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Jun 06, 2007

Overview of Tax-Exempt Financing For NonProfit Hospitals

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


Feb 26, 2002

Community Improvement Districts as a Tool for Infrastructure Financing

Private businesses are more frequently being called upon to bear the costs of public infrastructure improvements necessitated by new facility locations and real estate developments. Long-standing practice has required businesses and developers undertaking new projects to construct adjoining or connecting roads, curbing, sidewalks, street lighting, utility lines, and similar improvements, and to dedicate these to public use. In addition, a more recent trend is to require developers to pay to cities or counties impact fees that reflect the costs of additional infrastructure needs arising as a result of a project, such as road widenings, traffic signals, buffers, parks, and highway… Read more


Jun 06, 2007

Reimbursement of Prior Expenditures With Bond Proceeds-Final Reimbursement Bond Regulations

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


Feb 19, 2002

Requirements for a “Trust Lease” for Exclusion From Treatment as a Capital Expenditure

As a general rule, any capital expenditure which is properly chargeable to the capital account of any person and which is made with respect to the financed facility must be included for purposes of the $10,000,000 capital expenditure limitation under I.R.C. § 144(a)(4). Treasury regulations provide, however, that certain capital expenditures may be excluded from the computation. One such excluded expenditure is an expenditure made by a person, other than the bond user, a related person, or a State or local governmental unit, if the expenditure is made with respect to tangible personal property, or intangible personal property, leased to… Read more


Jun 06, 2007

Regional Solid Waste Management Authorities

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


Jun 06, 2007

Taxable Versus Tax-Exempt Bond Financing for Project Financing

When an industrial expansion will create jobs, revenues and development, many communities will offer incentives to attract the location. Bonds are an important incentive, authorized by state law to provide advantageous financing for certain businesses. A government body may issue bonds to finance a qualifying project, and the company operating the facility must pay amounts to service the bonds. Federal tax law changes have restricted the use of tax-exempt industrial development bonds (IDBs) prompting communities to develop alternatives. In many jurisdictions “Taxable Bonds” can be issued with some of the same advantages. Tax-Exempt IDBs Interest on qualified IDBs is exempt… Read more


Jun 06, 2007

How School Systems Borrow

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


Apr 08, 2008

Overview of Special Purpose Local Option Sales Tax for Educational Purposes

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


Jun 24, 2008

Overview of Georgia Debt Referendum Requirements

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


Jun 06, 2007

How Cities Borrow

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 city. Georgia law will not permit the mayor or city manager 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 commissions and taxpayers, borrowing by cities is highly restricted and… Read more