Travis County Commissioners Court
April 1, 2008
Capital Industrial Development Corporation
Now let's call to order the capital industrial development corporation, and one item. That is to consider and take appropriate action on request by mccaul, parkhurst and horton llp to execute a waiver of conflict regarding the internal revenue service examination of Texas disposal systems, inc., solid waste disposal revenue bonds series 2001.
>> good afternoon. I’m harvey Davis, manager of the corporation. In 2001 the corporation issued 15 and a half million dollars of solid waicht disposal retch new bonds for -- revenue bonds for Texas disposal system. Last April the i.r.s. Initiated an examination of the bonds. Mccaul parkhurst was bond counsel on the transaction. The i.r.s. Believes there is a conflict of interest between the issuer and bon counsel when they do an examination, so they will not -- they will not talk with bond counsel unless the issuer executes a waiver of conflict of interest. So they are requesting that the board execute that waiver. I’ve talked with representatives of Texas disposal system. They support that we execute the waiver, and also our attorney, cliff blunt, says that this would be an appropriate thing for us to do that we would -- we want bond counsel to be involved in the examination. The status of the examination is that -- and Texas disposal system has been on the front of interacting and answering i.r.s.'s questions, and they believe that everything is okay on the examination and that the bonds will remain tax exempt. I think they had some minor issue of the timing of some expenses that Texas disposal system used the funds for, but it was like less than $100,000, so it was really a minor issue. But otherwise they have answered all the questions. Usually the examination of bonds take a long time, more than a year, and so it's not -- at this time there's not any real concern of the status of these bonds. So we recommend that the board approve this request.
>> okay. And mccaul parkhurst is legal counsel for tds?
>> they are bond counsel on the transaction. So we as the issuer hired mccaul parkhurst.
>> so in 2009 they were our counsel basically?
>> yes.
>> move of the requested waiver.
>> second.
>> discussion?
>> let me ask this: I’m getting from the backup that the i.r.s. Basically takes the position that you had bond counsel who said there was nothing wrong with this transaction. Now they're saying this is something wrong with this transaction and we don't want to talk to the lawyer who advised there was nothing wrong with the transaction?
>> no. I think -- my understanding is the i.r.s. From the beginning said bond counsel just as a matter of course has a conflict of interest with the issuer. So they want -- in order for them to work with bond counsel to -- or bond counsel to be able to get information from i.r.s., then they want the issuer to issue the waiver. For this examination, the i.r.s. Has been directing their questions to representatives of Texas disposal system, their accountant and their attorneys.
>> and we don't anticipate that they would expand their inquiry to our behavior in the transaction? Or behavior of our bond counsel?
>> I don't anticipate that, but it's always possible.
>> okay.
>> any more questions?
>> one other question. What would be the procedure if we wanted to revoke -- can you revoke a waiver if it does turn out -- and this is so outside the probabilities. This is really more in the nature of precedent than the facts of this case. Because this sounds like it's probably garden variety, some t didn't get crossed or some I didn't get dotted, so they're looking into it. But just in terms of precedent, once you waive it can you unwaive it if the investigation goes south on you?
>> well, I can't answer being 100% sure, but I am almost certain that yes, you could. That yes, you could provide the i.r.s. With a written notification saying that you have undone the waiver and then the i.r.s. Would not give information to bond counsel.
>> thereafter.
>> thereafter, that's right.
>> after the revocation if that's true. But whatever has been released up to that point is fate accompli, lawyers say.
>> right.
>> and mr. Bowerman says according to your memo if at any time during the examination he thought a conflict arose, he would remove himself as the legal representative.
>> right.
>> so again, I ask this more in terms of precedent than in terms of the facts of this case it looks like are for purposes of this, the idea that we would ever end up in real conflict is really remote.
>> yes.
>> but lawyers can conjure up those possibilities, can't they, mr. Davis? Isn't that what makes a lawyer?
>> sometimes.
>> any more discussion, questions or delay -- I mean...
>> [ laughter ] all in favor? That passes by unanimous vote.
>> move adjourn.
>>
>> second.
>> five enthusiastic supporters.
>> that was a motion to adjourn? All in favor? That passes by unanimous vote. Jill, I wonder what we're doing, just keep notes.
>> [ laughter ]
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Last Modified:
Wednesday, April 2, 2008 8:51 PM