Post on 14-Apr-2017
UNDERSTANDING THETAX-EXEMPT FINANCING PROCESS
Understanding some
basic conceptsApplicable
sourcesof lawParties to a typicaltaxable
financing
Parties to a typical tax-
exempt financing
Potential issuers of tax-exempt
debtPurposes tax-exempt debt
may be issued
UNDERSTANDING THETAX-EXEMPT FINANCING PROCESS
Potential purchasers of
tax-exempt debtPotential borrowers
of proceedsRestrictions on
tax-exempt debt
UNDERSTANDING THETAX-EXEMPT FINANCING PROCESS
Understanding Some Basic Concepts
“Tax-Exempt”An organization which is exempt from paying state or federal income taxes.
Interest on a debt which is exempt from federal or state income taxes.
“Revenue Bonds”Revenue Bonds are payable only from specified revenues.
Revenue bonds may bear interest at fixed rates or variable rates.
Applicable Sourcesof Law
Federal Tax LawFederal tax law determines whether the interest on obligations validly issued under State law is exempt from federal income tax.
State Tax Law
State law determines the validity of obligations.
In limited cases, State law also determines whether the interest on obligations validly issued under State law is exempt from State income tax.
Parties to a Typical Taxable Financing
Parties to a Typical Taxable Financing
Lender
Borrower
Parties to a Typical Tax-Exempt Financing
Purchaser (Lender)
Borrower
Trustee as representative of purchasers
Credit Enhancer
Issuer
Who are the Potential Issuers of
Tax-Exempt Debt
Must be a governmental or quasi-governmental unit
Health Authorities
Cities, Towns and Villages
Redevelopment Authorities
Housing Authorities
Community Development Authorities
For what purposesmay tax-exemptdebt be issued
Hospitals ClinicsContinuing
Care Facilities
Community-Based
Residential Facilities
Private Colleges
and Universitie
s
Federally qualified health centers
K-12 Schools
Research Facilities
Nursing Homes
I designed this PowerPoint Presentation about some of the basics of tax-exempt bond financing. The information contained in this slideshow is incomplete and may be out-of-date at the time of viewing. April L. Trickelwww.linkedin.com/in/apriltrickel