Real estate finance company, Red Stone Partners, has unveiled a $250 Million
Tax-Exempt Bond Fund.
The acquisition received
tax-exempt bond financing provided through the New York City Housing Development Corporation (HDC).
This became an even larger problem with the advent of
tax-exempt bond mutual funds holding an increasing proportion of
tax-exempt bonds in the market.
In 1991 the Industrial Development Board of Nashville (IDB) and the Metropolitan Government of Nashville (Metro) approved a $15 million
tax-exempt bond issue for David Lipscomb University, a liberal-arts institution affiliated with the Churches of Christ.
The city has held similar public hearings and
tax-exempt bond approvals in the past, including one for the YMCA in 1993, the Bouquet Canyon Seniors Housing project in 1997 and two in 2000, for the Child and Family Center and Henry Mayo Newhall Memorial Hospital.
In addition,
tax-exempt bond financing for a not-for-profit organization usually requires that an amount of cash equal to approximately one year's total debt service payments.
We then assisted Fairview in floating a $52 million
tax-exempt bond issue to fund the development of the project.
If it were an airport, a toll road, or a water system serving the public (as opposed to simply a few private users), it would qualify for
tax-exempt bond financing.
For example, in January you could purchase a
tax-exempt bond or fund yielding 5.
Under section 141(b)(1) of the Internal Revenue Code (IRC), no more than 10 percent of
tax-exempt bond proceeds (5 percent for tax-exempt entities) may be applied to any "private business use," which is defined to mean use (directly or indirectly) in a trade or business carried on by any private party.
If the taxpayer is in the 28% marginal tax bracket, multiplying the interest rate of the taxable bond by 72% will make it comparable with the
tax-exempt bond.
The report contains eight provisions that would impact the
tax-exempt bond sector.
