Terror Vision

A Hammonton company will help regulators in the state?s investigation of efforts by electric utilities to turn the lights back on following Tropical Storm Irene and an October snowstorm.

The state Board of Public Utilities on Monday said it will sign a contract with Emergency Preparedness Partnerships, a consulting firm in Hammonton.

The company specializes in disaster response and business continuity planning to various industries, including electric, gas and water utilities, according to its website.

Irene, which was downgraded from a hurricane to a tropical storm by the time it reached New Jersey on Aug. 28, knocked out power to about 780,000, nearly 71 percent of JCPLs 1.1 million customers, including approximately 300,000 in Monmouth and Ocean counties. For some, power was out for more than a week. It was nine days until the last customer had the lights back on, the report states.

A preliminary staff report released by the BPU in December was critical of JCPLs efforts to restore power following Irene. While all the utilities faced challenges, the Morristown-based utility ?in particular was deficient in its storm restoration process, especially during Hurricane Irene,? the report states.

It said changes must be made at the utilities, touching on issues involving communications, staffing, the electric infrastructure, prioritizing power restoration and tree trimming.

Public Service Electric and Gas Co. had nearly 40 percent of its 2.2 million customers lose power. Atlantic City Electric had 273,898, nearly 51 percent of its customers, lose power.

The Oct. 29 snowstorm that followed, with its wet, heavy snow, collapsed tree limbs and power lines, and knocked out power to 1.03 million New Jersey customers.

All told, the two storms hit everyone from residential customers and emergency responders to critical customers such as hospitals, water and sewer treatment plants, prisons and schools.

The analysis by Emergency Preparedness Partnerships will focus on the utilities? effectiveness in dealing with outages following Irene, according to state documents. I will include a look into what they did before, during and on the days immediately following the storm.

By Pollard Rogers

The global recession provided a stress test of the US economy, one significant sector being our public institutions. It is painfully clear that the cost of providing state and local services and the infrastructure to support those services has become unsustainable at their current levels. Economic growth and the tax revenues generated from that growth have not kept pace with the increasing demand and cost for public services we have come to expect, and for many governmental entities it is harder today to access the tax-exempt bond market.

We must revisit traditional thinking in how our public institutions deliver and fund services and the Texas Legislature has attempted to address this dilemma by encouraging governmental entities to partner with the private sector by the passage of the Public and Private Facilities and Infrastructure Act of 2011 (Act).

Governmental entities and developers have found creative ways to work together on public projects for years. Economic development corporations and private transportation authorities have been popular vehicles for the public and private sectors to develop projects. Municipal bonds, tax increment financing, 380 grants, ad valorem tax abatements and eminent domain powers have been widely used to encourage development by the private sector. The Legislature has recognized that these relationships should be encouraged and has provided a statutory frame work under the Act for the state and other governmental entities to enter into formal public/private partnerships for development of public projects, commonly referred to as P3s.

The Act specifically acknowledges (1) the need for construction and operation of education facilities, technology and other public infrastructure and facilities; (2) the need for these projects is not wholly satisfied by existing methods of procurement; (3) there are inadequate resources to develop these projects; (4) the need to provide governmental entities with the greatest possible flexibility in contracting with the private sector for public services through qualifying projects,; and (5) financial incentives exist under federal and state tax provisions to encourage the use of P3s. Qualifying projects must serve a public purpose, and the Act defines a qualifying project by identifying specific uses such as parking facilities, water supply facilities, waste treatment facilities, schools, public buildings and any improvements necessary or desirable to unimproved real estate owned by a governmental entity. The Act does not apply to construction and operation of a highway, a transportation authority or any telecommunication, cable, television, video service or broadband infrastructure.

The Act requires that a governmental entity adopt guidelines before considering a proposal for a qualifying project. Guidelines for the state are somewhat different from the guidelines for other governmental entities; one significant difference is that proposals for state projects must be reviewed by the Partnership Advisory Commission. The guidelines must include procedures for financial review and analysis of the proposed project that, at a minimum, consists of a cost-benefit analysis, an assessment of opportunity costs and consideration of the degree to which functionality and services similar to the functionality and services to be provided by the proposed project are already available in the private market.

