During the financial crisis, private equity, mezzanine and venture capital firms have spent a lot of time "cleaning house."  The financial crisis has made cheap debt less available and thus private equity and other firms are not able to complete deals with the huge leverage ratios that existed prior to the crisis.  So, they have taken a close, hard look at existing investments in order to determine which could be saved and have allocated resources appropriately.  

This sort of review has included, from a legal perspective, review of debt covenants and commercial contracts.  The firms have wanted to determine which of their portfolio companies are in danger of violating a financial covenant or failing to perform under a critical contract. 

Recent reviews have also included analyses of potential exit strategies in a down economy.  The potential strategies include the traditional options of bankruptcy, sale and IPO.  IPO's have been down sharply until very recently, so this option has not been given much consideration.  Sales have continued, but with valuations low, this is often not a favored option.  Bankruptcy is, as always, fraught with difficulties as firms consider the opposition of creditors as well as the value of their secured positions, if any.

Throughout the financial crisis, distressed investing has continued.  With the credit markets tight, private equity and other firms have taken some opportunities to fund companies that have not been able to get credit in the traditional credit markets.  These efforts persist, and the firms continue to focus sharply on the fundamentals of these companies in order to protect their investments. 

If you haven't read the thousands of pages of the current Senate-proposed version of the Patient Protection and Affordable Care Act (that's the formal name of the proposed healthcare reform bill), you might be surprised by the kinds of opportunities that are available for businesses.  This commentary may be a bit premature given that a bill has not been passed, but because the Senate-proposed bill is currently forming the basis for congressional debates, it could become relevant to businesses very soon.

Everyone knows that the bill would require universal health insurance and impose a broad range of new requirements on the healthcare industry.  In addition, the bill has a variety of grants and opportunities it makes available to businesses both within and outside the traditional healthcare field. 

There are numerous grant opportunities for states, and in many cases, the state can allocate funds through a bidding process.  Traditional healthcare organizations such as hospitals are eligible for a large number of grants and funded study and training projects.  Nonprofits have a number of opportunities available, too.  And colleges and universities also can take advantage of a wide range of potential grant and award programs.  Funds are also available for other businesses, such as grants to implement comprehensive workplace wellness programs or contracts to establish Web sites.

It will be an interesting road to see what happens to healthcare reform in the next weeks and months.  We will keep you posted on the funding opportunities that might be available for your business.

Just days before the United Nations Climate Change Conference in Copenhagen, Denmark, the U.S. Patent and Trademark Office (USPTO) initiated the Green Technology Pilot Program on December 8, 2009 to expedite the examination of "green technology" patent applications. By offering the program, the USPTO hopes to accelerate the development and deployment of green technologies, help create green jobs, and promote U.S. competitiveness in the clean technology sector. In the press release announcing the Pilot Program, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos explained "Every day an important green tech innovation is hindered from coming to market is another day we harm our planet and another day lost in creating green businesses and green jobs."

According to its own statistics, the USPTO takes on average 30 months to issue an initial office action for green technology patent applications and approximately 40 months to make a final determination on the patentability of such applications. In the normal process, applications are taken up for examination based on their filing date. Recognizing that over a three and half year wait is too long in the green technology sector, the Pilot Program provides a mechanism for green technology patent applications to be advanced, out of turn, to examination without having to pay any additional fees or provide any additional examination support documentation. The USPTO estimates that this Pilot Program will reduce the examination time of these applications on average by one year.

The Pilot Program broadly defines the term "green technologies" as technologies that pertain to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction. Despite this broad definition, the USPTO currently requires that a patent application be classified in one of 79 specific U.S. patent classifications outlined in the Pilot Program to be eligible.

The Pilot Program only applies to non-provisional utility applications filed prior to December 8, 2009 that have yet to be examined. Applications that are either filed after December 8, 2009 or already being examined are not eligible for the Pilot Program. The Pilot Program is set to expire on December 8, 2010 and the USPTO only guarantees that it will accept the first 3,000 petitions to make an application special under the Pilot Program. Thereafter, the USPTO will evaluate whether the Pilot Program should be extended based on the USPTO's workload and available resources. Thus, time is of the essence for those wanting to take advantage of the Pilot Program.

While there are limitations on the number and type of claims that can be included in the application and a requirement that an applicant waive its right to object to a restriction requirement, the Pilot Program does provide an inexpensive mechanism to expedite the examination of a green tech patent application. Such an expedited examination can prove beneficial to those looking to enforce their patent rights as quickly as possible and/or those looking for funding options.

The Official Notice of the Pilot Program can be found at 74 Fed. Reg. 64666 (Dec. 8, 2009) (See http://www.uspto.gov/patents/law/notices/74fr64666.pdf ) and the USPTO Press Release for the Pilot program can be found at www.uspto.gov/news/pr/2009/09_33.jsp.

If you have questions about the Green Technology Pilot Program, you can contact Alex Forman or Bill Lyon, members of Ice Miller's Intellectual Property Group.

Some studies suggest that the answer is  yes!  In a recent study, the Preqin Research Report Private Equity Investor Survey August 2009, many limited partners (LPs) investing in private equity funds reported that the balance of power in negotiations between the funds general partners (GPs) and the LP's had shifted in favor of the LPs.  In fact, according to the Preqin report, in April 2009, 27 percent of investors thought they had greater negotiating power.  Three months later, in July 2009, 55 percent of investors interviewed by Preqin believed they had greater negotiating power.

Why would that be?  Certainly, one of the reasons is that levels of LP investment have fallen significantly from previous years.  According to the Preqin report, private equity funds raised $194.5 billion in the first quarter of 2008, while they raised only $64 billion in the first quarter of 2009.  The GPs have to compete for the limited LP funds that are actually being invested now.  One of the ways to do that is to offer LPs more favorable terms.

So, cash-rich LPs appear to be returning to the market.  Private equity fundraising has already begun to improve in 2009.  According to the Preqin report, $79.7 billion was raised by private equity funds in the second quarter of 2009 as compared to $64 billion in the first quarter of 2009.

Today, we visited Zhejiang University and met with the president of the university, Yang Wei.  Zhejiang University has over 40,000 full time students at its five campuses.  In comparison, Indiana University (IU) has about 101,700 students on all 8 campuses; including 42,500 on the Bloomington campus.  There really isn't a school in China that's the size of our large universities, which is surprising considering their population.  We were at the largest campus and all of the campuses have names related to water.

