Qualified Private Activity Bonds (PABs) are federally tax-exempt bonds. Under the federal volume cap, Kansas has a total 2018 bond allocation of $311,375,000 for this purpose. The types of bonds qualifying for such tax-exempt status are:
Exempt facility bonds
Qualified mortgage bonds
Qualified veterans’ mortgage bonds
Qualified small issue bonds
Qualified student loan bonds
Qualified redevelopment bonds
Qualified 501(c)(3) bonds
In Kansas, the primary demand for bond allocation has been for the issuance of exempt facility bonds, mortgage revenue bonds and qualified small issue bonds (or industrial revenue bonds).
Exempt Facility Bonds
Exempt facility bonds are used to fund activities such as:
Mass commuting facilities
Facilities for the furnishing of water
Solid waste disposal facilities
Qualified residential rental projects
Facilities for the local furnishing of electric energy or gas
Local district heating or cooling facilities
Qualified hazardous waste facilities
Mortgage revenue bonds (MRBs) and mortgage credit certificates (MCCs) are issued to provide first-time homebuyers an enhanced opportunity to finance the purchase of a new home. Persons meeting certain financial and demographic guidelines are able to achieve substantial savings over the life of a home mortgage through the use of these available programs.
Kansas legislation allows government units to issue qualified small issue bonds (or industrial revenue bonds) to be used for qualifying industrial or other authorized purposes. These industrial revenue bonds (IRBs) are securities issued by cities, counties or the Kansas Developmental Finance Authority (KDFA) to provide the funds for credit-worthy companies to purchase land, pay the cost of constructing and equipping new facilities or purchase, remodel or expand existing facilities.