bonds do not have to be sent for authentication followed by subsequent delivery to DTC. Book-entry bonds are issued as one bond per maturity. That “jumbo” bond is held by the trustee or paying agent until maturity. There are no new bonds issued or turned

in; and if a person wanted to know how much of the bond was outstanding 10 years later, either the FAST agent or DTC could determine the outstanding balance by checking their computers. If you are working on a financing where the trustee or paying agent is not a FAST agent, contact the trustee or paying agent well before the closing and encourage it to contact DTC for the appropriate procedures. Ann Atkinson, Chair Committee on Legal Assistants EMPLOYMENT OPPORTUNITY PUBLIC FINANCE ASSOCIATE Faegre & Benson, a Minneapolis law firm, has an opening in its Public Finance group for an entry-level or experienced associate. All candidates should have excellent academic credentials and professional recommendations. Please send résumé and law school transcript to Joanne Jaensch, Manager, Legal Personnel Services, Faegre & Benson LLP, 2200 Nor-west Center, 90 South Seventh Street, Minneapolis, MN 55402. Visit NABL's Website: www.nabl.org

* Information for this article was obtained

from Norwest Bank Minnesota, National Association.


BOND DOGS (Our dynamic duo continue their canine chronicles of the bond industry by uncovering the foibles of its participants. And let’s face it folks, sometimes they don’t have to dig very deep.) Skippy: Do you know what the Darwin

Awards are? Jake: They are awarded annually to

those individuals who improve the remaining gene pool by eliminating themselves in the most absurd ways. People microwaving themselves to death, flying balloon-powered lawn chairs in the jet stream, that sort of thing.

Skippy: I want to institute our own form of

Darwin Award for the stupidest act in the tax-exempt bond community perpetuated during a fiscal year. This year we recognize the small issue manufacturing bond issue that was retired 90 days after it was issued when the company

voluntarily exceeded the $10M capital expenditure limit.

Jake: Admittedly the bonds were not outstanding for very long. It sounds like an expensive trans-action but it doesn’t sound too extraordinary.

Skippy: Let me finish. The bonds were issued and retired in 1992. Last year the IRS commenced a “random audit” of the transaction, which audit is still ongoing. Even if the IRS determines that the bonds were taxable from the date of their issue, the statute of limitations on collecting the tax has long since run.

Jake: Hurrah for the IRS random audit

program. Our first Darwin Award winner.

* * * * * * *

[Network Financial Printing ad]


Skippy: We have never held ourselves out as being politically correct. One of our friends recently referred to a female colleague as a “deal guy” and was chastised for it.

Jake: I understand he argued that it was

a term of art in the industry, and no more sexist than fireman or college freshman. I cannot imagine saying “freshperson.”

Skippy: In an attempt to resolve the issue,

he consulted another colleague, this time a female tax lawyer, and asked if she minded being called a “tax guy.” She put an end to the conversation by responding that she didn’t really care but observed “ours are much bigger than yours anyway.” I think she meant tax lawyers.

Jake: . . . I didn’t know what that meant

either.

* * * * * * * Skippy: The long people days of summer

have past. Boy it was hot across the entire country. But I never saw a single report of a dog dying from the heat.

Jake: The heat did have certain effects on

people though. It seemed like a tragic summer for random acts of violence with firearms.

Skippy: The notion that firearm manu-

facturers are responsible has led to the possibility that lawsuits brought by state and local gov-ernments could generate settle-ments used as a source of repay-ment for tax-exempt bonds.

Jake: Much like the proposed tobacco

settlement deals. Skippy: After The Bond Buyer ran an

editorial to this effect, they received a letter in response from an apparently irate lawyer who ar-gued that guns aren’t as bad as

tobacco and because gun companies are losing money, they should not be held accountable.

Jake: The implications are obvious and

quite pervasive. If a government can use tobacco and gun company judgments, they can also use other legally obtained sources of reve-nues to secure their bonds. The only limit is the willingness of pur-chasers to buy the debt.

Skippy: I can see it now, “Dog Revenue

Bonds,” probably to be referred to as DRB’s, secured as to repayment from fines levied for pooper-scooper, curb your dog, and leash law violations. And if a wild pooch bites the mayor on the behind, the bondholders get a windfall. Or windfill as the case may be.

* * * * * * * Jake: The IRS issued a ruling recently

regarding the ability of Tennessee State University to play its games at a bond-financed football stadium intended for a professional team. It’s PLR 199928036.

