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Private Activity Bonds
Private Activity Bonds are tax-exempt bonds that can be issued for specific purposes. The federalgovernment grants annual allocations of this bonding authority to states under the Tax Reform Act of 1986. The State of Colorado established its Private Activity Bond (PAB) allocation program by statute (24-32-1701 et seq, C.R.S.) to provide for the allocation of Colorado's PAB authority.
The primary purpose of Colorado's PAB program is to meet federal requirements in the Tax Reform Act of 1986 and also to:
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Establish an orderly and equitable process of allocating tax-exempt PAB issuance authority.
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Encourage private investment in housing, higher education, jobs, solid and hazardous waste treatment, and water and sewer facilities.
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Encourage development in areas of the state where housing, higher education, jobs, and certain infrastructure improvements are most needed.
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Encourage the increase or maintenance of the local tax base.
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Maximize the use of the state's tax-exempt PAB allocation.
Private Activity Bonds are tax-exempt bonding authority, used either to create a loan for a project at a tax-exempt interest rate, or to create a mortgage credit certificate.
Eligible Grantees:
The Statewide Balance is available to (1) local issuers (ie, governments) not receiving a direct allocation or (2) state authorities and designated local governments that need additional allocation.
Eligible Activities:
- Qualified residential rental projects* - Bonds may finance new construction or acquisition/rehabilitation of housing for low/moderate income persons.
- Single-family mortgage revenue bonds (SFMRB) - Bonds sold by local and state agencies for mortgages for persons with low and moderate incomes.
- Mortgage Credit Certificates (MCC) - Local issuers may use a bond allocation as mortgage credit certificates for qualified homebuyers.
- Student loans provide low interest loans to eligible students at institutions of higher education.
- Manufacturing "small issue" industrial development bonds (not to exceed $10,000,000) - Bonds sold for construction of manufacturing facilities that cause a change in the condition of goods or products.
- Qualified redevelopment bonds - Bonds sold to acquire property in blighted areas; prepare land for redevelopment; and relocate occupants of structures on the acquired property.
- Exempt facility bonds - Hazardous waste facilities, solid waste disposal facilities, water and sewer facilities, mass commuting facilities, local district heating and cooling facilities, local electric energy or gas facilities, and multifamily housing bonds.
- Qualified 501(c) (3) bonds - For use by non-profit hospitals and private universities.
Colorado's Private Activity Bond program holds workshops around the state each summer. These classes are designed for local officials, potential developers & others who want to learn how to best utilize PAB financing to benefit their communities, especially given all the recent changes in our economy and the bond market. Please see the brochure for locations and registration information.
2012 Annual Private Activity Bond Report
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