Can Public Facilities Districts Issue Tax-Exempt Bonds?
PFDs can issue tax-exempt or taxable bonds, either as general obligation bonds or as revenue bonds. General obligations are backed by the full faith, credit and resources of the PFD and are subject to statutory debt limitations. Any bonds backed by taxes are ordinarily viewed as debt subject to these limitations. Revenue bonds are not debt for the purposes of these debt limitations and are backed by net revenues of the project financed. PFDs may issue double-barreled bonds (for example, backed by both tax receipts and net project revenues). Tax-exempt financing can reduce the cost of developing a regional center or other project. There are numerous federal tax law considerations that a PFD should take into account in order to take advantage of this resource. Generally, for bonds to receive tax-exempt status, the project financed by the bonds must be used for a public purpose, as opposed to a private activity. Private use restrictions applicable to other tax-exempt financings also apply
