Tax-Exempt Bonds, 2007

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by Emily Shammas

ax-exempt bonds are issued by State and local

governments to finance a variety of projects,

including construction or improvement of essential facilities and infrastructure, as well as to

help provide services for citizens.1 Bonds issued by

State and local governments are classified as either

“governmental” or “private activity,” depending on

whether the proceeds are used and secured by public

or private entities and resources.

The total amount of tax-exempt bonds issued by

State and local governments increased 20.6 percent

between Calendar Years 2006 and 2007, from $428.3

billion in 2006 to $516.7 billion in 2007. For 2007,

governmental bonds accounted for $379.3 billion

(73.4 percent) of total tax-exempt bond proceeds,

while private activity bonds accounted for the remaining $137.4 billion (26.6 percent).

When a bond is issued, the issuer is obligated to

repay the borrowed bond proceeds, at a specified rate

of interest, by some future date. For Federal income

tax purposes, investors who purchase governmental

bonds and certain types of private activity bonds are

allowed to exclude the bond interest from their gross

incomes.2 This tax exemption effectively lowers the

borrowing cost incurred by tax-exempt debt issuers,

since holders of tax-exempt bonds are generally willing to accept an interest rate lower than that earned

on comparable taxable bonds. The interest exclusion

for tax-exempt bonds is not allowed for arbitrage

bonds and bonds not in registered form.3, 4

Emily Shammas is an economist with the Special Studies

Special Projects Section. This data release was prepared

under the direction of Melissa R. Ludlum, Chief.

Both governmental and private activity bonds

are obligations issued by or on behalf of State and local governmental units; it is the use of proceeds that

differentiates the two. Governmental bond proceeds

finance essential government operations, facilities,

and services that are for general public use, and the

debt service on these bonds is paid from general governmental sources. Private activity bonds are issued

by or on behalf of local or State governments for the

purpose of financing the project of a private user.

Since the private activity bond proceeds are used by

one or more private entities, the debt service is paid

or secured by one or more private entities. Specifically, section 141(a) of the Internal Revenue Code

provides that the term private activity bond means

any bond issued as part of an issue which meets: 1)

the private business tests set forth in IRC section

141(b); or 2) the private loan financing test set forth

in IRC section 141(c).5 Interest income earned on

most private activity bonds is taxable. However,

over the years, Congress has deemed certain types

of private activities necessary for the public good,

and, therefore, interest income earned on “qualified

private activity bonds,” as defined in IRC section

141(e), is generally tax-exempt.6, 7

Over time, the list of qualified activities and

facilities eligible for tax-exempt bond financing has

been expanded. Appendix A provides an historical

overview of major tax-exempt bond legislation, dating back to the Tax Reform Act of 1986. Appendix

B covers the most recent bond legislation, the American Recovery and Reinvestment Act of 2009. The

Act (ARRA09) included several new types of taxexempt and tax-credit bonds intended to encourage

investment in infrastructure projects and job creation.

The term “State” includes the District of Columbia and any Possession of the United States.

In addition, for State income tax purposes, most States allow for the exclusion of interest on bonds issued by government agencies within their own States, thus increasing

the benefit to bondholders.

3 An arbitrage bond is one in which any portion of the proceeds is used to purchase higher-yielding investments, or is used to replace proceeds which have been used to

purchase higher-yielding investments. Certain rules allow for arbitrage earnings with respect to tax-exempt bonds within a specified time period, so long as these earnings

are rebated to the Department of the Treasury.

4 A registered bond is defined as: “a bond whose owner is designated on records maintained by a registrar, the ownership of which cannot be transferred without the

registrar recording the transfer on its records.” (From the Municipal Securities Rulemaking Board’s Glossary of Municipal Securities Terms http://www.msrb.org/

msrbl/glossary/. See also IRC section 149(a) for additional information.)

5 The private business tests of IRC section 141(b) define a bond as a private activity bond if both of the following criteria are met: 1) more than 10 percent of the bond

proceeds are used for a private business purpose; and, 2) more than 10 percent of the bond debt service is derived from private business use and is secured by privately used

property. The private loan financing test of IRC section 141(c) defines a bond as a private activity bond if the amount of proceeds used to (directly or indirectly) finance

loans to nongovernmental persons exceeds the lesser of $5 million or 5 percent of the proceeds.

6 Tax-exempt private activity bonds include “exempt facility bonds,” qualified mortgage bonds, qualified veterans’ mortgage bonds, qualified small issue bonds, qualified

student loan bonds, qualified redevelopment bonds, and qualified section 501(c)(3) bonds (all of which are defined in the Explanation of Terms section of this article).

Examples of exempt facilities include airports; docks and wharves; sewage facilities; solid waste disposal facilities; qualified residential rental projects; and facilities for the

local furnishing of electricity or gas. Qualified section 501(c)(3) bonds are issued by State and local governments to finance the activities of charitable and similar organizations that are tax-exempt under IRC section 501(c)(3). The primary beneficiaries of these bonds are hospitals, universities, and organizations that provide low-income

housing or assisted living facilities.

7 The interest income from qualified private activity bonds (other than qualified section 501(c)(3) bonds) is subject to the alternative minimum tax requirements.

173

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Tax-Credit Bonds

ax-credit bonds are different from taxexempt bonds in that they are not interestbearing obligations. In lieu of receiving

periodic interest payments from the issuer, a

bondholder is generally allowed an annual income

tax credit while the bond is outstanding. The

amount of the credit is determined by multiplying the bond’s credit rate by the face amount on

the holder’s bond. The credit rate on the bonds is

determined by the U.S. Secretary of the Treasury

and is an estimate of the rate that permits issuance

of such bonds without discount and interest cost to

the qualified issuer. The credit is includable in the

bondholder’s gross income (as if it were an interest payment on the bond), and it can be claimed

against regular income tax liability and alternative

minimum tax liability.

Among other provisions included as part of

the Taxpayer Relief Act of 1997 was the creation

of the first type of tax-credit bond—the Qualified

Zone Academy bond. In 2005, two additional

types—clean renewable energy bonds and Gulf

tax-credit bonds—were created. In prior years,

the lack of information reporting requirements and

generally low issuance volumes prevented SOI

from publishing separate data for tax-credit bonds.

More recently, issuers of tax-credit bonds were

required to submit to the IRS information filings

similar to those required of tax-exempt bond issuers. Calendar Year 2007 marks the first issue year

for which significant numbers of returns were filed

for tax-credit bonds.

In 2007, State and local governments issued

$144 million in new money long-term tax-credit

bonds. These bonds were primarily issued as:

Bond Volume, by Term of Issue

174

Bonds are classified as either short-term or longterm, depending on the length of time from issuance

to maturity. Bonds having maturities of less than

13 months are typically classified as short-term,

while those having maturities of 13 months or more

are classified as long-term. Governmental bond issues totaled $379.3 billion in 2007, an 18.8-percent

Qualified Zone Academy bonds or clean renewable energy bonds.

The five States with the highest issuance of

tax-credit bonds were Louisiana, Oregon, Kansas,

Arkansas, and Massachusetts. Combined, they issued 23.6 percent of the new money long-term tax

credit bonds.

Total Tax-Exempt and Tax Credit Bonds, 2007

[Money amounts are in millions of dollars]

Type of Bond

Number

Total [1]

Tax-Exempt Bonds

Tax Credit Bonds

Amount

(1)

(2)

29,714

29,633

516,901

516,757

144

New Money, Long-Term Tax-Credit Bonds, by

State of Issue and Bond Purpose, 2007 [2]

[Money amounts are in millions of dollars]

State

Total tax

credit bonds [1]

Qualified

zone academy

bonds [2]

Clean renewable

energy bonds [2]

Number Amount Number Amount Number Amount

(1)

(2)

(3)

(4)

(5)

(6)

All States

144

119

Arkansas

Kansas

Louisana

Massachusetts

Missouri

Oklahoma

Oregon

Wisconsin

All other States,

combined

105

[1] Includes combined data from all governmental and private activity bond returns

(Forms 8038-G and 8038) combined.

[2] Includes data from governmental and private activity bond returns (Forms 8038-G

and 8038) that specifically referenced "qualified zone academy" bonds or "clean

NOTE: Detail may not add to totals because of rounding.

increase from the $319.4 billion issued in 2006.

Long-term bonds accounted for $316.3 billion, more

than 83 percent of all governmental bond proceeds.

Long-term bonds are generally used to finance construction or other capital improvement projects.

The remaining $63.1 billion of governmental

bonds were issued for short-term projects. Most

short-term governmental bonds are issued in the

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

form of tax anticipation notes (TANs), revenue anticipation notes (RANs), or bond anticipation notes

(BANs). TANs and RANs generally mature within 1

year of issuance, at which time the proceeds are paid

from specific tax receipts or other revenue sources.

The proceeds of a BAN are typically used to pay

for startup costs associated with a future, long-term

bond-financed project. A renewal BAN can be issued

on maturity of an outstanding BAN, until, eventually, the proceeds of the future bond issue are used to

pay off, or retire, the outstanding BAN. Combined,

TANs, RANs, and BANs comprised 92.1 percent of

all short-term governmental bond proceeds for 2007.

Tax-exempt private activity bond issues totaled

$137.4 billion in 2007, a 26.2 percent increase from

the $108.9 billion issued in 2006. Short-term bonds

accounted for $0.9 billion, only 0.7 percent, of the

total private activity bond proceeds for 2007.

Figure A1

Volume of Long-Term Tax-Exempt Governmental Bonds

Issued, by Type and Issue Year, 2002-2007

Billions of dollars

350

250

$275.7

Long-Term Bond Volume, by Selected Purpose

Figure B presents the composition of long-term taxexempt bond proceeds, by selected purpose as well

as type of issue, for both governmental and private

$272.2

$269.5

$200.1

200

150

$154.8

$148.1

$157.7

$159.8

$180.2

$116.1

$151.6

100

$127.6

$127.9

$111.8

$92.1

2002

2003

2004

2005

2006

2007

Issue year

Long-Term Bond Volume, by Type of Issue

Total bond issuance is composed of both (“new

money”) nonrefunding issues and refunding issues.

The proceeds of new money issues finance new capital projects, while proceeds of refunding issues retire

outstanding debt of prior bond issues. A bond issue

can include both new and refunding proceeds.

