Sales Tax Bonds
Sales Tax Bonds do not fall under the volume cap and are eligible to communities that have passed the economic development sales tax. Ineligible projects include for-profit hospitals, multi-family projects and municipal services.
Bonds can be issued to finance certain facilities such as:
- Certain qualified hazardous waste facilities (including certain training and storage facilities)
- Dock and wharf facilities
- High-speed inter-rail facilities
- Mass commuting facilities
There is no limit on the amount of the issue and these issues do not require a reservation under the volume cap. Although the facility must be governmentally owned, it may be leased or subject to management contracts with the business.
Other types of exempt bonds include:
- Facilities for the local furnishing of electricity or gas
- Local district heating or cooling facilities
- Projects for water
- Sewage and solid waste facilities
These types of exempt-facility issues must reserve a portion of the volume cap. Exempt-facility bonds that are not governmentally owned may reserve up to $25 million in tax-exempt volume cap allocation each year, however, there is no restriction to project size.
Tax-Exempt Industrial Revenue Bonds
Tax-Exempt Industrial Revenue Bonds are designed to provide tax-exempt financing to finance land and depreciable property for eligible industrial or manufacturing projects. The maximum bond amount is $10 million (which can include certain capital and administrative costs). (On January 1, 2007, the maximum bond amount will increase to $20 million.) These issues must receive a reservation under the State's volume limitation ("volume cap") managed by the Texas Bond Review Board.
The Tax Reform Act of 1986 imposes a volume ceiling on the aggregate principal amount of "private activity bonds" that may be issued with the State during any calendar year. Generally, the reservation of state ceiling issues is allocated by lottery in October each program year.
For more information on the “volume cap” or the lottery dates, contact the Texas Bond Review Board at 512-463-1741.