A tribal government's gas-fired combustion turbine electric generating project can be financed with tax-exempt bonds even though the borrower, a political subdivision of the tribe, charges residents for the power, the Internal Revenue Service determined in a recent private-letter ruling.

The ruling, which was dated Dec. 8 but not publicly released until yesterday, clarifies that the "ownership and operation of the borrower's interest in the project" qualifies as an "essential governmental function," a requirement tribal governments must meet for tax-exempt bond financings except those using $2 billion of economic development bonds authorized by the new stimulus law.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.