Skippy: The bonds were issued as “gov-

ernmental bonds,” even though the professional team was clearly using the facility in a private trade or business.

Jake: The tax theory was that, while

there was private use, there was no private payment. Tax lawyers all nod their heads sagely at this conclusion.

Skippy: But along comes a governmental

state university who says “we want to play there too.” The IRS says “no,” because while the pro team can play all it wants and not cause the bonds to be private activity bonds, the governmental use by the university would, according to the IRS, give rise to private payments.


Jake: Why is the logic of this ruling escaping me? Forget all the tax lawyers’ geek-speak. I take it they are still nodding sagely. Something has to be wrong.

Skippy: Maybe it is an anti-Gore ruling in a

campaign year aimed at fragmenting the Tennessee delegation.

* * * * * * * Jake: Speaking of the IRS, they have this

big restructuring going on. More customer-oriented, kinder and gentler.

Skippy: They are having trouble trying to

figure out where to put the tax-exempt bond people in the new hierarchy. The current thinking is that bonds may be combined with employee plans and exempt organizations.

Jake: The IRS released some very telling

statistics along these lines. For the year 1996, there were 85,000,000 participants in employee plans controlling assets in excess of $4.1 trillion, 1,267,884 returns filed, and 199,073 ruling and determinations made by the IRS. That same year, there were over 1,500,000 exempt organizations filing 497,310 returns and 71,800 IRS rulings and determinations. But for 1996, there were only 86,000 state and local governments plus 555 recognized Indian tribes issuing 28,332 new bonds.

Skippy: If “EP,” “EO” and “Bonds” are

combined, the allocation of IRS resources on the basis of “customer needs” is likely to result in a very small percentage being targeted to our industry. That would be both in terms of enforcement actions taken and in guidance issued.

Jake: Bonds will be no more significant

than a tick on the butt of a Doberman.

Skippy: Don’t look at me. I use that new powder.

* * * * * * * Jake: The American Bar Association

continues to make low guttural noises which could affect the practice of bond law. In particular, they continue to fight about pay-to-play and the ability of nonlawyers and lawyers to practice together.

Skippy: Arf, arf, arf. Arf, arf, arf.

(Translation: Blah, blah, blah. Blah, blah, blah.)

Jake: What I don’t understand is why

some guy in New York who is not a bond lawyer is so adamant about asserting the point that bond lawyers, in particular, are guilty of bribing public officials. I don’t get it.


Skippy: I don’t either. But I hear that he

has so few friends these days he was actually seen at the grocery store buying a zucchini.

* * * * * * * Jake: You know how we count in dog

years. Eight dog years is the equiv-alent of one person year.

Skippy: Right, and that means by our

count, “yield burning” has now dragged into its 56th year.

Skippy and Jake: Arf, arf, arf. Arf, arf, arf. Skippy & Jake


EDITOR'S NOTES

The Model Letter of

Underwriters' Counsel reminds us anew that back-to-basics is a really good idea. As its drafts-persons remind us, it is terrifically useful to know who one's client is, what the client expects, and who might be entitled to rely on the opinion. Again the Committee on Opinions has done yeoman

service. The Committee's challenge was to try to bring order out of the chaos of disparate forms of

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[Kiel photo]


underwriters' counsel's opinions. Its model may not, of course, do quite that — and the model includes abundant disclaimers — but the Committee's product, and its fascinating com-mentaries, take us well down the road. Committee Chair Edwin F. Lucas III and the members of the Committee have done themselves and the Association proud. Association member Martha Mahan Gaines has departed Barnes & Thornburg's Chicago office and joined the SEC's Office of Municipal Securities for a two-year stint as an Attorney-Fellow. Careful readers will have noted that several columnists' photographs appeared for the first time last quarter. President Floyd Newton's was not among them, probably because we asked him to appear jointly with one of the wild Russian hogs he'd just bagged somewhere north of the Napa Valley. Members who have read Bill Larsen's Washington Saga now know that he is an irre-pressible punster. We intend to encourage him in his efforts unless outrage ensues. Go, Bill. We noted with sadness the July demise of Grant's Municipal Finance, which fortnightly brought us the best non-academic writing on municipal finance topics seen anywhere, and we wish Joe Mysak, its editor, all the best in his new role as a Bloomberg columnist. On the David Cone model, the Association has pitched a perfect game against Opinion 33 of the New Jersey Supreme Court's Committee on the Unauthorized Practice of Law. In a July 21 decision (reported supra at more length in the President's Column), the New Jersey Supreme Court, quoting liberally from our brief, held that New Jersey issuers in need of special expertise may contract directly with out-of-state law firms. This precedential holding may reverberate. What's next? Many sophisticated practitioners will not go into the deserts of, say, Arizona without local counsel, preferably local bond counsel. And then there's Georgia; your editor was advised thirty years ago that there were serious alligators in the Georgia swamps. But there may also be toothèd fauna anywhere; not all bond law is properly in-dexed, and not all case law is published. There is or was some law around to the effect that the opinion of an unlicensed lawyer is not just an opinion, but a