Twenty-five percent of the people in China attend universities or technical colleges.  The government only spends money to educate the best and the brightest traditionally, although they're moving more toward private money paying for education.  Considering China has 1.3 billion people, the U.S. is behind in the number of students attending college.

Someone asked how students are accepted to these schools and we learned that students take a national entrance exam they must pass.  Students spend their entire last year of high school to prepare for this exam.  Zhejiang University gets a large portion of the top performing students.  The 2,700 students admitted this year to Zhejiang University were from the top 4,500 ranked students who applied to all colleges in China.  Meaning, of the top 4,500 students taking the national entrance exam, 2,700 of them went to Zhejiang University.

There are certain instances in which you can bypass this entrance exam to get into college.   They, for instance, can pick 500 students in specialty areas with special talents, such as students who are really excelling in language.  Also, high schools can recommend some of their very top students.

There were a lot of new buildings at Zhejiang University, including a new school for agriculture and life sciences.  This demonstrates their commitment to renewed energy and agriculture.  They also built a new indoor-outdoor stadium which was pretty fantastic. 

Yang, who has visited IU, spoke about the economics of the country and how its impacting the school.  He stated that Zhejiang University is looking at three main ingredients for economic growth: investment (which is doing well - it grew almost 30 percent in the last year); consumption (which is also doing well – it has increased about 15 percent); and import/export (which unfortunately has decreased about 15-20 percent over the last year).  The university wants to do more "internationalization," and by that they mean more international collaboration and also recruiting more international faculty. 

The research grants have increased dramatically since 1998 to 2008.  And patents have also greatly increased since 1998.  For the last three to fours years Zhejiang University has been the leader in the application of patents.  They have two different types of patents: invention patents and progress patents.  An important component of growing the number of patents is to train faculty on the importance of patents, and also the respect of having patents.

There are major reforms in place at Zhejiang University.   The first is dealing with their undergrad program.  In the past, they had 112 undergrad programs in 24 schools, and now they've put everything into just 6 categories.  They believe this allows students more time to develop their interests.  For the first two years they are exposed to a variety of classes because they take what we would consider "general studies" and in the last two years they focus on a specific area.  Each of the six different categories have different color t-shirts that the students wear so they can be easily identified.  This is obviously more ritualistic than in the U.S.

Another major reform in the university is that they've signed an agreement with the Hangzhou government to bring more investment and to grow the university in other regions.  They've added a national park and another university, and they're working to build campuses about the same size as the existing campus that we visited today in another location within the city. 

The university has a river on the main campus, and they're trying to connect the river to the main river locally, and then to the main river in Zhejiang.  This would allow a continual flow of water from the campus all the way up to Beijing. 

The university has a hospital system and a medical school on the main campus, which consists of seven affiliated hospitals and a staff of over 7,000.  The amount of money generated from the hospital system is significant; about $750 million in U.S. dollars.  This is approximately the same amount of revenue generated by the total university.  The university has joint research centers with other international universities, such as Singapore, Hong Kong, and the University of California. 

Important new initiatives the university is focusing on include sustainable energy, water pollution, e-service (which is a collaboration they have with IBM), social entrepreneurship (which includes a law school supported by a Taiwanese foundation), as well as a digital library which includes over 20 universities. 

Zhejiang University is in close collaboration with both Purdue and IU.  In fact, Zhejiang University has 16 students attending Purdue this year and they also have administrative staff that are going for training.  The Zhejiang University intends to double its student exchange in the next three years.  The majority of overseas students are language students.

In the afternoon, we attended a seminar dealing with investment and cooperation opportunities in Indiana for representatives of Chinese companies seeking to invest in the state.  There were over 84 participants at this seminar.

We also visited a "vineyard" for tea.  Tea is such a traditional drink in China that I'm going to go into more specifics in a later posting.

We ended the day at a banquet hosted by the governor of Zhejiang, Lu Zushan.

Tomorrow we are traveling to Japan and I look forward to learning about these very different Asian business and social cultures.

Day 3 - September 9, 2009 – Traveling to Hangzhou

I was really looking forward to traveling by train to Hangzhou and I was not disappointed.  It was a great opportunity for me to learn more about the Chinese culture and see more of China's beautiful landscape.

Hangzhou is in the Zhejiang Province located about 112 miles southwest of Shanghai.    Hangzhou has a population of over 6 million people, which is small by Chinese standards, and has a beautiful fresh water lake called West Lake.  West Lake is surrounded by mountains on three sides and is very well known in China.

Many Chinese homes, especially in farm villages, have temples on top of them to pay homage to their ancestors.  Ancestry and history play a large part of the Chinese culture and the temples are another example of these influences.

I also thought it was interesting, that unlike the U.S., Chinese grooms and their families pay for about 80 percent of the cost of their weddings.

It is early in the day of September 9, 2009 – 9/9/09 – and 9 is a very lucky number in the Chinese culture.  If fact, the Chinese celebrate the ninth second, of the ninth minute, of the ninth hour, of the ninth day, of the ninth month of the ninth year.  The luck of nine did not rub off on the number four in this culture.  Four is considered very unlucky, similar to the U.S. perception of the number 13.

I look forward to reporting more about this day's events in tomorrow's blog.

September 8, 2009 - Day 2

We spent the first part of our day with the American Chamber of Commerce for a discussion on "green collar" jobs.  Chinese carbon emissions are escalating and China has seven of the 10 most polluted cities in the world.  As a result, environmental protection has become more important to the Chinese.

Later in the day we traveled to Eli Lilly's facility at the Pudong Science Park.  Lilly has over 2,000 employees in China, which means China has the second largest Lilly operation in the world.  Pudong is one of Shanghai's newest districts with a focus on three main industries: life sciences, software and integrated circuits.

Some of us were also able to visit ShangPharma.  ShangPharma provides research services to pharmaceutical and biotech companies.  They currently have over 1,600 scientists.  An interesting question was raised about how intellectual property is protected for the company and its clients.  The uncertainty of intellectual property protection is not isolated to just ShangPharma.  It is an issue that China is addressing as a country.

Following these visits we had a traditional Chinese lunch that was again served on a lazy Susan.  There were six different courses that included duck, shrimp, squid, scallops, fresh vegetables, jellyfish and fried rice.  Beer and wine were again offered.  Chinese meals are traditionally very  large.  I was curious how the society remains so thin.  Meal preparation seems to hold the answer.  They use vegetable oils and other "waist friendly" and heart healthy preparation methods.

The day concluded with a Friends of Indiana reception.  Guests included companies that have a business connection to Indiana or have an interest in doing business in Indiana.  Eli Lilly, Cummins and Alison Transmission all attended.