Figures A1 and A2 show total issuance, as well

as the split between new money and refunding issues, for both tax-exempt governmental and taxexempt private activity bonds issued between 2002

and 2007. In 2007, new money issues represented

approximately two-thirds of the total bond proceeds

for both governmental and tax-exempt private activity bonds; refunding issues accounted for one-third

of the proceeds.

Between 2006 and 2007, new money issues and

refunding issues increased for both long-term governmental and tax-exempt private activity bonds.

New money, long-term governmental bond issues increased by 11.0 percent, from 2006 to 2007; refunding issues increased by 26.1 percent. Tax-exempt

new money private activity bond issues were 36.9

percent higher in 2007 than in 2006, while refunding

issues increased by 10.4 percent.

$316.3

$311.3

$282.6

300

All issues

New money issues

Refunding issues

Figure A2

Volume of Long-Term Tax-Exempt Private Activity Bonds

Issued, by Type and Issue Year, 2002-2007

Billions of dollars

$136.6

140

120

100

$109.5

$91.1

$92.6

$108.6

$93.1

$50.2

$40.8

$47.0

$47.9

$45.6

$45.2

'2003

2004

$54.8

$54.7

$86.6

$63.3

$50.0

$45.3

2002

2005

2006

2007

Issue year

All issues

New money issues

Refunding issues

NOTE: Detail may not add to totals because of rounding.

activity bond issues. Approximately 61.0 percent of

the total $316.3 billion long-term governmental bond

proceeds for 2007 financed education, utilities, and

transportation projects. Just over one-fourth (28.3

percent) of the long-term governmental bond proceeds were allocated for “other bond purposes” (i.e.,

specific purpose(s) did not apply or were not separately allocated by the issuer). For all of the governmental bond purposes shown in Figure B, more pro-

175

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Figure B

Long-Term Tax-Exempt Governmental Bonds, by Selected Bond Purpose and Type of Issue, 2007

Billions of dollars

110

100

$34.1

$38.3

$18.5

$71.6

$12.9

$51.1

$6.3

$32.0

$23.7

$9.7

Education

Other purposes [1]

Utilities

Transportation

Environment

$1.9

$2.6

$4.9

Public safety

$3.2

Health and hospital

Bond purpose

Long-Term Tax-Exempt Private Activity Bonds, by Selected Bond Purpose and Type of Issue, 2007

Billions of dollars

$14.7

$11.7

$11.0

$27.4

$17.3

$1.7

$13.5

$3.2

$7.4

Qualified section

501(c)(3)

nonhospital

Qualified hospital Qualified mortgage Qualified residential

rental

$0.8

$4.5

$3.3

Airport

Qualified student

loan

Solid waste

disposal

Bond purpose

New money issues

Refunding issues

[1] "Other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038-G.

176

$0.9

$3.6

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

ceeds were spent financing new capital projects than

were put toward refunding prior bond issues.

Qualified section 501(c)(3) bonds, which include

total qualified hospital bonds and qualified nonhospital bonds issued to benefit other nonprofit charitable

organizations, combined, accounted for 52.0 percent

of the $136.6 billion of long-term private activity

bonds issued for 2007. Private activity bonds issued

to provide housing assistance in the form of qualified

residential rental projects and qualified mortgages accounted for another 24.6 percent of total proceeds.

Overview of Bond Issues, by State

Total new money, long-term governmental bond

volume increased by approximately $20 billion (11.0

percent) from 2006 to 2007. States with significant

increases in new money, long-term governmental

bond issues from 2006 to 2007 include Ohio, whose

issuance rose 154.6 percent, from slightly less than

$3.4 billion in 2006 to $8.6 billion in 2007; California, whose issuance rose from $23.1 billion in 2006

to $30.9 billion in 2007; Georgia, whose issuance

rose from $4.4 billion in 2006 to $7.2 billion in 2007;

and Massachusetts, whose issuance rose from $2.9

billion in 2006 to $4.8 billion in 2007.

Tennessee experienced a significant decrease in

new money, long-term governmental bond issues,

from $6.4 billion in 2006 to $1.6 billion in 2007, as

did Wyoming, whose issuance fell 60.4 percent, from

$134 million in 2006 to $53 million in 2007. In all,

22 States reduced the amount of new money, longterm governmental bonds issued from 2006 to 2007,

by $55.6 billion, up from the 18 States whose combined issuance fell $10.2 billion for the corresponding 2005 to 2006 timeframe.

Figure C presents the amount of bonds issued

for the top 15 States, in terms of total dollar volume

of new money, long-term tax-exempt bonds issued

for 2007, for both governmental and private activity

bond issuances. Combined, the top 15 States accounted for 70.4 percent of the total $200.1 billion of

new money, long-term governmental bond issues for

the year. About $86.7 billion (43.3 percent) of the

total were issued by authorities in the following five

States: California (15.4 percent), Texas (11.2 per-

cent), Florida (6.3 percent), New York (6.1 percent),

and Ohio (4.3 percent). According to 2007 Census

estimates, together, these five States accounted for

35.8 percent of the total U.S. population.8

An examination of issuance by State reveals

some differences in the allocation of proceeds by

bond purpose. Overall, for 2007, 35.8 percent of

the $200.1 billion of new money, long-term governmental bonds was issued for educational purposes.

However, the amounts allocated for this purpose varied by State. For example, the total amount of new

money, long-term education bonds issued in Ohio

represented approximately 73.9 percent of total State

issuance, compared to 42.8 percent in Alabama and

21.2 percent in New York.

Bonds issued for other unspecified purposes accounted for 25.5 percent of States’ total new money,

long-term proceeds. Like educational bond issues,

the total amount of other purpose bond issues ranged

significantly across States. In the U.S. Possessions,

60.5 percent of the total new money, long-term governmental bond proceeds were for other purposes.9

In contrast, in Ohio, only 11.7 percent was allocated

for this purpose.

Nebraska allocated 76.8 percent of its total

amount of new money, long-term governmental

bonds to utility projects, a considerably larger share

than in the U.S. total (16.0 percent). Arizona and

Alabama also spent large portions of their total new

money, long-term issuance on utility projects—36.2

percent and 33.9 percent, respectively.

Total new money, long-term tax-exempt private

activity bond volume increased $23.3 billion (approximately 37 percent) from 2006 to 2007. Louisiana substantially increased its issuance of new

money, long-term private activity bonds from 2006

to 2007, from $833 million in 2006 to $2.9 billion

in 2007. The majority of this increase is attributed

to $1.9 billion of Qualified Gulf Opportunity Zone

and Gulf Opportunity Zone Mortgage bonds issued.

These bond provisions were promulgated under the

Gulf Opportunity Zone Act. They support capital investment and rebuilding in local and regional economies in parts of Louisiana, Mississippi, and Alabama

that were devastated by hurricanes in 2005. Signifi-

The resident population estimates were released by the U.S. Census Bureau on December 22, 2006, in Press Release CB06-187.

U.S. Possessions include Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands.

177

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Figure C1

New Money Long-Term Tax-Exempt Governmental Bonds, by Selected Bond Purpose, for Top 15

States, Ranked by Total Governmental Bond Issuance, 2007

[Money amounts are in millions of dollars]

Selected bond purpose

Total

Education

State of issue

Amount

Total, All States

California

Texas

Florida

New York

Ohio

Georgia

Illinois

Arizona

Pennsylvania

North Carolina

Washington

Massachusetts

Alabama

Virginia

U.S. Possessions [2]

Amount

(1)

(2)

200,148

30,919

22,347

12,552

12,305

8,594

7,232

6,848

5,898

5,854

5,405

5,116

4,801

4,351

4,330

4,314

71,595

12,475

9,009

4,887

2,604

6,349

2,983

2,681

1,541

2,191

2,034

1,361

1,695

1,863

1,460

Other purposes [1]

Percentage

of State

total

(3)

35.8

40.3

38.9

21.2

73.9

41.2

39.2

26.1

37.4

37.6

26.6

35.3

42.8

33.7

0.0

Amount

(4)

51,113

6,195

4,031

3,273

4,529

1,002

968

1,830

1,298

1,594

882

1,432

2,431

832

1,447

2,609

Percentage

of State

total

(5)

25.5

20.0

18.0

26.1

36.8

11.7

13.4

26.7

22.0

27.2

16.3

28.0

50.6

19.1

33.4

60.5

Utilities

Amount

(6)

32,019

6,653

5,113

2,081

133

426

1,840

1,224

2,137

295

385

587

1,476

388

Transportation

Percentage

of State

total

(7)

16.0

21.5

22.9

16.6

1.1

5.0

25.4

17.9

36.2

5.0

7.1

11.5

33.9

9.0

Amount

(8)

23,698

2,424

3,211

1,464

3,435

520

362

863

782

466

464

1,448

251

223

Environment

Percentage

of State

total

(9)

11.8

7.8

14.4

11.7

27.9

6.1

5.0

12.6

13.3

8.0

8.6

28.3

5.2

1.1

5.2

0.0

Amount

(10)

Percentage

of State

total

(11)

9,659

1,952

432

150

167

514

838

307

502

4.8

6.3

3.4

1.2

1.9

7.1

0.8

14.3

1.3

6.4

0.6

11.6

Footnotes at end of figure.

