The unpopularity of property taxes and the simplicity and perceived fairness of sales taxes have made the County 1% Special Purpose Local Option Sales Tax (“SPLOST”) a popular method for funding needed capital projects in Georgia. That the voters must approve the SPLOST through referendum reinforces democratic principles and is popular with officials. The voters will decide whether the described projects are funded through SPLOST, and elected officials need not raise property taxes for funded projects. The SPLOST statute was substantially rewritten in the 2004 General Assembly, effective July 1, 2004, with respect to how the tax is to be… Read more

Introduction This memorandum provides a brief explanation and overview of tax-exempt Bond financing for 501(c)(3) nonprofit organizations under the Internal Revenue Code of 1986, as amended (the “I.R.C.”). Tax-exempt 501(c)(3) Bonds may be issued for most facilities utilized for the exempt purposes of Section 501(c)(3) organizations, as outlined in this memorandum. The principal advantages of such bond financing are the low interest rates and the attractiveness of the debt to lenders and investors. Bond financing may permit a user to build its projects sooner, expand the scope of its projects, or direct its fundraising to other purposes. With facilities financed… Read more

Introduction. Nonprofit schools increasingly are taking advantage of tax-exempt bond financing to fund capital improvements and expansion. Bond financing can be used for land acquisition, bricks and mortar, furniture, furnishings and equipment and many other costs associated with a school’s educational, recreational and charitable purposes, including in proper circumstances refinancing of capital debt. The principal advantages of such bond financing are the low interest rates and the attractiveness of the debt to lenders and investors. Bond financing may permit a school to build its projects sooner, expand the scope of its projects, or direct its fundraising to other purposes. With… Read more

Introduction This memorandum provides a brief explanation and overview of tax-exempt financing for governmental purposes under Georgia law and the Internal Revenue Code of 1986. A summary is presented of the state law procedures and requirements for issuance of bonds and other forms of financing by local governments and public authorities. Rules governing the exemption from federal income taxation of interest paid on such obligations are also outlined. A variety of governmental debt obligations may qualify for tax exemption (e.g., bonds, notes, revenue certificates, bank loans, leases and certificates of participation), and these are sometimes referred to interchangeably as “bonds,”… Read more

Introduction Scope. This memorandum provides a brief explanation and overview of tax-exempt financing for nonprofit hospitals and other healthcare organizations under Georgia law and the Internal Revenue Code of 1986. A variety of governmental debt obligations may qualify for tax exemption (e.g., bonds, notes, revenue anticipation certificates, bank loans, installment sales and leases), and these are sometimes referred to interchangeably as “bonds,” “debt,” or “obligations.” A summary is presented of the state law requirements for issuance of debt by public hospital authorities. Rules governing the exemption from federal income taxation of interest paid on such obligations also are outlined. Debts… Read more

Regulations Require Declaration of Official Intent The Internal Revenue Service has revised its regulations concerning the use of tax-exempt financing (bonds, notes and leases, referred to below generally as “bonds”) to reimburse expenditures made prior to the date of the financing. Under the new regulations, the proceeds of bonds may be allocated to a prior capital expenditure for a period of time after the expenditure is made, but only if a formal declaration of reasonable intention to reimburse the expenditure with the proceeds of a borrowing (a “declaration of official intent”) had been properly made within sixty (60) days after… Read more

BENEFITS OF A REGIONAL APPROACH TO SOLID WASTE MANAGEMENT NEEDS The Georgia Comprehensive Solid Waste Management Act (the “Act”), enacted by the General Assembly of the State of Georgia in 1990, has placed a number of compliance, management and other requirements on cities and counties in dealing with their municipal solid waste stream. A regional approach to meeting the obligations imposed by the Act offers economies and efficiencies of scale that would be difficult for cities and counties to attain acting on their own. A regional solid waste management authority could offer a variety of services to its participating cities… Read more

In these days of “easy credit,” one receives credit cards in the mail nearly weekly, can readily purchase a car or household items on terms and gets spam daily for “low rates on mortgages.” Although an individual or business may go into debt easily, it is an entirely different matter for a Georgia public school system. Georgia law will not permit the chairman of the board of education or superintendent of schools to simply go to the local bank and sign a form note or lease. Reflecting the seriousness of long-term obligations and the burden they place on future boards… Read more

The unpopularity of property taxes and the simplicity and perceived fairness of sales taxes have made the 1% Special Purpose Local Option Sales Tax for Educational Purposes (“Education SPLOST”) a popular method for funding capital outlay projects for public schools in Georgia. That the voters must approve the Education SPLOST through referendum reinforces democratic principles and is popular with school board officials. The voters will decide whether the described projects are funded through Education SPLOST, and the board of education need not raise property taxes for funded projects. Out-of-county shoppers will pay a portion of the sales tax, adding to… Read more

GENERAL REQUIREMENTS: The Georgia Constitution prohibits a county, municipality, or other political subdivision (e.g., school system) from incurring any new general obligation debt without the assent of a majority of the qualified voters of the subdivision, obtained in an election held for that purpose. Ga. Const. art. IX, § V, ¶ I(a). This memo summarizes the key requirements for conducting a bond referendum (election) for counties, municipalities and school systems in Georgia. General obligation bonds for counties, school systems and municipalities must mature within 30 years of issuance. Ga. Const. art. IX, § V, ¶ VI. Prior to or at… Read more