Code of Virginia

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Code of Virginia
Title 15.2. Counties, Cities and Towns
Chapter 50. Private Activity Bonds
12/4/2021

Chapter 50. Private Activity Bonds.

§ 15.2-5000. Definitions.

As used in this chapter:

"Exempt project" for the purposes of the industrial development portion of the state ceiling means the following facilities:

1. Sewage, solid waste and qualified hazardous waste disposal facilities; and facilities for the local furnishing of electric energy or gas;

2. Certain facilities for the furnishing of water (including irrigation systems);

3. Mass commuting facilities;

4. Local district heating and cooling facilities.

"Industrial development bond" means those obligations issued by the Commonwealth and its issuing authorities which constitute manufacturing and exempt facility private activity bonds and the private use portion of governmental projects over the fifteen million-dollar threshold amount.

"Issuing authority" means any political subdivision, governmental unit, authority, or other entity of the Commonwealth which is empowered to issue private activity bonds.

"Local housing authority" means any issuer of multifamily housing bonds or single family housing bonds, created and existing under the laws of the Commonwealth, excluding the Virginia Housing Development Authority.

"Manufacturing facility" means (i) any facility which is used in the manufacturing or production of tangible personal property, including the processing resulting in a change of condition of such property, (ii) any facility which is used in the creation or production of intangible property as described in § 197(d)(1)(C)(iii) of the Internal Revenue Code of 1986, as amended, to be any patent, copyright, formula, process, design, pattern, knowhow, format, or other similar item, or (iii) any facility which is functionally related and subordinate to a manufacturing facility if such facility is located on the same site as the manufacturing facility. This definition is for bonding purposes under this chapter only and shall not apply to local taxation under Title 58.1.

"Multifamily housing bond" means any obligation which constitutes an exempt facility bond under federal law for the financing of a qualified residential rental project within the meaning of § 142 of the Internal Revenue Code of 1986, as amended.

"Private activity bond" means a part or all of any bond (or other instrument) required to obtain an allocation from the state's volume cap pursuant to § 146 of the Internal Revenue Code of 1986, as amended, in order to be tax exempt, including but not limited to the following:

1. Exempt project bonds,

2. Manufacturing facility bonds,

3. Industrial development bonds,

4. Multifamily housing bonds,

5. Single family housing bonds,

6. Any other bond eligible for a tax exemption as a private activity bond pursuant to § 141 of the Internal Revenue Code of 1986, as amended.

"Single family housing bonds" means any obligation described as a qualified mortgage bond under § 143 of the Internal Revenue Code of 1986, as amended.

"State ceiling" means the maximum amount of private activity bonds that the Commonwealth of Virginia may issue in a calendar year as limited by federal law under the Internal Revenue Code of 1986, as amended.

1987, c. 306, § 15.1-1399.10; 1990, c. 299; 1997, c. 587; 2008, c. 445; 2010, cc. 122, 360.

§ 15.2-5001. Purpose of chapter.

It is the intent of the legislature by the passage of this chapter to allocate Virginia's total private activity bond issuing authority to those issuing authorities empowered to issue private activity bonds.

The Tax Reform Act of 1986 imposes restrictions on the issuance of bonds designated in the Act as "private activity bonds." These restrictions include limitations on the aggregate amount of private activity bonds that may be issued in each state in any calendar year that may be regarded as exempt from federal income taxation. Section 146 (e) of the Tax Reform Act of 1986 provides the authority for each state to establish a system for the allocation of the state ceiling on private activity bonds.

It is the intent of the legislature to provide for the allocation of the state ceiling among issuers of such bonds in a manner which will promote the public purposes and maximize the public benefits created by the issuance of such bonds.

1987, c. 306, § 15.1-1399.11; 1997, c. 587; 2008, c. 445.

§ 15.2-5002. Allocation of state ceiling for 2008 and beyond.

This section shall apply to all private activity bonds issued by issuing authorities during 2008 and in years subsequent to 2008. The state ceiling for these calendar years shall be allocated as follows:

1. "Housing." For calendar years 2008 and beyond, an amount equal to 57 percent of the Virginia state ceiling on private activity bonds shall be set aside for single family and multifamily housing bonds. The housing portion of the state ceiling shall be divided between local housing authorities and the Virginia Housing Development Authority. The bond authority allocated to these issuers shall be distributed as follows:

aIssuerPortion of State Ceiling
b

Local Housing Authorities

14%

c

Virginia Housing Development Authority

43%

d

Total Housing Allocation

57%

2. "Industrial Development." For calendar years 2008 and beyond, an amount equal to 25 percent of the Virginia state ceiling on private activity bonds shall be set aside for the issuance of industrial development bonds for manufacturing and exempt facilities; provided, however, that in the event that on July 1, 2008, the amount of private activity bonds allocated since January 1, 2008, for manufacturing and exempt facilities pursuant to the guidelines established under § 15.2-5003 shall have exceeded such 25 percent amount, the amount set aside for the Virginia Housing Development Authority under this section for calendar year 2008 shall be reduced by the amount of such excess, but in no event shall the amount of private activity bonds so allocated exceed 41 percent of the Virginia state ceiling on private activity bonds for calendar year 2008.

