Bass, Berry & Sims attorney Jeff Oldham, chair of the firm's Public Finance Practice, discusses the impact of a proposed exception to Tennessee Usury Law and the bond financing for the new Nashville Convention Center for The Bond Buyer. The article by Shelly Sigo, titled "Nashville Convention Deal Waits on Change to State’s Usury Law," appears in the March 3, 2010 issue.
From the article:
But Nashville has asked lawmakers for an exception to the usury law because it is unclear whether the 35% interest subsidy for BABs from the U.S. Treasury can be included in the interest-rate calculation, said Jeff Oldham, the authority’s bond counsel at Bass Berry & Sims PLC.
"This is just a clarification of state law to make sure BABs and their higher stated coupons don't trip up against a technical usury statute," he said. "BABs offer us a good deal and because of the way they are structured with a taxable interest rate, we don’t want to go into a market with any doubts."
Tennessee has had a usury law since 1979 regulating the maximum interest rate on muni bonds. The law was instituted when the prime and interest rates were much higher. The current rate is 4% over the prime rate, or 7.25%, said Mary-Margaret Collier, director of the state's Division of Bond Finance.
With permission of © 2010 The Bond Buyer and SourceMedia Inc., All rights reserved.