Figure C2

New Money Long-Term Tax-Exempt Private Activity Bonds, by Selected Bond Purpose, for Top 15

States, Ranked by Total Tax-Exempt Private Activity Bond Issuance, 2007

[Money amounts are in millions of dollars]

Selected bond purpose

Total

Qualified section

501(c)(3) nonhospital

Amount

State of issue

Total, All States

California

New York

Texas

Pennsylvania

Massachusetts

Florida

Illinois

Louisiana

Ohio

Georgia

Washington

Michigan

Mississippi

Arizona

Tennessee

(1)

(2)

86,576

10,527

8,193

5,079

4,533

4,050

3,803

3,785

2,910

2,638

2,510

2,380

2,331

1,963

1,915

1,787

27,352

3,393

2,920

886

2,117

2,664

1,382

1,333

347

488

842

562

434

867

399

Percentage

of State

total

(3)

31.6

32.2

35.6

17.4

46.7

65.8

36.3

35.2

11.9

18.5

33.5

23.6

18.6

45.3

22.3

Qualified hospital

Amount

(4)

17,270

2,892

952

2,001

959

858

906

897

220

918

777

865

679

154

542

119

Percentage

of State

total

(5)

19.9

27.5

11.6

39.4

21.2

23.8

23.7

7.6

34.8

31.0

36.3

29.1

7.8

28.3

6.7

Qualified mortgage

Amount

(6)

13,508

1,171

264

568

311

740

948

211

312

208

217

245

257

Percentage

of State

total

(7)

15.6

11.1

3.2

11.2

6.9

19.5

25.0

7.3

11.8

8.3

9.1

12.5

5.0

14.4

Qualified residential

rental

Amount

(8)

7,359

1,852

1,622

367

237

258

292

214

387

219

122

Percentage

of State

total

(9)

8.5

17.6

19.8

7.2

5.9

6.8

7.7

3.1

8.5

16.3

9.4

5.1

6.8

All other bonds,

combined [3]

Amount

(10)

Percentage

of State

total

(11)

6,893

212

1,869

433

857

d—Data deleted to avoid disclosure of information about specific bonds. However, the data are included in the appropriate totals.

[1] For purposes of this figure, "other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038-G. It does not

include specific purposes, such as public safety and housing, that are not shown separately in this figure. See Table 1.

[2] U.S. Possessions include Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands.

[3] For purposes of this figure, certain bond purposes were combined. For this reason, data in this figure will differ slightly from the data in Tables 8 and 9.

NOTE: Detail may not add to totals because of rounding.

178

8.0

2.0

22.8

8.5

0.0

48.0

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

cant increases also occurred in Arizona, whose issuance more than tripled, from $574 million in 2006 to

$1.9 billion in 2007; Utah, whose issuance increased

from $209 million in 2006 to $602 million in 2007;

South Dakota, whose issuance increased from $138

million in 2006 to $386 million in 2007; and Oregon,

whose issuance more than doubled, from $292 million in 2006 to $657 million in 2007.

Between 2006 and 2007, 33 States issued a

smaller amount of new money, long-term private

activity bonds. Altogether, this accounted for a total

reduction of $2.7 billion. Arkansas experienced a

significant decrease in new money, long-term private

activity bond issuance, from $401 million in 2006 to

$150 million in 2007, as did Indiana, whose issuance

fell 61.7 percent, from $2.3 billion in 2006 to $0.9

billion in 2007. Similarly, Alaska and North Carolina’s new money, long-term private activity bond

issuance for 2007 decreased by 59.4 percent and 37.8

percent, respectively.

Combined, the top 15 States accounted for 67.5

percent of the total $86.6 billion of new money, longterm private activity bond issues for the year. Approximately 37.4 percent ($32.4 billion) of the total

was issued by authorities in the following five States:

California (12.2 percent), New York (9.5 percent),

Texas (5.9 percent), Pennsylvania (5.2 percent), and

Massachusetts (4.7 percent).

Similar to governmental bond issuance, there

were differences in the composition of total new

money, long-term private activity bond issuance, by

purpose, among the States. Examining the bond allocations by purpose for 2007, overall, 31.6 percent of

the amount of new money, long-term private activity

bonds was issued for qualified IRC section 501(c)(3)

nonhospital organizations. Another 19.9 percent was

issued for qualified hospital bonds.

Of the total amount of new money, long-term

private activity bonds issued in Massachusetts, 65.8

percent was issued for IRC section 501(c)(3) nonhospital organizations, compared to 32.2 percent in

California and 11.9 percent in Louisiana for the same

purpose. Qualified hospital bonds accounted for

39.4 percent of new money, long-term private activity bond issues in Texas, compared to 21.2 percent

in Pennsylvania and 6.7 percent in Tennessee for the

same purpose.

Together, States allocated only 8.5 percent of the

$86.6 billion of new money, long-term private activity bonds in 2007 for qualified residential rental projects. However, both New York and California directed a much larger share of their total new money,

long-term issuances to this purpose, 19.8 percent and

17.6 percent, respectively.

Tax-exempt private activity bonds are subject

to State volume limitations, or volume caps. Most

types of private activity bonds are subject to the unified State volume cap, which limits the aggregate

dollar amount of bonds that each State can issue

annually. For each of the qualified issue types subject to the unified volume cap, there is no specific

limit on the dollar amount of issuance; rather, each

State must allocate issuance authority in such a way

that the combined issuance does not exceed the annual volume cap. The unified State volume cap is

adjusted annually for population growth and is also

indexed for inflation.10

Other types of private activity bonds are subject

to separate volume limitations based on the specific

bond purpose, or types of projects being financed.

Refunding bonds are not subject to volume cap limitations, as long as there is no increase in the principal

amount of the outstanding bond. Issuers can elect

to carry forward unused volume cap for a specified

bond purpose. Bonds issued with respect to the specified bond purpose are not subject to the volume cap

for the following 3 calendar years.

Figure D shows the total amount of new money,

long-term tax-exempt private activity bond issuance,

new issues subject to the unified State volume cap,

amounts applied from prior-year carryforward elections, and volume cap allocations, by State, for 2007.

The total amount of new bonds issued by a State can

exceed that State’s total volume cap allocation in

instances where bonds are issued for purposes other

than those subject to the unified State volume cap

and where amounts are being carried forward from

previous years’ allocations.

Unlike private activity bonds, governmental

bonds are generally not subject to the volume cap.

However, if more than $15 million of the proceeds

of an issue are used in private use or disproportionate use, then the amount in excess of $15 million is

subject to the volume cap, and the issuer is required

For 2007, the volume cap was the greater of $85 per capita or $256,235,000. Volume caps for U.S. Possessions, with populations less than the population of the least

populous State, are determined under IRC section 146(d)(4).

179

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Figure D

New Money Long-Term Tax-Exempt Private Activity Bonds, Carryforward, and Volume Cap, by State

of Issue, 2007

[Money amounts are in millions of dollars]

State of issue

Total, All States

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Total amount of bonds

issued

Amount subject to

the unified State

volume cap [1]

Amount not subject to the

volume cap

under a carryforward

election [2]

Total volume

cap allocation [3]

(1)

(2)

(3)

(4)

86,576

1,280

297

1,915

150

10,527

1,371

1,547

549

1,106

3,803

2,510

526

3,785

889

649

624

486

2,910

384

1,508

4,050

2,331

1,467

1,963

1,395

31,928.0

355.0

228.0

506.0

80.0

3,722.0

552.0

311.0

439.0

198.0

1,125.0

835.0

510.0

1,555.0

214.0

279.0

437.0

331.0

402.0

261.0

589.0

512.0

1,033.0

488.0

422.0

548.0

15,025.0

193.0

228.0

252.0

47.0

1,309.0

268.0

36.0

439.0

185.0

822.0

416.0

430.0

714.0

0.0

67.0

316.0

7.0

56.0

175.0

345.0

4.0

310.0

161.0

305.0

147.0

28,549.9

390.9

256.2

524.1

256.2

3,098.9

404.0

297.9

256.2

1,537.6

795.9

256.2

1,090.7

536.6

256.2

357.5

364.5

256.2

477.3

547.2

858.1

439.2

256.2

496.6

Footnotes at end of figure.

to report the amount of the State volume cap allocated to the governmental issue.11, 12 For 2007, issuers reported allocating a combined $86 million of

State volume cap to the total $379.3 billion of total

tax-exempt governmental bond issues. This indicates

some private business involvement, but not in an

amount sufficient to satisfy the 10 percent use criteria for private activity bonds for each governmental

bond issue.

Over 25,000 tax-exempt Governmental bonds were

issued in 2007, raising $379.3 billion of proceeds

for public projects such as schools, transportation

infrastructure, and utilities. Of the $316.3 billion of

long-term Governmental bonds issued, $200.1 billion

of proceeds were used to finance new projects, while

the remaining $116.1 billion of proceeds refunded

prior Governmental bond issues. In addition, over

Disproportionate use occurs when the proceeds to be used for the private business use exceed the amount of proceeds used for the related governmental use.

IRC section 141(b)(5) states that a governmental bond will be treated as a private activity bond if: (1) the “nonqualified amount” exceeds $15 million, but is less than the

amount needed to meet any of the private activity bond tests; and (b) the issuer does not allocate a portion of its volume cap to the issue in an amount equal to the excess of

such nonqualified amount over $15 million.

180

Summary

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Figure D—Continued

New Money Long-Term Tax-Exempt Private Activity Bonds, Carryforward, and Volume Cap, by State of

Issue, 2007—Continued

[Money amounts are in millions of dollars]

State of issue

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

U.S. Possessions [4]

Total amount of bonds

issued

Amount subject to

the unified State

volume cap [1]

(1)

(2)

538

657

816

554

1,667

323

8,193

1,435

441

2,638

461

657

4,533

357

862

386

1,787

5,079

602

350

1,614

104

2,380

400

1,191

361.0

567.0

302.0

266.0

730.0

278.0

2,020.0

826.0

363.0

942.0

299.0

226.0

1,284.0

262.0

383.0

290.0

1,260.0

1,848.0

292.0

275.0

789.0

761.0

248.0

526.0

307.0

Amount not subject to the

volume cap

under a carryforward

election [2]

(3)

208.0

500.0

136.0

83.0

796.0

64.0

646.0

359.0

305.0

331.0

33.0

162.0

509.0

263.0

48.0

241.0

1,037.0

264.0

113.0

28.0

561.0

128.0

197.0

275.0

216.0

Total volume

cap allocation [3]

(4)

256.2

741.6

256.2

1,641.0

752.8

256.2

975.6

304.2

314.6

1,057.5

256.2

367.3

256.2

513.3

1,998.2

256.2

649.6

543.6

256.2

472.3

256.2

d—Data deleted to avoid disclosure of information for specific bonds when compared to other published data. However, the data are included in the appropriate totals.

[1] These calculations are based on the data reported on Part II of Form 8038 for type of issue, and include the following: mass commuting facilities, water furnishing facilities, sewage

facilities, solid waste disposal facilities, qualified residential rental projects, local electric energy or gas furnishing facilities, local district heating and cooling facilities, qualified

hazardous waste facilities, high-speed intercity rail facilities, qualified mortgage bonds, qualified small issue bonds, qualified student loan bonds, and qualified redevelopment bonds.

