DALLAS -- Engaged in a flap with the Internal Revenue Service over arbitrage profits, the Oklahoma City school district board is delaying the sale of $90 million in general obligation bonds for capital improvements and equipment.

In a resolution earlier this week, board members agreed to postpone the bond sale, which was scheduled Nov. 16, to an unspecified date.

District spokesman L.D. Barney said the board was concerned about the recent downturn in the bond market. In addition, members decided the district needed more time to finish legal, printing, and other kinds of work involved in the issue, Barney said.

"There is more time needed to complete the process," Barney said. The bond issue was approved by voters Oct. 12.

Barney and other district officials dismissed speculation that the delay was precipitated by the board's refusal last month to pay the IRS arbitrage profits, penalties, and interest on bonds sold during 1990-91.

The action prompted concern fund managers, industry sources said. They said investors could penalize the school district by bidding less for the bonds.

In addition, the sources said the IRS could blacklist the district and ban it from certifying the issues tax-exempt in the future, although this has not happened in the past.

However, school officials said their action should have no legal repercussions on the bond sale, and expressed little concern about market penalties.

"It's an independent issue," said Cleeta John Rogers, the district's counsel.

Rogers said the board does not plan to remove its financial adviser, Stifel, Nicolaus & Co., from working on the issue, despite a growing dispute between the board and Stifel.

In the meantime, representatives from Moody's Investors Service and Standard & Poor's Corp. visited Oklahoma City on Tuesday to gather information for their ratings.

The Oklahoma City School District board is scheduled to discuss when to sell the $90 million issue at a meeting Monday, Barney said.

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