A key feature of the Act is that a private entity may initiate the approval process by submitting a proposal, which capitalizes on the developer communitys entrepreneurial spirit, visionary optics and cost efficiencies such as those provided under design/build contracts. Regardless of whether the developer or the governmental entity initiates the process, public notice must be given to encourage submission of competing proposals.

A governmental entity may dedicate any property interest if it finds that the dedication will serve the public purpose by minimizing the cost of the qualifying project to the governmental entity and reducing the delivery time, including conveying any property interest in consideration for the developers agreement to develop and operate the project. The developer may finance a project by entering into a sale/lease back with the governmental entity and use the project as collateral for financing. Finally, the governmental entity may exercise any power of eminent domain to the extent that it dedicates the land or property interest to public use and finds that the action serves the public purpose of the Act.

If privatization of public services under P3s is to become the preferred vehicle, there are policy considerations that the public sector must address. Our public institutions must always balance their paramount responsibility to the public trust and welfare with the private sectors motivation to earn a profit in a free-market system. Public safety must be maintained and fees charged for services must be fair over the life of the project and these factors must be considered by the developer in determining an acceptable rate of return on the investment and the allocation of risk.

The Act should usher in a new wave of opportunity that will stimulate the economy and help governmental entities — including the state, municipalities and school districts — balance their budgets. P3s have demonstrated that even with higher financing costs, projects can be constructed and operated at a lower cost than by the public sector. The first step is for those governmental entities to adopt guidelines as required under the Act, identify and prioritize the services and infrastructure needs that are suitable for P3s, and invite the developers and service providers to the table.

Pollard Rogers is a Partner with the Cantey Hanger law firm in Fort Worth. He can be contacted by email at progers@canteyhanger.com.

AUSTIN, TX, Mar 11, 2012 (MARKETWIRE via COMTEX) –
(SXSW Interactive) Geoloqi, a powerful platform for next-generation
location-based services, today announced strategic new partnerships
with Appcelerator, a leading cross-platform mobile development
platform; Factual, a large-scale data aggregation platform with a
Global Places API; and Locaid, the world’s largest carrier location
platform. Through these partnerships, Geoloqi is significantly
enhancing its location data and analytics offering while expanding
its reach to millions of new developers and end users through Locaid
and Appcelerator’s customer bases.

Geoloqi is a complete cross-platform location solution that is
device, language and carrier agnostic allowing developers to easily
layer geolocation onto any IP connected device or application.
Geoloqi is creating a one-stop shop for the enterprise and developers
to unlock the full potential of real-time location-based services.
These strategic partnerships not only give Geoloqi a distinct
advantage in location data and application development services, but
also give carriers and handset manufacturers new technology for true
real-time location tracking, for the first time. The platform also
enables persistent background location tracking, real-time location
tracking, intelligent battery management and geofencing, rich
location and dwell-time analytics, and location messaging.

“These partnerships greatly enhance location technology for our
collective customers and provide new opportunities for the
enterprise,” said Amber Case, CEO and co-founder of Geoloqi. “We are
building the future of location services — key functionality for
layering next-generation location technology onto any application or
device. We’re confident that these partnerships will drive open new
markets and accelerate location technology more rapidly into the
future.”

Learn More about the Partners

Appcelerator
Winner of the 2012 GSMA
Global Mobile Award for “Best Cloud-Based Technology,” Appcelerator’s
Titanium is the leading mobile platform that powers more than 35,000
applications deployed on 40 million devices worldwide. Through the
partnership, the Geoloqi API and complete toolkit is now available in
Appcelerator’s marketplace, giving its customers access to rich,
real-time location technology while giving Geoloqi access to
Appcelerator’s global network of over 1.6 million developers.

“Appcelerator customers have been asking for a true, turnkey
geolocation solution and location-based analytics platform for some
time now, and we finally found one in Geoloqi that can meet the needs
of our enterprise customers,” said Jeff Haynie, CEO of Appcelerator.
“Its powerful toolkit is an essential addition to our app development
marketplace, and we’re excited to begin offering Geoloqi technology
to our customers next quarter.”

Factual
Factual has created the
definitive global location database of local businesses and points of
interest, and currently offers access to 60 million entities in 50
countries. Geoloqi’s partnership with Factual gives customers access
to Factual’s immense location database and significantly extends
Geoloqi’s data and storage capabilities.