guarantee of the result opined upon. Prudent bond lawyers will not wrap the New Jersey decision about their shoulders like angelic raiment. They will seek to know what the courts have held in the states where they seek to practice, and (as a Canadian firm once advised a colleague) govern themselves accordingly. The New Jersey decision, in fine, is no hunting license. Paul R. Schilling served on the Association's Board of Directors from 1988 through 1991. He was a useful, witty, loyal, and creative contributor. He died in Milwaukee on July 23, under more than mysterious circumstances, at the tender age of 51. Our thoughts are with his family, friends, and former colleagues.

NABL has a JOB BANK

for members and public sector lawyers seeking employment opportunities

with private law firms.

Contact Executive Director Patricia Appelhans

at 630/690-2235


QUARTERLY LIMERICKS I Just one unkempt computer blink Could one's so-nifty sale sink And those uptights And legal fights Produce a skating rink. II The WACS and the WAVES, and now Colonel Eileen, Headed for new frontiers: They donned their spats, And doffed their hats, Eclipsing male peers. The Chanta telescope now floats In space as black as fright To send back pictures so remote As billions of our dollars float Serenely out of sight.

III Arthur L, Arthur L, do you know, Will you tell, or just drift down the (old) River Poe? Were you scalded at birth By a bond man with girth Who became your implacable foe? Was he wearing white shoes (Singing post-Memphis blues)? Did he promise extravagant coupons? Did he offer mustardly Poupons? Is he now your reliable muse? Orin Macgruder


MEMBERSHIP SERVICES Education Program The Association conducts seminars and workshops dealing with matters of interest to the bond law community. Still ahead in 1999:

¨ September 22, 23 and 24, 1999: Bond Attorneys' Workshop, Chicago — for lawyers with more than three years of bond experience — the preeminent annual gathering of bond lawyers, covering virtually all aspects of municipal bond law

¨ October 26, 1999: Ethics (audio seminar) These events offer members opportunities to exchange ideas about law and practice with fellow practito-ners. For more information, call Executive Director Patricia F. Appelhans at 630/690-1135. Law Reform: Committee Participation Through its Committees on Arbitrage and Rebate, General Tax Matters, and Securities Law and Disclosure, as well as ad hoc committees and task forces, the Association regularly testifies and files written comments about proposed tax, securities, and other federal legislation and regulations, and acts as an amicus curiae in judicial and administrative proceedings of general interest to the membership. (Amicus curiae guidelines are available from the Executive Director.) NABL members are invited to participate in committee activities. The Association works closely with public interest groups and industry organi-zations on matters of mutual interest. Office of Governmental Affairs In Washington, Director of Governmental Affairs William L. Larsen represents the Association in federal regulatory and legislative matters. The Director cooperates with state and local government groups, congressional and regulatory staffs, the Association's substantive committees, and individual members to help inform and educate Congress and federal regulatory agencies about public finance issues. Members may contact the Director at 202/682-1498 (e-mail [email protected]), or at 601 Thirteenth Street, N.W., Suite 800 South, Washington, DC 20005-3875, to discuss legislative and regulatory issues, request copies of current public finance proposals before Congress or regulatory agencies, and obtain NABL com-ments on proposed securities and tax regulations. For those with Internet access who send their e-mail address to him, he maintains e-mail contact with members on timely issues. Other Membership Benefits § Subscription to The Bond Lawyer; § Information of immediate concern is mailed to the membership;

§ The Association's renewed Website: www.nabl.org; § Preferential admission to the Association's educational programs at substantially re-

duced rates and reduced air fares; § Discounts on many of the Association's publications, including Disclosure Roles of

Counsel in State and Local Government Securities Offerings, Second Edition; Federal Taxation of Municipal Bonds (through Aspen Law & Business); Blue Sky Regulation of Municipal Securities; and seminar course books;

§ Free access to the Association's Job Bank through which members can receive job listings and firms can seek members interested in employment opportunities;

§ No charge for placement in The Bond Lawyer of brief notices of employment opportunities available or sought;

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