No distinction was made for governmentally-owned solid waste or high-speed intercity rail facilities (which are not subject to the volume cap). As a result, figures could be slightly

[2] As reported on Form 8038, line 44b. An issuing authority can elect to carry forward its unused volume cap for one or more carryforward purposes (see IRC section 146(f)). If the

election is made, bonds issued with respect to a specified carryforward purpose are not subject to the volume cap under IRC section 146(a) during the 3 calendar years following the

calendar year in which the carryforward arose, but only to the extent that the amount of such bonds does not exceed the amount of the carryforward elected for that purpose.

[3] The volume cap amount was calculated based on State population estimates produced by the U.S. Bureau of the Census and published in Internal Revenue Bulletin Number 200711 (Notice 2007-23). For 2007, the volume cap was the greater of $85 per capita or $256.2 million.

[4] U.S. possessions include Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands.

NOTE: Detail may not add to totals because of rounding.

4,300 tax-exempt private activity bonds were issued

in 2007, for a total $137.4 billion in proceeds. These

tax-exempt private activity bond proceeds financed

qualified private facilities (such as residential rental

facilities, single family housing, and airports), as

well the facilities of Internal Revenue Code section

501(c)(3) organizations (such as hospitals and private

universities). Of the $136.6 billion of long-term private activity bonds issued, $86.6 billion of proceeds

were used to finance new projects, while the remaining $50.0 billion of proceeds refunded prior taxexempt private activity bond issues.

Data Sources and Limitations

The data presented in this article are based on the

populations of Forms 8038, Information Return for

Tax-Exempt Private Activity Bond Issues, and Forms

8038-G, Information Return for Tax-Exempt Govern181

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

mental Obligations, filed with the Internal Revenue

Service for bonds issued during Calendar Year 2007.

The data exclude returns filed for commercial paper

transactions, as well as issues that are loans from the

proceeds of another tax-exempt bond issue (pooled

financings). Additionally, except where specifically

mentioned, the data exclude returns filed for taxcredit bonds, which are treated separately for the purposes of this article.

Bond issuers were required to file bond information returns by the 15th day of the second calendar

month after the close of the calendar quarter in which

the bond was issued. However, in an effort to include as many applicable returns for a particular issue year as possible, the study period extended well

beyond this timeframe. The study includes returns

processed by the IRS from January 1, 2007, to May

31, 2009, for bonds issued in 2007. Where possible,

data from amended returns filed and processed before

the cutoff date were included. Late-filed returns

for tax-exempt bonds issued during 2007, but processed after the cutoff date, were not included in the

statistics.

During statistical processing, returns were subject to thorough testing and correction procedures to

ensure data accuracy and validity. Additional checks

were conducted to identify and exclude duplicate

returns. Wherever possible, returns with incomplete

information, mathematical errors, or other reporting

anomalies were edited to resolve internal inconsistencies. However, in other cases, it was not possible

to reconcile reporting discrepancies. Thus, some reporting and processing errors may remain.

Explanation of Selected Terms

Clean Renewable Energy Bonds (CREBs)—A

type of tax-credit bond used to finance certain renewable energy and clean coal facilities. Section 54 of

the Internal Revenue Code of 1986 (IRC) provides

that the term clean renewable energy bond means any

bond issued as part of an issue if (1) the bond is issued by a qualified issuer; (2) the bond is issued pursuant to an allocation by the Secretary of the Treasury to such issuer of a portion of the national clean

renewable energy bond authority; (3) 95 percent or

more of the proceeds of the issue are to be used for

capital expenditures incurred by qualified borrowers

for one or more qualified projects; (4) the qualified

issuer designates such bond for purposes of section

182

54, and the bond is issued in registered form; and (5)

the qualified issuer meets the applicable spending

requirements.

Commercial paper—Commercial paper consists

of short-term notes that are continually rolled over.

Maturities average about 30 days but can extend up

to 270 days. Many localities use commercial paper

to raise cash needed for current transactions.

Enterprise Zone facility bond—A type of exempt

facility bond, the proceeds of which may be used

for certain businesses in “empowerment zones” or

“enterprise communities.” Empowerment zone and

enterprise community designations are made by the

Secretaries of Agriculture and Housing and Urban

Development and last for a 10-year period. Qualified

enterprise zone facility bonds are generally subject to

the same rules as exempt facility bonds.

Exempt facility bond—Bond issue of which 95

percent or more of the net proceeds is used to finance

a tax-exempt facility (as listed in IRC sections 142(a)

(1) through (13) and 142(k)). These facilities include

airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water, sewage

facilities, solid waste disposal facilities, qualified residential rental projects, facilities for the local furnishing of electric energy or gas, local district heating or

cooling facilities, qualified hazardous waste facilities,

high-speed intercity rail facilities, environmental enhancements of hydroelectric generating facilities, and

qualified public educational facilities.

Governmental bond—Any obligation issued by

a State or local government unit that is not a private

activity bond (see below). The interest on a governmental bond is excluded from gross income under

IRC section 103.

Gulf Opportunity Zone bond—The proceeds of

such bonds are used to finance the construction and

rehabilitation of certain residential and nonresidential property located in certain localities in Alabama,

Louisiana, and Mississippi, designated as the “Gulf

Opportunity Zone.” This area constitutes the portion

of the Hurricane Katrina disaster area determined by

the President to warrant individual or individual and

public assistance from the Federal Government, under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

IRC section 1400N(a)(2) defines a qualified Gulf

Opportunity Zone bond as any bond issued as part of

an issue if it meets the following requirements: (1)

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

95 percent or more of the net proceeds is to be used

for qualified project costs, or such issue meets the

requirements of a qualified mortgage issue, except

as otherwise provided in IRC section 1400N(a); (2)

such bond is issued by the State of Alabama, Louisiana, or Mississippi or any political subdivision

thereof; (3) such bond is designated for purposes

of IRC section 1400N(a) either by the Governor, or

approved bond commission, of such State; (4) the

bond is issued after December 21, 2005, and before

January 1, 2011; and (5) no portion of the proceeds

of such issue is to be used to provide any property

described in IRC section 144(c)(6)(B).

Gulf Opportunity Zone bonds that meet the general requirements of a qualified mortgage bond issue,

and the proceeds of such bond issues that finance

residences located in the Gulf Opportunity Zone,

shall be treated as qualified mortgage bonds (“Gulf

Opportunity Zone Mortgage bonds”), as described

in IRC section 1400N(a)(2)(A)(ii). The act also

authorized the issuance of “Gulf Opportunity Zone

Advance Refunding bonds,” which allow for an additional advance refunding for certain bonds, issued

by the States of Alabama, Louisiana, or Mississippi

(or any political subdivision thereof), and outstanding on August 28, 2005. This provision was effective

for bonds issued between December 21, 2005, and

January 1, 2011. (See Internal Revenue Service Notice 2006-41, Internal Revenue Bulletin 2006-18, for

additional information.)

New York Liberty Zone bonds—IRC section

1400L(d) authorizes the issuance of an additional

type of exempt facility bond, namely, “Liberty

bonds.” Liberty bonds are subject to the following

additional requirements: (1) 95 percent or more of

the net proceeds of such issue must be used for qualified project costs; (2) the bond must be issued by

the State of New York or any political subdivision

thereof; (3) the Governor of the State of New York or

the Mayor of the City of New York must designate

the bond for purposes of section 1400L(d); and (4)

the bond must have been issued after March 9, 2002,

and before January 1, 2005. The maximum aggregate face amount of bonds that could be designated

as Liberty bonds was $8 billion.

Nongovernmental output property bond—Bonds

used to finance the acquisition of property used by a

nongovernmental entity in connection with an output

facility (such as an electric or gas power project).

This bond must meet additional tests under IRC section 141(d).

Pooled financing— An arrangement whereby a

portion of the proceeds of a governmental bond issue

is used to make loans to other governmental units.

Private activity bond—Bond issue of which more

than 10 percent of the proceeds is used for any private business use, and more than 10 percent of the

payment of the principal or interest is either secured

by an interest in property to be used for private business use (or payment for such property), or is derived

from payments for property (or borrowed money)

used for a private business use. A bond is also considered a private activity bond if the amount of the

proceeds used to make or finance loans (other than

loans described in IRC section 141(c)(2)) to persons

other than governmental units exceeds the lesser of 5

percent of the proceeds or $5 million.

Qualified green building and sustainable design

project—Bond issue of which 95 percent or more of

the net proceeds is used to finance qualified green

building and sustainable design projects, as designated by the Secretary of the Treasury, after consultation

with the Administrator of the Environmental Protection Agency. The project must be nominated by a

State or local government, and the issuer must submit

a detailed application to the Treasury Department for

consideration, and, on approval, allocation of a specified issuance amount. (See Internal Revenue Service

Notice 2006-41, Internal Revenue Bulletin 2006-18,

for additional information.)

Qualified highway or surface transfer freight

facility bond—Bond issue of which 95 percent or

more of the net proceeds is used to provide qualified

highway or surface freight transfer facilities. Section 142(m)(1) defines the term “qualified highway

or surface freight transfer facilities” as: (a) any

surface transportation project that receives Federal

assistance under title 23, United States Code (as in

effect on August 10, 2005); (b) any project for an

international bridge or tunnel for which an international entity authorized under Federal or State law

is responsible and that receives Federal assistance

under title 23, United States Code (as so in effect);

or, (c) any facility for the transfer of freight from

truck to rail or rail to truck (including any temporary

storage facilities directly related to such transfers)

that receives Federal assistance under either title 23

or title 49, United States Code (as so in effect). This

183

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

legislation authorized issuance of up to $15 billion

of such bonds, not subject to the unified volume cap,

applicable to bonds issued after August 10, 2005. Allocation of the $15 billion national limitation is under

the jurisdiction of the Department of Transportation.

(See Internal Revenue Service Notice 2006-45,

Internal Revenue Bulletin 2006-20, for additional

information.)

Qualified mortgage bond—Bond issue of which

the proceeds (except issuance costs and reasonably

required reserves) are used to provide financing assistance for single-family residential property, and

which meets the additional requirements in IRC section 143. Bond proceeds can be applied toward the

purchase, improvement, or rehabilitation of owneroccupied residences, as well as to finance qualified

home-improvement loans.

