Bond Finance Resource Center
Bonds are the bedrock of public development finance. In its simplest form, a bond is a debt or a loan incurred by a governmental entity. The bonds are issued and sold to the investing public, and the proceeds are typically made available to finance the costs of a capital project. If the bonds are being issued for the benefit of a non-governmental borrower, the proceeds are often loaned to such borrower, and the borrower then makes loan payments corresponding to when principal and interest are due on the bonds. Bondholders receive interest over the term of the bonds, and such interest is often exempt from federal, state and local income taxes. The tax-exempt status of certain bonds makes them an attractive investment option for investors.
There are two types of bonds: Governmental Bonds (GOs) and Private Activity Bonds (PABs). GOs may be used for many public purposes (e.g., highways, schools, bridges, sewers, jails, parks, government equipment and buildings, etc.). Private entities may not significantly use, operate, control or own the facilities that are being financed. GOs benefit the general public, while PABs benefit private entities. A bond issuer’s objective is to raise capital at the lowest cost. The tax-exempt treatment of GOs makes them the lowest cost option. However, various “private activity tests” serve to limit the amount of private sector involvement with facilities that are financed with GOs. PABs permit a larger degree of private sector involvement, but they do so at a higher interest rate. In the economic development industry, PABs are the development finance mechanisms that drive projects involving both the public and private sector.
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-Types of Bonds
-Industrial Development Bonds (IDBs)
Industrial Development Bonds (IDBs), which are often referred to as Small Issue Manufacturing Bonds, are issued for qualified manufacturing projects, with a total bond issuance limit of $10 million. These bonds can support expansion and investment in existing manufacturing facilities, as well as the development of new facilities and the purchase of new machinery and equipment.
Industrial Development Bond FinancingMembers only Login
This resource deals with tax-exempt bond financing. This is a special form of financing available for construction of new manufacturing facilities, for an expansion of existing manufacturing facilities and for rehabilitation of existing manufacturing facilities.
Built by Bonds
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This unique publication from CDFA provides the definitive argument for tax-exempt bond finance, which is a critical tool for American economic development and job creation. Using both qualitative and quantitative analysis, Built by Bonds demonstrates the proven efficiency of tax-exempt bonds.
-Renewable Energy / Energy Efficiency Bonds
Financing Low-Carbon Buildings and Energy Efficiency in the Green Bond Market
There are substantial opportunities to leverage green bonds to finance low-carbon buildings and energy efficiency in the country. Issuance across the world shows that capital markets can be accessed to finance energy efficiency and buildings. Financing climate adaptation and resilience also presents opportunities.
Growing Green Bond Markets: The Development of Taxonomies to Identify Green Assets
Green bond guidelines are being implemented across the globe to support issuers and investors in selecting and reporting on suitable projects. However, a gap of adoption of green definitions remains, suggesting the need to develop consistent approaches that can increase the capability of issuers and investors to identify eligible green and sustainable assets.
Building Resiliency Through Green InfrastructureMembers only Login
Cities have recently integrated more green infrastructure strategies into their climate resiliency planning. Creating climate-resilient cities takes more than a series of infrastructure investments; more than sea walls and permeable pavement. It takes investment in people. Those most vulnerable to the effects of climate change are those without living wages or access to political power—very often communities of color.
Growing the U.S. Green Bond MarketMembers only Login
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The United States’ deteriorating infrastructure is woefully underprepared to address the challenge of adapting to climate change. The funding gap has presented an opportunity for global capital markets to create investment vehicles that provide long-term yield, while also helping communities mitigate or adapt to the effects of global warming. One such vehicle that has arisen in the past decade is the green bond: a traditional fixed income security with an additional layer of environmental sustainability.
Primer On Monitoring Post-Issuance ComplianceMembers only Login
This audio cast from the IRS covers the importance of implementing post-issuance compliance procedures and regularly monitoring those procedures to preserve the status of tax-advantaged bonds over the entire life of the bonds. Tax-advantaged bonds, includes tax-exempt bonds, tax credit bonds, and direct-pay bonds.
Compliance Guidelines for Tax-Exempt BondsMembers only Login
This document explains the guidelines and practices that Stanford follows to remain in compliance with rules relating to tax-exempt bonds. Compliance is required both upon the issuance of the bonds and during the post-issuance phase which extends through and beyond the life of the bonds.
Post-Issuance Compliance ChecklistMembers only Login
The National Association of Bond Lawyers (NABL) and the Government Finance Officers Association (GFOA) have jointly developed the following checklist to assist bond counsel in discussing with issuers and conduit borrowers, as applicable, post issuance compliance matters.
Timing of Annual Financial DisclosuresMembers only Login
The MSRB’s report finds that the majority of issuers had a commitment date of 180 days or 270 days from the end of the issuer’s fiscal year. Over the last several years, the number of commitments of 180 days has generally decreased while there has been an upward trend in commitments of 270 days.
Conduit Issuer ResponsibilitiesMembers only Login
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This is part two, Conduit Issuer Responsibilities, of a three-part series for conduit issuers of tax-exempt financing This module focuses on some of the responsibilities conduit issuers have in ensuring, compliance necessary to retain the tax-advantage status of the bonds they issue.
CDFA’s highly acclaimed Intro Bond Finance Course
provides an in-depth look at governmental and qualified private activity bonds, with a focus on industrial development bonds (IDBs), 501(c)(3) non-profit bonds, exempt facility bonds, and other special bond programs authorized by the federal government.
The Intro Bond Finance WebCourse will address the basic requirements for issuing a bond, the rules and regulations that govern tax-exempt and taxable bonds, the major players involved in a bond transaction, and the roles and responsibilities of both public and private sector participants. Plus, learn about the tax-exempt bond market, the ratings process, how to buy and sell bonds, and ongoing continuing disclosure.
The Advanced Bond Finance Course
is designed for professionals who already have an understanding of tax-exempt financing and seek detailed instruction on complex financing techniques, including the application of financial derivatives, advance refundings, investing bond proceeds and how to spot arbitrage issues. This course is an ideal opportunity to enhance your knowledge and maximize your community's ability to finance economic development using tax-exempt bonds.
CDFA - PFM Capital Markets Webinar Series: What Your Bond Finance Team Worries About
During this webinar, Bethany Pugh, Managing Director at PFM, Todd Fraizer, Managing Director at PFM, Austin McGuan, Director, Stifel Nicolaus & Company, Matthew Eisel, Managing Director at PFM, and Robert McCarthy, Partner with Bricker & Eckler LLP discussed what bond finance teams across the country worry about.