3. "State allocation." For calendar years 2008 and beyond, an amount equal to eighteen percent of the Virginia state ceiling on private activity bonds shall be set aside for state issuing authorities for allocations to housing and to exempt projects and manufacturing facilities of state and regional interests as determined by the Governor.

1987, c. 306, § 15.1-1399.14; 1990, c. 299; 1995, cc. 359, 384; 1997, c. 587; 1998, cc. 39, 784; 2008, c. 445.

§ 15.2-5003. Administration.

The Board of Housing and Community Development shall establish guidelines in accordance with this chapter that shall detail (i) the specific administrative policies, criteria, and procedures for the allocation to local housing authorities set forth in subdivision 1 of § 15.2-5002 and (ii) the administrative procedures for the state allocation set forth in subdivision 3 of § 15.2-5002. The Virginia Housing Development Authority shall administer its allocation set forth in subdivision 1 of § 15.2-5002 and shall use such allocation to finance loans for single family and multi-family housing in accordance with the policies, criteria, and procedures in its rules and regulations applicable to such loans, provided, however, that notwithstanding any other provision of this chapter, the Virginia Housing Development Authority may use any or all of its allocation of bond authority under § 15.2-5002 and any unused bond authority reallocated or continued to be allocated to the Virginia Housing Development Authority under § 15.2-5004 to issue mortgage credit certificates in accordance with (a) the provisions of § 25 of the United States Internal Revenue Code of 1986, as amended, and any successor provisions and (b) the policies, criteria, and procedures in its rules and regulations applicable to such certificates. The Virginia Small Business Financing Authority shall establish guidelines in accordance with this chapter which detail the specific administrative policies, criteria, and procedures for the use of the allocation for industrial development set forth in subdivision 2 of § 15.2-5002. Specific application, allocation, and reporting requirements shall be provided by the guidelines. The guidelines of the Board of Housing and Community Development and the Virginia Small Business Financing Authority shall be in accordance with the limitations and restrictions contained in federal law.

1987, c. 306, § 15.1-1399.15; 1995, c. 128; 1997, c. 587; 2008, c. 445; 2012, c. 239.

§ 15.2-5004. Reallocation of bond authority.

The allocation formulas prescribed in this chapter are established to utilize the entire state ceiling on private activity bonds by providing issuing authority to housing and industrial development projects. The allocation to local housing authorities and the allocation for industrial development provided in § 15.2-5002 shall be effective for such period in each calendar year as is set forth in the guidelines established pursuant to § 15.2-5003.

Any unused bond authority remaining in any category after the effective period of the allocation set forth in such guidelines shall be reallocated to the Virginia Housing Development Authority (and any unused bond authority allocated to the Virginia Housing Development Authority shall continue to be allocated to the Virginia Housing Development Authority) in the amount requested by the Virginia Housing Development Authority, subject to the receipt by the Director of the Department of Housing and Community Development of assurances from the Virginia Housing Development Authority of anticipated usage of such amount of unused bond authority within the time period permitted by federal law, and any remaining amount that is not so reallocated (or continued to be allocated) to the Virginia Housing Development Authority shall be reallocated according to the guidelines established by the Board of the Department of Housing and Community Development and the Virginia Small Business Financing Authority. The guidelines shall also provide a priority system for the reallocation of any such remaining unused bond authority not reallocated (or continued to be allocated) to the Virginia Housing Development Authority at year-end to projects that are eligible to carry forward issuing authority to later years. The provisions of this section shall not apply to the amount of the state ceiling set aside for the state allocation during any calendar year.

1987, c. 306, § 15.1-1399.16; 1989, c. 35; 1990, c. 299; 1995, c. 128; 1997, c. 587; 2008, c. 445.

§ 15.2-5005. Changes by the federal government.

If federal laws or regulations controlling private activity bonds are revised so that the provisions of this chapter are affected or the tax exempt status of certain private activity bonds expires or is extended, the Governor may establish measures through executive order to allocate Virginia's total bond issuing authority in accordance with the limitations and restrictions contained in the revised federal law.

1987, c. 306, § 15.1-1399.17; 1990, c. 299; 1997, c. 587.