private activity bond

(redirected from Private Activity Bonds)

Private Activity Bond

A tax-exempt municipal bond in which a local government entity is seeking to raise money for a private company. A municipality issues a private activity bond when it wishes to attract a business and the jobs it brings to the area, especially when the business may be otherwise unable to obtain financing for the project. The municipality issuing the bond must be able to prove that a public benefit derives from the private activity bond in order to qualify for tax-exempt status. Private activity bonds generally are not guaranteed by the revenue of the municipality.

private activity bond

A type of municipal bond issued when funds are to be used for a nonessential purpose. Private activity bonds pay taxable interest unless specifically exempted by the federal government. Private activities for which tax-exempt bonds may be issued include airports, electric and gas distribution systems, government mass transportation systems, hazardous waste disposal facilities, solid waste disposal facilities, and student loans. Small issues of industrial development revenue bonds and nonprofit college and hospital bonds are also permitted. Except for nonprofit college and hospital bonds, interest from tax-exempt private activity bonds is subject to the alternative minimum tax. Also called nonessential function bond, private purpose municipal bond. Compare essential function bond. See also 501(c)(3) bond, municipal bond, small-issue bond.
References in periodicals archive ?
Additionally, we are very appreciative that the final agreement continues to allow colleges to finance infrastructure projects with private activity bonds.
Securities and Exchange Commission, affirmed the 'BBB-' ratings on approximately $100 million of senior private activity bonds (PABs), issued by North Carolina Department of Transportation (NCDOT) on behalf of I-77 Mobility Partners LLC (the project company), and a $189 million subordinated loan granted under the Transportation Infrastructure Finance and Innovation Act (TIFIA) issued by the project company.
Under the Trump plan, broadband facilities in rural areas-including small cell and Wi-Fi attachments that are used to avoid environmental reviews required for large towers-would also be eligible to receive funding through Private Activity Bonds, which allow private projects to be pursued while benefiting from "the lower financing costs of tax-exempt municipal bonds.
Additionally, Heller and a bipartisan group of senators introduced the Public Buildings Renewal Act, a bill that enables communities to establish public-private partnerships (P3s) for needed public infrastructure improvements, such as in schools or public universities, by creating $5 billion in new private activity bonds for public buildings.
Another product is a 4-percent tax credit, but that is paired with private activity bonds.
We welcome the passage of this bill, the first meaningful tax reform effort in many years," said Michael Johnson, president and CEO of the National Stone, Sand and Gravel Association (NSSGA], "In addition to supporting a corporate tax rate of 21 percent, NSSGA actively worked to protect the tax-exempt status of private activity bonds for state and local infrastructure projects.
The continuation of private activity bonds should also support medical property development.
Significant changes were made to the pass-through provisions, Alternative Minimum Tax, and private activity bonds during the legislative process.
more in line with taxation of other countries -- but it is concerned about a House proposal to eliminate private activity bonds and advanced refunding in the municipal bond market and the Senate's FIFO proposal -- first in first out -- which would be "the first time in the history of the U.
The loss of the tax exemption for private activity bonds would pretty much constitute a death blow to the 4 percent credit.
In the Senate, GFOA standing committee members discussed tax reform, including preserving advance refundings and private activity bonds, with Wisconsin Senator Ron Johnson, Kansas Senator Pat Roberts, Louisiana Senator Bill Cassidy, and Texas Senator Ted Cruz.
The bureau's financing and funding tools include loans under the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Railroad Rehabilitation and Improvement Financing program, private activity bonds, and the Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies (FASTLANE) grant program.