Streamline - Fall 2016 - 40

NRWA Recap BY MIKE KEEGAN, NRWA ANALYST ALABAMA RURAL WATER WARNS NEW IRS PROPOSAL TO CHANGE DEFINITION OF "POLITICAL SUBDIVISION" On February 23, the Internal Revenue Service proposed new rules for political subdivisions issuing tax-exempt bonds that critics claim will completely change the way water infrastructure has been financed in a number of states. This regulation is significant because it proposes that an entity that is not a "political subdivision" cannot issue tax-exempt bonds. The new definition states an entity is a political subdivision that can issue taxexempt bonds only if it meets a three-prong test - it must exercise sovereign powers, serve a governmental purpose, and be governmentally controlled. The requirement to be governmentally controlled is new. Some rural utility districts have been set up to issue tax-exempt bonds to finance water utility projects. The IRS wants political subdivisions to be controlled by state or local governments or a group of elected officials that do not constitute a "private faction." The proposed rules would take effect beginning 90 days after they are finalized. However, they would not apply to existing tax-exempt bonds or to refundings that do not extend the maturities of the underlying bonds. Also, there would be a three-year transition period under which entities in existence "prior to 30 days after the proposed rules are published" could continue to issue tax-exempt bonds while restructuring to comply with the new rules. The new definition is a reaction to a 2013 case where the IRS concluded that the Village Center Community Development District in Florida was not a political subdivision and therefore could not have issued millions of dollars of tax-exempt bonds as it did from 1993 to 2004 because its board was and will always be controlled by the developer rather than publicly elected officials. COULD HAVE MAJOR IMPACT ON WATER UTILITIES: Historically, the determination of whether an entity was a political subdivision was based on whether it had the right to exercise substantial sovereign powers such as the power to tax for services. The IRS commented, "We'll put water systems into the pot of those that we do not want to-with zeal-disrupt and we'll consider the impact on them carefully as we move forward." What Constitutes "Control": In its proposal, the IRS would provide at least three benchmarks of rights or powers that constitute control. These would be the right or power to: both approve and remove a majority of an entity's governing body; elect a majority of the governing body of the entity in periodic elections of reasonable frequency; and approve or direct the significant uses of funds or assets of the entity in advance of those uses. The IRS provides two facts and circumstances tests that serve as brackets to determine if there is governmental control. One, the number of private persons controlling an electorate "is always unreasonably small" if the combined votes of the three voters with the largest share of votes determine 40 S T R E A M L I N E * F a l l 2 0 1 6

