Bond Financing

Benefits of Tax-Exempt Debt     

The Finance Authority is qualified under state and federal law to issue tax-exempt bonds and other tax-exempt debt obligations. Tax-exempt debt lowers financing costs to borrowers as a result of lower interest rates. Because bondholders are not required to pay income tax on tax-exempt interest, bondholders are willing to accept interest rates that are lower relative to taxable debt. In addition, tax-exempt bonds issued by the Finance Authority are often exempt from various Ohio and political subdivision income taxes.

Types of Tax-Exempt Bonds     

Typically, bonds issued by the Finance Authority constitute what are commonly referred to as “conduit bonds,” meaning the Finance Authority does not use the proceeds of the bonds and the Finance Authority is ultimately not financially responsible for the repayment of such bonds. Instead, bond proceeds are made available to another private or public entity to finance a project and that entity is responsible for generating funds to repay the debt.

Federal tax law allows many types of projects and entities to benefit from a variety of tax-exempt bond classifications. Below is a non-exhaustive list of examples.  The Finance Authority and its professional services providers are well suited to determine whether tax-exempt or taxable financing is available to advance a particular project.