Introduction This Memorandum provides a brief explanation and overview of tax-exempt lease-purchase financing and certificates of participation (“COPs”) in Georgia. Counties, cities and school districts (referred to as “Local Governments” in this Overview) are authorized by Georgia law to obtain tax-exempt lease-purchase financing as described below. By this method Local Governments can acquire real property, buildings, vehicles and equipment without incurring a traditional form of debt, such as general obligation bonds or revenue bonds, and no voter referendum or court bond validation is required. The simplified procedures make lease-purchase financing particularly suitable for shorter-term or smaller financings of essential governmental… Read more

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

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

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

Introduction Tax-exempt bond financing is available for certain water and sewage, solid waste disposal/recovery project, waste-to-energy projects, and wastewater treatment projects. Bond financing may be available for public, private and public-private partnership projects. Bonds might be issued directly by a city or a county for government-owned project pursuant to Georgia’s Revenue Bond Law. A privately owned and operated project might be financeable through Georgia’s Development Authorities Law. A government-owned project or a public-private partnership project might be financed with Georgia’s Resource Recovery Development Authorities Law or Georgia’s Regional Solid Waste Management Authorities Law. In order for the bonds to be… Read more

The bond documents have been bound in a neat, thick transcript. The chief financial officer has worked for months with the board of directors, management, bond counsel and the remainder of the bond working group to structure and close a successful 501(c)(3) bond issue. The 501(c)(3) nonprofit commences its building program with the bond proceeds and looks forward to enjoying the low, tax-exempt interest rate on the bonds for their full term. What more does the nonprofit need to do? Although continuing compliance with a tax-exempt 501(c)(3) bond issue need not be burdensome, it is rife with specialized and non-intuitive… 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

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

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

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