“We are really thrilled to be part of Geoloqi’s rich SDK for
developers,” said Eva Ho, VP of Marketing & Operations at Factual.
“Adding our more than 60 million US businesses and POIs to their
suite of tracking, geofencing and messaging tools will give
developers everything they need to quickly build the next amazing
app. Definitely a nice marriage of our strengths.”

Locaid
Locaid is
the world’s largest location-as-a-service company. The partnership
gives Geoloqi access to its over 350 million mobile devices in North
America, and gives Locaid’s enterprise customers real-time
handset-based location technology, greatly enhancing the carrier-only
location services previously available.

“Mobile developers want the best of both worlds from location
companies: the whiz-bang tools from device-based location and the
massive footprint and no battery-drain from network location.
Together, Locaid and Geoloqi give developers a one-two punch, the
first such partnership in the history of location-based services,”
said Rip Gerber, Locaid president and CEO. “Now, companies large and
small can combine Geoloqi’s check-ins, location-based messaging,
geofence alerts and real-time maps with Locaid’s 350 million device
footprint and privacy services to create amazing capabilities and
apps for any device, anywhere, locatable anytime. Personally, I’m
also delighted to be working with world’s foremost cyborg
anthropologist.”

About Geoloqi
Geoloqi is a powerful platform for real-time
location-based services, making it simple for enterprise partners,
OEMs and mobile developers to quickly add rich geolocation
functionality to apps and devices. It provides a complete, real-time
toolkit for tracking, messaging, battery management, geofencing,
storage and actionable analytics, with a language agnostic SDK and
proprietary API. Founded in 2010, Geoloqi is based in Portland, OR
and backed by Portland Seed Fund and TIE. For more information on
Geoloqi, please visit
www.geoloqi.com .

About Appcelerator
Appcelerator’s Titanium is the leading mobile
platform of choice for thousands of companies who are seizing the
mobile opportunity. With more than 35,000 applications deployed on 40
million devices, Appcelerator’s Titanium Platform leverages over
5,000 mobile device and operating system APIs to create native iOS
and Android apps as well as HTML5 mobile web apps. Customers who
standardize on the Titanium Platform get to market 70% faster and can
quickly optimize business results with analytics-driven insights into
user behavior and app performance. The open and fully extensible
Titanium Platform makes it easy to integrate data, content and
services from a variety of sources into mobile applications to
leverage best-of-breed capabilities. Appcelerator Cloud Services
(ACS) provides instant social, location, communication and content
features for user-centric mobility. ACS is pre-integrated into the
Titanium Platform and is also separately available for all mobile
developers and publishers. Appcelerator’s worldwide ecosystem
includes 1.6M developers and hundreds of ISVs and integration
partners. Please visit
http://www.appcelerator.com .

About Factual
Factual is a large-scale data aggregation platform
that provides high value data and services to developers, publishers
and enterprises. The sources of data come from premium partners,
developers, user communities and the web. Its core offering is a
powerful set of open APIs around Global Place data which includes
more than 60 million businesses and points of interest in 50
countries. Factual was founded in 2007 by Gil Elbaz, co-founder of
Applied Semantics which originally developed ASI AdSense. Factual is
funded by Andreessen Horowitz and Index Ventures. For more
information on Factual, go to
www.factual.com .

About Locaid
Locaid is the world’s largest Location-as-a-Service
(LaaS) company. We operate a location privacy platform that allows
mobile developers to locate over 350 million devices for enterprise
authentication, fraud management, consumer location services and
opt-in mobile marketing. Locaid locates smartphones, feature phones,
tablets and any mobile device on leading wireless carriers, including
America Movil, AT&T, Rogers, Sprint, T-Mobile, TELUS, and Verizon
Wireless. Locaid also helps shape and enforce location privacy
policies via leadership roles on governing associations, including
the CTIA, MMA and IAPP. The largest financial institutions, mobile
marketers, M2M platforms and mobile service providers get network
location from Locaid. Location Matters.(TM) You can locate us at

http://www.loc-aid.com .

