Private Activity Bonds

Reduce the cost of debt capital.

Maximize savings for your qualified, public-benefit development project.

PABs-to-Date

Total Project Investment

$698.9M

Project Minimum

$3M

Reduction in Interest

1% - 2%

Private Activity Bonds help reduce the cost of debt-capital for qualified, public-benefit projects.

The Industrial Development Authority of the City of Tucson, Arizona (“Tucson IDA”) is a nonprofit corporation and political subdivision of the State of Arizona. As a conduit issuer of revenue bonds, the Tucson IDA offers a way for private borrowers to receive the benefits of tax-exempt bond financing. The Tucson IDA is authorized to issue bonds and loan the proceeds to a private borrower to assist in financing qualifying projects. The Tucson IDA does not lend its own money to fund the bond financing, but rather bond proceeds originate from a bank or bondholders. Repayment of the bonds is the sole obligation of the borrower.

In order for the bonds to receive tax-exempt classification, the project financed with the bond proceeds must have a public purpose and must be considered governmental or a qualified private activity bond as defined by the Internal Revenue Code. Tax-exempt interest means lower rates for the borrower and, therefore, reduce overall borrowing costs.

Private Activity Bonds are a "blended capital" strategy which helps to secure private investment to finance projects that provide a public benefit. Borrowers are private parties, including corporations, limited liability companies, limited partnerships or nonprofit corporations.

Not all projects are a good fit for Private Activity Bond financing.
We can work with you to determine if your project qualifies.

Projects: Through this mechanism, the Tucson IDA can only finance a qualified “Project” which generally includes the acquisition, construction, rehabilitation, improvement, and operation of land, buildings, machinery, or equipment.

Size: In order to experience the cost-savings, generally speaking, your project will be planning on financing over $3,000,000 in debt-capital. There are also projects that are too large to be financed through a single Private Activity Bond Issuance. In these cases we might have to finance a portion of the project or issues several different types.

Tax-Exemption: The Internal Revenue Code dictates which types of projects are suitable for federal-tax-exemption. In order for bonds to be issued on a tax-exempt basis, the project to be financed must meet all of the requirements of a private activity bond as defined by the Internal Revenue Code. In order for bonds to be issued on a taxable basis, the project to be financed must meet all of the requirements of the Arizona Industrial Financing Act and by Tucson IDA’s policies.

Affordable Housing

Non-profit 501(c)3
Organizations

Exempt Facilities

Manufacturing

The Internal Revenue Code Outlines the following types of projects federally tax-exempt:

Airports
Docks and wharves
Mass commuting facilities
Facilities for the furnishing of water
Sewage facilities
Solid waste disposal facilities
Qualified residential rental projects (e.g., low income apartments)
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
Qualified public educational facilities
Qualified green building and sustainable design projects
Qualified highway or surface freight transfer facilities
Qualified small issue bonds for manufacturing facilities (limited to $10MM and borrower must not have more than $40MM in capital expenditures during the three years before and after issuance of the bonds)
Qualified 501(c)(3) bonds (i.e., property for use by a 501(c)(3) organization in connection with its exempt activities) – Examples: hospitals, nonprofit schools, other charitable organizations (YMCA, Goodwill, etc.)
Qualified high speed internet projects
Qualified carbon capture infrastructure

Consult with an attorney to determine if some or all of your projects are exempt

Our goal is to be your local partner, ensuring that from start to finish, our collaboration is effective and streamlined.

Thank you for your interest in working with Tucson IDA. We are excited to work with you as a conduit issuer in your effort to secure tax-exempt bond financing. Here is what the process looks like!

