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The Private Activity Bond (PAB) is Utah's tax-exempt bonding authority creating a lower cost, long-term source of capital under the Federal Tax Act of 1986.
As a result, the federal government allocates $24 billion per year to states on a per capita basis, with Utah receiving $246,610,000 in 2006 (compared to California's $2.8 billion). Each state establishes its usage priorities by statute. The Utah Legislature has established its priorities for this important scarce resource in the following four accounts:
Small Issue Account
Volume Cap Amount: $59,186,400
Percent of Total Volume Cap: 24%
Users: Multi-family Affordable Housing (apartments) and Manufacturing Facilities (credit worthy with higher paying jobs; to build or buy a new building, equipment, and/or land)
Single Family Account
Volume Cap Amount: $103,576,200
Percent of Total Volume Cap: 42%
Users: Utah Housing Corporation for first-time single family homeowners
Student Loan Account
Volume Cap Amount: $81,381,300
Percent of Total Volume Cap: 33%
Users: Board of Regents for university and college students
Exempt Facility Account
Volume Cap Amount: $2,466,100
Percent of Total Volume Cap: 1%
Users: Pollution and Waste Control Projects
The Small Issue Account attempts to allocate this "Volume Cap" to meet two critical state needs: build essential multi-family housing and create high paying jobs that will support a family. Through use of Multi-family Housing Bonds and Manufacturing Facility Bonds (i.e. Industrial Development Bonds or IDBs), long-term capital is made available at 100 to 300 basis points (1 to 3 percentage points) less than market rates for periods of 20 to 40 years.
The Single Family Mortgage and Student Loan Programs lower thousands of Utahns' long-term costs annually for their first home mortgages or college student loans.
Volume Cap allocations require qualified bond counsel and an underwriter that result in tax-exempt bonds. Volume Cap is allocated by the Private Activity Bond Review Board in 90-day certificates at the regularly scheduled monthly meetings. Applications are submitted at least five weeks prior to the board meetings.
For more information on the individual programs and to receive applications, click here.