I'm really looking forward to traveling by train to Hangzhou tomorrow.  It will be a great opportunity for me to see some of the rural parts of China and its landscape.

We've arrived in Shanghai China!  China is the world's most populous country with a population of 1.3 billion (with over 700,000 million living in rural farm villages) and one of the largest producers and consumers of agricultural products.  Over 40 percent of China's labor force is engaged in agriculture, even though only 10 percent of the land is suitable for cultivation and crops.  China is among the world's largest producers of rice, corn, wheat, soybeans, vegetables, tea and port. Industry and construction account for about 46 percent of China's gross domestic product (GDP). 

China is the second largest producer of oil after the U.S.  Coal makes up the bulk of China's energy consumption and is the largest producer and consumer of coal in the world.  China is home to 7 of the world's top 10 most polluted cities. 

China is now one of the most important markets for U.S. exports and in 2007, U.S. exports to China totaled $65.2 billion. 

Shanghai is beautiful with many high-rise buildings and lovely architecture.  It's approximately 200-300 years old, relatively new by Chinese standards.  It's very cosmopolitan and has one of the world's largest buildings.  The highways are elevated and the transportation system is very efficient with subways and lots of taxis, but traffic jams are not uncommon. 

The average age of marriage is 25 and it's not uncommon for many generations to reside in the same household.   This makes defining China's "middle class" difficult.  A young adult will have low expenses because they live with their elders, but they have a large impact on spending.

We concluded the evening with a wonderful 7 course dinner.  Keeping with tradition, we changed chopsticks with each course.  Dinner consisted of many "firsts" for me including sautéed prawns in chile sauce, shredded chicken soup, steamed garoupa, pan-fired beef and mushrooms, and a sweetened almond crème with pastries for dessert. 

During dinner many toasts were given, as is tradition in China.   When a person receives a toast they must participate by taking a drink.  Many high ranking officials and business leaders have people who help "protect" them from toasts so the leader isn't required to drink a large amount of alcohol.  When receiving a toasting you should hold your wine glass below the glass of the person who is making the toast as a sign of respect.

Monday, Sept. 7, 2009
We had a briefing at the hotel by the U.S. Commercial Service and we talked a lot about China.  We started off breakfast before the presentation with a combined traditional Chinese/American breakfast.  On the Chinese side we had soups, dumplings, fresh seafood, salad and loose leaf tea.

China's GDP is about one-third of the U.S. and they have the third largest global economy.  China has had 5 years of rapid double-digit GDP growth.

Shanghai is not representative of China as a whole.  The standard of living between large metropolitan cities and farm villages is vast with marked differences in health care and education.  It is very cosmopolitan and an important economic center.  Like most countries, China has been impacted by the worldwide recession.  Exports are down 7.8 percent as of last year and they have had over 100,000 factory closings.  There are 26 million unemployed Chinese migrant workers.

China was the first major country to enact a stimulus package.  They injected $582 billion in their economy with a majority of the stimulus funds targeted toward infrastructure (air, railways, highways and power grids) and earthquake reconstruction. They have had a 2009 economic revival with a growth rate of 7.9 percent, mostly due to the stimulus package and an increase in lending.  Auto sales are up 25 percent and for the first time China has surpassed the United States.  Home sales have also improved recently.

Daniels was the featured speaker at a conference hosted by Cummins, Inc. for representatives of some of Cummins’ top Chinese suppler companies and members of the Indiana delegation.  Steve Chapman, Cummins’ group vice president for China and Russia, who lives in Beijing, introduced Daniels. The governor discussed Indiana’s business climate and encouraged conference attendees to visit the Hoosier state as they consider setting up operations in the U.S.  The governor was the guest of honor at a luncheon hosted by Cummins at the conclusion of the conference.

There has been quick growth in U.S. exports to China since China joined a common trade union in 2002.  There are many U.S. companies in China and a significant U.S. presence in human capital.  China has surpassed Japan as the U.S.'s largest export market behind Canada and Mexico.  U.S. companies with a presence in China tend to be profitable in their operations and include companies such as General Electric, 3M, GM, Boeing, Cargill, IBM  and Caterpillar.  The Chinese are less likely to have large corporate centers in the U.S. because they don't experience managing a worldwide work force and because labor is much more expensive in the U.S. compared to China.   The average labor cost in the U.S. is $25/hour compared to $1/hour in China.

Shanghai has a population of 20 million and is the commercial capital and one of the wealthiest areas of China, similar to Manhattan.  Shanghai is the economic powerhouse so an important area for Governor Daniels an our delegation to visit.

In the evening we met with the Shanghai Foreign Commerce Commission to discuss why Chinese companies should do business in Indiana.  Governor Daniels discussed how businesses would benefit from working with Indiana including the fact that Indiana has higher capital and foreign investments than any other U.S. state and Indiana does not raise taxes to pay for unbalanced budgets.  After we left the commerce commission, we immediately  went to the Hoosier Club of Shanghai reception at the yacht club.  Members of the Hoosier club are comprised of alumni from Indiana universities.  The governor spoke and commented on the importance of student exchange programs.
 
To end the evening we went to an authentic Chinese restaurant featuring several courses including shrimp, soft shell crab, beef and avocado.  The food here is incredible and made from many natural ingredients.

Our day started with a traditional Brazilian breakfast of fresh fruit (papayas, cherries, peaches), cheese, breads and, of course, meat.  The juices are fantastic and are made fresh from locally grown fruit.  Brazil doesn't use frozen or concentrated juice like the U.S.  I have been talking about what a leader Brazil is in energy, but I am reminded continuously that they are very proud of their beef and meat industry.  Beef is prevalent in all their meals; breakfast, lunch and dinner.  Their beef is served a little dryer and tougher than the U.S. but Brazilians would argue their way is the only way to serve it!
 
I may decide to stick with my traditional Indiana meat styles, but I humbly admit that we have a lot to learn when it comes to energy efficiency.  This morning we visited the Technical Companies of Monsanto (CanaVialis) in Campinas, Brazil.  CanaVialis develops and supplies genetic solutions for sugarcane production.  Currently, the development of sugarcane is a six year cycle.  CanaVialis is working to help reduce the time it takes to bring sugarcane to market.  Sixty-five percent of the production cost involved in sugarcane is on agricultural production.  The rest of the cost is associated with packaging and transportation.  Increasing sugarcane production efficiencies will have an enormous impact on the Brazilian economy.  Our trip to Unicamp later in the day proved that Brazil is determined and sophisticated enough to make historical changes to better position themselves in the global economy.