Download Application Online: Download and submit a completed application to the Tucson IDA. You can find the link below. It is best to apply when your source of capital has been confirmed and you are about 6 months out from funding. There is a $1,000 application fee due on submission.
Inducement Resolution Vote: After staff and counsel have reviewed your application, we will schedule a Board Meeting for a preliminary (or inducement) resolution. Review our Meeting Schedule to see our monthly meeting times. In time sensitive cases, we can schedule a Special Meeting. If the inducement resolution is approved, a portion of your non-refundable application fee is due at this time.
Structure Terms: Applicant works with Bond Counsel and Underwriter (or Purchaser) to establish parameters for Bonds and structure terms.
Volume Cap Allocation Application: In some cases it may be necessary to request for volume cap allocation is submitted to the Arizona Department of Commerce.
Tax Equity and Fiscal Responsibility Act (TEFRA) Hearings: In some cases, the Internal Revenue Code requires a public hearing to be held. The Tucson IDA will facilitate this process.
Final Bond Resolution Vote: The Tucson IDA Board Bond will review final bond terms and documents and pass a final resolution authorizing the issuance and inform the Arizona Attorney General.
Mayor and Counsel Vote: The City of Tucson Mayor and Counsel will review the public hearing and authorizes issuance of the bonds by the Tucson IDA.
Additional ADH Process:
- If necessary, an application is made to the Arizona Department of Housing for review of the Bonds under Section 35-726, Arizona Revised Statutes, as amended.
- If necessary, a hearing under 35-726, Arizona Revised Statutes, as amended is held by the Arizona Department of Housing, which approves the issuance of the bonds.
Bonds are Sold: The bonds can now be sold by the Underwriter (or purchased by the Purchaser).
Transaction closes: The bonds are issued and all fees are paid. Depending on the terms, annual or semi-annual fees may be collected for the term of the financing.

Simplified, reasonable fees are re-invested into programs that strengthen our community.

Application Fee:

The complete fee for filing an Application is $3,000, which is nonrefundable. One Thousand Dollars ($1,000) is to be paid at the time the Application is filed and the balance within 10 days of the Tucson IDA’s grant of preliminary approval to the issuance of the proposed bonds. If the preliminary approval is denied, no further fees beyond the initial $1,000 is required unless the application is resubmitted, and preliminary approval is subsequently given.

Counsel Fee:

Tucson IDA’s and Tucson IDA’s Counsel Fees. By submitting an Application, the Applicant also agrees to pay all costs and expenses incurred by the Tucson IDA or its Board related to the issuance of the bonds.

Issuer Administrative Fee:

Tucson IDA’s annual administrative fee is 5 basis points per annum (paid annual or semiannually) on the outstanding amount of the bonds as of the date of payment (prior to any prepayment or redemption), with a minimum amount of $3,000.00 per year, in arrears and pro-rata for the time outstanding.

Additionally, the Tucson IDA may approve a one-time payment at or after closing of the bonds in lieu of annual administrative fee payments, reflecting the present value of the Tucson IDA’s annual administrative fees for less than the life of the bonds (provided such payment shall provide for at least the period from issuance to first redemption date).

Why Bond
With Us?

The Tucson IDA remains on the pulse of the needs and opportunities in the City of Tucson and Pima County and is charged to develop and support innovative solutions for public-benefit.

Municipal Service Partnerships

As the Industrial Development Authority for the City of Tucson, we are an integral part of contributing to local government initiatives and stays tuned in and tapped in to large, long-term economic development projects.

Sustainability Development Enhancements

Groundswell Capital is Arizona's first Green Bank, garnering national recognition as one of six selected for the Coalition for Green Capital. Groundswell offers additional cost savings through sustainable development.

Multilingual Functionality

First-Rate Materials

Application Form

Download Application

$3,000 Application Fee

$1,000 due upon application submission

National Bond Issuance

Supporting Public-Benefit Projects, with the ability to issue Private Activity Bonds throughout the
United States.

Green Photo-centric Government Progress Report Sustainable Development Goals Presentation.

Procedural & Application Guidelines

Review our Procedural Policies and Application Guidelines prior to submitting your application.

The total application fee is $3,000 with the first increment of $1,000 due upon application submission.

Procedures & Guidelines

Book An Info Session

During this session, our Bond Specialist will run through everything you need to know about Private Activity Bond benefits, project eligibility, and additional cost savings available prior to your project application submission.

Book Info Session

Download Info Deck