Media Contact
If you are press attending SXSW Interactive and would like to speak with Amber Case, CEO of Geoloqi, please reach out to:
Vanessa Camones or Jennifer Lankford
theMIX agency for Geoloqi
415-412-2856
Email Contact

SOURCE: Geoloqi

http://www2.marketwire.com/mw/emailprcntct?id=73C86ADBA8C02DFB

Copyright 2012 Marketwire, Inc., All rights reserved.

NASAs affiliation with Michigan could increase in the coming years, officials say.

A group of five program managers, engineers and technologists from three NASA centers were in Detroit Tuesday and today to discuss partnerships and job creation opportunities with more than 80 Michigan businesses and organizations. The space agency is looking for potential future suppliers and partners, as well as companies interested in using NASA technology.

We think there are some very good matches, said Ted Mecum, senior technology transfer manager at Goddard Space Flight Center in Maryland. Were very excited about what weve seen so far.

Mecum said while NASA has no plans to build a new space center in Michigan or anywhere for that matter at least a half dozen or so companies may be reviewed for partnerships.

Were not here for procurement, he said. Were here for partnerships and collaborations.

The two-day visit was organized by the Detroit Regional Chambers Connection Point, an economic development program founded in October 2010 with federal grant money.

HONG KONG, Dec 06, 2011 (BUSINESS WIRE) –
Insurers will increasingly rely on flexibility to fit themselves into
bancassurance models that are growing rapidly in Asia-Pacific markets,
according to an article in the most recent edition of BestWeek
Asia-Pacific.

Sujoy Ghosh, regional head of bancassurance at ING Insurance
Asia-Pacific Ltd., said insurers will need to adapt to the business
models of the banks they engage rather than trying to impose their own
models on banking partners.

Also in BestWeek Asia-Pacific, insurance markets in Indonesia and
Malaysia are increasingly looking to takaful, or Islam-compliant family
coverage as a growth driver. One article in the current edition of BestWeek
Asia-Pacific examines Prudential BSN Takaful’s experiences in Malaysia,
while a second outlines A.M. Best’s updating of its takaful rating
methodology.

The 6 December edition is available at
www.bestweek.com/asia
and
www.bestweek.com .

Other features of this issue include an interview with an A.M. Best
analyst on A.M. Best’s recent special report on the Middle East and
North Africa, and a Best’s Underwriting Guide snapshot of the insurance
implications related to central-station alarm monitoring services.

BestWeek is published by A.M. Best Co. for insurance
professionals. To subscribe, visit
www.ambest.com/sales/BestWeek .

Founded in 1899, A.M. Best Co. is the world’s oldest and most
authoritative insurance rating and information source. For more
information, visit
www.ambest.com .

Copyright (C) 2011 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.

SOURCE: A.M. Best Co.

A.M. Best Co.
Iris Lai, +(852) 2827 3400
iris.lai@ambest.com

Copyright Business Wire 2011

Officials from South Louisiana Community College and Acadiana Technical College signed a memorandum of understanding Wednesday to enhance the partnerships between the two schools.

?This is an effort to put this down on paper so we can talk about the benefits of this collaboration,? said Phyllis Dupuis, ATC regional director and SLCC interim chancellor.

Already, the two community colleges share human resource departments and are merging their accounting offices. Because the two Lafayette facilities are adjacent, they also share parking lots for student use.

But the schools have recently hired a joint workforce development officer who represents students of both schools to business and industry partners, and students can cross-enroll at ATC and SLCC in order to take the best advantage of what each school has to offer.

?It?s not just about the efficiency of the economics. We?re giving (students) a chance to move up even more than maybe they thought they could when they came here,? said State Rep. Bob Hensgens.

For more on this story, see Thursday?s edition of The Daily Advertiser.

Email: laurie@jaybirdcom.com
Website: http://www.7digital.com
? Vickie Nauman appointed President of 7digital-North America to expand and grow 7digital?s global business

London, UK, December 6, 2011 ? 7digital, the leading digital media company, today announced the company will be expanding its North American operation and opening US offices beginning January 2012 in response to its growing business.

Leading the stateside effort will be newly appointed President of 7digital North America, Vickie Nauman, who has been serving as Vice President since Q4 2009 when the company acquired its US and Canadian music rights. Nauman will oversee business development, strategy, partnerships, label relations, and marketing. As a partner-friendly company, 7digital seeks to expand its growing base of clients and strategic partners that currently includes T-Mobile USA, HP, RIM, Samsung, Songbird, AOL?s Winamp, and Fantrail. Through the use of 7digital?s platform, hundreds of worldwide clients have built music initiatives on 7digital?s API platform (Application Programming Interface), designed to simplify the integration of music into third party efforts.