Unicamp is one of three large universities in Brazil funded by the government - 2.5 percent of taxes goes toward Unicamp.  Unicamp is widely regarded for their research and helped transform Brazil from a country dependent on oil imports to a global powerhouse in energy production.  In the 1970s, 80 percent of the oil that Brazil used was imported.  In 1975, Brazil decided they needed to substitute biofuels for their gasoline usage.  With the help of Unicamp, Brazil is now 100 energy independent.  Not to mention the fact that they have become the largest producer and exporter of sugarcane in the world.  Brazil predicts that they could provide 10 percent of the worlds fuel by 2020.  If Indiana and the United States want to become competitive in biofuels we must learn from Brazil and become the best at producing our own raw materials, whether it is corn or sugarcane.

The excitement for possibilities didn't end at Unicamp and CanaVialis.  This afternoon we visited Campinas, which is a city and county in the interior of São Paulo.  Campinas is also the number one hub for cargo in Brazil.  In fact, they have a cargo airport.  The delegation met with the mayor of Campinas, Hélio de Oliveira Santos, and discussed how the cities may work to learn from each other.  Specifically, how the Indianapolis International airport and the Campinas cargo airport can work together, as well as what they can learn from the U.S. regarding public transportation.  Public transportation is a big problem in Brazil.  In fact, Indiana is miles ahead in this area.  The synergies that both these cities can bring to each other are so tremendous that Indianapolis and Campinas became sister cities today.

We ended our day at a traditional Brazilian restaurant where we were served fresh fruit and vegetables, rice, beans, and, of course, beef.  Dinner is not to be taken lightly in Brazil.  Their work days are long and they end it at an evening meal that can take two to three hours.  Quite different from the American drive-thru.

After an overnight flight from the U.S., we arrived in São Paulo, Brazil, the nation's largest city in the southern region of the country.  Brazil covers a very large area along the eastern coast of South America and includes much of the continent's interior region.  The county is equivalent in size to the continental U.S., but has less than two-thirds of the U.S. population.

Once we answered questions from the Brazilian hotel staff on the upcoming NFL season and the Indianapolis Colts, we meet with Scott Shaw, deputy senior commercial officer at the U.S. Consulate.  One of the main focuses for this trade mission is to learn about energy.  Brazil's advances in this area make it an ideal place to learn,  especially with São Paulo on the leading edge of energy independence.  The briefing provided a great overview of Brazil's energy programs and the impact they've made in energy advancement.

Brazil is 100 percent energy independent and they have virtually no carbon issues, which means they also don't have the cap and trade issues the U.S. is facing.  Seventy percent of Brazil's energy is from water.  The rainforests, which comprise about 98 percent of northern Brazil, help stabilize the atmosphere and environment and reduce manmade environmental impacts in the region.  In addition, Brazil doesn't use coal.  Another strong energy source for Brazil is ethanol with sixty percent of Brazil's ethanol being produced in São Paulo.  They've been using homegrown biofuels since 1973 and their ethanol is based on sugar cane.  Sugar cane is not a resource easily grown in the U.S. and our ethanol is based on cellulosic and corn ethanol.

Brazil is so committed to energy and global climate change that they have pledged that the 2014 FIFA World Cup soccer event will be carbon neutral.  The stadium currently under construction will use only solar energy.

After the briefing with the U.S. Consulate, we met with representatives of the Federação das Industrias do Estado de São Paulo (FIESP).  The FIESP is an industrial entity comprised of 127 industrial associations (which make up 42 percent of the industrial GDP).  The FIESP monitors and fosters business relations with countries worldwide.  Major projects for this group include renewable and sustainable energy, climate change legislation and solar energy for heating.

We then traveled to the Fundaçoa de Amparo a Pesquisa do Estado de São Paulo (FAPESP), which is the state of Sao Paulo Research Foundation.  FAPESP is one of the main funding sources for scientific and technological research in Brazil.  Funding is derived from a one percent tax to all employers and the board of directors is appointed by the government.  Even with the funding subsidized by the government, the group has autonomy in how they manage and invest the $350 million annual budget.

We were also able to meet with many Brazilian and São Paulo dignitaries at an evening reception hosted by the FIESP.  The reception again reinforced what we already learned .  Brazil, and São Paulo, has learned to use their environment to improve their country and the lives of their people, without harming the natural resources that provide so much.

The Alliance of Mergers & Acquisitions Advisors and PitchBook Data recently released a study of the private equity industry.  The study showed that there is an overhang of approximately $400 billion in private equity fundraising.  That means private equity firms have raised about $400 billion more than they have invested.  There's a lot of money out there waiting to be invested.  In fact, it's at an all-time high.  Click here to see a copy of the report.

As tough as times have been, people have continued to give their money to private equity funds.  The funds just haven't found companies that they consider good investments.  So what needs to happen?  According to some, it's a matter of companies lowering their expectations.  Companies can no longer expect to get the kind of multiples or the kind of leverage that were used before 2007.  Others say it's all about the stability of the economy and the re-opening of the credit markets.  Still others say that investors need to change the way they do diligence on a company.  The old methods will no longer work in light of the current economic realities.

So which is it?  Probably a combination of all.  Either way, I look forward to the days when we start to use that $400 billion.

U.S. Secretary of Agriculture Tom Vilsack made a tour through Indiana on June 3, primarily to tout the Obama administration’s plans to rebuild and revitalize rural America.   He made three stops in Indiana: Terre Haute, Indianapolis and Danville.  The most interactive of the stops for Indiana residents was in Danville, where the secretary held a forum (part of USDA's Rural Tour) to collect ideas and comments from local residents on how best to revitalize the rural economy.

Vilsack outlined the goals of the American Reinvestment and Recovery Act – providing  assistance to struggling families; investing in the nation’s transportation system; and building “green collar” jobs.  He acknowledged that families are struggling because of the economic crisis.  In rural areas, Vilsack pointed to a few specific areas of relief provided by the stimulus funds, including infrastructure in watershed areas to reduce flooding and promotion of renewable energy production to revitalize local economies.

Rural community residents, ag organization and business leaders in attendance asked the secretary questions on a variety of topics… the struggle to feed a growing world population, the regulatory environment and wind energy issues were just a few.  Another topic though dominated the conversation and also provide the insight into the administration's priorities in agriculture – structural changes in U.S. agriculture and USDA's plans for assisting small farmers.

This has been a recurring theme for Vilsack following the release of the 2007 Census of Agriculture.  Referencing three different segments of producers ("large" farms that produce 75 percent of the nation's output; mid-sized farms and small farms), the secretary outlined priorities primarily for the latter two groups.

