What Law Authorizes Tribal Economic Development Bonds?
On February 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (“ARRA” or “Recovery Act”), a $787 billion recovery package intended to stimulate the U.S. economy out of recession. The ARRA consists of supplemental appropriations for federal spending, as well as tax incentives, state fiscal relief and other provisions. Section 1402 of the ARRA amends the Indian Tribal Governmental Tax Status Act of 1982, 26 U.S.C. ยง7871 (“Indian Tax Status Act”) to permit, for the first time, “Tribal Economic Development Bonds” (TEDBs). What is a Tax-Exempt Bond and Why is the Authority to Issue Tax-Exempt Bonds Important? A bond is a type of loan. The issuer (except in the case of private activity) is the borrower. The purchaser of a bond is the lender. A bond normally has a longer term than a business loan and is capable of being freely bought and sold by the bondholders. When a bond qualifies as tax-exempt under the Internal Revenue Code, the holders of the bonds do not have
