March 18, 2005 |
2005-R-0304 | |
PRIVATE ACTIVITY BONDS | ||
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By: Judith Lohman, Chief Analyst | ||
You asked what Connecticut’s federal private activity bond limit is, how much of the permitted amount has been allocated, and for what purposes.
Private activity bonds (also known as industrial development bonds) are issued by quasi-public authorities and municipalities. They are backed by the credit of private borrowers or pools of borrowers, who pay the debt service on the bonds. Federal law exempts these bonds from federal taxation if they are issued for tax-exempt sewage disposal, water, solid waste disposal, or local district heating and cooling facilities; qualified nonprofit corporation projects; manufacturing projects; or as qualified redevelopment bonds for tax-exempt facilities.
Federal law limits the volume of tax-exempt private activity bonds that can be issued each year. Each state has its own cap. Originally Connecticut’s cap was $ 50 per capita or $ 150 million. Starting in 2002, this amount increases annually with inflation. Table 1 shows Connecticut’s private activity bond limits for calendar years 2000 through 2004.
Table 1: Connecticut’s Private Activity Bond Limits
Calendar Year |
Per Capita |
Minimum |
Cap |
2000 |
$ 50. 00 |
$ 150,000,000 |
$ 164,100,000 |
2001 |
$ 62. 50 |
$ 187,500,000 |
$ 212,800,000 |
2002 |
$ 75. 00 |
$ 225,500,000 |
$ 256,900,000 |
2003 |
$ 75. 00 |
$ 225,500,000 |
$ 259,500,000 |
2004 |
$ 80. 00 |
$ 233,400,000 |
$ 278,700,000 |
Source: Office of Fiscal Analysis, Connecticut’s Capital Budget, November 2004
Starting in 2001, Connecticut law requires each year’s private activity bond total to be allocated according to a statutory formula. Table 2 shows the issuing agencies and the percentage of each year’s bond total that each receives.
Table 2: Statutory Private Activity Bond Allocation
Agency |
Calendar 2001 |
Calendar 2002 and after |
Connecticut Housing Finance Authority |
60% |
60. 0% |
Connecticut Development Authority |
15% |
12. 5% |
Municipalities, Connecticut Higher Education Supplemental Loan Authority, and contingencies |
25% |
27. 5% |
Source: CGS § 32-141(a)
PA 01-7, June Special Session eliminated the separate Private Activity Bond Commission and transferred its authority to allocate private activity bonds to the State Bond Commission. The State Bond Commission approves private activity bond allocations at its December meeting each year. We attach allocation summaries for calendar years 1999 through 2004 taken from the minutes of the Bond Commission’s December meetings, which are available on the Office of Policy and Management Web site (http: //www. opm. state. ct. us). The summaries show annual amounts allocated and for what purposes, and the unallocated balances for each year.
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