Mid-sized farms, he noted, are decreasing in number because they are either being purchased by larger farming operations or are dissolved because they are no longer able to compete in the industry.  USDA and other federal programs will promote job creation in local areas to provide alternative job opportunities for those farmers.

Small farms, on the other hand, are a growing segment and one that USDA will attempt to help more because of the "job opportunities they create in rural America."  How will USDA help these smaller operators?

1. Expansion  of the beginning farmer program
2. Connecting local consumers and local producers to establish more market opportunities for farm products. 
3. Expanded conservation programs will help farmers more efficiently use their land.
4. Increased focus on biofuels,  expanded trade, and climate friendly programs will also create more opportunities for small farmers.

These comments provide much needed reassurance and promises of support to rural communities hard hit  by the current economic downturn.  At the same time, they also foretell a significant shift in USDA focus and programming away from the largest, most productive farms to smaller farms seeking more localized expansion opportunities.  It is still early in this administration's term and so difficult to predict precise directives or outcomes, but it is clear that Vilsack has yet to waver from this theme and these new priorities.

The American Recovery and Reinvestment Act of 2009 includes few provisions that will have an impact on private equity and venture capital funds.  One provision that could affect private equity funds and their portfolio companies is a tax provision that will permit companies to restructure their outstanding troubled debt and defer the tax consequences thereof for five years.  The provision will allow companies to more easily deleverage their balance sheets, and thus should be considered by private equity funds and their portfolio companies which have outstanding debt.

Read the entire article on debt restructuring tax relief.

As we all know, we are in a recession.  In these difficult economic times, everyone is wondering where we can find money to help start or grow our businesses.  It seems that everyone is holding their money close to the vest.  In reality, however, there are many different places where a company can obtain equity or debt financing to help its business.  The key is understanding what type of money is available.

Traditionally, the first place to find money when starting a new business is from family and friends.  Obviously, investments from family and friends are made in large part upon the relationship you have with those individuals, but you need to be careful to comply with federal and state securities laws.  This usually means that you want to make sure you investors are accredited investors and that you conduct your private offering in compliance with an exemption under Regulation D  of the federal securities laws.  There are limits on the number of investors and the amount of financing a company can receive in order to fall within one of the many exemptions.  Family and friends are still providing capital during the recession, however the amounts that can be raised from family and friends have diminished as individual investment and savings accounts took a beating from the drop in the equity markets over the last year.

If you do not have close friends or families with the available cash to invest in your business, "Angel investors" can be and are a still a great source of capital.  Angel investors are high net worth individuals that can provide large tranches of capital through equity or convertible debt investments.  Typically, angel capital is the second round of capital that start-up companies and businesses receive and can provide capital in the range of $500,000 to $2,000,000 depending on the needs of the company and the willingness of the "angels" to invest.  Although angel investors are more selective in these economic times, angels are still investing and are looking for the right opportunities and the right companies.  Once again, when raising money from angels, you need to comply with federal and state securities laws and structure your offering to comply with on the private offering exemptions.

Venture funding is another source of capital that can be very advantageous for start-up companies.  Venture funding comes at a price.  Generally, venture capital firms will require a seat on the board, veto rights on major decisions such as additional financing and sale of the company, and a high return on their invested capital.  There are numerous venture capitalists looking to deploy money right now.  They are more selective in these economic times, but the venture capital firms typically do have the money to invest.  Venture funding is one of the key types of financing that provides the necessary capital infusion to allow a company to take the next step.

Private equity capital is generally available for more mature companies that are looking to expand and grow.  Private equity investments can take a variety of forms and generally involve a buy-out or a purchase of a majority equity interest in a company.  As with venture funding, there are numerous private equity funds with millions of dollars to deploy right now.

Traditional debt financing from institutional banks is available to companies as well.  The credit markets have suffered through the banking crisis and the recession, but the current administration's policies have encouraged banks to loosen the reigns to start lending money again.  It remains to be seen whether that will work.  A bank will generally require security interest the company's assets including inventory, real estate and/or accounts receivables, pledge of stock or a personal guaranty.  Bank financing will also require meeting certain financial covenants.

Indiana Department of Environmental Management, DieselWise Indiana  - Application Deadline is May 15, 2009

The DieselWise program is grant availability for projects designed to significantly reduce diesel emissions across Indiana.  The total estimated funding for this competitive grant opportunity is in excess of $2,000,000.  DieselWise Indiana anticipates awarding cooperative agreements from this announcement ranging from $25,000 to $250,000, subject to availability of funds and the quality of proposals received.  Additional funds may be available in the near future.  Project proposals submitted under this grant announcement may be awarded for funding from these additional funds.  Preference will be given to applicants that are willing to provide a financial match and/or in-kind match, provide actual historic idling hours pre-installation and post installation of idle reduction technologies, along with a commitment to maximize the use of any installed diesel emission reduction technology.  Information can be found at http://www.in.gov/idem.5255.htm

USEPA Small Business Innovation Research Program - Solicitation closes May 20, 2009

The U.S. Environmental Protection Agency’s (EPA) Small Business Innovation Research Program supports small businesses in developing new environmental technologies.  The EPA anticipates the total funding that will be available for Phase I projects issued under this announcement will be $1.8 million. A total of $70,000 is available in funding for each EPA Phase I award. Recipients of Phase I awards will be eligible to compete for a much larger (up to $295,000) two-year Phase II award. Companies with fewer than 500 employees are eligible.  Solicitation closes May 20.

SBIR Phase I green building materials and systems research topics are:

• Building Materials and Site Management
• Energy and Indoor Environmental Quality
• Water Use and Management

HUD Brownfields Economic Development Initiative Funds - Application Deadline June 16, 2009
 
The Department of Housing and Urban Development (HUD) published a notice of availability of $20 million in Brownfields Economic Development Initiative (BEDI) funds (74 FR 20494) on May 4.  David Kaminsky, who works on development grants in HUD's Office of Economic Development, said the funds will be awarded competitively, and individual grants are capped at $2 million. BEDI grant funds are targeted for use in redeveloping brownfield sites as part of larger urban economic development projects, according to HUD. Brownfields are underutilized, abandoned or vacant sites where expansion or redevelopment may be burdened by confirmed or suspected environmental contamination, according to HUD. Kaminsky said BEDI grants must be used in conjunction with a new guaranteed loan under Section 108 of the Housing and Community Development Act. Section 108 is the loan guarantee provision of the Community Block Grant Program administered by HUD. The application deadline is June 16. The funds are coming from fiscal year 2008 and fiscal year 2009 appropriations, according to HUD. See http://www.hud.gov/offices/cpd/economicdevelopment/programs/bedi/funding09/index.cfm.

