Nevada Administrative Code Chapter 348A - Issuance of Private Activity Bonds
Overview
NAC Chapter 348A governs the issuance, management, and administration of private activity bonds (PABs) in Nevada.
Private activity bonds are a type of tax-exempt bond issued by a government authority for the benefit of private entities to finance projects that serve a public purpose, such as:
Affordable housing
Industrial facilities
Airports or transportation infrastructure
Educational or health facilities
This chapter establishes the rules, procedures, and compliance requirements for issuing PABs in Nevada.
1. Purpose
The main purposes of NAC 348A are:
Provide a framework for issuing private activity bonds in accordance with federal and state law.
Ensure transparency and accountability in bond issuance.
Define eligibility and requirements for private entities seeking bond financing.
Regulate compliance with reporting, recordkeeping, and tax-exemption rules.
The chapter aligns Nevada’s procedures with IRS regulations, since the federal government controls the tax-exempt status of private activity bonds.
2. Definitions
Key terms in NAC 348A include:
Private Activity Bond (PAB): A bond issued by a government or public authority for the benefit of a private entity, with interest exempt from federal and state taxes under certain conditions.
Qualified Project: A project eligible for financing under PAB rules (e.g., affordable housing, industrial development).
Issuer: The public authority or governmental body authorized to issue PABs.
Borrower/Private Entity: The private business or organization receiving bond proceeds for a qualifying project.
Volume Cap: The limit set by law on the total amount of PABs that may be issued in a year.
These definitions clarify who can participate and what qualifies for bond financing.
3. Eligibility for Private Activity Bonds
Not all projects or entities qualify for PABs. NAC 348A specifies:
Eligible Projects: Includes projects that serve a public purpose, such as housing, industrial facilities, hospitals, educational facilities, or infrastructure.
Eligible Entities: Private corporations, non-profit organizations, or partnerships that comply with state and federal requirements.
Compliance with Volume Cap: The total bond issuance cannot exceed the state’s allocated volume cap for the year.
The purpose is to ensure PABs benefit public purposes and comply with federal limits.
4. Application and Approval Process
Entities seeking PABs must follow a formal application process:
Submit Application: Including project details, cost estimates, feasibility study, and legal documentation.
Review by Issuer: The state authority or board reviews the application to ensure eligibility and compliance.
Public Purpose Determination: The issuer confirms that the project serves a public purpose.
Approval: If all requirements are met, the issuer approves the bond issuance and allocates a portion of the state volume cap.
This process ensures fair and transparent allocation of PABs.
5. Issuance of Bonds
Once approved, NAC 348A sets rules for the actual issuance:
Bond Documentation: Legal documents must clearly define the issuer, borrower, project, interest rates, repayment terms, and tax-exempt status.
Compliance with Federal Law: Bonds must meet IRS requirements to retain tax-exempt status.
Allocation of Proceeds: Funds from the bond sale must be used exclusively for the approved project.
Bond Registration and Reporting: Bonds must be registered and reported to appropriate state authorities.
This ensures accountability and legal compliance.
6. Reporting and Recordkeeping
NAC 348A requires:
Detailed records of bond proceeds, expenditures, and project progress.
Annual reports to the state and federal authorities on bond use and compliance.
Retention of records for a period sufficient to allow audits and verification (typically several years).
Proper reporting ensures transparency and IRS compliance for tax-exempt bonds.
7. Limitations and Restrictions
The chapter also imposes limitations:
Bonds cannot exceed the state’s volume cap.
Proceeds must only be used for eligible projects.
Borrowers must comply with all conditions for maintaining tax-exempt status.
Refinancing or transferring bonds may require additional approval.
These rules prevent misuse of tax-exempt financing.
8. Enforcement and Compliance
The issuer has authority to:
Monitor compliance with project and bond requirements
Request audits or reports from borrowers
Take corrective action if funds are misused or conditions are violated
Non-compliance can lead to loss of tax-exempt status, penalties, or repayment requirements.
9. Summary
NAC Chapter 348A provides a structured framework for:
Defining eligible projects and entities for private activity bonds.
Managing the application, review, and approval process.
Issuing, documenting, and allocating bond proceeds.
Reporting, recordkeeping, and compliance monitoring.
Ensuring adherence to federal and state tax laws, including volume cap limits.
Essentially, the chapter ensures that private activity bonds in Nevada are used responsibly to support projects with public benefits while maintaining tax compliance and transparency.
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