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Private Activity Bonds

Overview

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 2018-57 published by the Internal Revenue Service, the volume limit on qualified private activity bonds for calendar year 2021 was the greater of $105 per capita (calculated from the state’s resident population) or $316.7 million. For calendar year 2021, Oklahoma’s volume cap was $417.9 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. 2018-57).

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

2022 State Volume Ceiling: $418,597,095

Statutory Allocation Pools Allocation Size Pool Total
Oklahoma Student Loan Authority 15.5% $64,882,550
Economic Development 12.0% $50,231,651
Qualified Small Issue 12.0% $50,231,651
Beginning Agricultural Producer 1.0% $4,185,971
Exempt Facility 2.5% $10,464,927
Oklahoma Housing Finance Agency 15.0% $62,789,564
State Issuer 1 4.0% $16,743,884
Local Issuer - Single Family 2 17.5% $73,254,492
Rural Area Housing 2 8.0% $52,324,637
Metropolitan Area Housing 3 12.5% $33,487,768
Total 100.0% $418,597,095

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.

Last Modified on May 02, 2022
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