Qualified public educational facility bond—Bond

issue of which 95 percent or more of the net proceeds

is used to provide qualified public educational facilities, defined by IRC section 142(k)(1) as any school

facility that is: (a) part of a public elementary or

secondary school; and (b) is owned by a private, forprofit corporation under a public-private partnership

agreement with a State or local educational agency.

Under a “public-private partnership agreement,” the

corporation agrees to construct, rehabilitate, refurbish, or equip a school facility and, at the end of the

term of the agreement, to transfer the school facility

to the State or local educational agency for no additional consideration. Such bonds are not subject

to the unified volume cap; rather, the annual State

limit is equal to the lesser of $10 per resident or $5

million.

Qualified redevelopment bond—Bond issue of

which 95 percent or more of the net proceeds is used

to finance certain specified real property acquisition

and redevelopment in blighted areas. (See IRC section 144(c) for additional requirements.)

Qualified section 501(c)(3) bond—A bond issued by State and local governments to finance the

activities of charitable organizations that are taxexempt under IRC section 501(c)(3). A bond must

meet the following conditions to be classified as a

section 501(c)(3) bond: 1) all property financed by

the net proceeds of the bond issue is to be owned by

a section 501(c)(3) organization or a governmental

unit; and 2) the bond would not be a private activity

bond if section 501(c)(3) organizations were treated

184

as governmental units with respect to their activities that are not related trades or businesses, and the

private activity bond definition was applied using a 5

percent threshold rather than a 10 percent threshold.

The primary beneficiaries of these bonds are private,

nonprofit hospitals, colleges, and universities. A

qualified hospital bond issue is one in which 95 percent or more of the net proceeds is to be used for a

hospital.

Qualified small issue bond—Bond issue generally not exceeding $1 million, and of which 95 percent or more of the net proceeds is used to finance

the acquisition of land and depreciable property or

to refund such issues. In certain instances, an election to take certain capital expenditures into account

can increase the limit on bond size, from $1 million

to $10 million. These bonds may only be used to

finance manufacturing facilities and to benefit certain

first-time farmers.

Qualified student loan bond—Bond issue of

which 90 percent or more of the net proceeds is used

to make or finance student loans under a program

of general application subject to the Higher Education Act of 1965 (see IRC section 144(b)(1)(A) for

additional requirements), or of which 95 percent or

more of the net proceeds is used to make or finance

student loans under a program of general application

approved by the State (see Code section 144(b)(1)(B)

for additional requirements).

Qualified veterans’ mortgage bond— In general,

a bond issue of which 95 percent or more of the net

proceeds is used to finance the purchase, improvement, or rehabilitation of owner-occupied residences

for veterans who: 1) served prior to January 1, 1977;

and, 2) applied for such a mortgage prior to the date

30 years after leaving active service or January 31,

1985, whichever is later. The payment of interest

and principal must be secured by a general obligation

of the State, and the bond must meet certain requirements of IRC section 143. The issuance of qualified

veterans’ mortgage bonds was limited to the following five states: Alaska, California, Oregon, Texas,

and Wisconsin, each of which had a veterans’ mortgage bond program in effect prior to June 22, 1984.

Qualified zone academy bond—Section 54E(a)

of the Internal Revenue Code provides that a qualified zone academy bond (QZAB) means any bond

issued as part of an issue if: (1) 100 percent of the

available project proceeds of such issue are to be

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

used for a qualified purpose with respect to a qualified zone academy established by an eligible local

education agency; (2) the bond is issued by a State

or local government within whose jurisdiction the

academy is located, and (3) the issuer: (a) designates

such bond for purposes of this section; (b) certifies

that it has written assurances that the private business

contribution requirement of subsection 54E(b) will

be met; and, (c) certifies that it has written approval

of the eligible local education agency for such bond

issuance.

Tax Reform Act transition property bond— A

bond issued under transitional rules contained in the

Tax Reform Act of 1986. Proceeds from bonds issued under these rules include issues used to fund

such items as pollution control facilities, parking

facilities, industrial parks, sports stadiums, and convention facilities. Proceeds from other bonds issued

under the transitional rules are included in this category only if they could not be identified as another

issue type.

NOTE: Additional tax-exempt bond data, including

data for prior years, can be found on the SOI's Tax

Stats: http://www.irs.gov/taxstats. (Click on “TaxExempt Bonds.”)

185

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Appendix A

Historical Overview of Tax-Exempt Bond Legislation, 1986-2008

The Tax Reform Act of 1986 (TRA86) included

significant legislation intended to curb the use of

tax-exempt bonds for private purposes.

186

The Act reduced the limit on private use

of bond proceeds from 25 percent to 10

percent.

The Act further tightened state volume limitations for private activity tax-exempt bonds

through the unified state volume cap, which

limited total state issuance. States were then left

to allocate issuance amounts for each permitted

bond type.

TRA86 eliminated the use of tax-exempt

bonds for privately-owned pollution control, water, sewer, and solid waste facilities;

sports convention and trade show facilities,

parking, and industrial parks.

wildlife resources and those for recreational

purposes or other improvements required by the

terms of a Federal license for the operation of a

hydroelectric generating facility. Bonds issued

for these purposes are not subject to volume cap

limitations.

TRA86 imposed a limit of one advance

refunding for Governmental bonds and

qualified 501(c)(3) bonds, and prohibited

advance refundings entirely for qualified

private activity bonds.

TRA86 also made interest income on taxexempt private activity bonds subject to

alternative minimum tax requirements.

The Technical and Miscellaneous Revenue

Act of 1988 expanded the definition of exempt

facility types to include high-speed intercity rail

facilities. Seventy-five percent of the principal

amount of the bonds issued for high-speed rail

facilities is exempt from the volume cap limit.

However, if the property to be financed is owned

by a governmental unit, then the bonds are completely exempt from the volume limit.

The Energy Policy Act of 1992 expanded the

definition of exempt facility types to include

environmental enhancements of hydro-electric

generating facilities. Eligible facilities include

those that protect or promote fisheries or other

The Omnibus Budget Reconciliation Act of

1993 authorized the designation of nine empowerment zones and 95 enterprise communities to

provide tax incentives for businesses to locate

within certain geographic areas designated by the

Secretaries of Housing and Urban Development

and Agriculture.

The Act expanded the definition of exempt

facility types to include qualified enterprise

zone facility bonds, which can be used by

entities in the designated “Empowerment

Zones” and “Enterprise Communities.”

The Taxpayer Relief Act of 1997

The Act provided certain economically depressed census tracts within the District of

Columbia designation as the “D.C. Enterprise Zone.”

The Act also authorized the issuance of

Qualified Zone Academy Bonds (QZABs),

the first type of tax-credit bond. A QZAB

is a taxable bond issued by a state or local

government, the proceeds of which are used

to improve certain eligible public schools.

Initially, $400 million of QZABs was authorized to be issued annually in calendar years

1998 and 1999.

The Economic Growth and Tax Reconciliation

Act of 2001 expanded the definition of exempt

facility types to include qualified public educational facility bonds, pursuant to IRC sections

142(a)(13) and 142(k). Issuance authority for

this type of private activity bond applies to bonds

issued after December 31, 2001 and before January 1, 2011 and is based on state population (but

not subject to the unified volume cap).

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

The Job Creation and Worker Assistance Act

of 2002

The Act created IRC section 1400L to provide various tax benefits for the area of New

York City damaged or affected by the terrorist attack on September 11, 2001. The Act

authorized the issuance of up to $8 billion

of Liberty Zone bonds, and up to $9 billion

of Liberty Zone Advance Refunding bonds

to be issued after March 9, 2002, and before

January 1, 2005.

dences and increasing the permitted amount of a

qualified home improvement loan with respect to

such residences.

The Act also authorized issuance of up to

$400 million of QZABs annually in calendar years 2002 and 2003.

The American Jobs Creation Act of 2004 expanded the definition of exempt facility types to

include qualified green building and sustainable

design projects. With certain exceptions, up to

$2 billion were authorized for applicable bonds

issued after December 31, 2004, and before October 1, 2009.

The Energy Tax Policy Act of 2005, enacted

on August 6, 2005, introduced the second type

of tax-credit bond—Clean Renewable Energy

Bonds (CREBs)—pursuant to IRC section 54.

Initially, $800 million of CREBs was authorized

to be issued before December 21, 2007. The allocation is under the jurisdiction of the Secretary

of the Treasury.

The Safe, Accountable, Flexible, Efficient,

Transportation Equity Act of 2005, enacted

on August 10, 2005, expanded the definition of

exempt facility types to include qualified highway or surface freight transfer facilities, pursuant to IRC sections 142(a)(15) and 142(m). The

allocation of the $15 billion national limitation

is under the jurisdiction of the Department of

Transportation.

The Katrina Emergency Tax Relief Act of

2005, enacted on September 23, 2005, waived

certain requirements applicable to qualified mortgage bonds under IRC section 143 by treating

certain qualified residences as targeted area resi-

The Gulf Opportunity Zone Act of 2005 was

enacted on December 21, 2005.

The Act was created to provide various tax

benefits for certain areas of Alabama, Louisiana, and Mississippi—designated as the

“Gulf Opportunity Zone” pursuant to IRC

section 1400M—that were devastated by

Hurricane Katrina.

Pursuant to IRC section 1400N, the Act created three new types of tax-exempt bonds:

Gulf Opportunity Zone facilities bonds,

Gulf Opportunity Zone mortgage bonds,

and Gulf Opportunity Zone Advance Refunding bonds. Issuance authority applied

to bonds issued after December 21, 2005,

and before January 1, 2011.

The Act also created a third type of tax-credit

bond—Gulf tax-credit bonds. The maximum

amount of Gulf tax-credit bonds authorized was

$200 million in Louisiana, $100 million in Mississippi, and $50 million in Alabama. Issuance

authority applied to bonds issued after December

21, 2005, and before January 1, 2007.

The Tax Relief and Healthcare Act of 2006

The Act provided for $400 million of QZAB

issuance authority for each of the calendar

years 2006 and 2007. The Act also modified the current provisions by imposing the

arbitrage restrictions of IRC section 148 to

QZABs, and by requiring issuers to submit

to the IRS information filings in a manner

similar to tax-exempt bond issuers.

