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Madison approves engagement with Public Finance Partners to monitor redevelopment bond tax compliance
Summary
The Madison City Commission approved an engagement letter with Public Finance Partners to provide post-issuance tax monitoring for a $4.9 million private-placement redevelopment bond; the quoted fee is $3,500 and the engagement is described through June 12, 2030.
The Madison City Commission on Aug. 12 approved an engagement letter with Public Finance Partners to perform tax and post-issuance compliance monitoring for the city's redevelopment district bond, a private placement with German American Bank.
City staff said the engagement will ensure required federal tax filings and arbitrage calculations are tracked for the bond. Shirley Sinclair, City of Madison staff, told the commission that the work involves "post issuance compliance issues" and a set of annual monitoring tasks she did not have the time or capacity to perform herself. "Minimum fee, I think her total quote was 3,500," Sinclair said of the consultant, Stephanie Surgay of Public Finance Partners.
Sinclair said the consultant would review tax or arbitrage certificates, monitor investment and expenditure of bond proceeds, and identify any potential violations of federal tax requirements so remedial steps could be taken. Sinclair summarized the scope as lengthy: "There are 4 pages of items that I would need to complete. That's why I say I almost guarantee I would not be able to obtain that knowledge this quickly." The engagement letter presented to the commission lists a quoted fee of $3,500 and indicates the consultant would provide oversight through approximately June 12, 2030.
The bond was placed privately with German American Bank; staff said that because it was a private placement they did not engage or pay a placement agent to handle post-issuance monitoring. City staff asked the commission to approve the engagement so the city's clerk-treasurer would have an external specialist monitoring federal tax compliance for the bond.
Commissioners moved and seconded approval of the engagement letter. The commission voted in favor.
The engagement was presented as a preventive measure to avoid filings or remedial obligations that could arise under federal tax rules for tax-exempt bonds. Staff said they expect monitoring needs to begin in the next year depending on interest receipts and that any need to file with the IRS would be identified by the consultant.