?The last two years have been full of constant change in the digital landscape, and we?ve been steadily building our profile and partnerships in the US and Canada,? comments Ben Drury 7digital CEO and co-founder, ?Vickie has led these efforts and will now lead an expanded presence with new staff and office. We look forward to being able to provide enhanced services to our customers and partners in 2012.?

Commenting on the North American business, Nauman says, ?The US market has its own dynamics and needs, and as the digital music market evolves, it?s getting more difficult to find neutral, strategic partners, which is precisely the role we fulfill. We have now established a significant number of North American-based clients as well as a growing business selling 320K MP3s on 7digital.com. Everyone wants a best-in-class experience, a complete music catalog, and a mix of music ownership and cloud-based services, and we are uniquely positioned to deliver this globally.?

Nauman joined 7digital from Sonos, where she established global partnerships between wireless digital music system for the home with music companies Last.fm, Spotify, SiriusXM, RadioTime, Pandora, Rhapsody, Napster, and Deezer. Prior to Sonos, Nauman managed an international and media-focused consultancy CrossBorderWorks, created the online services for boutique Seattle radio station KEXP, served on the product team of MusicNet at RealNetworks, and earned a 2006 MBA through the London School of Economics, New York University, and HEC-Paris, in the collaborative executive program TRIUM.

All technology and platform operations will remain in the company?s London headquarters and a small team will manage all partnerships and business in the North American market. Nauman will remain based in Los Angeles, and the team will likely have presence on both the west and east coast as well as maintain its dedicated North American team in London.

###
Notes to Editors

About 7digital
Established in 2004, 7digital.com is a leading, globally operating digital media delivery company based in London. Through 7digital?s download store (www.7digital.com) and mobile applications consumers can access over 17,000,000 legal high quality MP3 music tracks from all major and indie labels at competitive prices across Europe, Asia-Pacific and North America.

Combining 7digital?s secure and robust technology platform with the broadest agreements in the digital media industry, the company provides comprehensive digital services to a wide range of partners around the world. 7digital partners with diverse clients across consumer electronics, carriers, music industry, artists, brands, retailers, and agencies to harness the power of digital entertainment to engage customers.

The 7digital API (Application Programming Interface) allows developers to use and license the 7digital technology platform with over 16,000,000 tracks to create new music websites, applications and devices or to integrate music into existing services.

7digital has provided digital media services to hundreds of international partners including T-Mobile USA, HP, RIM, Sony, Samsung, Toshiba, Ubuntu, Shazam, Last.fm, Winamp, Songbird, HMV, Universal Music, EMI, Warner Music and Sony Music.

For more information visit www.7digital.com/business

7digital Media Contacts:

US:
Laurie Jakobsen
Jaybird Communications
Tel: 646-484-6764
Email: laurie@jaybirdcom.com

Europe:
Simon Hilliard / Roberta Main-Millar at Racepoint Group UK
Tel: 020 8811 2137 / 2132
Email: 7digitaluk@racepointgroup.com

In a sign of increasing collaboration between journalism groups, NBC on Tuesday will announce a series of partnerships between its television stations and nonprofit news organizations.

Effectively immediately, NBC’s station in Chicago will work with The Chicago Reporter blog and magazine; its station in Philadelphia, with WHYY, a public radio station, and its community site NewsWorks; and its station in Los Angeles, with KPCC, a public radio station. All 10 of NBC’s stations will at times collaborate with ProPublica, the acclaimed investigative journalism nonprofit organization.

The partnerships — which NBC said would help its stations better cover their cities — are a byproduct of Comcast’s successful bid to gain control of NBC Universal, including the 10 television stations owned by NBC. As the government considered the bid last year, Comcast made a number of promises about news coverage, one of them being that it would set up such partnerships with at least five of its stations. The proposal was modeled after the relationship between the NBC station KNSD in San Diego and the local Web site voiceofsandiego.org.