Modern agriculture is affected by more than just traditional farm policy - in other words, the statutes and programs that offer financial supports and incentives for production agriculture.  Today, new and changing policies and regulations require different strategic and business planning considerations.  Agriculture policy now is inextricably linked to rural, energy, trade, climate change, nutrition, transportation and infrastructure policies not to mention food safety, financial services and environmental regulations. 
 
This increasingly important set of policy priorities coupled with a new political administration in Washington, D.C. with a strong will to act suggest that the agriculture industry be prepared for something other than the status quo.  In just the last few weeks, several announcements and actions that connect the Environmental Protection Agency (EPA), the US Department of Agriculture (USDA), the Congress, the court system and the agriculture industry support this view. 
 
Consider the following:
 
1.  EPA's greenhouse gas endangerment finding  After a thorough scientific review ordered in 2007 by the U.S. Supreme Court, the EPA issued last week a proposed finding that greenhouse gases contribute to air pollution that may endanger public health or welfare. The gases in question are: carbon dioxide, methane, nitrous oxide, hydro fluorocarbons, per fluorocarbons and sulfur hexafluoride. 
 
As the proposed endangerment finding states, "in both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act."  The report continues, "the science clearly shows that concentrations of these gases are at unprecedented levels as a result of human emissions, and these high levels are very likely the cause of the increase in average temperatures and other changes in our climate." 

Many industries send out warning signals at the first sign of "over-regulation" and agriculture is no exception.  This specific finding is a slippery slope for agriculture - especially the livestock industry that could be subject to new permit requirements for structure construction or modification and ultimately naturally occurring methane emission fees per animal to the tune of $175 per dairy cow, $87.50 per beef cow and $21.87 per hog (according to the American Farm Bureau Federation).  

In response, Nebraska Senator and former Secretary of Agriculture Mike Johanns has co-sponsored legislation that would protect animal agriculture from any greenhouse gas regulations promulgated by EPA.  Citing the significant economic value his state reaps from commercial red meat production, Johanns suggests this "cow tax" could cost Nebraska's farmers and ranchers tens of thousands of dollars per farm per year.
 
Before the finding takes effect, EPA is required to hold it open for public comment for 60 days and then issue proposed regulations which again would be subject to a public comment period. So EPA’s “deliberative process” could take another two years or more. Meanwhile, last week's announcement will increase pressure on Congress to move ahead on climate change legislation.

2.  Comprehensive climate change legislation  Climate change is near the top of the legislative agenda. In the Senate, Energy and Public Works Committee Chairman Barbara Boxer (D-CA) says she’ll do her best to work with anyone who seeks to move legislation quickly.  The House Energy and Commerce Committee is holding hearings now on a draft released by Chairman Rep. Henry Waxman (D-CA) and Rep. Ed Markey (D-MA) that proposes a mandatory cap-and-trade system to reduce greenhouse gas emissions.

The House Agriculture Committee wants a seat at the table on climate change, too. Committee staffers are currently reviewing stakeholder responses to a 29-question survey regarding the role of agriculture and forestry in a carbon reduction program. The input will be used in “crafting principles that could be part of any subsequent legislation,” explained Ag Committee Chairman Collin Peterson, who says the panel will launch its own hearings on the issue in the next few weeks.

3.  EPA does not appeal court decision on pesticide applications  The U.S. Justice Department recently announced it will not appeal a federal court decision that could eventually require farmers to seek permits from the EPA for all pesticide applications and open the door to citizen lawsuits.  The U.S. Court of Appeals 6th Circuit issued the decision on the case, National Cotton Council vs. EPA, in January, nullifying an earlier EPA ruling that allowed chemical applications to be regulated under existing federal pesticide regulations. Instead, the pesticides applied in or near waterways will now be classified under the Clean Water Act. The change, if allowed to stand, carries significant implications for agriculture as a user of pesticides unable to completely control runoff caused by rainfall. 

A wide range of other beneficial pest control activities could be subjected to lawsuits from activists claiming that the use of pesticides is prohibited under the Clean Water Act unless authorized by permit.  This is of great concern to mosquito control officials and pest managers for forests, recreational waterways, irrigation canals and parks. 

In a March 6, 2009 letter, Agriculture Secretary Tom Vilsack asked EPA Administrator Lisa Jackson to seek a rehearing and request reversal of the 6th Circuit's decision. Senate Agriculture Committee Chairman Tom Harkin, (D-IA) and Ranking Member Saxby Chambliss (R-GA) weighed in with a similar letter.  But those requests were rebuffed, and the EPA has indicated they would be requesting a two-year implementation plan for the ruling. 

4.  EPA seeks public comment on raising the ethanol blend level to E15  EPA's broad reach into agriculture also is evident in its renewable fuel mandate authorities.  EPA is currently seeking public comment on a waiver application submitted by representatives of the ethanol industry to authorize up to 15 percent ethanol blends with gasoline.  The 30-day comment period will run through at least May 20, 2009. By law, the EPA is required to grant or deny the request no later than December 1, 2009.  Since 1978, the limit has been a 10 percent volume ethanol blend (E10) for conventional (non flex-fuel) vehicles.

According to the EPA release, the applicants contend that increasing the blend rate is needed to bring greater investment to next generation biofuels technologies and commercialization.  And the higher blend rate is arguably critical to fulfilling the 2007 Energy Independence and Security Act's renewable fuel mandates.  Opponents (typically environmental and consumer groups and small engine and car manufacturers) counter that the increased blend rate might damage pollution control equipment, reduce air quality, and undermine vehicle and equipment performance and warranties.

5.  New environmental and climate position at USDA   Agriculture Secretary Vilsack announced last week the creation of a new environmental and climate position in his inner office.  Robert Bonnie will serve as Senior Advisor to the USDA Secretary for Environment and Climate.   Referencing that two out of the three key goals of President Obama for USDA are tied to the environment, Vilsack will rely on Bonnie to help guide broad natural resource and climate policy and program decisions.  Bonnie has worked for the Environmental Defense Fund (EDF) for over 14 years with extensive experience in carbon credit programs and conservation initiatives for endangered species.