The Act increased the national bond volume

cap for CREBs from $800 million to $1.2

billion, and extended issuance authority

an additional year, through December 31,

2008. Further, the Act increased the maximum amount of CREBs that may be allocated to projects for governmental bodies to

$750 million (from $500 million).

187

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

188

It also made permanent the modifications

(from The Tax Increase Prevention and Reconciliation Act of 2005) to state volume limits for qualified veterans’ mortgage bonds

issued in certain states; and expanded the

permitted use of qualified mortgage bonds

to finance mortgages for veterans who

served in the active military without regard

to the first-time homebuyer requirement.

The Energy Improvement and Extension Act

of 2008 was enacted on October 3, 2008.

The Act provided for $800 million of New

CREB issuance authority, applicable to

qualified bonds issued after the date of

enactment.

The Act also created Qualified Energy Conservation Bonds (QECBs), a new category

of tax-credit bonds pursuant to IRC section

54D. The national bond volume cap for

QECBs is $800 million. Each State receives a population-based QECB allocation,

which then must be allocated to large, local

governments in a similar fashion.

The Tax Extenders and Alternative Minimum

Tax Relief Act of 2008, enacted on October 3,

2008, provided for $400 million of QZAB issuance authority for each of calendar years 2008

and 2009.

The Housing Assistance Tax Act of 2008 enacted on July 30, 2008, amended IRC sections

143 and 146 related to qualified mortgage bonds.

Specifically, the Act provided a temporary $11

billion increase in the annual private activity

bond volume cap under section 146 for qualified

housing issues and eased restrictions to permit

the use of qualified mortgage bonds to refinance

certain subprime mortgage loans.

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Appendix B

American Recovery and Reinvestment Act of 2009 Tax-Credit Bond Provisions

American Recovery and Reinvestment Act of

2009 (ARRA09) was enacted on February 17,

2009, to help stimulate the U.S. economy by providing tax incentives for infrastructure projects

and promoting job growth. ARRA09 included

several new types of tax-exempt and tax-credit

bonds.

Build America Bonds (BABs) are a new category of taxable tax-credit bonds that bond issuers can elect to issue in lieu of tax-exempt bonds.

Specifically, as defined by IRC section 54AA(d),

a Build America Bond is any taxable State or

local governmental bond (excluding a private

activity bond under section 141) that meets the

following requirements: (1) the interest on said

bond would (except for section 54AA) be excludable from gross income under section 103;

(2) the bond is issued before January 1, 2011;

and (3) the issuer makes an irrevocable election

to have section 54AA apply.

There are two general types of Build America

Bonds:

“Build America Bonds (Tax-Credit)” provide a Federal subsidy through Federal tax

credits to bond investors in an amount equal

to 35 percent of the total coupon interest

payable by the issuer on taxable governmental bonds (net of the tax credit). This

represents a Federal subsidy to the State or

local governmental issuer equal to approximately 25 percent of the total return to the

investor (including the coupon interest paid

by the issuer and the tax credit). This type

of Build America Bond generally may be

used to finance any governmental purpose

for which conventional tax-exempt governmental bonds could be issued under section

103 (excluding private activity bonds under

section 141).

“Build America Bonds (Direct Payment)”

provide a Federal subsidy through a refundable tax credit paid to State or local governmental issuers by the Treasury Depart-

ment and the Internal Revenue Service in

an amount equal to 35 percent of the total

coupon interest payable to investors in these

taxable bonds. This type of Build America

Bond generally may be used to finance only

capital expenditures and certain issuance

costs and reasonably required reserve funds.

Recovery Zone Bonds provide tax incentives for

State and local governmental borrowing at lower

borrowing costs to promote job creation and general economic recovery that is targeted to areas

particularly affected by employment declines.

Specifically, a “Recovery Zone” is defined in

section 1400U-1 as: (1) any area designated by

the issuer as having significant poverty, unemployment, rate of home foreclosures, or general

distress; (2) any area designated by the issuer as

economically distressed by reason of the closure

or realignment of a military installation pursuant

to the Defense Base Closure and Realignment

Act of 1990; and, (3) any area for which a designation as an empowerment zone or renewal

community is in effect as of the effective date of

ARRA09.

Recovery Zone Economic Development

Bonds (Direct Payment), defined by IRC

section 1400U-2, represent a third type of

Build America Bond. Recovery Zone Economic Development Bonds are comparable

to Build America Bonds (Direct Payment),

except that they provide for a deeper Federal subsidy through a refundable tax credit

paid to State or local governmental issuers

in an amount equal to 45 percent (rather

than 35 percent) of the total coupon interest

payable to investors in these taxable bonds

and they have different program requirements regarding eligible uses of proceeds

for “qualified economic development purposes” within recovery zones.

Recovery Zone Facility Bonds—ARRA09

created this new type of exempt facility

bond, defined by IRC section 1400U-3.

189

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

changes enacted in ARRA09, the current law

rules that restricted the purpose of tribal bonds to

“essential governmental functions” no longer apply to these bonds, and the bonds could be issued

as tax-exempt private activity bonds. However,

there are still restrictions on the use of taxexempt bond proceeds to finance certain gaming

facilities and facilities outside an Indian reservation. The national bond volume cap for Tribal

Economic Development Bonds is $2 billion.

Proceeds of such bond issues may be used

to finance certain “recovery zone property.”

190

Recovery Zone Bonds may be issued by each

State and counties and large municipalities within each State before January 1, 2011. Section

1400U-1 imposes a national bond volume cap

of $10 billion for Recovery Zone Economic Development Bonds and $15 billion for Recovery

Zone Facility Bonds. The volume cap for Recovery Zone Bonds is allocated among the States

and counties, and large municipalities within the

States, based on relative declines in employment

in 2008.

Qualified Energy Conservation Bonds

(QECBs)—ARRA09 increased the national

bond volume cap for QECBs from $800 million

to $3.2 billion.

Qualified School Construction Bonds

(QSCBs)—ARRA09 created this new type of

tax-credit bond. Pursuant to IRC section 54F, a

QSCB is defined as any bond issued as a part of

an issue if (1) 100 percent of the available project proceeds of such issue are to be used for the

construction, rehabilitation, or repair of a public

school facility or for the acquisition of land on

which such a facility is to be constructed with

part of the proceeds of such issue; (2) the bond is

issued by a State or local government within the

jurisdiction of which such school is located, and

(3) the issuer designates such bond purposes of

this section.

The Act added section 54F(c) to provide a national bond limitation authorization for QSCBs

of $11 billion for each of the calendar years 2009

and 2010.

Tribal Economic Development Bonds were

created under IRC section 7871(f) of ARRA09.

In general, the purpose of new section 7871(f)

was to give Indian tribal governments greater

flexibility to use tax-exempt bonds to finance

economic development projects. Prior to

ARRA09, generally, the use of tax-exempt bonds

by Indian tribal governments was limited to

certain manufacturing facilities and activities

that constitute essential governmental functions

customarily performed by State and local governments with general taxing powers. With the

New Clean Renewable Energy Bonds (New

CREBs)—IRC section 54C(c) provides for an

increase in the national bond volume cap for

New CREBs, from $800 million to $2.4 billion.

Section 54C(c)(2) provides that the Secretary

shall allocate no more than one third of the volume cap to qualified projects owned by public

power providers, governmental bodies, and cooperative electric companies, respectively.

Qualified Zone Academy Bonds (QZABs)—

The Act further amended IRC section 54E(c)(1)

to provide an increased national zone academy

bond limitation authorization for QZABs of

$1.4 billion for each of the calendar years 2009

and 2010.

IRC section 54E(d) defines a “qualified zone

academy” as any public school (or academic

program within a public school) which is established by and operated under the supervision of

an eligible local education agency to provide

education or training below the postsecondary

level provided: (1) the public school or program

is designed in cooperation with business to enhance the academic curriculum, increase graduation and employment rates and prepare students

for college or the workforce; (2) students will be

subject to the same academic standards and assessments as other students educated by the eligible local education agency; (3) the comprehensive education plan is approved by the eligible

local education agency; and (4)(i) such public

school is located in an empowerment zone or

enterprise community including such designated

after October 3, 2008; or (ii) there is a reasonable

expectation (as of the date of bond issuance) that

at least 35 percent of the students will be eligible

for free or reduced cost lunches under the school

lunch program established under the National

School Lunch Act.

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 1. Tax-Exempt Governmental Bonds, by

Type and Term of Issue, 2007

[Money amounts are in millions of dollars]

Type and term of issue

Number

Amount

All issues, total [1]

Short-term

Long-term

25,253

6,798

18,455

379,326

63,076

316,250

New money issues, total

Short-term

Long-term

21,000

5,125

15,875

252,566

52,419

200,148

Refunding issues, total

Short-term

Long-term

6,425

2,303

4,122

126,759

10,657

116,102

[1] A given bond issue can include both new money and refunding proceeds. Thus, the

number of new money issues plus the number of refunding issues will sometimes

exceed the total number of issues. However, the money amounts add to the totals.

NOTE: Detail may not add to totals because of rounding.

Table 2. Long-Term Tax-Exempt Governmental Bonds, by Bond Purpose and Type of Issue, 2007

[Money amounts are in millions of dollars]

Bond purpose

Total [1]

Education

Health and hospital

Transportation

Public safety

Environment

Housing

Utilities

Bond and tax/revenue anticipation notes

Other purposes [2]

All issues

New money issues

Refunding issues

Number

Amount

Number

Amount

Number

Amount

(1)

(2)

(3)

(4)

(5)

(6)

18,455

6,137

374

1,215

2,391

1,325

126

2,180

310

5,662

316,250

105,660

5,772

36,583

6,815

16,008

1,830

50,479

3,739

89,363

15,875

5,187

333

1,063

2,285

1,102

1,724

281

4,852

200,148

71,595

3,210

23,698

4,941

9,659

628

32,019

3,284

51,113

4,122

1,411

277

219

430

820

1,415

116,102

34,065

2,562

12,885

1,874

6,349

1,202

18,460

455

38,250

[1] A given bond issue can include more than one purpose and can include both new money and refunding proceeds. Thus, the summation of number of issues by purpose or by type

of issue will sometimes exceed the total number of issues. However, the money amounts add to the totals.

