Treasury Department Seeks Input To Improve Tribal Economic Development Bond Program

The Treasury Department is seeking comments from Tribal Governments and interested individuals regarding the ability of Tribes to issue tax-exempt bonds. This includes Tribal Economic Development Bonds (TEDBs) that were authorized by ARRA. The attached PDF document contains the Treasury Department's notice, and comments are due by September 10, 2010.

Questions posed by the Department include:

Are there any specific additional types of projects or activities beyond those allowed for State and local governments for which Indian tribal governments should be authorized (or not authorized) to use qualified tax-exempt private activity bonds (i.e., in which private business ownership, leasing, or other private business use of the bond-financed projects would be permitted) in light of their special needs or unique circumstances?

Should the limitation on use of Tribal Economic Development Bonds to finance projects that are located outside of Indian reservations be modified to address special needs or unique circumstances of Indian tribal governments?

Should consideration be given to changing the law permanently to authorize Indian tribal governments to use qualified tax-exempt private activity bonds for the same types of projects and activities as are allowed for State and local governments?


Many Tribes and their partners have chafed over the past decade as the IRS introduced, largely on a retroactive basis through its audit program, new requirements that prohibited Tribes from issuing debt on a tax-exempt basis (e.g. there could be no commercial aspects of a bond-financed project and a tribe would need to prove that numerous state and local governments had been financing similar improvements with bonds over long periods of time).

Comments can include real-life examples of projects that Tribes had to forego (or finance on a more expensive taxable basis) because the current tax laws prohibited tax-exempt financing. It may also be helpful to identify frustrations Tribes have encountered trying to use TEDBs, and debunk the myth that tribes are mainly focused on casinos.

For more information regarding how to help influence the Treasury Department to improve its Tribal bond program, contact Foster Pepper’s Jeff Nave.
 

Second Billion-Dollar Tribal Economic Development Bond Allocation Announced

The second billion-dollar tranche of Tribal Economic Development Bonds has now been allocated by the federal government, with the funding authorization being spread over 76 projects for Tribes throughout the country. The largest dollar allocation for any single project in this financing tranche is $30,000,000.00, which was authorized for five projects, with the remainder receiving smaller authorizations.

Examples of approved projects in the second allocation round include:

Campo Band of Mission Indians in California: $30,000,000.00 for Renewable Energy, Tourism, and Wastewater Facilities

Delaware Nation in Oklahoma: $27,253,437.90 for Retail, Industrial, Tourism, Housing, and Renewable Energy Facilities

Ohkay Owingeh in New Mexico: $22,913,488.65 for Refinancing, Recreational, Governmental, and Commercial Facilities

Yankton Sioux Tribe in South Dakota: $10,934,616.39 for Retail, Farming, Renewable Energy, Tourism, and Governmental Facilities

Confederated Tribes of the Umatilla Indian Reservation in Oregon: $5,330,048.86 for Health Facilities

Skokomish Indian Tribe in Washington: $1,822,436.05 for Refinancing

The complete list of Tribal projects authorized for bond issues in this second phase is available HERE.
 

 

IRS Allocates First Billion In Tribal Economic Development Bonds

The first billion-dollar tranche of Tribal Economic Development Bonds has now been allocated by the federal government, with the funds being spread over 58 projects for Tribes throughout the country.  The largest dollar allocation for any single project in this financng tranche is $22,565,088.46, which was authorized for over 30 projects, with the remainder receiving smaller authorizations. 

Examples of approved projects in the first financing round include:

Confederated Tribes of the Warm Springs Reservation of Oregon: Water Infrastructure and Tourism Facility Improvements -- $22,565,088.46

Lummi Nation (Washington): Environmental and Transportation Infrastructure -- $22,565,088.46

Santee Sioux Tribe of Nebraska: Health Facility -- $13,539,053.08

Pueblo of Acoma (New Mexico): Manufacturing Facility -- $8,273,865.77

Mille Lacs Band of Ojibwe (Minnesota): Education Facility -- $6,279,393.17

The first tranche of bond authorization was significantly oversubscribed, with the IRS receiving many more applications for projects than the available funding could support.  In an unusual move, rather than reject certain projects completely, the IRS imposed an across-the-board percentage cut to nearly all projects that were approved.  As a result, many projects did not receive the full amount of funding sought, and Tribes may need to revise the scope of work to achieve completion with available funds.

The complete list of Tribal projects authorized for bond issues in this first phase is available here.