Tax Law Summary

Tax-exempt bonds used to redeem outstanding tax-exempt bonds are permitted. Only one “advance refunding” issues more than 90 days before the call date of the refunded bonds is permitted. 
Borrowers of tax-exempt debt are not permitted to use bond proceeds to finance facilities for which other funds have been made specifically available such as board restricted funds or designated gifts.
Eligible Projects
Mostly limited to capital expenditures such as land, renovation, equipment and/or related infrastructure, or buildings.
Cost of Issuance
Maximum of 2% of proceeds can be used to finance cost of issuance. Additional cost of issuance funds may be funded with equity or taxable bonds.
Project Completion Guidelines
• 85% of funds must be used in first 3 years
• 85% of funds must be used within 5 years permitted if also:
• 10% within 1 year
• 30% within 2 years
• 60% within 3 years
Reimbursement Resolution
Bond proceeds must be used to reimburse a cost no later than 18 months after the later of the date cost is paid or the date the project is place in service. Soft costs such as engineering and architectural fees incurred prior to financing are reimbursable up to 20% of bond. A reimbursement resolution must be signed no less than 60 days before the actual date of expenditure. 
Arbitrage Rebate
Interest earnings in excess of the arbitrage yield must be rebated unless borrower meets 6 month, 18 month or 2 year exception. After 3 years, monies are subject to restriction.
Bond Maturity
Average maturity of bonds cannot exceed 120% of weighted average of reasonably expected economic life of assets financed.
Private Uses
5% of net proceeds can be used for unrelated private business, 10% for public colleges and universities.