[2] "Other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038-G.

NOTE: Detail may not add to totals because of rounding.

191

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 3. Computation of Lendable Proceeds for Long-Term Tax-Exempt Governmental Bonds, by

Bond Purpose, 2007

[Money amounts are in millions of dollars]

Entire issue price

Bond purpose

Total [1]

Education

Health and hospital

Transportation

Public safety

Environment

Housing

Utilities

Bond and tax/revenue anticipation notes

Other purposes [2]

Bond purpose

Total [1]

Education

Health and hospital

Transportation

Public safety

Environment

Housing

Utilities

Bond and tax/revenue anticipation notes

Other purposes [2]

Bond issuance

costs

Credit

enhancement

Allocation to reserve fund

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

18,455

6,137

374

1,215

2,391

1,325

126

2,180

310

5,662

316,250

105,660

5,772

36,583

6,815

16,008

1,830

50,479

3,739

89,363

11,081

3,758

191

828

785

881

1,818

217

3,681

2,658

855

251

142

465

790

4,556

1,882

320

275

332

807

1,428

896

196

149

150

319

1,403

216

104

131

326

553

2,893

785

280

111

751

810

Total lendable proceeds

Proceeds used to refund

prior issues

Nonrefunding proceeds

Number

Amount

Number

Amount

Number

(9)

(10)

(11)

(12)

(13)

(14)

18,453

6,136

374

1,215

2,390

1,325

126

2,180

310

5,662

309,802

103,824

5,603

35,903

6,665

15,719

1,804

49,112

3,728

87,445

114,320

33,706

2,500

12,645

1,842

6,272

1,194

18,160

454

37,546

15,873

5,186

333

1,063

2,284

1,102

1,724

281

4,852

195,483

70,118

3,103

23,258

4,823

9,447

609

30,952

3,274

49,899

4,122

1,411

277

219

430

820

1,415

Amount

[1] A given bond issue can include more than one purpose. Thus, the summation of number of issues by purpose will sometimes exceed the total number of issues. However, the

money amounts add to the totals.

[2] "Other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038-G.

NOTE: Detail may not add to totals because of rounding.

192

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 4. New Money Long-Term Tax-Exempt Governmental Bonds, by Bond Purpose and Size of Entire

Issue, 2007

[Money amounts are in millions of dollars, except for size of entire issue, which is in whole dollars]

Bond purpose

All issues

Number

(1)

Total [2]

Education

Health and hospital

Transportation

Public safety

Environment

Housing

Utilities

Bond and tax/revenue anticipation notes

Other purposes [3]

Under $500,000 [1]

Amount

(2)

15,875

5,187

333

1,063

2,285

1,102

1,724

281

4,852

200,148

71,595

3,210

23,698

4,941

9,659

628

32,019

3,284

51,113

Number

(3)

Amount

(4)

5,688

1,702

343

1,350

253

290

1,657

1,340

403

310

384

Size of entire issue

$500,000

under

$1,000,000

Number

(5)

Amount

(6)

1,943

590

121

307

148

192

542

1,335

412

200

122

364

$1,000,000

under

$5,000,000

Number

(7)

Amount

(8)

3,792

1,113

258

348

339

598

151

1,205

8,831

2,551

204

464

673

593

1,259

353

2,660

Size of entire issue—continued

$5,000,000

$10,000,000

$25,000,000

under

$10,000,000

$25,000,000

$75,000,000

Bond purpose

Number

(9)

Total [2]

Education

Health and hospital

Transportation

Public safety

Environment

Housing

Utilities

Bond and tax/revenue anticipation notes

Other purposes [3]

1,619

595

109

131

260

507

Amount

(10)

10,619

4,039

252

456

529

679

1,426

181

3,023

Number

(11)

1,296

516

101

160

476

Amount

(12)

18,216

7,096

237

888

843

1,067

147

1,907

176

5,855

Number

(13)

962

450

129

278

Amount

(14)

35,943

16,524

732

2,435

1,095

2,148

223

3,750

203

8,835

$75,000,000

Number

(15)

575

221

187

Amount

(16)

123,864

40,572

1,736

19,302

1,290

5,020

136

23,483

2,332

29,993

[1] Form 8038-G returns with an entire issue price less than $100,000 are excluded from the study. Issuers of these bonds are instructed to file Form 8038-GC, Statistics of Income (SOI)

does not process data from the Forms 8038-GC filed with the Internal Revenue Service.

[2] A given bond issue can include more than one purpose. Thus, the summation of number of issues by purpose will sometimes exceed the total number of issues. However, the money

amounts add to the totals.

[3] "Other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038-G.

NOTE: Detail may not add to totals because of rounding.

193

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 5. New Money Long-Term Tax-Exempt Governmental Bonds, by State of Issue and Bond

Purpose, 2007

[Money amounts are in millions of dollars]

Bond purpose

All States

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

U.S. Possessions [3]

Footnotes at end of table.

194

Education

Total [1]

State of issue

Health and hospital

Transportation

Public safety

Number

Amount

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

15,875

332

356

299

1,168

298

138

514

414

824

422

336

298

296

224

132

172

254

497

623

243

477

506

382

145

718

450

127

380

357

183

632

251

214

1,377

159

252

219

109

447

200,148

4,351

502

5,898

1,199

30,919

3,031

1,935

415

1,357

12,552

7,232

795

472

6,848

3,146

1,104

1,557

3,392

1,752

312

3,159

4,801

3,628

3,662

873

3,676

181

2,300

1,658

280

4,236

1,364

12,305

5,405

225

8,594

1,552

2,769

5,854

791

2,095

346

1,600

22,347

1,511

217

4,330

5,116

288

1,850

4,314

5,187

166

118

470

109

411

137

127

160

185

197

383

120

231

239

410

120

71,595

1,863

1,541

586

12,475

966

388

259

4,887

2,983

308

2,681

1,119

529

621

817

309

888

1,695

1,426

569

192

1,251

223

802

1,501

325

2,604

2,034

6,349

677

1,268

2,191

242

728

116

730

9,009

674

1,460

1,361

477

3,210

116

188

845

186

303

137

1,063

100

107

23,698

782

2,424

128

371

1,464

362

863

100

470

883

251

685

173

107

770

246

1,213

3,435

464

520

173

784

466

522

3,211

249

[2]

223

1,448

332

2,285

110

140

107

161

4,941

266

242

335

131

111

161

100

149

147

120

417

618

124

111

162

426

235

333

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 5. New Money Long-Term Tax-Exempt Governmental Bonds, by State of Issue and Bond

Purpose, 2007—Continued

[Money amounts are in millions of dollars]

Bond purpose—continued

State of issue

All States

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

U.S. Possessions [3]

Environment

Housing

Utilities

Bond and tax/revenue

anticipation notes

Other purposes [4]

Number

Amount

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

1,102

103

9,659

207

1,952

432

514

166

451

131

115

400

307

467

509

220

120

196

150

167

838

502

106

233

628

1,724

304

32,019

1,476

117

2,137

176

6,653

765

2,081

1,840

1,224

883

307

853

184

163

361

729

1,767

136

133

385

142

426

265

295

375

379

5,113

301

388

587

139

281

3,284

485

765

339

4,852

159

316

119

213

106

231

121

157

112

290

117

325

174

185

130

113

403

173

51,113

832

189

1,298

6,195

990

1,018

3,273

968

589

1,830

464

257

365

969

966

120

646

2,431

832

1,704

410

456

171

453

109

1,140

780

4,529

882

1,002

202

508

1,594

415

367

193

4,031

187

164

1,447

1,432

547

2,609

d—Data deleted to avoid disclosure of information about specific bonds. However, the data are included in the appropriate totals.

[1] A given bond issue can include more than one purpose. Thus, the summation of number of issues by purpose will sometimes exceed the total number of issues. However, the

money amounts add to the totals.

[2] Indicates an amount less than $500,000.

[3] U.S. Possessions include Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands.

[4] "Other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038-G.

NOTE: Detail may not add to totals because of rounding.

195

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 6. Tax-Exempt Private Activity Bonds, by Type

and Term of Issue, 2007

[Money amounts are in millions of dollars]

Type and term of issue

Number

Amount

All issues, total [1]

Short-term

Long-term

4,380

4,310

137,432

878

136,553

New money issues, total

Short-term

Long-term

3,637

3,586

87,172

596

86,576

Refunding issues, total

Short-term

Long-term

1,499

1,474

50,260

283

49,977

[1] A given bond issue can include both new money and refunding proceeds. Thus, the number of

new money issues plus the number of refunding issues will sometimes exceed the total number of

issues. However, the money amounts add to the totals.

NOTE: Detail may not add to totals because of rounding.

Table 7. Long-Term Tax-Exempt Private Activity Bonds, by Bond Purpose and Type of Issue, 2007

[Money amounts are in millions of dollars]

All issues

Bond purpose

Total [1]

Airport

Docks and wharves

Water

Sewage

Solid waste disposal

Qualified residential rental

Local electricity or gas furnishing facilities

Local district heating or cooling facilities

Qualified hazardous waste facilities

Tax Reform Act of 1986 transition property

Qualified new empowerment zone

Qualified public educational facilities

Qualified green building and sustainable design

Qualified Gulf Opportunity Zone and

Gulf Opportunity Zone mortgage

Qualified New York Liberty Zone

Qualified mortgage

Qualified veterans' mortgage

Qualified small issue

Qualified student loan

Qualified redevelopment

Qualified hospital

Qualified section 501(c)(3) nonhospital

Gulf Opportunity Zone advance refunding

Other purposes [2]

New money issues

Refunding issues

Number

Amount

Number

Amount

Number

Amount

(1)

(2)

(3)

(4)

(5)

(6)

4,310

142

619

136,553

6,819

1,360

388

458

4,183

9,106

359

3,903

3,586

124

508

86,576

3,578

405

256

346

3,316

7,359

163

512

1,474

127

49,977

3,241

955

132

112

868

1,747

196

3,391

312

775

436

1,754

3,973

395

24,472

374

2,531

5,330

28,923

42,061

1,467

259

729

344

1,428

3,912

13,508

119

2,383

4,489

17,270

27,352

879

213

203

736

10,964

254

148

841

11,653

14,709

588

d—Data deleted to avoid disclosure of information about specific bonds. However, the data are included in the appropriate totals.

