WASHINGTON — The Treasury Department yesterday
American Recovery and Reinvestment Act provisions enable tribal governments to issue either tax-exempt or Build America Bonds for any project a state or local government could finance with bonds. Tribal governments had to submit applications to the Internal Revenue Service to request an allocation of the bonds. Each application had to describe the project, financing plan, and timeframe for completion.
The ARRA-authorized bond program offers greater flexibility to tribes because they otherwise must adhere to the restrictive “essential governmental function” test for traditional tax-exempt bond financings. Tribal economic development, or TED, bonds do not have to pass that test. The only projects specifically prohibited from financing with the bonds are gaming facilities.
“Through tribal bonds, communities across Indian Country can access lower-cost borrowing to help finance economic development projects that create jobs,” deputy Treasury secretary Neal Wolin said in a written statement. “The first round of awards announced in September helped 58 tribes get infrastructure projects off the ground, and this new allocation will help jump-start even more projects that will spur economic growth.”
The bonds will be used to finance a wide variety of projects, including infrastructure projects, facilities for tourism, renewable energy, or housing. Several tribes are utilizing the bonds to refinance outstanding tax-exempt debt.
The Treasury announced allocations for the first $1 billion tranch in September. That segment was allocated to finance 58 projects.
Recipients of the most recent allocation have until the end of the year to issue the bonds.