Independently, each of the above should be important to agriculture, but taken collectively they are evidence of an intensifying regulatory landscape for the industry.  Every part of agriculture - from crop and livestock production, food processing and manufacturing to alternative energy production - is affected by these developments.  Increasingly, EPA will be shaping environmental and climate policy that directly affects agriculture.  Climate change legislation and related programs will be developed and implemented - it's not a matter of if, but when and what form.  Agriculture must communicate with the new political and policy leaders, engage in the policy formation and influence more beneficial rather than harmful outcomes for the industry.
 

Serendipitous timing or well-planned launch, the Energy Systems Network (ESN) launched today at a press conference attended by Governor Daniels. The ESN is an economic development initiative for the clean-technology sector. ESN is the latest economic development initiative under the Central Indiana Corporate Partnership, which also houses Conexus (the manufacturing/logistics initiative) and BioCrossroads (life sciences). The dialogue on clean energy received a boost this week with the introduction of the Waxman-Markey comprehensive energy legislation. Playing off the theme that carbon-capture legislation is coming, even as early as this session, Jim Rogers, Duke Energy President and CEO, highlighted the need for clusters addressing energy technology by saying that groups like the ESN need to connect and convene in order to solve the energy issues facing not only our generation, but generations to come. Highlighting his Princeton, Ind., roots and his grandson at Purdue, Mr. Rogers stated that Indiana has the configuration of technology companies, know-how and passion to turn energy vision to reality. Committing $1M in funds from Duke over three years, Duke is a partner, with IPL and others, in one of the first ESN initiatives announced, the power plug-in initiative, to create a vehicle system connected to the smart grid. Allison Transmission, Cummins and EnerDel lead the contributors to a Hoosier heavy hybrid program for medium and heavy duty trucks. Governor Daniels reminded the audience that there are not enough BTUs from these sources to replace coal, so don't think Indiana is not going to be a player in the energy economy, but that these technologies are an important supplement and a driver of jobs and the economy in Indiana. An all-star board including Mr. Rogers, Mike Hudson of I-Power, President Dr. Cordova of Purdue, Charles Gassenheimer of EnerOne and others joined the Governor and Mr. Rogers at the event. Joe Loughrey, formerly of Cummins, announced that he will chair the ESN.

Once a business decides to raise money, management is left to figure out how to make it happen.  Strong advisors help, but there are some steps that any business can take to make it easier to raise funds.  Collecting information to give to investors is a good place to start. 

Regardless of who invests, the information that investors will want to see will be pretty much the same, and the business can get this ready ahead of time.  The information should be readily available to the business.

Managers can be surprised at the amount of information they need to provide.  When a business takes money from an investor, it gives something back – an interest in the business.  What the business gives back – whether it's called "stock," "partnership interests," "LLC interests," "notes," or some other name – is often a security.  When the business gives a security to the investor for their money, the investor is protected by securities laws.  One of the protections provided by securities laws is that, before the investor decides to invest, the business has to tell its investors everything material about itself – that is, it has to make a "full disclosure." 

Many managers see full disclosure as the opposite of marketing.  Sure, full disclosure includes the good parts about the business.  But investors will need to know all of the bad things too, as well as all of the indifferent but important things about the business.  To some managers, it seems that after convincing the investor that buying into the business is a great idea, the manager then needs to tell the investor all of the reasons that they should not invest.  Although this can be contrary to a sales mentality, investors should be left with a complete picture of the business – the good, the bad and the material.

The way you end up raising the money will impact how the information about the business is presented.  But the basic content that a business must provide will largely stay the same.  Time invested collecting this information early is well spent, and will save time later.  At minimum, any business looking to raise money should be sure to have the following available:

Financial Statements:  These are the basic financial statements for the business.  Investors will typically want to look back up to five years (if the business has been around that long).  If the financial statements are audited, investors will want to see the audit reports as well. 

Organizational documents:  These are the official documents that govern how the business exists and will vary depending on what kind of business it is.  For example, if the business is a corporation, they would be the articles of incorporation, bylaws, amendments, board minutes and resolutions, shareholder minutes and resolutions, etc.  If the business is a limited liability company, they would be the articles of organization, operating agreement, amendments, minutes and resolutions, etc.  These are often compiled in a "minute book" for the business.  Many businesses operate with multiple companies – subsidiaries, holding companies, etc.  If this is the case, you should keep one set of organizational documents for each subsidiary.  Investors will want to review these documents, as they are important to the kinds of investments that can be made.

Tax information:  This includes tax returns, tax registrations, tax ID numbers, listings of taxes for which the business has registered, etc.  Many businesses have tax advisors; if yours does, the advisor should be able to help compile and present them.  Investors will probably want to look back three to seven years.

Information about legal proceedings:  Investors will want to see if the business is in the middle of any lawsuits or if it has been threatened with a suit.  Lawsuits involving major owners and managers could be important as well.  The lawyer representing the business can help prepare the information that most investors would seek.  Working with the lawyer to put it together is usually advisable to protect against losing attorney-client privilege or disclosing things against the business's interests.

Information about real estate:  Investors will want to see a listing of all of the properties where the business has an interest.  Does it own the land?  Is it leased?  This will include all leases, deeds, mortgages, etc. on the properties.

Material contracts:  Investors will want to understand the business's important contracts.  Examples can include employee contracts, contracts with key customers and suppliers, leases, licenses, and other arrangements that are important for the business.  You probably do not need to include the office copier lease.

Regulatory issues:  Investors want to confirm that the business has the right authority to do its business.  It is helpful to prepare a listing of all of its applications, licenses and permits that the business has.  This can cover anything from investment advisor registrations to elevator permits.

Intellectual property (IP):  As IP continues to be critical in the economy, investors are sensitive to it.  It is helpful to have a list of any patents, trademarks, copyrights, licenses and any other registrations and applications that the business keeps.  It is also important to include any contracts that let the business use someone else's IP.

Insurance:  Prepare a listing of all insurance policies the business has of any kind.  It is also helpful to get a current insurance certificate for each of the business's policies as well.

Employee benefits: Prepare a list of the business's employee benefit plans, including health plans, retirement plans, 401(k)s, employee discounts, etc. and get copies of all of the plan documents (contracts, summaries, etc.). 

These are general rules that can help any kind of business get ready to work with its investors.  Every business is different, so not all businesses will have all of the information discussed above.  Others will need much more detail about some or all of these categories.  So the listing above is not a checklist but rather a guide to start reviewing your own business.  By preparing and collecting these materials ahead of time, businesses can better balance the burdens of raising funds, save time later in the process and reduce professional fees to collect these items.