196

[1] A given bond issue can include more than one purpose and can include both new money and refunding proceeds. Thus, the summation of number of issues by purpose or by type

of issue will sometimes exceed the total number of issues. However, the money amounts add to the totals.

[2] For this table, "other purposes" refer to obligations for which a specific purpose either did not apply or was not clearly indicated on the Form 8038.

NOTE: Detail may not add to totals because of rounding.

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 8. Computation of Lendable Proceeds for Long-Term Tax-Exempt Private Activity Bonds, by

Selected Bond Purpose, 2007

[Money amounts are in millions of dollars]

Selected bond purpose

Total [1]

Airport

Docks and wharves

Water

Sewage

Solid waste disposal

Qualified residential rental

Qualified Gulf Opportunity Zone and

Gulf Opportunity Zone mortgage

Qualified mortgage

Qualified veterans' mortgage

Qualified small issue

Qualified student loan

Qualified hospital

Qualified section 501(c)(3) nonhospital

All other bonds, combined [2]

Selected bond purpose

Total [1]

Airport

Docks and wharves

Water

Sewage

Solid waste disposal

Qualified residential rental

Qualified Gulf Opportunity Zone and

Gulf Opportunity Zone mortgage

Qualified mortgage

Qualified veterans' mortgage

Qualified small issue

Qualified student loan

Qualified hospital

Qualified section 501(c)(3) nonhospital

All other bonds, combined [2]

Entire issue price

Bond issuance costs

Credit enhancement

Allocation to reserve fund

Number

(1)

4,310

142

619

Amount

(2)

136,553

6,819

1,360

388

458

4,183

9,106

Number

(3)

2,735

102

145

Amount

(4)

1,048

Number

(5)

1,082

Amount

(6)

532

Number

(7)

730

Amount

(8)

1,752

148

312

775

436

1,754

3,973

24,472

374

2,531

5,330

28,923

42,061

6,576

120

377

357

1,453

250

495

151

149

600

222

211

435

178

439

821

Total lendable proceeds

Proceeds used to refund

prior issues

Nonrefunding proceeds

Number

(9)

Number

(11)

Number

(13)

Amount

(10)

Amount

(12)

Amount

(14)

4,310

142

619

133,221

6,579

1,349

379

451

4,094

9,028

1,474

127

48,976

3,187

948

132

111

866

1,736

3,686

125

509

84,245

3,392

402

247

340

3,227

7,292

312

775

436

1,754

3,927

24,231

372

2,484

5,267

28,013

40,534

6,513

213

203

736

10,900

253

146

836

11,332

14,191

4,277

266

731

355

1,506

3,866

13,331

119

2,338

4,431

16,680

26,344

2,236

d—Data deleted to avoid disclosure of information for specific bonds. However, the data are included in the appropriate totals.

[1] A given bond issue can include more than one purpose. Thus, the summation of number of issues by purpose will sometimes exceed the total number of issues. However, the

money amounts add to the totals.

[2] For purposes of this table, this category includes all issues for which a specific purpose either did not apply or was not clearly indicated on the Form 8038, as well as bonds issued

for: local electricity or gas furnishing facilities, local district heating or cooling facilities, qualified hazardous waste facilities, facilities issued under a transitional rule of the Tax Reform

Act of 1986, new empowerment zone facility bonds, qualified public educational facilities, qualified green building and sustainable design projects, New York Liberty Zone bonds,

qualified redevelopment bonds, and Gulf Opportunity Zone advance refunding bonds.

NOTE: Detail may not add to totals because of rounding.

197

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 9. New Money Long-Term Tax-Exempt Private Activity Bonds, by Selected Bond Purpose and

Size of Entire Issue, 2007

[Money amounts are in millions of dollars, except for size of entire issue, which is in whole dollars]

Size of entire issue

All issues

Selected bond purpose

Total [1]

Airport

Docks and wharves

Water

Sewage

Solid waste disposal

Qualified residential rental

Qualified Gulf Opportunity Zone and

Gulf Opportunity Zone mortgage

Qualified mortgage

Qualified veterans' mortgage

Qualified small issue

Qualified student loan

Qualified hospital

Qualified section 501(c)(3) nonhospital

All other bonds, combined [2]

$1,000,000 under

$5,000,000

Under $1,000,000

$5,000,000 under

$10,000,000

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

3,586

124

508

86,576

3,578

405

256

346

3,316

7,359

376

109

885

129

2,408

395

699

137

4,636

114

992

259

729

344

1,428

3,912

13,508

119

2,383

4,489

17,270

27,352

2,284

270

243

403

701

165

1,005

156

305

1,049

323

1,918

Size of entire issue—continued

Selected bond purpose

Total [1]

Airport

Docks and wharves

Water

Sewage

Solid waste disposal

Qualified residential rental

Qualified Gulf Opportunity Zone and

Gulf Opportunity Zone mortgage

Qualified mortgage

Qualified veterans' mortgage

Qualified small issue

Qualified student loan

Qualified hospital

Qualified section 501(c)(3) nonhospital

All other bonds, combined [2]

$10,000,000 under

$25,000,000

$25,000,000 under

$50,000,000

$50,000,000 under

$100,000,000

$100,000,000 or more

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(9)

(10)

(11)

(12)

(13)

(14)

(15)

(16)

713

168

9,646

554

2,445

365

10,321

125

971

1,463

261

13,122

172

972

790

287

46,334

3,202

660

1,267

322

240

585

702

4,193

169

326

1,922

178

906

4,294

658

3,065

423

2,374

4,285

2,581

7,828

3,888

12,796

11,615

2,014

d—Data deleted to avoid disclosure of information for specific bonds. However, the data are included in the appropriate totals.

[1] A given bond issue can include more than one purpose. Thus, the summation of number of issues by purpose will sometimes exceed the total number of issues. However, the

money amounts add to the totals.

[2] For purposes of this table, this category includes all issues for which a specific purpose either did not apply or was not clearly indicated on the Form 8038, as well as bonds issued

for: local electricity or gas furnishing facilities, local district heating or cooling facilities, qualified hazardous waste facilities, facilities issued under a transitional rule of the Tax Reform

Act of 1986, new empowerment zone facility bonds, qualified public educational facilities, qualified green building and sustainable design projects, New York Liberty Zone bonds,

qualified redevelopment bonds, and Gulf Opportunity Zone advance refunding bonds.

NOTE: Detail may not add to totals because of rounding.

198

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 10. New Money Long-Term Tax-Exempt Private Activity Bonds, by State of Issue and Selected

Bond Purpose, 2007

[Money amounts are in millions of dollars]

Selected bond purpose

State of issue

All States

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

U.S. Possessions [4]

Total [1]

Number

Amount

(1)

3,586

275

106

141

231

184

125

126

238

107

221

160

(2)

86,576

1,280

297

1,915

150

10,527

1,371

1,547

549

1,106

3,803

2,510

526

3,785

889

649

624

486

2,910

384

1,508

4,050

2,331

1,467

1,963

1,395

538

657

816

554

1,667

323

8,193

1,435

441

2,638

461

657

4,533

357

862

386

1,787

5,079

602

350

1,614

2,380

400

1,191

316

Airports, docks, and

wharves [2]

Water, sewage, and

solid waste disposal [2]

Qualified residential

rental

Number

(3)

Amount

(4)

3,983

349

389

185

290

226

(5)

153

Amount

(6)

3,918

190

392

229

117

118

153

470

372

578

(7)

508

112

Amount

(8)

7,359

1,852

104

258

214

292

237

219

127

112

1,622

115

122

367

387

Qualified Gulf Opportunity

Zone and Gulf Opportunity

Zone mortgage

Number

(9)

Amount

(10)

3,912

628

1,929

1,355

Footnotes at end of table.

199

Tax-Exempt Bonds, 2007

Statistics of Income Bulletin | Fall 2009

Table 10. New Money Long-Term Tax-Exempt Private Activity Bonds, by State of Issue and Selected

Bond Purpose, 2007—Continued

[Money amounts are in millions of dollars]

Selected bond purpose—continued

State of issue

All States

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

U.S. Possessions [4]

200

Qualified hospital

Qualified section

501(c)(3) nonhospital

Qualified mortgage

Qualified small issue

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(11)

259

(12)

13,508

1,171

310

175

439

740

208

477

948

104

313

158

211

408

282

245

145

177

500

139

136

264

123

312

139

311

175

257

568

147

113

561

217

108

268

(13)

729

122

(14)

2,383

198

161

178

144

(15)

344

(16)

17,270

542

2,892

906

777

897

283

220

858

679

348

154

159

158

358

952

208

918

117

195

959

300

119

2,001

227

865

352

(17)

1,428

112

134

(18)

27,352

218

867

3,393

370

1,172

340

1,382

842

1,333

387

305

177

126

347

114

904

2,664

434

632

586

239

572

2,920

242

488

209

2,117

179

399

886

305

566

562

114

299

All other bonds,

combined [3]

Number

(19)

Amount

(20)

6,893

212

1,869

857

433

d—a deleted to avoid disclosure of information about specific bonds. However, the data are included in the appropriate totals.

[1] A given bond issue can include more than one purpose. Thus, the summation of number of issues by purpose will sometimes exceed the total number of issues. However, the

money amounts add to the totals.

[2] For purposes of this table, certain bond purposes were combined. For this reason, data in this table will differ slightly from the data in Table 9.

[3] This category includes all issues for which a specific purpose either did not apply or was not clearly indicated on the Form 8038, as well as bonds issued for: local electricity or

gas furnishing facilities, local district heating or cooling facilities, qualified hazardous waste facilities, facilities issued under a transitional rule of the Tax Reform Act of 1986, new

empowerment zone facility bonds, qualified public educational facilities, qualified green building and sustainable design projects, New York Liberty Zone bonds, qualified veterans'

mortgage bonds, qualified student loan bonds, qualified redevelopment bonds, and Gulf Opportunity Zone advance refunding bonds.

[4] U.S. Posessions include Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands.

NOTE: Detail may not add to totals because of rounding.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.