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of issuance and what was substituted for the projects as security
for the obligations to the investors were shell corporations'
letters of credit secured by the GIC's.
4. What this means is that the so-called originator of the
conduit financings, the Housing Authority, was eliminated from
(or never even got into) the loop. The Housing Authority as such
did not issue its own bonds. All that the so-called bonds
purportedly issued by the Housing Authority evidenced were the
interests of the bond holders in the GIC's, which were
obligations of a taxable entity, the Crown Life Insurance Co. As
a result, the bonds were taxable obligations from their
inception.
All the woofing about reasonable expectations, monitoring
actual usage, the arbitrage rebate rules, and the status of the
bonds as industrial development bonds may well be subsequent
questions that one need never get to under a proper tax analysis.
CHABOT, J., agrees with this concurring opinion.
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