Hawkins Delafield & Wood LLP has one of the municipal industry's largest and most experienced tax departments devoted primarily to public finance. Hawkins has seven experienced tax partners in the tax-exempt bond area who have unmatched depth and breadth of national public finance tax expertise. In addition, we have a number of tax associates and financial analysts who support our federal tax practice. We see complex, cutting edge tax issues earlier, more often, and in more variations than most other firms around the country. We offer the benefits of both our Firm’s collective tax insights and our ability to address most tax issues more efficiently than can others. We have an unwavering commitment to provide tax planning and prompt tax services to support our tax-exempt bond transactional practice.
We can provide value-added tax services in a number of ways, including: (i) our staffing with leading tax experts; (ii) our tax structuring expertise to support our tax-exempt bond transaction practice; (iii) our proactive approach to current tax legislative and IRS administrative developments; (iv) our quantitative expertise in profiding arbitrage rebate services and a full range of related financial services; (v) our ability to address the tax aspects of prudent use of financial products with tax-exempt bonds; (vi) our expertise in dealing effectively with complex issues when necessary with the expanding IRS audit program for tax-exempt bonds; and (vii) our nationally-recognized low-income housing tax credit experience.
Highlights of our Tax practice include the following:
Tax Structuring for Tax-exempt Bond Transactions
Our familiarity with the federal tax aspects of the full range of tax structures for tax-exempt bond transactions enables us to advise our issuer clients on a variety of alternatives available to finance their tax-exempt bond programs. To take one illustrative example, in the housing area, we can offer tax advice on various techniques used to try to achieve efficiencies with scarce resources for affordable housing, such as loan participations, convertible option bonds, forward financings, cross-calling, tax-exempt/taxable bond combinations, and “universal cap” tax planning for parity resolutions.
Proactive Approach to Current Tax Developments
Hawkins participates proactively in the federal tax legislative and IRS regulatory and administrative process. We confer, when appropriate, with IRS and Treasury officials on tax policy issues and the development of regulations on tax-exempt bonds and we generally prepare extensive written comments on proposed regulations. We have represented a number of issuer clients on proposed legislative changes and IRS regulatory matters. Set forth below are several illustrative examples.
In 2002, we assisted New York City in drafting proposed federal tax legislation which ultimately was enacted with refinements into new Code Section 1400L(d) to provide a framework for the issuance of up to $8 billion in New York Liberty Bonds to assist New York City in redevelopment efforts after the September 11, 2001 terrorist attack. In 1997, in connection with IRS consideration of the 1997 private activity bond regulations on tax-exempt bonds, we represented over 25% of the state and local governments who testified at the IRS public hearing.
IRS Private Letter Rulings
Hawkins has significant experience in obtaining IRS private letter rulings on behalf of issuer clients on arbitrage and other tax issues affecting tax-exempt bonds. In general, however, the Firm seeks private letter rulings only rarely and only when it believes that existing law is sufficiently unclear as to not allow the rendering of an unqualified tax opinion. Several notable IRS private letter rulings obtained by Hawkins warrant highlighting. In 1999, the Firm obtained a private letter ruling which protected certain governmental preference customer arrangements against private business use treatment in connection with sales of electric power involving the Niagara project. In 1998, the Firm obtained a significant favorable private letter ruling on an expedited basis on one of the largest municipal bond transactions in history involving an approximately $7.5 billion governmental acquisition of a private utility which addressed several difficult arbitrage issues. In 1997, the Firm obtained two significant private letter rulings for two cities to preserve the tax-exempt status of over $6 billion in tax-exempt public utility bonds in rulings which were believed to be the first interpretations of the private management contract provisions of the 1997 final Treasury Regulations on the private activity bond tests.
Arbitrage Rebate and Other Financial Services
The Firm provides arbitrage rebate services, tax yield computational services, private business use tracking services, “family trees” for housing bond refundings (e.g., to determine if housing bonds descended from favored “pre-Ullman” bond financing or pre-1986 bond financings with fewer tax restrictions), and a full range of financial calculation services for all types of tax-exempt bond transactions from simple new money financings to complex advance refundings.
One of our Firm’s tax partners, T. Kam Wong, leads our active arbitrage rebate practice and related quantitative service practice, Financial Analysis & Services Group. The Firm stands behind its arbitrage rebate calculations with Firm tax opinions on the same. We have a number of fully-trained financial analysts who support our quantitative practice. We have created most of our computer software applications in-house and in many instances tailored them to a particular task or client. We have the capability to verify independently the financial calculations made by other consultants in tax-exempt bond transactions.
Hawkins is active in providing tax analysis on the use, when prudent and appropriate, by issuers of financial products in connection with tax-exempt bonds. We regularly advise issuers on a host of tax issues involving interest rate swaps, caps, and forward refundings. All of our tax partners have participated in the development and tax analysis associated with some of the largest and most complex municipal interest rate swap transactions to date involving billions of dollars. John J. Cross III also was one of the principal authors of the arbitrage “hedging” rules which permit issuers to take certain hedges to modify the risk of interest rate changes (e.g., interest rate swaps) into account in computing the yield on tax-exempt bonds for arbitrage purposes.