IRS Expands Management Contract Guidelines For Projects Financed With Tax-Exempt Bonds

Edward Rojas is Senior Counsel for Holland and Knight's New York office.

HIGHLIGHTS:

• The Internal Revenue Service (IRS) earlier this year released Rev. Proc. 2017-13 (the Guidelines), which contained new safe harbors for qualified management contracts relating to facilities financed with tax-exempt bonds.
• If a management contract satisfies the safe harbors under the new Guidelines, it will not result in "private use" of the financed facility.
• The Guidelines apply to management contracts entered into on or after Jan. 17, 2017, but an issuer may elect to apply them to prior contracts. However, because prior IRS revenue procedures were superseded by the Guidelines, the prior IRS procedures can be applied only to contracts entered before Aug. 18, 2017, and that are not materially modified or extended after that date.