The government subsequently put the partnership commitment in writing, and NBC started a casting call of sorts last May. Somewhat surprisingly, the company did not link exclusively with Web sites like voiceofsandiego.org, which is nationally recognized for its highly local journalism. Instead, it also teamed up with radio and print outlets. The Chicago Reporter, for instance, is a blog and bimonthly magazine that focuses on race and poverty issues and specializes in data analysis. WHYY, an affiliate of NPR, operates NewsWorks, a hyperlocal news site.

“We cast a wide net,” said Valari Staab, the president of the NBC-owned television stations. She said the local stations “looked for what organizations we thought could contribute unique content we couldn’t otherwise have.”

The partnerships will in some cases allow the stations to cover more news and conduct more investigations without adding more staff directly.

“The true value of the partnerships is helping local television affiliates, which have cut back under tough times in recent years, fill their many broadcast hours with valuable public service journalism,” said Scott Lewis, the chief executive of voiceofsandiego.org. At the same time, he said, the partnerships provide nonprofit news organizations with a new outlet for that journalism and an ability to “recover part of the costs in the process.”

NBC is making a donation to each of the partners. Ms. Staab would not specify the amounts. She said she anticipated that in relationships like the ones to be announced Tuesday, “different people will bring different things to the table.”

Independent local news sites might have data-mining experts who identify trends, and then “our people will make television out of it,” she said, “and talk to the people they need to talk to and get responses to what’s shown in that data.”

NBC has taken several steps this year to shore up its 10 local stations, which suffered from financial cuts before Comcast took over the company. It has added newscasts, replaced live television trucks and hired reporters in most of its markets.

Why not civil partnerships in Anglican churches?

By Rev John Richardson
http://ugleyvicar.blogspot.com/2011/12/for-magazines-why-not-civil.html
December 6, 2011

To answer this question we must first venture into territory unfamiliar to all but a very few.

Most people imagine that this is simply a matter of inclusion, allowing the gay and lesbian minority to enjoy the privileges of the straight majority. Church ceremonies, they believe, should be open to everyone, and indeed it is the governments clear intention that this should be so.

But as experts in this field are well aware, things are far from being that straightforward. One such is Professor Adrian Thatcher, a Research Fellow in Applied Theology at the University of Exeter, and a strong advocate of change in church policy.

In a paper presented to the 2011 Inclusive Church conference, he wrote as follows:

… there are other sexualities than straight and gay. Intersex, bisexual and transgender people, are generally excluded from the rigid and inadequate frameworks within which the Church discusses sexuality …

And he added,

… sexual inclusiveness will not be complete until they too feel wholly affirmed as members of the Body of Christ. (Gender and the Gospel, Nov 2011, p1)

What Thatcher says about the Church, however, is clearly the intention of others for society in general. For them, the idea that the world divides into either straight or gay and lesbian is already outmoded. Instead, human sexuality has a multitude of expressions.

According to Thatcher, new research in Classics, New Testament Studies, Medical History and Queer Theory are revolutionizing what has until now been a sterile theological discourse.

And if youve never heard of Queer Theory, you really dont understand the current debate.

The fact is that in the long term the aim is not simply the inclusion of people in the existing institution of marriage but to go on broadening the patterns of relationships society accepts and endorses. Marriage, Thatcher notes, is a flexible institution that has incorporated many changes. The only question is whether marriage can accommodate the change that some same-sex partners want (p14). If not, then presumably other relationships will be have to be found.

It is against this background that we must understand the position of the Church of England. For Anglicans, marriage is not a flexible institution but a divinely ordered one, which ultimately reflects the relationship between God and his people.

What makes a marriage marriage is two things: covenant and sex.

Where there is no covenant – no promise to have and to hold … till death us do part – there is either promiscuity (expressed in the prevalence of sex outside marriage) or widespread unfaithfulness (leading to divorce and marital breakdown).

Within the marital covenant, however, sexual activity is properly channelled – to bearing children and building love.

But as even Adrian Thatcher recognizes, sex is inextricably linked with reproduction: Beings who reproduce, he writes, need to be sexed, meaning they must have one of the two genders (p9, his emphasis). Thus although health issues and age may impose limits on fertility, sexual intercourse is intercourse between two people of opposite sexes. Same-sex sex, by contrast, is a contradiction in terms.