Table of Contents for the Digital Edition of Streamline - Fall 2016

From the President: Life Decisions
From the Executive Director: Communicating – Networking – Team Work!
The 2016 VRWA Expo
Leaks/Water Loss – Everyone’s Problem
How to Reduce FOG in Your System
Succession Planning
Dominion Coal Ash Ponds
Reporting on Your System
Cost-Based Rates, Part 1
Coming Back from the Edge
Capital Projects: Savings or Debt?
When to Repair or Replace Pipe
NRWA Recap
Throwing My Loop: Where Do You Live?
VRWA Members Corner
eLearning Benefits
Membership Application
Benefits for VRWA Members
Board of Directors
VRWA Committees
Index to Advertisers/Ad.com
Streamline - Fall 2016 - cover1
Streamline - Fall 2016 - cover2
Streamline - Fall 2016 - 3
Streamline - Fall 2016 - 4
Streamline - Fall 2016 - 5
Streamline - Fall 2016 - 6
Streamline - Fall 2016 - 7
Streamline - Fall 2016 - 8
Streamline - Fall 2016 - From the President: Life Decisions
Streamline - Fall 2016 - 10
Streamline - Fall 2016 - From the Executive Director: Communicating – Networking – Team Work!
Streamline - Fall 2016 - The 2016 VRWA Expo
Streamline - Fall 2016 - 13
Streamline - Fall 2016 - 14
Streamline - Fall 2016 - 15
Streamline - Fall 2016 - 16
Streamline - Fall 2016 - 17
Streamline - Fall 2016 - 18
Streamline - Fall 2016 - Leaks/Water Loss – Everyone’s Problem
Streamline - Fall 2016 - 20
Streamline - Fall 2016 - How to Reduce FOG in Your System
Streamline - Fall 2016 - 22
Streamline - Fall 2016 - Succession Planning
Streamline - Fall 2016 - 24
Streamline - Fall 2016 - Dominion Coal Ash Ponds
Streamline - Fall 2016 - 26
Streamline - Fall 2016 - Reporting on Your System
Streamline - Fall 2016 - Cost-Based Rates, Part 1
Streamline - Fall 2016 - 29
Streamline - Fall 2016 - Coming Back from the Edge
Streamline - Fall 2016 - 31
Streamline - Fall 2016 - Capital Projects: Savings or Debt?
Streamline - Fall 2016 - 33
Streamline - Fall 2016 - 34
Streamline - Fall 2016 - When to Repair or Replace Pipe
Streamline - Fall 2016 - 36
Streamline - Fall 2016 - 37
Streamline - Fall 2016 - 38
Streamline - Fall 2016 - 39
Streamline - Fall 2016 - NRWA Recap
Streamline - Fall 2016 - 41
Streamline - Fall 2016 - 42
Streamline - Fall 2016 - 43
Streamline - Fall 2016 - 44
Streamline - Fall 2016 - Throwing My Loop: Where Do You Live?
Streamline - Fall 2016 - 46
Streamline - Fall 2016 - VRWA Members Corner
Streamline - Fall 2016 - 48
Streamline - Fall 2016 - eLearning Benefits
Streamline - Fall 2016 - Membership Application
Streamline - Fall 2016 - Benefits for VRWA Members
Streamline - Fall 2016 - 52
Streamline - Fall 2016 - VRWA Committees
Streamline - Fall 2016 - Index to Advertisers/Ad.com
Streamline - Fall 2016 - cover3
Streamline - Fall 2016 - cover4
http://www.nxtbook.com/naylor/VRWQ/VRWQ0119
http://www.nxtbook.com/naylor/VRWQ/VRWQ0418
http://www.nxtbook.com/naylor/VRWQ/VRWQ0318
http://www.nxtbook.com/naylor/VRWQ/VRWQ0218
http://www.nxtbook.com/naylor/VRWQ/VRWQ0118
http://www.nxtbook.com/naylor/VRWQ/VRWQ0417
http://www.nxtbook.com/naylor/VRWQ/VRWQ0317
http://www.nxtbook.com/naylor/VRWQ/VRWQ0217
http://www.nxtbook.com/naylor/VRWQ/VRWQ0117
http://www.nxtbook.com/naylor/VRWQ/VRWQ0416
http://www.nxtbook.com/naylor/VRWQ/VRWQ0316
http://www.nxtbook.com/naylor/VRWQ/VRWQ0216
http://www.nxtbook.com/naylor/VRWQ/VRWQ0116
http://www.nxtbook.com/naylor/VRWQ/VRWQ0415
http://www.nxtbook.com/naylor/VRWQ/VRWQ0315
http://www.nxtbook.com/naylor/VRWQ/VRWQ0215
http://www.nxtbook.com/naylor/VRWQ/VRWQ0115
http://www.nxtbook.com/naylor/VRWQ/VRWQ0414
http://www.nxtbook.com/naylor/VRWQ/VRWQ0314
http://www.nxtbook.com/naylor/VRWQ/VRWQ0214
http://www.nxtbook.com/naylor/VRWQ/VRWQ0114
http://www.nxtbook.com/naylor/VRWQ/VRWQ0413
http://www.nxtbook.com/naylor/VRWQ/VRWQ0313
http://www.nxtbook.com/naylor/VRWQ/VRWQ0213
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0113
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0412
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0312
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0212
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0112
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0411
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0311
http://www.nxtbook.com/nxtbooks/naylor/VRWQ0211
http://www.nxtbookMEDIA.com