Projects financed on a tax-exempt basis with private activity bonds must comply with the Internal Revenue Code and its regulations. The EIERA is further limited in the private activity bonds it may issue by state law. An entity considering this type of financing should contact its bond counsel to determine whether the project is eligible.
Financing with tax-exempt bonds requires strict compliance with a series of requirements and limitations established by the Internal Revenue Code. Additionally, federal securities rules have additional requirements and provide that in most instances the entity obligated to pay debt service on the bonds must annually provide operational and financial data to national information repositories sanctioned by the Securities and Exchange Commission.
In order to meet these and other tax and securities requirements, the entity must retain appropriate professional representation, including qualified bond counsel, underwriter and paying agent/bond trustee. Other professional services may also be necessary. The entity is responsible for retention of and payment for all of its professional service providers.
Most entities that are eligible for tax-exempt bond financing are subject to the federally required annual volume cap which restricts the amount of certain tax-exempt private activity bonds that can be issued in any one state. Missouri’s allocation of the volume cap is administered by the DED. Allocations of volume cap are valid for sixty days unless bonds have been issued or the allocation is extended. Application for volume cap is made to DED by the EIERA on behalf of the entity seeking financing. DED is solely responsible for determining whether volume cap will be allocated to the entity.