The Church of England has therefore taken the view that it will only recognize and bless opposite sex unions as having the status of marriage. And insofar as civil partnerships are already widely treated as gay marriage (as any follower of Coronation Street will know), it would thus be inappropriate for Anglican ministers to conduct them in church.

Ultimately, therefore, those who question the Churchs stance need to ask where they themselves would draw the line. The answer matters not just to us but to the future of our society.

END

I recently wrote an article on the Investors View of Master Limited Partnerships (here). The article had an extremely high interest level and many readers chose to add comments. Many of the comments/questions involved whether or not MLPs are well suited for IRAs.

There were a number of comments that werent all in concert with the tax problems associated with MLPs. It seems best to devote this article to a more in depth discussion.

The problem in including an MLP in an IRA is based on a section of the IRS Code (Section 512(a)(3)) that can impose taxes on entities that are otherwise tax exempt. This is commonly referred to as Unrelated Business Taxable Income-UBTI. This tax would include entities such as an IRA or Roth (even pension and Keogh Plans). Before I go into the MLP specifics, it might be of help if we discussed what this section is about.

Lets say your local Church regularly runs a Cake Sale to raise money. After doing this successfully for a while the Church decides to open a bakery and make even more money. They hire staff and even though all the profit goes to the Church for its good work, they are in the bakery business. Now, a bakery business is quite different than a cake sale. The IRS took the position that regular engagement in a business gives tax-exempt entities an unfair advantage over for-profit business and introduced UBTI to even the playing field. They did so by imposing a tax on the earnings, even though they would accrue to the Church. This tax is imposed on tax-exempts that regularly engage in a business (with some exceptions that arent relevant to this article).

When an IRA buys units in an MLP it becomes a partner in the MLPs business. Though the units may be a very small minority interest, it is an interest nonetheless. As a result a proportionate share of the MLPs net earnings are taxed to the IRA. There is a $1,000 annual exclusion that helps somewhat.

Many readers that have MLPs in their IRAs noted that they dont seem to have much of an income to report. As a result they conclude it is not so much of a problem. That conclusion does not tell the whole story. Lets look a little closer.

Lets say that $25,000 is invested in an MLP. The distribution (return of capital) is 6% per year ($1,500). This is not subject to UBTI as return of capital is not taxable income. Now, the MLP does make money from its operations. The net income represents a pass-through to the unit holder. Your share of the gross income might be $5,000 and your share of cash expenses (salaries, interest, etc.) might be $3,500. So far, the share of the net income is $1,500. This is before application of certain accounting adjustments.

You wont see this $1,500 reported on the K-1 as net income subject to UBTI. Thats because the MLP has some accounting tools, namely depreciation, depletion allowances and similar tools that further reduce currently taxable income.

Assuming these tools provide another $1,400 in expense deductions, your taxable earnings are reduced to just $100. It is this amount that is reported on the K-1 and is within the $1,000 annual limit.

Unfortunately, there is a catch. This additional $1,400 is recaptured when you dispose of the units and classified as ordinary income. That means that though the current MLP earnings are shielded, the shield is taken off at disposition and all previous earnings that were shielded are now brought back in as ordinary income. It is this income that is now subject to UBTI.

Lets say that you held your units for 10 years and the MLP had $15,000 in earnings. Of those earnings $14,000 was shielded by these tools and is now subject to recapture.

Lets say that you then sell the units for $35,000. In your mind you have a $10,000 capital gain which is not taxed to the IRA.

In fact thats not how the IRS tallies the transaction. They would consider $14,000 as recapture subject to ordinary income and therefore UBTI. Only the balance is either capital gain or cost basis and not subject to tax. If you now withdraw these after UBTI-taxed amounts from your IRA they will be taxed again. This is not the result most people would want.

Whether anyone decides on including an MLP in their IRA is a choice only they can make. It is important that their choice be an informed choice and so they need to be aware of the possibility of current AND/OR deferred tax obligations. The investor should not be swayed just by the current K-1 because it doesnt tell the whole story.

Additional note: Though this article focused on the UBTI issues in an IRA, the same tax issues exist for MLPs in taxable accounts. That is, on disposition of the units, your sales price will include ordinary income, capital gains and cost basis recovery.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.