When you are raising money for your company, a private placement memorandum (PPM) can be used to provide information to potential investors to help them evaluate the merits of an investment in your company.  It is intended to disclose material information to potential investors about the securities you are selling, your company and its business, in particular, the risk factors associated with an investment in your company.  A PPM is not always required for full legal compliance with securities regulations, but it is a useful way to show that you provided all material information to investors.  Generally, each PPM will include a business plan, risk factors, a description of how you intend to use the proceeds of the offering, a capitalization table and a description of the closing process for the investment.

However, there is no "one size fits all" PPM.  They will vary according to the company's size, industry, development stage, offering size and other factors.  Therefore, it is important that a company offering securities retain competent legal counsel to assist with preparing the PPM and conducting the offering.

Business Plan

The business plan section lets you educate potential investors about your company's strengths and weaknesses.  This section should describe the products and services offered by your company, the needs of the market place, the risks which may be posed by actual and potential competitors, your strategic plans with respect to innovation, marketing and financing, and the overall business environment in which your company will operate during the term of the investment.  In most cases, the business plan section is drafted by you and reviewed by legal counsel.  One of the major purposes of legal counsel's review is to ensure that the PPM, taken as a whole, is not misleading to potential investors.

Risk Factors

The risk factors section of the PPM is a specific description of some of the risks that may be associated with your company, the industry and the particular terms of the offering.  If well drafted, the risk factors section can provide useful protection against some potential claims by investors.  Although the actual risk factors for your company will depend on your company's specific business and activities, there are some fairly standard disclosures found in most PPMs.  For example, a "development stage" company will likely include in its PPM the following as risk factors:  lack of revenue, losses and financing requirements, product development risks, technological risks, manufacturing and distribution risks, dependence on key employees, competition, regulatory risks, potential inability to exercise a redemption right, dilution, no market for shares, and difficulty of determining an appropriate offering price.  The company should also include any other risks relevant to its particular business.

Use of Proceeds

The PPM should include a section that describes how you intend to use the proceeds of the offering.  Naturally, you will want to retain some flexibility regarding the use of the funds, but the investors will likely require at least a general breakdown of uses.  The use of proceeds section might list product development, acquisition of new technologies, facilities expansion, hiring of new employees or general working capital requirements as possible applications of the proceeds.  The key to this section is to strike the delicate balance between flexibility for your company and certainty for the investor.

Capitalization

The capitalization section describes the capital structure of your company.  The capitalization section should include a capitalization table which will allow a potential investor to determine how much of the company he will own (or how much of the company's debt he will own).  The capitalization table should reflect both the actual debt and shareholders' equity of the company prior to the offering, as well as the adjusted figures reflecting the completion of the offering on the terms contemplated in the PPM.

Closing Process

The closing process or subscription procedure (as some refer to it) can be foreign and confusing for investors.  Therefore, it is helpful to provide investors some guidance in the PPM regarding how the closing will proceed.  You can require that a minimum amount of money be raised before you will proceed with the offering.  If that is the case, the PPM should disclose the minimum aggregate capital commitments. After any applicable minimum is met, qualified investors generally have to complete and return a subscription agreement which obligates them to buy the securities, along with a check for the amount of the purchase price (payment may also be made by wire transfer), by a date specified in the subscription agreement.  Sometimes the subscription agreement is included with the PPM.

The investor may also be required to complete and return an "accredited investor" questionnaire to allow the company to comply with certain exemptions from the securities laws.  If required, the questionnaire is typically attached to the subscription agreement. 

After the company has received all signed documentation and funds, it should provide the investor signed counterparts of the documentation.  The company may also provide the investor share or unit certificates or promissory notes, if applicable, and signed copies of the company's governing documents.  If the company is making the private offering pursuant to certain registration exemptions, after the closing it may need to file various documents, including Form Ds and U-2 Uniform Consents to Service of Process, with the state and federal authorities where the investors are located.

This blog was posted by Terry Mumford and Albert Lee.

NCPERS Annual Legislative Conference was held February 3, 2009 and the NAPPA Tax Section Meeting was held February 4, 2009.  Both were in Washington, D.C. and included speakers from Congress, the U. S. Treasury and the IRS. 

National Conference on Public Employee Retirement Systems (NCPERS)

The NCPERS conference is designed to educate attendees about hot topics on Capitol Hill so that they can be well informed in making calls on their U.S. representatives and senators.  I was particularly interested in the comments made by Mildeen Worrell, tax counsel to the Ways and Means Committee because she focused on issues that she believes governmental plans will face in the future.  In particular she talked about the following issues that "cross-over" from the private sector to affect governmental plans:

• Funding.  Worrell observed that articles about the funding levels of public plans can have a negative effect unless governmental plans make their voices heard. 
• Benefit Design.  If Congress allows the private sector retirement plans to be increasingly based on individual plans, that will also threaten traditional DB governmental plans.  In her personal opinion, hybrid plans (cash balance plans) are the future of defined benefit plans.  However, political forces prevent Congress and regulators from doing what should be done on cash balance plans.  Leaving the situation to the courts does not make sense.
• Fee Disclosure.  According to Worrell, the fee disclosure issue will likely expand outside of the 401(k) context – at least to 403(b) and 457(b) plans.
• Other issues on the horizon include providing for independent investment advice and the "auto IRA."

Many Ice Miller governmental clients will be challenged in 2009 and beyond to address these issues at the state and local level.

Read a discussion of regulatory topics at the NCPERS conference.

National Association of Public Pension Attorneys (NAPPA) Tax Section
Terry Mumford is the lead chair of the NAPPA Tax Section.

The NAPPA Tax Section meeting is intended to educate public pension attorneys on statutory and regulatory developments that affect the qualified status of public pension plans and the taxation of member benefits. Martin "Marty" Pippins, IRS EP technical guidance and quality assurance, has addressed this group for many years with regard to IRS guidance projects.
 
Pippins discussed a governmental plan questionnaire (Form 14035) that at the time of the conference had not yet been released.  As stated by Pippins the survey went to 25 governmental plans that were randomly selected to answer the survey.  At the same time the survey was posted on the Web site for a 90 day comment period.  Based upon the comments, the questionnaire will be revised and then sent to additional plans (100-200) for completion.

Read a question and answer session with Marty Pippins that contains more information.

On December 23, 2008, President Bush signed into law the "Worker, Retiree, and Employer Recovery Act of 2008" (Act).

The Act provides numerous technical corrections to the Pension Protection Act of 2006 (PPA) and provides pension funding relief in light of the current economic crisis.  

Read a summary of some of the Act's provisions of interest to single employer plans.