Private Activity Bonds
Overview
- PA-1 Private Activity State Ceiling Application
- PA -2 Final Certification of Private Activity Bond Issuance
Private activity bonds under the Internal Revenue Code (the Code) are described generally as any bond: (1) of which more than 10% of the proceeds is to be used in a trade or business of any person or persons other than a governmental unit or which is to be directly or indirectly repaid, or secured by revenues from a private trade or business; and (2) in which an amount exceeding the lesser of 5% or $5 million of the proceeds is to be used for loans to any person or persons other than a governmental unit.
The Federal Tax Reform Act of 1986 established limits on the volume of private activity bonds that may be issued in a state during any calendar year. To ensure compliance with federal law, the Oklahoma legislature passed the Oklahoma Private Activity Bond Allocation Act (the Act).
Yearly PA Bond Apportionments
The Act provides for the systematic distribution of the state’s Volume Ceiling and allows for fair access to small communities. The Act, which is administered by the Deputy Treasurer for Debt Management, ensures that the state complies with the provisions of federal law limiting the use of these bonds. Pursuant to Revenue Procedure 2022-38 published by the Internal Revenue Service, the volume limit on qualified private activity bonds for calendar year 2023 was the greater of $120 per capita (calculated from the state’s resident population) or $358.8 million. For calendar year 2023, Oklahoma’s volume cap was $482.4 million.
Oklahoma Private Activity Bond Allocation Act
Most private activity bonds must be sold on a taxable basis. However, the Code grants exceptions when certain bonds can be sold on a tax-exempt basis (“Qualified Private Activity Bonds”). Such bonds, with certain exceptions, are subject to the federal alternative minimum tax. The Code also imposes a limitation on the amount of Qualified Private Activity Bonds which may be issued by a state in any calendar year (see Rev. Proc. 2022-38).
At 8:00am on September 2 of each calendar year, the remaining unallocated Volume Cap from all pools is combined to form the Consolidated Pool. Allocations from this pool can be made to any type of Private Activity Bond pursuant to a priority system provided for in the Act. The Consolidated Pool terminates at 9:00 a.m. on December 20th of each calendar year.
Yearly PA Bond Apportionments
2023 State Volume Ceiling: $482,376,000
| Statutory Allocation Pools | Allocation Size | Pool Total |
| Oklahoma Student Loan Authority | 15.5% | $74,768,280 |
| Economic Development | 12.0% | $57,885,120 |
| Qualified Small Issue | 12.0% | $57,885,120 |
| Beginning Agricultural Producer | 1.0% | $4,823,760 |
| Exempt Facility | 2.5% | $12,059,400 |
| Oklahoma Housing Finance Agency | 15.0% | $72,356,400 |
| State Issuer 1 | 4.0% | $19,295,040 |
| Local Issuer - Single Family 2 | 17.5% | $84,415,800 |
| Rural Area Housing 2 | 8.0% | $60,297,000 |
| Metropolitan Area Housing 3 | 12.5% | $38,590,080 |
| Total | 100.0% | $482,376,000 |
1Allocations for certain state issuers of Qualified Small Issue obligations.
2Allocations for certain local issuers of Single Family Mortgage Revenue Bonds and/or Mortgage Credit Certificates.
3Allocations for certain Oklahoma County and Tulsa County issuers of Single Family Mortgage Revenue Bonds.
Each County receives an allocation of 50% of this pool.
