Planning Your 2025 Public Bond Issuance

In public finance, a public bond issuance isn’t just a fundraising tool — it’s a commitment. It's a statement about a community’s ambitions and its stewardship of taxpayer resources.

As 2025 approaches, the rules of engagement are shifting once again. New regulatory pressures, evolving market dynamics, and growing investor scrutiny mean that municipalities must approach bond issuance with greater legal precision than ever before.

Here’s what you need to know — and act on — before the new year gets underway.

Waiting until the eleventh hour is a risk few can afford. Over the past year, enforcement actions against municipal issuers have increased significantly. The SEC’s 2024 report on municipal securities flagged a 20% rise in penalties tied to disclosure failures.

What’s often overlooked is that mistakes rarely stem from bad intent. More commonly, it’s the result of outdated internal practices, lack of communication across departments, or underestimating just how much the legal environment has changed.

Quiet Reality:

Veteran bond attorneys know that legal problems in public bond deals are rarely found in the final documents — they’re born months earlier when assumptions go unchecked and issues go unaddressed.

The takeaway for 2025: legal groundwork isn’t just paperwork. It’s the scaffolding that will determine whether a project moves forward or falls apart.

Every successful public bond issuance relies on a cast of specialists — and their roles should be defined early and clearly:

• Bond Counsel: The central legal authority ensuring the transaction’s legality and, if applicable, its tax-exempt status.
• Disclosure Counsel: A separate voice ensuring what’s said to investors meets federal disclosure standards.
• Underwriter’s Counsel: Advising the underwriter on due diligence and liability exposure.
• Financial Advisor: Helping shape the structure and sale, while quietly identifying legal tripwires.

Conflicts of interest — real or perceived — often trip up issuances. It’s not enough for team members to be qualified. Their duties must be cleanly separated to withstand public and regulatory scrutiny.

Hiring based on past relationships or cost-cutting measures can seem practical but may be costly later. Look instead for experience with complex transactions, familiarity with recent SEC enforcement trends, and a history of managing issues before they become problems.

Municipal issuers have long balanced compliance with operational demands. But in 2025, compliance needs to be seen as an ongoing obligation, not a one-time hurdle.

Federal Securities Law

SEC Rule 15c2-12 demands that issuers not only disclose upfront but maintain the flow of material information to investors. Missteps here are among the SEC’s most aggressively pursued issues.

Tax Law and IRS Scrutiny

Tax-exempt bonds must meet IRS private activity restrictions, arbitrage rebate rules, and public use standards. A new layer for 2025: the IRS’s upgraded electronic compliance certification system, which demands more precision and faster timelines for issuers.

State and Local Nuances

Many states impose requirements that can stretch the issuance calendar — voter approvals, validation suits, environmental reviews. For instance, California’s constitutional mandates around voter-backed revenue measures can delay bond timelines by months.

The IRS is now focusing more closely on "post-issuance drift," where bond-financed projects evolve in ways that violate original tax-exempt conditions — often without issuers realising it until it's too late.

Investors aren't just looking for raw data — they’re scanning for red flags buried beneath financial tables and footnotes. The SEC’s public commentary over the past year has sharpened expectations: disclose early, disclose often, and disclose clearly.

What Must Be Covered:

• Financial health (current and projected)
• Pending litigation
• Major project risks
• Pension and OPEB obligations
   

What Too Many Still Miss:
It’s not enough to copy-paste boilerplate language. Disclosures must genuinely reflect the unique risks of the issuer and project. Anything less is a red flag.

In 2023, a mid-sized city was fined after omitting a significant environmental lawsuit from its bond documents — not because they didn’t know about it, but because internal communications broke down. A preventable mistake, but an expensive one.

Timelines aren’t just administrative details — they are strategic assets. A rushed issuance often signals trouble to rating agencies and investors alike.

A best-practice timeline would look like this:

Early 2025: Lay the Groundwork

• Engage counsel
• Finalize project scopes
• Start preliminary due diligence

Mid-2025: Secure Approvals and Launch Disclosures

• Obtain governing body resolutions
• Draft and review preliminary offering documents
• Prepare for investor engagement

Late 2025: Execute and Monitor

• Market bonds to investors
• Finalize sales
• Complete regulatory filings and set post-issuance monitoring plans

States like Florida and Georgia still require bond validation proceedings — a full court process that can add 60 to 90 days to the timeline. Missing that window can derail funding schedules completely.

If 2024 enforcement actions made anything clear, it’s that the SEC no longer views small issuers as low-risk.

Case in Point:

• City of Rochester: Penalized for misleading pension disclosures.
• Central States Authority: Repeated late disclosure filings drew both fines and reputational damage.

Key Lesson:

Intent doesn’t shield issuers from penalties. Misstatements — even accidental ones — are actionable.

And it’s no longer just institutions that face scrutiny. Individual officers and staff involved in disclosure failures are increasingly being named in enforcement actions. The stakes are personal now.

Issuing bonds is not just about raising capital. It’s about maintaining the credibility that keeps capital affordable and accessible.

Strategies Worth Investing In:

• Strong, Centralized Recordkeeping: Maintain thorough, date-stamped records at every stage.
• Staff Training: Invest in regular training on disclosure responsibilities.
• Investor Relations: Keep lines of communication open post-issuance. Transparency isn’t just regulatory; it’s strategic.

Activist groups are using public records requests to scrutinize issuers post-offering. Solid documentation is your best protection against second-guessing and litigation.

A public bond issuance is more than just a financial transaction — it’s an act of public trust. How a municipality prepares, discloses, and executes that issuance shapes not only individual projects but also its reputation for years to come.

The 2025 landscape demands that issuers get the fundamentals right — and understand that the fundamentals are more complex than ever.

Starting early, assembling the right legal team, planning disclosures carefully, and building a strong, flexible timeline are no longer optional if success is the goal.

If you're preparing for a 2025 bond issuance, now is the time to put a solid legal and compliance strategy in place.

Contact Endow Law today to find out how we can help you succeed with public finance legal services — and make sure your next public financing meets every standard with confidence.